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Landstar System Reports Second Quarter Diluted Earnings Per Share Of $0.66

JACKSONVILLE, Fla., July 25, 2013 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported 2013 second quarter diluted earnings per share of $0.66, the second best second quarter diluted earnings per share in the Company's history. Gross profit margin representing gross profit (gross profit defined as revenue less the cost of purchased transportation and commissions to agents) divided by revenue was 16.1 percent and operating margin, representing operating income divided by gross profit, was 45.7 percent.  Revenue for the 2013 second quarter was $679.3 million

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2013 second quarter was $622.7 million, or 92 percent of revenue, and revenue hauled by rail, air and ocean cargo carriers was $42.6 million, or 6 percent of revenue. 

Trailing twelve-month return on average shareholder's equity was 33 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 25 percent.  During the 2013 second quarter, Landstar purchased 884,327 shares of its common stock at a total cost of $46,603,000. Currently, there are 1,107,550 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program. As of June 29, 2013, the Company had $102 million in cash and short term investments and $20 million in borrowings outstanding under its senior credit facility. As of June 29, 2013, there was $170 million available for borrowing under the Company's senior credit facility.

Commenting on Landstar's 2013 second quarter performance, Landstar Chairman, President and CEO, Henry Gerkens said, "Revenue, gross profit margin, operating margin and diluted earnings per share in the 2013 second quarter were all in line with our recent expectations, as previously communicated in our 2013 second quarter mid- quarter update call on May 28, 2013. Consistent with the 2013 first quarter, the Company experienced softness in both the number of loads and revenue per load on loads hauled via truck throughout the second quarter with much of the softness coming from revenue hauled on unsided/platform equipment. Despite the soft operating environment, Landstar's operating margin for the 2013 second quarter was a very solid 45.7 percent. In addition, our 2013 second quarter operating margin was negatively impacted by increased insurance and claims expense and an approximate $2 million in costs for Landstar's Annual Agent Convention which was held in the 2013 second quarter as opposed to the first quarter of the prior year. The 2013 second quarter operating results, although not equal to the 2012 second quarter results, demonstrates the resiliency of our variable cost business model."

Gerkens continued, "During the first several weeks of the 2013 third quarter, revenue trends remained somewhat choppy, but improved from the trends experienced in the 2013 second quarter compared to the 2012 second quarter. Although the revenue generated in the first several weeks of July of 2013 remained below the revenue generated in the comparable 2012 period, I am encouraged by the improved trends. Based upon current revenue trends and considering the soft U.S. industrial production forecasts for the balance of the year, I would anticipate revenue for the 2013 third quarter to be in a range of $670 million to $715 million. Additionally, assuming approximately the same level of insurance and claims expense as a percentage of BCO revenue as incurred in the 2013 second quarter, I would anticipate an operating margin of between 46 percent and 48 percent and diluted earnings per share in a range of $0.67 to $0.72 per diluted share."

Landstar will provide 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 Second Quarter 2013 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," "expects," "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 other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third-party capacity providers; decreased demand for transportation services; substantial industry competition; disruptions or failures in our computer systems; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; acquired businesses; intellectual property; and other operational, financial or legal risks or uncertainties detailed in Landstar's Form 10K for the 2012 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 worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation logistics services to a broad range of customers 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.

(Tables follow)

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)






























Twenty Six Weeks Ended


Thirteen Weeks Ended






June 29,


June 30,


June 29,


June 30,






2013


2012


2013


2012













Revenue



$        1,307,661


$         1,384,996


$          679,340


$       735,973

Investment income


745


792


371


405













Costs and expenses:










Purchased transportation


993,029


1,055,703


516,424


562,781


Commissions to agents


102,829


106,692


53,741


56,460


Other operating costs, net of gains on asset dispositions


9,526


11,188


4,201


4,716


Insurance and claims


23,654


20,401


11,848


9,306


Selling, general and administrative


70,976


76,461


35,750


37,662


Depreciation and amortization


14,993


13,404


7,810


6,664















Total costs and expenses


1,215,007


1,283,849


629,774


677,589













Operating income


93,399


101,939


49,937


58,789

Interest and debt expense


1,511


1,494


771


770













Income before income taxes


91,888


100,445


49,166


58,019

Income taxes 



34,682


37,743


18,740


22,164













Net income



$            57,206


$             62,702


$           30,426


$         35,855

























Earnings per common share


$                1.23


$                 1.34


$               0.66


$             0.76













Diluted earnings per share


$                1.23


$                 1.33


$               0.66


$             0.76













Average number of shares outstanding:










