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Landstar System Reports 11 Percent Increase in Diluted Earnings Per Share to a Third Quarter Record of $0.71

JACKSONVILLE, Fla., Oct. 25, 2012 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported 2012 record third quarter diluted earnings per share of $0.71 from net income of $33.1 million, compared to net income of $30.2 million, or $0.64 per diluted share, for the 2011 third quarter.  Operating margin, representing operating income divided by gross profit (gross profit defined as revenue less the cost of purchased transportation and commissions to agents) was 48.1 percent in the 2012 third quarter compared to 44.7 percent in the 2011 third quarter.  Revenue for the 2012 third quarter was $717.2 million compared to $684.0 million in the 2011 third quarter. 

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2012 third quarter was $663.5 million, or 93 percent of revenue, compared to $625.8 million, or 91 percent of revenue, in the 2011 third quarter.  Revenue hauled by rail, air and ocean cargo carriers was $38.9 million, or five percent of revenue, in the 2012 third quarter compared to $44.5 million, or seven percent of revenue, in the 2011 third quarter. 

Trailing twelve-month return on average shareholder's equity was 39 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 29 percent.  Landstar also announced that its Board of Directors has declared a quarterly dividend of $0.06 per share.  The dividend is payable on December 7, 2012 to stockholders of record at the close of business on November 13, 2012.  During the 2012 third quarter, Landstar purchased 183,800 shares of its common stock at a total cost of $8.8 million bringing the total number of shares purchased during the first three quarters of 2012 to 499,400 at an aggregate cost of $24.6 million.  Currently, there are 2,017,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase programs. 

"Landstar produced solid operating results in the 2012 third quarter, despite inconsistent demand and a tougher quarter over prior year quarter revenue per load comparison," said Landstar Chairman, President and Chief Executive Officer Henry Gerkens.  "Loads hauled via truck capacity in the 2012 third quarter increased a healthy seven percent over the 2011 third quarter.  Average truck revenue per load in the 2012 third quarter remained relatively high at $1,756 per load compared to historical amounts but was slightly lower than the $1,768 revenue per load amount in the 2011 third quarter.  After amounts paid for purchased transportation and agent commissions were deducted from revenue in the 2012 third quarter, the resulting gross profit amount was the second highest third quarter gross profit amount in Landstar history.  Landstar continued to demonstrate its operating leverage as it passed the increase in gross profit through to operating income, resulting in an operating margin of 48.1 percent in the 2012 third quarter.  Third quarter 2012 diluted earnings per share of $0.71 was a third quarter record."

Gerkens continued, "As I look at the 2012 fourth quarter, it is important to note that the 2012 fourth quarter is a thirteen week quarter whereas the 2011 fourth quarter was a fourteen week quarter.  I estimate that the extra week in the 2011 fourth quarter contributed approximately $25 to $30 million in additional revenue.  Using the 2011 fourth quarter gross profit margin of 15.8 percent, the increase in diluted earnings per share attributable to that additional revenue is estimated to be approximately $0.06 per diluted share.  In addition, the 2011 fourth quarter included a favorable income tax benefit of approximately $0.03 per diluted share. 

Although I am very confident in the long term outlook for Landstar, I am also somewhat cautious in the short term.  I believe that until the uncertainty surrounding the current political environment and tax and budgetary issues are resolved, the economy will continue to grow, but at a sluggish pace.  In the first few weeks of the 2012 fourth quarter, we have seen a slowing in demand beyond the choppiness experienced during the 2012 third quarter. Despite the slowing demand, revenue in the first several weeks of the 2012 fourth quarter continues to run above revenue of the first several weeks of the 2011 fourth quarter.  Given the uncertain economic environment and current revenue trends, I anticipate earnings per diluted share for the 2012 fourth quarter to be in a range of $0.63 to $0.68 per share."

Landstar will hold a live webcast of its quarterly earnings conference call this afternoon at 2:00 pm ET.  To access the webcast, visit the Company's website at www.landstar.com; click on "Investor Relations" and "Webcasts," then click on "Landstar's Third Quarter 2012 Earnings Release Conference Call."  The webcast will be available on the Company's website through Thursday, November 1, 2012.

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 2011 fiscal year, described in Item 1A Risk Factors, and in 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. is a non-asset based provider of integrated supply chain solutions.  Landstar delivers safe, specialized transportation and logistics services to a broad range of customers worldwide utilizing a network of agents, third-party capacity owners and employees.  All Landstar transportation services companies are certified to ISO 9001:2008 quality management system standards and RC14001:2008 environmental, health, safety and security management system standards.  Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR.

