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Landstar System Reports 18 Percent Increase in Earnings Per Diluted Share

JACKSONVILLE, Fla., April 17 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported revenue in the 2008 first quarter increased approximately 6 percent to $609 million compared to $577 million for the 2007 first quarter. Net income for the thirteen-week period ended March 29, 2008 was $23.7 million, or $0.45 per diluted share, compared to net income of $21.6 million, or $0.38 per diluted share, for the thirteen-week period ended March 31, 2007.

Revenue hauled by BCO Independent Contractors in the first quarter of 2008 was $324.8 million, or 54 percent of transportation logistics revenue, compared to $320.5 million, or 57 percent of transportation logistics revenue, in the 2007 first quarter. Moreover, in the first quarters of 2008 and 2007, the Company invoiced customers $57.8 million and $34.7 million, respectively, in fuel surcharges that were passed on 100 percent to BCO Independent Contractors and excluded from revenue. Revenue hauled by third-party truck brokerage carriers was $228.6 million, or 38 percent of transportation logistics revenue, in the 2008 first quarter compared to $205.9 million, or 36 percent of transportation logistics revenue, in the 2007 first quarter. Revenue hauled by rail, air, and ocean cargo carriers was $45.8 million or 8 percent of transportation logistics revenue, in the 2008 first quarter compared to $37.6 million, or 7 percent of transportation logistics revenue, in the 2007 first quarter.

As of the first quarter of 2008, the Company revised the format of its financial statement segment reporting presentation to consolidate from three segments (carrier, global logistics and insurance) to two segments (transportation logistics and insurance). This change in segment reporting reflects increased centralization and consolidation of the administrative and sales functions across all of the Company's operating subsidiaries and the increased similarity of the services provided by the operations of the Company's various operating subsidiaries, primarily with respect to truck brokerage services. As a result of this change in presentation, the revenue and operating results formerly reported in the carrier and global logistics segments, together with corporate overhead which was formerly included as "other" in the segment information, have been consolidated into the transportation logistics segment. This change in segment reporting has no impact on reporting with respect to the Company's insurance segment.

Landstar System, Inc. announced that its Board of Directors has declared a quarterly dividend of $0.0375 per share. The dividend is payable on May 30, 2008 to stockholders of record at the close of business on May 9, 2008. It is the intention of the Board of Directors to continue to pay a quarterly dividend.

"I am pleased with the Company's 2008 first quarter performance," said Landstar President and Chief Executive Officer Henry Gerkens. "Despite a continuing weak freight environment, Landstar continued to increase its revenue. Consolidated revenue in the 2008 first quarter increased approximately 6 percent over the 2007 first quarter, as revenue hauled by truck brokerage carriers increased 11 percent, revenue hauled by rail carriers increased 25 percent and revenue hauled by ocean cargo carriers increased 41 percent. Landstar also improved its operating margin to 6.7 percent in the 2008 first quarter compared to 6.4 percent in the 2007 first quarter. Landstar's solid results are directly attributable to sound execution and its unique non asset based business model."

"Additionally, Landstar continues to generate outstanding returns. Trailing twelve month return on average shareholders' equity remained high at 53 percent and trailing twelve month return on invested capital, net income divided by the sum of average equity plus average debt, was 33 percent. During the 2008 first quarter, the Company reduced debt by $17 million and increased cash and short-term investments by $21 million, ending the quarter with $105 million in cash and short-term investments. As of March 29, 2008, there were 734,400 shares of the Company's common stock available for purchase by the Company under its most recently authorized share purchase program."

Gerkens continued, "I anticipate the second quarter of 2008 to be similar to that of the 2008 first quarter. As such, I would anticipate revenue for the second quarter of 2008 as compared to the second quarter of 2007 to increase in the mid to upper single digits. Based upon the above revenue forecast, I would anticipate Landstar's earnings for the 2008 second quarter to be within a range of $0.51 to $0.57 per diluted share."

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 2 pm ET. To access the webcast, visit the Company's website at ; click on "Investor Relations" and "Webcasts," then click on "Landstar's First Quarter 2008 Earnings Release Conference Call."

The following is a "safe harbor" statement under the Private Securities Litigation Reform Act of 1995. Statements contained in this press release that are not based on historical facts are "forward-looking statements". This press release contains forward-looking statements, such as statements which relate to Landstar's business objectives, plans, strategies, expectations and intentions. Terms such as "anticipates," "believes," "estimates," "intention," "plans," "predicts," "may," "should," "will," the negative thereof and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: an increase in the frequency or severity of accidents or workers' compensation claims; unfavorable development of existing claims; dependence on independent sales agents; dependence on third party capacity providers; disruptions or failures in our computer systems; a downturn in domestic or international economic growth or growth in the transportation sector; substantial industry competition; and other operational, financial or legal risks or uncertainties detailed in Landstar's Form 10K for the 2007 fiscal year, described in Item 1A Risk Factors, and other SEC filings from time to time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on such forward- looking statements, and Landstar undertakes no obligation to publicly update or revise any forward-looking statements.

About Landstar:

Landstar System, Inc. delivers safe, specialized transportation and logistics services to a broad range of customers worldwide. The Company identifies and fulfills shippers' needs through the coordination of individual businesses comprised of independent sales agents and third-party transportation and logistics capacity providers. Through its operating subsidiaries, Landstar delivers excellence in complete transportation logistics services and solutions. Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market(R) under the symbol LSTR.