Earnings per common share  


46,380,000


46,856,000


46,253,000


46,915,000


Diluted earnings per share


46,555,000


47,083,000


46,386,000


47,104,000













Dividends paid per common share


$                   -


$               0.110


$                  -


$           0.055













Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)




























June 29,


Dec. 29,








2013


2012

ASSETS







Current assets:








Cash and cash equivalents



$        67,474


$        74,284


Short-term investments



34,560


35,528


Trade accounts receivable, less allowance






of $8,142 and $8,650



391,449


408,787


Other receivables, including advances to independent






contractors, less allowance of $4,257 and $4,657

56,483


55,278


Deferred income taxes and other current assets

23,187


18,067



Total current assets



573,153


591,944











Operating property, less accumulated depreciation






and amortization of $155,499 and $158,999

179,777


158,953

Goodwill





57,470


57,470

Other assets




81,831


71,054

Total assets




$      892,231


$      879,421











LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:








Cash overdraft




$        27,025


$        33,647


Accounts payable



188,529


188,981


Current maturities of long-term debt


25,252


19,016


Insurance claims



67,392


64,509


Other current liabilities



33,402


38,186



Total current liabilities



341,600


344,339











Long-term debt, excluding current maturities

94,033


95,125

Insurance claims




20,538


21,896

Deferred income taxes and other non-current liabilities

43,816


38,607











Shareholders' equity:







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






shares, issued 66,996,081 and 66,859,864 shares

670


669


Additional paid-in capital



177,486


173,976


Retained earnings



1,100,162


1,042,956


Cost of 21,296,347 and 20,411,736 shares of common






stock in treasury



(886,135)


(839,517)


Accumulated other comprehensive income

61


1,370



Total shareholders' equity



392,244


379,454

Total liabilities and shareholders' equity 

$      892,231


$      879,421


Landstar System, Inc. and Subsidiary


Supplemental Information


(Unaudited)






























Twenty Six Weeks Ended



Thirteen Weeks Ended






June 29,


June 30,



June 29,


June 30,






2013


2012



2013


2012



Revenue generated through (in thousands):


























Business Capacity Owners (1)


$     645,548


$     701,248



$     341,499


$      371,886




Truck Brokerage Carriers


551,822


578,932



281,181


308,090




Rail intermodal


36,688


36,220



18,677


18,838




Ocean and air cargo carriers


45,021


40,127



23,918


22,458




Other (2)   


28,582


28,469



14,065


14,701






$  1,307,661


$  1,384,996



$     679,340


$      735,973





























Number of loads:


























Business Capacity Owners (1)


392,370


415,150



204,600


215,950




Truck Brokerage Carriers


331,740


333,600



167,780


175,570




Rail intermodal


14,390


14,820



7,370


7,660




Ocean and air cargo carriers


8,040


7,910



4,070


3,930






746,540


771,480



383,820


403,110





























Revenue per load:


























Business Capacity Owners (1)


$          1,645


$          1,689



$         1,669


$          1,722




Truck Brokerage Carriers


1,663


1,735



1,676


1,755




Rail intermodal


2,550


2,444



2,534


2,459




Ocean and air cargo carriers


5,600


5,073



5,877


5,715





































June 29,


June 30,











2013


2012



Truck Capacity Providers


























Business Capacity Owners (1) (3)







7,876


7,959




Truck Brokerage Carriers:













     Approved and active (4)







20,844


19,283




     Approved







11,228


9,051











32,072


28,334




Total available truck capacity providers







39,948


36,293





























(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 8,368 and 8,478 at June 29, 2013 and June 30, 2012, 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., 904-398-9400