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Landstar System Reports Record Quarterly Revenue Of $814 Million And Record Quarterly Diluted Earnings Per Share Of $0.80 In The Second Quarter

JACKSONVILLE, Fla., July 23, 2014 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported record second quarter net income of $35.9 million, or $0.80 per diluted share, on record revenue of $814 million in the 2014 second quarter. Revenue and diluted earnings per share for the 2014 second quarter were the highest quarterly revenue and diluted earnings per share in Landstar history.  Landstar reported net income from continuing operations of $29.5 million, or $0.64 per diluted share, on revenue from continuing operations of $674 million in the 2013 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $121.6 million in the 2014 second quarter compared to $103.6 million in gross profit from continuing operations in the 2013 second quarter. Operating margin, representing operating income divided by gross profit, was 48.1 percent in the 2014 second quarter.       

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2014 second quarter was $764.7 million, or 94 percent of revenue, compared to $622.7 million, or 92 percent of revenue from continuing operations, in the 2013 second quarter.  Revenue hauled by rail, air and ocean cargo carriers was $39.9 million, or 5 percent of revenue, in the 2014 second quarter compared to $42.6 million, or 6 percent of revenue from continuing operations, in the 2013 second quarter. 

Trailing twelve-month return on average shareholder's equity was 35 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 28 percent.  As of June 28, 2014, the Company had $130 million in cash and short term investments. As of June 28, 2014, there was $192 million available for borrowing under the Company's senior credit facility.  Landstar purchased approximately 940,000 shares of its common stock during the 2014 first half at an aggregate cost of $56.4 million. Currently, there are approximately 1,828,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program.  In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.07 per share payable on August 29, 2014 to stockholders of record at the close of business on August 11, 2014.  This represents a 17 percent increase to the Company's previous quarterly dividend.  It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

"Landstar's 2014 second quarter results were outstanding," said Landstar Chairman and CEO Henry Gerkens. "Revenue, gross profit, operating income, net income, and diluted earnings per share were all second quarter records. Overall, demand for Landstar's truck transportation services in the 2014 second quarter was very strong, as the number of loads hauled via truck increased 9 percent over the 2013 second quarter.  Even stronger was the revenue per load hauled via truck which increased 13 percent over the 2013 second quarter. Both the number of loads hauled via truck and the related average revenue per load were the highest quarterly amounts in the Company's history.  From an equipment standpoint, revenue hauled via van equipment during the 2014 second quarter increased 26 percent compared to revenue hauled via van equipment in the 2013 second quarter while revenue hauled via unsided/platform equipment, in the 2014 second quarter exceeded the 2013 second quarter by 18 percent. Despite an increased provision for incentive compensation, our operating margin was an impressive 48.1 percent in the 2014 second quarter, the second highest second quarter operating margin in Landstar's history. And finally, diluted earnings per share from continuing operations in the 2014 second quarter increased 25 percent over the 2013 second quarter."

Gerkens continued, "At this point, I believe the current operating environment will remain very much intact throughout the balance of 2014.  The increase in underlying demand as well as industry-wide truck productivity issues should continue to contribute to the very healthy pricing environment for spot market transactions. Although the 2014 third quarter is only several weeks old, the strong trends have continued.  Based on the continuation of these positive trends through the 2014 third quarter and given that the revenue generated in the Company's third quarter has historically been very similar to revenue generated in the Company's second quarter, I would expect 2014 third quarter revenue, gross profit, operating income and diluted earnings per share to be similar with those experienced in the 2014 second quarter."

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 2014 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 and expectations.  Terms such as "anticipates," "believes," "estimates," "intention," "expects," "plans," "predicts," "may," "should," "could," "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 the Company's computer systems; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; intellectual property; unclaimed property; and other operational, financial or legal risks or uncertainties detailed in Landstar's Form 10K for the 2013 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 the Company 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 RC14001:2013 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 28,


June 29,


June 28,


June 29,







2014


2013


2014


2013














Revenue




$  1,502,640


$  1,297,270


$     814,443


$     674,390

Investment income



695


745


332


371














Costs and expenses:











Purchased transportation


1,158,964


994,536


628,933


517,040


Commissions to agents


116,565


102,747


63,861


53,715


Other operating costs, net of gains on asset dispositions


12,829


9,385


6,243


4,145


Insurance and claims



25,706


23,572


13,849


11,809


Selling, general and administrative


72,352


63,977


36,752


32,500


Depreciation and amortization


13,333


13,563


6,565


7,125
















Total costs and expenses


1,399,749


1,207,780


756,203


626,334














Operating income




103,586


90,235


58,572


48,427

Interest and debt expense



1,486


1,511


718


771














Income from continuing operations before income taxes


102,100


88,724


57,854


47,656

Income taxes 




38,537


33,481


21,929


18,164

Income from continuing operations


63,563


55,243


35,925


29,492














Income from discontinued operations, net of income taxes


-


1,963


-


934














Net income




$       63,563


$       57,206


$       35,925


$       30,426



























Earnings per common share:









   Income from continuing operations


$           1.41


$           1.19


$           0.80


$           0.64

   Income from discontinued operations


-


0.04


-


0.02

   Earnings per common share


1.41


1.23


0.80


0.66














Diluted earnings per share:










   Income from continuing operations


$           1.40


$           1.19


$           0.80


$           0.64

   Income from discontinued operations


-


0.04


-


0.02

   Diluted earnings per share


1.40


1.23


0.80


0.66














Average number of shares outstanding:










Earnings per common share  


45,171,000


46,380,000


44,935,000


46,253,000


Diluted earnings per share


45,362,000


46,555,000


45,128,000


46,386,000














Dividends per common share


$           0.12


$               -


$           0.06


$               -

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)













June 28,


Dec. 28,



2014


2013

ASSETS





Current assets:






Cash and cash equivalents


$     93,133


$   180,302


Short-term investments


36,633


34,939


Trade accounts receivable, less allowance







of $4,442 and $3,773


460,079


378,732


Other receivables, including advances to independent







contractors, less allowance of $3,785 and $4,253


54,615


73,903


Deferred income taxes and other current assets


28,712


14,592



Total current assets


673,172


682,468







Operating property, less accumulated depreciation








and amortization of $160,434 and $157,985


175,086


177,329

Goodwill


31,134


31,134

Other assets


83,136


79,765

Total assets


$   962,528


$   970,696






LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:






Cash overdraft


$     27,202


$     27,780


Accounts payable


195,335


157,796


Current maturities of long-term debt


29,419


27,567


Insurance claims


77,909


92,280


Other current liabilities


42,285


70,237



Total current liabilities


372,150


375,660






Long-term debt, excluding current maturities


63,386


73,938

Insurance claims


23,821


24,171

Deferred income taxes and other non-current liabilities


43,113


42,446






Shareholders' equity:






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







shares, issued 67,162,401 and 67,017,858 shares


672


670


Additional paid-in capital


183,681


179,807


Retained earnings


1,231,187


1,173,044


Cost of 22,471,704 and 21,528,693 shares of common







stock in treasury


(955,442)


(899,028)


Accumulated other comprehensive loss


(40)


(12)



Total shareholders' equity


460,058


454,481

Total liabilities and shareholders' equity


$   962,528


$   970,696

 


Landstar System, Inc. and Subsidiary


Supplemental Information


(Unaudited)




























Twenty Six Weeks Ended



Thirteen Weeks Ended





June 28,


June 29,



June 28,


June 29,





2014


2013



2014


2013


Revenue generated through (in thousands):
























Business Capacity Owners (1)


$    740,689


$    645,548



$ 397,037


$ 341,499



Truck Brokerage Carriers


669,154


551,822



367,641


281,181



Rail intermodal


37,021


36,688



20,526


18,677



Ocean and air cargo carriers


36,437


45,021



19,421


23,918



Other (2)   


19,339


18,191



9,818


9,115





$ 1,502,640


$ 1,297,270



$ 814,443


$ 674,390


























Number of loads:
























Business Capacity Owners (1)


411,370


392,370



212,500


204,600



Truck Brokerage Carriers


357,170


331,740



191,720


167,780



Rail intermodal


14,280


14,390



7,870


7,370



Ocean and air cargo carriers


8,010


8,040



4,120


4,070





790,830


746,540



416,210


383,820


























Revenue per load:
























Business Capacity Owners (1)


$        1,801


$        1,645



$     1,868


$     1,669



Truck Brokerage Carriers


1,873


1,663



1,918


1,676



Rail intermodal


2,593


2,550



2,608


2,534



Ocean and air cargo carriers


4,549


5,600



4,714


5,877


































June 28,


June 29,










2014


2013


Truck Capacity Providers
























Business Capacity Owners (1) (3)







8,074


7,876



Truck Brokerage Carriers:












     Approved and active (4)







23,807


20,844



     Approved







11,743


11,228










35,550


32,072



Total available truck capacity providers







43,624


39,948


























(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 revenue generated by the transportation logistics segment.


(3) Trucks provided by Business Capacity Owners were 8,591 and 8,368 at June 28, 2014 and June 29, 2013, 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., www.landstar.com, 904-398-9400