 














Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

































Thirty Nine Weeks Ended


Thirteen Weeks Ended







September 29,


September 24,


September 29,


September 24,







2012


2011


2012


2011














Revenue




$        2,102,164


$         1,931,560


$          717,168


$       684,013

Investment income



1,185


1,294


393


373














Costs and expenses:











Purchased transportation


1,603,865


1,459,660


548,162


518,300


Commissions to agents


162,728


153,165


56,036


54,990


Other operating costs



17,635


22,050


6,447


6,427


Insurance and claims



28,411


34,096


8,010


9,381


Selling, general and administrative


113,916


112,252


37,455


39,206


Depreciation and amortization


20,476


19,336


7,072


6,549
















Total costs and expenses


1,947,031


1,800,559


663,182


634,853














Operating income



156,318


132,295


54,379


49,533

Interest and debt expense



2,312


2,340


818


735














Income before income taxes


154,006


129,955


53,561


48,798

Income taxes 




58,203


49,642


20,460


18,640














Net income




95,803


80,313


33,101


30,158

Less: Net loss attributable to noncontrolling interest


-


(62)


-


-

Net income attributable to Landstar System,










Inc. and subsidiary



$            95,803


$             80,375


$           33,101


$         30,158














Earnings per common share attributable to










Landstar System, Inc. and subsidiary


$                2.05


$                 1.69


$               0.71


$             0.64














Diluted earnings per share attributable to 










Landstar System, Inc. and subsidiary


$                2.04


$                 1.68


$               0.71


$             0.64














Average number of shares outstanding:










Earnings per common share  


46,775,000


47,670,000


46,614,000


47,358,000


Diluted earnings per share


46,964,000


47,735,000


46,732,000


47,387,000














Dividends paid per common share


$              0.170


$               0.155


$             0.060


$           0.055

 

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)




























Sept. 29,


Dec. 31,








2012


2011

ASSETS







Current assets:








Cash and cash equivalents



$        79,961


$        80,900


Short-term investments



38,112


27,944


Trade accounts receivable, less allowance






of $8,299 and $6,591



429,684


368,377


Other receivables, including advances to independent






contractors, less allowance of $4,951 and $5,384

51,766


53,263


Deferred income taxes and other current assets

20,202


21,308



Total current assets



619,725


551,792











Operating property, less accumulated depreciation






and amortization of $154,657 and $145,804

163,569


142,146

Goodwill





57,470


57,470

Other assets




68,618


57,041

Total assets




$      909,382


$      808,449











LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:








Cash overdraft




$        26,719


$        25,905


Accounts payable



212,653


163,307


Current maturities of long-term debt


19,366


17,212


Insurance claims



68,410


76,624


Other current liabilities



45,526


48,065



Total current liabilities



372,674


331,113











Long-term debt, excluding current maturities

99,748


115,130

Insurance claims




25,386


27,494

Deferred income taxes and other non-current liabilities

40,141


34,135











Shareholders' equity:







Common stock, $0.01 par value, authorized 160,000,000 






shares, issued 66,855,922 and 66,602,486 shares

669


666


Additional paid-in capital



172,455


165,712


Retained earnings



1,035,003


947,156


Cost of 20,386,462 and 19,882,289 shares of common






stock in treasury



(838,273)


(813,684)


Accumulated other comprehensive income

1,579


727



Total shareholders' equity



371,433


300,577

Total liabilities and shareholders' equity 

$      909,382


$      808,449

 

 


Landstar System, Inc. and Subsidiary


Supplemental Information


(Unaudited)


























Thirty Nine Weeks Ended



Thirteen Weeks Ended




September 29,


September 24,



September 29,


September 24,




2012


2011



2012


2011

Revenue generated through (in thousands):






















Business Capacity Owners (1)


$  1,057,109


$  1,020,856



$     355,861


$      351,108


Truck Brokerage Carriers


886,532


747,122



307,600


274,731


Rail intermodal


55,002


53,991



18,782


19,159


Ocean and air cargo carriers


60,227


68,261



20,100


25,330


Other (2)   


43,294


41,330



14,825


13,685




$  2,102,164


$  1,931,560



$     717,168


$      684,013























Number of loads:






















Business Capacity Owners (1)


616,200


601,990



201,050


199,260


Truck Brokerage Carriers


510,360


441,930



176,760


154,720


Rail intermodal


22,290


22,750



7,470


7,920


Ocean and air cargo carriers


11,760


12,150



3,850


4,200




1,160,610


1,078,820



389,130


366,100























Revenue per load:






















Business Capacity Owners (1)


$          1,716


$          1,696



$         1,770


$          1,762


Truck Brokerage Carriers


1,737


1,691



1,740


1,776


Rail intermodal


2,468


2,373



2,514


2,419


Ocean and air cargo carriers


5,121


5,618



5,221


6,031































September 29,


September 24,









2012


2011

Truck Capacity Providers






















Business Capacity Owners (1) (3)







8,074


7,798


Truck Brokerage Carriers:











     Approved and active (4)







20,474


18,402


     Approved







9,315


9,088









29,789


27,490


Total available truck capacity providers







37,863


35,288













































(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 and warehousing and transportation management fee revenue

generated by the transportation logistics segment.



















(3) Trucks provided by Business Capacity Owners were 8,596 and 8,314 at September 29, 2012 and September 24, 2011, 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, Landstar System, Inc., +1-904-398-9400