JACKSONVILLE, Fla., Oct. 19 /PRNewswire-FirstCall/ -- Landstar System,
Inc. (Nasdaq: LSTR) reported net income for the 2006 third quarter of $30.6
million, or $.53 per diluted share, on revenue of $649 million. Included in
the 2006 third quarter results was $29.7 million of revenue attributable to
transportation services provided primarily under a contract between Landstar
Express America and the United States Department of Transportation/Federal
Aviation Administration (the "FAA"). The revenue recognized under the FAA
contract during the 2006 third quarter generated $4.5 million of operating
income which, net of related income taxes, increased net income by $2.8
million or, $.05 per diluted share. Operating margin in the 2006 third
quarter was 8.0 percent. The revenue generated under the FAA contract
increased operating margin by 35 basis points in the 2006 period.
Net income for the 2005 third quarter was $34.6 million, or $.58 per
diluted share on revenue of $676 million. 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 transportation services were provided primarily under the FAA contract.
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.
Landstar's carrier group of companies generated $461 million of revenue in
the 2006 third quarter, compared with revenue of $414 million in the 2005
third quarter. In the 2006 and 2005 third quarters, the carrier group
invoiced customers $48.9 million and $32.2 million, respectively, in fuel
surcharges that were passed on 100 percent to business capacity owners and
excluded from revenue. Landstar's global logistics group of companies,
comprised of Landstar Express America and Landstar Logistics, generated $180
million of revenue, which included the $29.7 million related to transportation
services provided under the FAA contract, in the 2006 third quarter compared
with $254 million of revenue, which included $129.8 million related to
transportation services provided primarily under the FAA contract, in the 2005
third quarter. Operating margin in the 2005 third quarter was 8.5 percent.
The revenue generated under the FAA contract increased operating margin by 213
basis points in the 2005 period.
Net income for the thirty-nine-week period ended September 30, 2006 was
$84.4 million, or $1.43 per diluted share, compared to net income of $73.8
million, or $1.22 per diluted share for the 2005 thirty-nine-week period ended
September 24, 2005. Included in net income for the 2006 thirty-nine-week
period was $12.2 million of operating income related to $86.0 million of
revenue from transportation services provided under the FAA contract. This
$12.2 million of operating income, net of related income taxes, increased net
income $7.5 million, or $.13 per diluted share. Included in net income for
the 2005 thirty-nine-week period was $24.2 million of operating income related
to the $137.9 million of revenue from transportation services provided
primarily 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. Revenue was $1,902 million in the 2006 thirty-nine-week
period, compared to revenue of $1,717 million in the corresponding 2005
period. Landstar's carrier group of companies generated $1,357 million of
revenue in the thirty-nine-week period ended September 30, 2006, compared with
$1,198 million in the thirty-nine-week period ended September 24, 2005. In
the 2006 and 2005 thirty-nine-week periods, the carrier group invoiced
customers $129.4 million and $81.5 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 $520 million of
revenue, which included the $86.0 million related to transportation relief
services provided primarily under the FAA contract, in the 2006 thirty-nine-
week period compared with $497 million of revenue, which included $137.9
million related to transportation services provided primarily under the FAA
contract, in the comparable 2005 period.
Landstar System, Inc. also announced that its Board of Directors has
declared its second quarterly dividend of $0.03 per share. The dividend is
payable on November 30, 2006, to stockholders of record at the close of
business on November 10, 2006. It is the intention of the Board of Directors
to continue to pay a quarterly dividend going forward.
Commenting on Landstar's 2006 third quarter performance, Landstar
President and CEO Henry Gerkens said, "Landstar has delivered another quarter
of strong growth in our core business, as consolidated revenue exclusive of
revenue generated under Landstar Express America's contract with the FAA
increased 13.4 percent. Operating margin, exclusive of the effect of revenue
generated under the FAA contract, increased 123 basis points to 7.6 percent."
Continuing, Gerkens said, "During the quarter Landstar continued the
rollout of its warehousing initiative. We have executed contracts providing
Landstar a warehousing presence in 25 markets. We have also begun to service
our second warehouse customer. Also during the quarter, we increased the
total number of approved truck capacity providers by over 700."
"Trailing twelve month return on average equity remained high at 51
percent and return on invested capital, net income divided by the sum of
average equity plus average debt, was 34 percent. During the 2006 third
quarter, Landstar purchased 1,415,479 shares of its common stock at a total
cost of $59,903,000, bringing the total number shares purchased during 2006 to
2,658,427 at a total cost of $114,597,000," Gerkens said. "The Company may
purchase up to an additional 1,866,800 shares of 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."