                               (Tables follow)

                            Landstar System, Inc.
                      Consolidated Statements of Income
               (Dollars in thousands, except per share amounts)

                                                     Thirteen Weeks Ended
                                                  March 29,         March 31,
                                                    2008              2007

    Revenue                                       $608,828          $576,649
    Investment income                                1,096             1,740

    Costs and expenses:
      Purchased transportation                     465,029           434,058
      Commissions to agents                         46,814            46,632
      Other operating costs                          6,584             5,506
      Insurance and claims                           9,521            17,540
      Selling, general and administrative           35,857            33,165
      Depreciation and amortization                  5,130             4,617

         Total costs and expenses                  568,935           541,518

    Operating income                                40,989            36,871
    Interest and debt expense                        2,142             1,592

    Income before income taxes                      38,847            35,279
    Income taxes                                    15,104            13,675

    Net income                                     $23,743           $21,604

    Earnings per common share                        $0.45             $0.39

    Diluted earnings per share                       $0.45             $0.38

    Average number of shares outstanding:
      Earnings per common share                 52,601,000        55,926,000
      Diluted earnings per share                53,003,000        56,470,000

    Dividends paid per common share                $0.0375           $0.0300

                            Landstar System, Inc.
                         Selected Segment Information
                            (Dollars in thousands)

                                                     Thirteen Weeks Ended
                                                 March 29,         March 31,
                                                    2008              2007

     Transportation logistics segment             $599,600          $567,439
     Insurance segment                               9,228             9,210

        Revenue                                   $608,828          $576,649

     Operating Income

     Transportation logistics segment              $32,386           $33,512
     Insurance segment                               8,603             3,359

        Operating income                           $40,989           $36,871

                            Landstar System, Inc.
                         Consolidated Balance Sheets
               (Dollars in thousands, except per share amounts)

                                                  March 29,           Dec 29,
                                                    2008               2007
    Current assets:
      Cash and cash equivalents                    $80,980           $60,750
      Short-term investments                        24,046            22,921
      Trade accounts receivable, less allowance
       of $4,264 and $4,469                        303,588           310,258
      Other receivables, including
       advances to independent
       contractors, less allowance of
       $4,987 and $4,792                            19,896            11,170
      Deferred income taxes and other
       current assets                               17,252            28,554
        Total current assets                       445,762           433,653

    Operating property, less accumulated
     depreciation and amortization of $93,254
     and $88,284                                   128,291           132,369
    Goodwill                                        31,134            31,134
    Other assets                                    33,010            31,845
    Total assets                                  $638,197          $629,001

    Current liabilities:
      Cash overdraft                               $27,211           $25,769
      Accounts payable                             110,980           117,122
      Current maturities of long-term debt          23,525            23,155
      Insurance claims                              27,705            28,163
      Accrued income taxes                          15,278            14,865
      Other current liabilities                     41,239            40,501
        Total current liabilities                  245,938           249,575

    Long-term debt, excluding current
     maturities                                    124,172           141,598
    Insurance claims                                36,458            37,631
    Deferred income taxes                           21,063            19,411

    Shareholders' equity:
      Common stock, $0.01 par value,
       authorized 160,000,000 shares,
       issued 65,856,787 and
       65,630,383 shares                               659               656
      Additional paid-in capital                   140,590           132,788
      Retained earnings                            623,308           601,537
      Cost of 13,121,109 shares of
       common stock in treasury                   (554,252)         (554,252)
      Accumulated other comprehensive income           261                57
        Total shareholders' equity                 210,566           180,786
    Total liabilities and shareholders' equity    $638,197          $629,001

                               Landstar System, Inc.
                              Supplemental Information

                                                    Thirteen Weeks Ended
                                                 March 29,         March 31,
                                                    2008              2007
    Revenue generated through (in thousands):

       Business Capacity Owners (1)               $324,804          $320,533
       Truck Brokerage Carriers                    228,633           205,897
       Rail intermodal                              33,789            26,971
       Ocean carriers                                8,434             5,970
       Air carriers                                  3,589             4,615
       Other (2)                                     9,579            12,663
                                                  $608,828          $576,649

    Number of loads:

       Business Capacity Owners (1)                203,200           205,600
       Truck Brokerage Carriers                    142,030           137,820
       Rail intermodal                              14,980            12,100
       Ocean carriers                                1,250             1,040
       Air carriers                                  1,990             3,280
                                                   363,450           359,840

    Revenue per load:

       Business Capacity Owners (1)                 $1,598            $1,559
       Truck Brokerage Carriers                      1,610             1,494
       Rail intermodal                               2,256             2,229
       Ocean carriers                                6,747             5,740
       Air carriers                                  1,804             1,407

                                                   March 29,        March 31,
                                                     2008              2007
    Truck Capacity

       Business Capacity Owners (1)(3)               8,277             8,510
       Truck Brokerage Carriers:
            Approved and active (4)                 15,820            14,784
            Approved                                 9,515             8,758
                                                    25,335            23,542
       Total available truck capacity providers     33,612            32,052

    Agent Locations                                  1,375             1,338

     (1) Business Capacity Owners are independent contractors who provide
         truck capacity to the Company under exclusive lease arrangements.

     (2) Includes premium revenue generated by the insurance segment,
         warehousing revenue generated by the Transportation Logistics segment
         and revenue derived from transportation services provided in support
         of disaster relief efforts provided primarily under a contract
         between Landstar Express America, Inc. and the United States
         Department of Transportation/Federal Aviation Administration.

     (3) Trucks provided by Business Capacity Owners were 8,856 and 9,158 at
         March 29, 2008 and March 31, 2007, respectively.

     (4) Active refers to Truck Brokerage Carriers who have moved at least one
         load in the past 180 days.

SOURCE Landstar System, Inc.

Jim Gattoni of Landstar System, Inc.,

Web site: