JACKSONVILLE, Fla., Oct. 13 /PRNewswire-FirstCall/ -- Landstar System,
Inc. (Nasdaq: LSTR) reported a 28 percent increase in revenue to a record
$676 million in the 2005 third quarter, up from $527 million in the 2004 third
quarter. Net income for the 2005 third quarter was a record $35.6 million, or
$.60 per diluted share, compared to net income of $21.6 million, or $.35 per
diluted share, for the 2004 third quarter. Operating margin in the 2005 third
quarter was 8.7 percent compared with 6.8 percent in the 2004 third quarter.
Included in the 2005 third quarter revenue was $129.8 million of revenue
related to disaster relief efforts for the various hurricanes that impacted
the United States during the quarter. These emergency transportation services
were provided primarily under a contract between Landstar Express America,
Inc. and the United States Department of Transportation/Federal Aviation
Administration (the "FAA"). The revenue recognized under this contract during
the 2005 third quarter generated $22.7 million of operating income which, net
of related income taxes, increased net income by $14.0 million, or $.23 per
diluted share. Included in the 2004 third quarter revenue was $27.9 million
of revenue related to disaster relief efforts provided primarily under the
contract with the FAA. The revenue recognized under the contract during the
2004 third quarter generated $5.1 million of operating income which, net of
related income taxes, increased net income by $3.1 million, or $.05 per
diluted share. Revenue attributable to emergency transportation services
provided primarily under the FAA contract increased operating margin in the
2005 and 2004 third quarters approximately 2.1 percent and 0.6 percent,
respectively.
Landstar's carrier group of companies generated $414 million of revenue in
the 2005 third quarter, compared with revenue of $369 million in the 2004
third quarter. In the 2005 and 2004 third quarters, the carrier group
invoiced customers $32.2 million and $15.3 million, respectively, in fuel
surcharges that were passed on 100 percent to business capacity owners and
excluded from revenue. Landstar's newly named global logistics group of
companies, comprised of Landstar Express America and Landstar Logistics,
generated $254 million of revenue, which included the $129.8 million related
to disaster relief services, in the 2005 third quarter compared with
$151 million of revenue, which included $27.9 million related to disaster
relief services, in the 2004 third quarter.
Net income for the thirty-nine-week period ended September 24, 2005 was
$77.0 million, or $1.27 per diluted share, compared to net income of
$47.3 million, or $.77 per diluted share for the 2004 thirty-nine-week period
ended September 25, 2004. Included in net income for the 2005 thirty-nine-
week period was $24.2 million of operating income related to $137.9 million of
revenue from emergency transportation services provided under the FAA
contract. This $24.2 million of operating income, net of related income
taxes, increased net income $14.9 million, or $.25 per diluted share.
Included in net income for the 2004 thirty-nine-week period was $5.1 million
of operating income related to the $27.9 million of revenue from emergency
transportation services provided primarily under the FAA contract. This
$5.1 million of operating income, net of related income taxes, increased net
income $3.1 million, or $.05 per diluted share. Also included in the 2004
thirty-nine-week period was $7.6 million of costs to settle one severe
accident. This charge, net of related income tax benefits, reduced net income
by $4.9 million, or $.08 per diluted share. Revenue was $1,717 million in the
2005 thirty-nine-week period, compared to revenue of $1,430 million in the
corresponding 2004 period. Landstar's carrier group of companies generated
$1,198 million of revenue in the thirty-nine-week period ended September 24,
2005, compared with $1,054 million in the thirty-nine-week period ended
September 25, 2004. In the 2005 and 2004 thirty-nine-week periods, the
carrier group invoiced customers $81.5 million and $37.4 million,
respectively, of fuel surcharges that were passed on 100 percent to business
capacity owners and excluded from revenue. Landstar's global logistics group
of companies generated $497 million of revenue, which included the
$137.9 million related to disaster relief services, in the 2005 thirty-nine-
week period compared with $354 million of revenue, which included
$27.9 million related to disaster relief services, in the comparable 2004
period.
Landstar System, Inc. also announced that its Board of Directors has
declared its second quarterly dividend of $0.025 per share. The dividend is
payable on November 30, 2005, to stockholders of record at the close of
business on November 10, 2005, and would pay out approximately $5,841,000 per
year if continued quarterly. It is the intention of the Board of Directors to
pay a comparable quarterly dividend going forward.
"I am very pleased with Landstar's 2005 third quarter performance," said
Landstar President and CEO Henry Gerkens. "Consolidated revenue increased by
28 percent, compared to the 2004 third quarter, to the highest quarterly
revenue in Landstar history. Revenue at the carrier segment increased 12
percent and revenue at the global logistics segment increased 69 percent.
Landstar was not only able to source the necessary capacity required for the
disaster relief efforts but was also able to source sufficient capacity to
support a 9.5 percent increase in revenue, excluding the revenue from
hurricane relief efforts in both periods. Landstar provided $129.8 million of
transportation services in support of disaster relief efforts during the 2005
third quarter, including $24.5 million related to buses and $15.7 million for
air transportation services. In addition, earnings per diluted share
increased 71 percent over the 2004 third quarter."
"During the quarter, we increased the total number of approved capacity
providers by over 1,400. Compared to the 2004 third quarter, revenue
generated through other third party truck capacity providers (truck brokerage)
increased 58 percent and revenue hauled by Landstar BCOs increased 7 percent.
Trailing twelve-month return on average equity remained high at 52 percent and
return on invested capital, net income divided by the sum of average equity
plus average debt, was 35 percent. During the thirty-nine-week period ended
September 24, 2005, we purchased 2,873,053 shares of Landstar common stock at
a total cost of $95,600,000 and ended the period with $135 million in cash and
short-term investments," Gerkens said. "The Company may purchase up to an
additional 2,525,227 shares of its common stock under its authorized share
repurchase program."
"The ongoing execution of our share purchase program combined with the
Board of Directors' declaration of the quarterly dividend reflects both the
ability of the Landstar business model to generate free cash flow and the
Board's commitment to returning value to the Company's stockholders."
"I anticipate the revenue increase for the 2005 fourth quarter over the
2004 fourth quarter to be within a range of 10 to 14 percent. This estimate
includes additional anticipated emergency transportation services revenue to
be provided under the FAA contract within a range of $40 million to
$50 million. The 2004 fourth quarter included $35.9 million of such emergency
transportation services revenue. Given the current operating environment, I
anticipate earnings for the 2005 fourth quarter to be within a range of
$.46 to $.51 per diluted share," said Gerkens.
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 http://www.landstar.com . Click on Investors and then the webcast
icon.
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, including any such expressions with respect to the level of
comfort with analyst estimates, 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
accident claims; dependence on independent sales agents; dependence on third
party capacity providers; disruptions or failures in our computer systems; a
downturn in domestic 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 2004 fiscal
year, described in the section Factors That May Affect Future Results and/or
Forward-Looking Statements, 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.
Landstar System, Inc. delivers safe, specialized transportation services
to a broad range of customers world-wide. The Company identifies and fulfills
shippers' needs through the coordination of individual businesses comprised of
independent sales agents and third-party transportation capacity providers.
Landstar's carrier group, which is comprised of Landstar Gemini, Inc.,
Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Ranger, Inc. and Landstar
Carrier Services, Inc., delivers excellence in complete over-the-road
transportation services. Landstar Global Logistics, Inc., which is comprised
of Landstar Express America, Inc. and Landstar Logistics, Inc., provides
international and domestic, multimodal (over-the-road, air, ocean and rail)
transportation, expedited, warehousing and contract logistics services. All
Landstar operating companies are certified to ISO 9001:2000 quality management
system standards. Landstar System, Inc. is headquartered in Jacksonville,
Florida. Its common stock trades on The NASDAQ Stock Market(R) under the
symbol LSTR.
Landstar System, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Thirty Nine Weeks Thirteen Weeks
Ended Ended
September September September September
24, 25, 24, 25,
2005 2004 2005 2004
Revenue $1,717,386 $1,430,212 $676,070 $526,883
Investment income 2,087 879 852 337
Costs and expenses:
Purchased transportation 1,286,016 1,066,739 502,924 392,646
Commissions to agents 135,689 113,414 53,650 42,777
Other operating costs 27,400 27,313 10,785 8,537
Insurance and claims 34,850 46,751 11,946 13,297
Selling, general and
administrative 95,405 87,831 34,582 30,643
Depreciation and
amortization 11,926 10,220 3,998 3,654
Total costs and
expenses 1,591,286 1,352,268 617,885 491,554
Operating income 128,187 78,823 59,037 35,666
Interest and debt expense 3,194 2,213 1,205 662
Income before income taxes 124,993 76,610 57,832 35,004
Income taxes 47,997 29,304 22,207 13,390
Net income $76,996 $47,306 $35,625 $21,614
Earnings per common share (1) $1.30 $0.79 $0.61 $0.36
Diluted earnings per share (1) $1.27 $0.77 $0.60 $0.35
Average number of shares
outstanding:
Earnings per common
share (1) 59,416,000 60,002,000 58,494,000 60,435,000
Diluted earnings per
share (1) 60,730,000 61,654,000 59,709,000 61,909,000
(1) All 2004 earnings per share amounts and average number of shares
outstanding have been adjusted to give retroactive effect to a two-for-
one stock split effected in the form of a 100% stock dividend declared
December 9, 2004.
Landstar System, Inc.
Selected Segment Information
(Dollars in thousands)
(Unaudited)
Thirty Nine Weeks Thirteen Weeks
Ended Ended
September September September September
24, 25, 24, 25,
2005 2004 2005 2004
External Revenue
Carrier segment $1,197,614 $1,054,016 $414,093 $368,821
Global Logistics segment 496,769 353,794 254,181 150,507
Insurance segment 23,003 22,402 7,796 7,555
External revenue $1,717,386 $1,430,212 $676,070 $526,883
Operating Income
Carrier segment $113,960 $91,631 $43,027 $36,492
Global Logistics segment 33,958 14,290 24,446 8,277
Insurance segment 17,697 7,164 6,069 4,126
Other (37,428) (34,262) (14,505) (13,229)
Operating income $128,187 $78,823 $59,037 $35,666
Landstar System, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
September 24, December 25,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $112,000 $61,684
Short-term investments 22,617 21,942
Trade accounts receivable, less
allowance of $4,618 and $4,021 339,389 338,774
Other receivables, including
advances to independent
contractors, less allowance of
$4,438 and $4,245 12,891 13,929
Deferred income taxes and other
current assets 15,615 13,503
Total current assets 502,512 449,832
Operating property, less accumulated
depreciation and amortization of $67,413
and $65,315 82,281 76,834
Goodwill 31,134 31,134
Other assets 27,447 26,712
Total assets $643,374 $584,512
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $24,463 $23,547
Accounts payable 174,443 120,197
Current maturities of long-term debt 9,193 8,797
Insurance claims 32,317 32,612
Other current liabilities 60,426 54,926
Total current liabilities 300,842 240,079
Long-term debt, excluding current
maturities 96,259 83,293
Insurance claims 32,321 32,430
Deferred income taxes 12,511 15,871
Shareholders' equity:
Common stock, $.01 par value,
authorized 160,000,000 and
80,000,000 shares, issued
63,757,290 and 63,154,190
shares 638 632
Additional paid-in capital 51,482 43,845
Retained earnings 371,474 295,936
Cost of 5,344,883 and 2,490,930
shares of common stock in treasury (221,776) (127,151)
Accumulated other comprehensive
income (loss) (182) 47
Notes receivable arising from
exercises of stock options (195) (470)
Total shareholders' equity 201,441 212,839
Total liabilities and shareholders'
equity $643,374 $584,512
Landstar System, Inc.
Supplemental Information
(Unaudited)
Thirty Nine Weeks Thirteen Weeks
Ended Ended
September September September September
24, 25, 24, 25,
2005 2004 2005 2004
Carrier Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) $906,581 $879,730 $307,359 $301,639
Other third party
truck capacity
providers 291,033 174,286 106,734 67,182
$1,197,614 $1,054,016 $414,093 $368,821
Revenue per revenue mile $1.85 $1.76 $1.92 $1.78
Revenue per load $1,484 $1,351 $1,545 $1,424
Average length of haul
(miles) 803 766 806 798
Number of loads 807,000 780,000 268,000 259,000
Global Logistics Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) (2) $91,508 $72,066 $56,173 $38,178
Other third party
truck capacity
providers 285,369 201,882 130,704 83,104
Rail, Air, Ocean and
Bus Carriers (3) 119,892 79,846 67,304 29,225
$496,769 $353,794 $254,181 $150,507
Revenue per load (4) $1,489 $1,399 $1,498 $1,443
Number of loads (4) 241,000 233,000 83,000 85,000
As of As of
September 24 September 25,
2005 2004
Capacity
Business Capacity Owners
(1) (5) 7,846 7,758
Other third party truck
capacity providers:
Approved and active (6) 13,328 10,324
Approved 8,178 6,870
21,506 17,194
Total available truck
capacity providers 29,352 24,952
(1) Business Capacity Owners are independent contractors who provide
truck capacity to the Company under exclusive lease arrangements.
(2) Includes revenue generated through Carrier Segment Business Capacity
Owners.
(3) Included in the 2005 thirty nine and thirteen week periods was
$24,471,000 of revenue attributable to buses provided under the FAA
contract.
(4) Number of loads and revenue per load excludes the effect of revenue
derived from emergency transportation services provided under the FAA
contract.
(5) Trucks provided by business capacity owners were 8,581 and 8,644,
respectively.
(6) Active refers to other third party truck capacity providers who have
moved at least one load in the past 180 days.
SOURCE Landstar System, Inc.
Stock Overview