Continuing, Gerkens said, "When evaluating Landstar's 2006 fourth quarter
guidance, it should be noted that revenue for the 2005 fourth quarter included
approximately $138 million of revenue attributable to transportation services
provided under the FAA contract. In addition, Landstar's 2005 fiscal year was
a 53 week year. Thus, the 2005 fourth quarter was a fourteen-week period,
running from September 25, 2005 through December 31, 2005, versus the 2006
fourth quarter which is a thirteen-week period, running from October 1, 2006
through December 30, 2006. I estimate the extra week in the 2005 fourth
quarter represented approximately $50 million of revenue. Based upon
anticipated business levels, I estimate consolidated revenue for the 2006
fourth quarter to be in a range of $675 million to $715 million, including an
estimated $12 million of transportation services that have been requested to
be provided under the FAA contract. In addition, making no further assumption
as to revenue generated under the FAA contract and including an anticipated
charge of approximately $.02 per diluted share attributable to the adoption of
Statement of Financial Accounting Standard No. 123R, Share-Based Payment, I
estimate earnings for the fourth quarter of 2006 to be within a range of $.47
to $.53 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 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 and expectations. Terms
such as "anticipates," "believes," "estimates," "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 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 2005 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 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 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's global logistics group, which is comprised
of Landstar Global Logistics, Inc. and its subsidiaries Landstar Express
America, Inc. and Landstar Logistics, Inc., provides international and
domestic multimodal (over-the-road, air, ocean and rail) transportation,
expedited, contract logistics and warehousing 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.
(tables follow)
Landstar System, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Thirty Nine Weeks Ended Thirteen Weeks Ended
Sept 30, Sept 24, Sept 30, Sept 24,
2006 2005 2006 2005
Revenue $1,902,477 $1,717,386 $649,197 $676,070
Investment income 2,589 2,087 1,337 852
Costs and expenses:
Purchased transportation 1,430,411 1,286,016 486,102 502,924
Commissions to agents 149,694 135,689 52,173 53,650
Other operating costs 37,125 27,400 14,837 10,785
Insurance and claims 30,230 34,850 9,656 11,946
Selling, general and
administrative (1) 102,809 99,923 31,885 36,072
Depreciation and
amortization 12,230 11,926 4,180 3,998
Total costs and
expenses (1) 1,762,499 1,595,804 598,833 619,375
Operating income (1) 142,567 123,669 51,701 57,547
Interest and debt expense 4,950 3,194 1,808 1,205
Income before income
taxes (1) 137,617 120,475 49,893 56,342
Income taxes (1) 53,222 46,664 19,313 21,773
Net income (1) $84,395 $73,811 $30,580 $34,569
Earnings per common
share (1) $1.45 $1.24 $0.53 $0.59
Diluted earnings per
share (1) $1.43 $1.22 $0.53 $0.58
Average number of shares
outstanding:
Earnings per common
share 58,229,000 59,416,000 57,287,000 58,494,000
Diluted earnings per
share (1) 59,155,000 60,660,000 57,948,000 59,526,000
Dividends paid per common
share $0.080 $0.025 $0.030 $0.025
(1) On January 1, 2006, the Company adopted the provisions of Statement of
Financial Accounting Standard No. 123R, Share-Based Payment ("FAS 123R"),
under the modified retrospective method. The adoption of FAS 123R
resulted in the recognition of a $5,125,000 pretax charge for the thirty
nine week period ended September 30, 2006, which net of related income tax
benefits, reduced net income by $3,514,000, or $.06 per common share ($.06
per diluted share). In the thirteen week period ended September 30, 2006,
the implementation of FAS 123R resulted in the recognition of a $1,828,000
pretax charge, which net of related income tax benefits, reduced net
income by $1,280,000, or $.02 per common share ($.02 per diluted share).
In the thirty nine week period ended September 24, 2005, the
implementation of FAS 123R resulted in the recognition of a $4,518,000
pretax charge, which net of related income tax benefits, reduced net
income by $3,185,000, or $.05 per common share ($.05 per diluted share).
In the thirteen week period ended September 24, 2005, the implementation
of FAS 123R resulted in the recognition of a $1,490,000 pretax charge,
which net of related income tax benefits, reduced net income by
$1,056,000, or $.02 per common share ($.02 per diluted share).
Landstar System, Inc.
Selected Segment Information
(Dollars in thousands)
(Unaudited)
Thirty Nine Weeks Ended Thirteen Weeks Ended
Sept 30, Sept 24, Sept 30, Sept 24,
2006 2005 2006 2005
External Revenue
Carrier segment $1,356,780 $1,197,614 $460,847 $414,093
Global Logistics segment 520,080 496,769 179,613 254,181
Insurance segment 25,617 23,003 8,737 7,796
External revenue $1,902,477 $1,717,386 $649,197 $676,070
Operating Income
Carrier segment (1) $137,398 $112,979 $49,334 $42,700
Global Logistics segment (1) 25,353 33,403 8,331 24,261
Insurance segment 24,056 17,697 8,967 6,069
Other (1) (44,240) (40,410) (14,931) (15,483)
Operating income (1) $142,567 $123,669 $51,701 $57,547
(1) Amounts for the periods ended September 24, 2005, have been adjusted
to reflect the provisions of Statement of Financial Accounting Standard
No. 123R, Share-based Payment, under the modified retrospective
method implemented by the Company January 1, 2006.
Landstar System, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
Sept 30, Dec 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $82,819 $29,398
Short-term investments 21,162 20,693
Trade accounts receivable, less
allowance of $5,550 and $4,655 357,482 534,274
Other receivables, including
advances to independent
contractors, less allowance
of $5,024 and $4,342 18,827 11,384
Deferred income taxes and other
current assets (1) 30,289 21,106
Total current assets (1) 510,579 616,855
Operating property, less accumulated
depreciation and amortization of
$76,885 and $68,561 103,346 89,131
Goodwill 31,134 31,134
Other assets 33,556 28,694
Total assets (1) $678,615 $765,814
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $29,495 $29,829
Accounts payable 141,419 164,509
Current maturities of long-term
debt 16,860 12,122
Insurance claims 26,526 27,887
Other current liabilities 57,249 65,149
Total current liabilities 271,549 299,496
Long-term debt, excluding current
maturities 110,250 154,851
Insurance claims 38,295 37,840
Deferred income taxes 18,139 17,938
Shareholders' equity:
Common stock, $.01 par value,
authorized 160,000,000 shares,
issued 64,858,208 and 64,151,902
shares 649 642
Additional paid-in capital (1) 103,225 84,532
Retained earnings (1) 472,292 392,549
Cost of 7,988,710 and 5,344,883
shares of common stock in treasury (335,767) (221,776)
Accumulated other comprehensive
loss (17) (211)
Note receivable arising from
exercise of stock options - (47)
Total shareholders' equity (1) 240,382 255,689
Total liabilities and shareholders'
equity (1) $678,615 $765,814
(1) Amounts as of December 31, 2005, have been adjusted to reflect the
provisions of Statement of Financial Accounting Standard No. 123R, Share-
based Payment, under the modified retrospective method implemented by the
Company January 1, 2006.
Landstar System, Inc.
Supplemental Information
(Unaudited)
Thirty Nine Weeks Ended Thirteen Weeks Ended
Sept 30, Sept 24, Sept 30, Sept 24,
2006 2005 2006 2005
Carrier Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) $964,260 $906,581 $323,664 $307,359
Other third party
truck capacity
providers 392,520 291,033 137,183 106,734
$1,356,780 $1,197,614 $460,847 $414,093
Revenue per revenue mile $2.02 $1.85 $2.05 $1.92
Revenue per load $1,613 $1,484 $1,652 $1,545
Average length of haul
(miles) 800 803 807 806
Number of loads 841,000 807,000 279,000 268,000
Global Logistics Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) (2) $78,308 $91,508 $31,145 $56,173
Other third party
truck capacity
providers 302,746 285,369 104,445 130,704
Rail, Air, Ocean and
Bus Carriers (3) 139,026 119,892 44,023 67,304
$520,080 $496,769 $179,613 $254,181
Revenue per load (4) $1,482 $1,489 $1,428 $1,498
Number of loads (4) 294,000 241,000 105,000 83,000
As of As of
Sept 30, Sept 24,
2006 2005
Capacity
Business Capacity
Owners (1) (5) 8,463 7,846
Other third party truck
capacity providers:
Approved and active (6) 14,604 13,328
Approved 8,009 8,178
22,613 21,506
Total available truck
capacity providers 31,076 29,352
Agent Locations 1,291 1,131
(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 2006 thirty nine and thirteen week periods was
$23,032,000 and $3,594,000, respectively, of revenue attributable to buses
provided under the FAA contract. 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 exclude the effect of revenue
derived from transportation services provided under the FAA contract.
(5) Trucks provided by business capacity owners were 9,164 and 8,581,
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.
/CONTACT: Bob LaRose of Landstar System, Inc., +1-904-398-9400/
/Web site: http://www.landstar.com/
(LSTR)
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