JACKSONVILLE, Fla., Feb. 1 /PRNewswire-FirstCall/ -- Landstar System, Inc.
(Nasdaq: LSTR) reported net income for the thirteen-week period ended December
30, 2006 of $28.7 million, or $.50 per diluted share, on revenue of $611
million. Included in the 2006 fourth quarter results was $14.7 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 fourth quarter generated
$2.4 million of operating income which, net of related income taxes, increased
net income by $1.5 million or, $.03 per diluted share. Operating margin in
the 2006 fourth quarter was 8.0 percent. The revenue generated under the FAA
contract increased operating margin by 21 basis points in the 2006 period.
Net income for the fourteen-week period ended December 31, 2005 was $41.8
million, or $.70 per diluted share, on revenue of $800 million. Included in
the 2005 fourth quarter revenue was $138.0 million of revenue related to
disaster relief efforts for the various hurricanes that impacted the United
States during the second half of 2005. These transportation services were
provided primarily under the FAA contract. The revenue recognized under this
contract during the 2005 fourth quarter generated $27.8 million of operating
income which, net of related income taxes, increased net income by $16.7
million, or $.28 per diluted share.
Operating margin in the 2005 fourth quarter was 8.7 percent. The revenue
generated under the FAA contract increased operating margin by 238 basis
points in the 2005 period.
Landstar's carrier group of companies generated $440 million of revenue in
the thirteen-week period ended December 30, 2006, compared with revenue of
$494 million in the fourteen-week period ended December 31, 2005. In the 2006
and 2005 fourth quarters, the carrier group invoiced customers $38.4 million
and $45.4 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 generated $162 million of revenue, which
included the $14.7 million related to transportation services provided
primarily under the FAA contract, in the 2006 thirteen-week period compared
with $298 million of revenue, which included $138.0 million related to
transportation services provided primarily under the FAA contract, in the 2005
fourteen-week period.
Net income for the 2006 fiscal year was $113.1 million, or $1.93 per
diluted share, compared to net income of $115.6 million, or $1.91 per diluted
share for the 2005 fiscal year. Operating margin for the 2006 fiscal year was
7.6 percent compared to 7.7 percent for the 2005 fiscal year. Included in net
income for the 2006 fiscal year was $14.6 million of operating income related
to $100.7 million of revenue from emergency transportation services provided
primarily under the FAA contract. This $14.6 million of operating income, net
of related income taxes, increased net income $8.9 million, or $.15 per
diluted share. Included in net income for the 2005 fiscal year was $51.9
million of operating income related to $275.9 million of revenue from
emergency transportation services provided primarily under the FAA contract.
This $51.9 million of operating income, net of related income taxes, increased
net income $31.6 million, or $.52 per diluted share. Revenue generated under
the FAA contract increased operating margin 29 basis points in the 2006 fiscal
year and 137 basis points in the 2005 fiscal year.
Revenue was $2.514 billion in the fifty-two week 2006 fiscal year,
compared to revenue of $2.518 billion in the fifty-three week 2005 fiscal
year. Landstar's carrier group of companies generated $1.797 billion of
revenue in the 2006 fiscal year, compared with $1.692 billion in the 2005
fiscal year. In the 2006 and 2005 fiscal years, the carrier group invoiced
customers $167.8 million and $126.9 million, respectively, of fuel surcharges
that were passed on 100 percent to business capacity owners and excluded from
revenue. Landstar Global Logistics generated $683 million of revenue, which
included $100.7 million of revenue related to disaster relief efforts, in the
2006 fiscal year compared with $795 million of revenue, which included $275.9
million related to disaster relief efforts in the 2005 fiscal year.
Landstar System, Inc. also announced that its Board of Directors has
declared a quarterly dividend of $0.03 per share. The dividend is payable on
February 28, 2007 to stockholders of record at the close of business on
February 13, 2007. It is the intention of the Board of Directors to continue
to pay a quarterly dividend on a go forward basis.
Commenting on Landstar's 2006 fourth quarter performance, Landstar
President and CEO Henry Gerkens said, "Despite lower than anticipated revenue,
Landstar was able to generate earnings per diluted share of $.50 per share.
The 2006/2005 fourth quarter comparison is very unusual as the 2005 fourth
quarter included an estimated $50 million of revenue attributable to an extra
week in the 2005 period and $123 million of additional revenue generated under
the FAA contract. These two unique factors combined with soft demand, excess
capacity and lower freight rates made the fourth quarter of 2006 even more
challenging. However, once again the power of Landstar's non-asset based
variable cost business model combined with the financial benefits attributable
to our long term commitment to safety generated better than anticipated
operating results and strong earnings per diluted share."
"Trailing twelve month return on average shareholders' equity remained
high at 45 percent and return on invested capital, net income divided by the
sum of average equity plus average debt, was 30 percent. During the 2006
fourth quarter, Landstar purchased 1,039,299 shares of its common stock at a
total cost of $41,895,000, bringing the total number of shares purchased
during 2006 to 3,697,726 at a total cost of $156,492,000," Gerkens said. "The
Company may purchase up to an additional 827,501 shares of common stock under
its authorized share repurchase program."
"In 2006 Landstar used its free cash flow to purchase over $156 million of
Landstar common stock and to reduce debt by $37.7 million. Landstar ended 2006
with cash and short term investments of $113 million. It is Landstar's
intention to continue to use its free cash flow to enhance shareholder value."
Gerkens continued, "January of any given year is typically the slowest
month of the year. Through January 2007, I have seen little change in the
operating environment experienced in the second half of the 2006 fourth
quarter, and that is soft demand, over capacity and downward pressure on
price. I am anticipating that this environment will continue throughout the
first part of 2007 and will gradually improve as the year goes on. In
addition, the 2006 first quarter and full year results included $35.4 million
and $100.7 million, respectively, of revenue generated under the FAA contract.
We are not forecasting any such revenue in 2007 even though the contract has
been extended through June 30, 2007 and the FAA has an option to extend the
contract for the balance of the year. Given the above, I anticipate revenue
for the first quarter of 2007 as compared to the first quarter of 2006, which
included $35.4 million of FAA revenue, to be down slightly, while revenue
growth for the full 2007 fiscal year versus 2006, which included $100.7
million of FAA revenue, to be in the mid single digits. I anticipate
Landstar's earnings for the 2007 first quarter to be within a range of $.37 to
$.43 per diluted share and I anticipate diluted earnings per share for the
2007 full fiscal year to be within a range of $1.95 to $2.20 per 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, 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 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 and
logistics 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'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.
Landstar System, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Fiscal Year Ended Fiscal Quarter Ended
Dec 30, Dec 31, Dec 30, Dec 31,
2006 2005 2006 2005
Revenue $2,513,756 $2,517,828 $611,279 $800,442
Investment income 4,250 2,695 1,661 608
Costs and expenses:
Purchased transportation 1,890,755 1,880,431 460,344 594,415
Commissions to agents 199,775 203,730 50,081 68,041
Other operating costs 45,700 36,709 8,575 9,309
Insurance and claims 39,522 50,166 9,292 15,316
Selling, general and
administrative (1) 134,239 140,345 31,430 40,422
Depreciation and
amortization 16,796 15,920 4,566 3,994
Total costs and
expenses (1) 2,326,787 2,327,301 564,288 731,497
Operating income (1) 191,219 193,222 48,652 69,553
Interest and debt expense 6,821 4,744 1,871 1,550
Income before income
taxes (1) 184,398 188,478 46,781 68,003
Income taxes (1) 71,313 72,880 18,091 26,216
Net income (1) $113,085 $115,598 $28,690 $41,787
Earnings per common
share (1) $1.95 $1.95 $0.51 $0.71
Diluted earnings per
share (1) $1.93 $1.91 $0.50 $0.70
Average number of shares
outstanding:
Earnings per common
share 57,854,000 59,199,000 56,728,000 58,610,000
Diluted earnings per
share (1) 58,654,000 60,413,000 57,328,000 59,737,000
Dividends paid per common
share $0.110 $0.050 $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 $6,908,000 pretax charge for the fiscal year ended
December 30, 2006, which net of related income tax benefits, reduced net
income by $4,739,000, or $.08 per common share ($.08 per diluted share).
In the fiscal quarter ended December 30, 2006, the implementation of FAS
123R resulted in the recognition of a $1,783,000 pretax charge, which net
of related income tax benefits, reduced net income by $1,225,000, or $.02
per common share ($.02 per diluted share).
In the fiscal year ended December 31, 2005, the implementation of FAS
123R resulted in the recognition of a $6,260,000 pretax charge, which net
of related income tax benefits, reduced net income by $4,358,000, or $.07
per common share ($.07 per diluted share). In the fiscal quarter ended
December 31, 2005, the implementation of FAS 123R resulted in the
recognition of a $1,742,000 pretax charge, which net of related income tax
benefits, reduced net income by $1,173,000, or $.02 per common share ($.02
per diluted share).
Landstar System, Inc.
Selected Segment Information
(Dollars in thousands)
(Unaudited)
Fiscal Year Ended Fiscal Quarter Ended
Dec 30, Dec 31, Dec 30, Dec 31,
2006 2005 2006 2005
External Revenue
Carrier segment $1,796,616 $1,691,668 $439,836 $494,054
Global Logistics segment 682,542 795,136 162,462 298,367
Insurance segment 34,598 31,024 8,981 8,021
External revenue $2,513,756 $2,517,828 $611,279 $800,442
Operating Income
Carrier segment (1) $181,550 $169,882 $44,152 $56,903
Global Logistics segment (1) 31,433 60,115 6,080 26,712
Insurance segment 35,673 19,374 11,617 1,677
Other (1) (57,437) (56,149) (13,197) (15,739)
Operating income (1) $191,219 $193,222 $48,652 $69,553
(1) Amounts for the periods ended 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.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
Dec 30, Dec 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $91,491 $29,398
Short-term investments 21,548 20,693
Trade accounts receivable, less
allowance of $4,834 and $4,655 318,983 534,274
Other receivables, including advances
to independent contractors, less
allowance of $4,512 and $4,342 14,198 11,384
Deferred income taxes and other
current assets (1) 25,142 21,106
Total current assets (1) 471,362 616,855
Operating property, less accumulated
depreciation and amortization of
$77,938 and $68,561 110,957 89,131
Goodwill 31,134 31,134
Other assets 33,198 28,694
Total assets (1) $646,651 $765,814
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $25,435 $29,829
Accounts payable 122,313 164,509
Current maturities of long-term debt 18,730 12,122
Insurance claims 25,238 27,887
Accrued compensation 11,993 20,299
Other current liabilities 46,485 44,850
Total current liabilities 250,194 299,496
Long-term debt, excluding current maturities 110,591 154,851
Insurance claims 36,232 37,840
Deferred income taxes 19,360 17,938
Shareholders' equity:
Common stock, $.01 par value, authorized
160,000,000 shares, issued 64,993,143
and 64,151,902 shares 650 642
Additional paid-in capital (1) 108,020 84,532
Retained earnings (1) 499,273 392,549
Cost of 9,028,009 and 5,344,883 shares
of common stock in treasury (377,662) (221,776)
Accumulated other comprehensive loss (7) (211)
Note receivable arising from exercise
of stock options - (47)
Total shareholders' equity (1) 230,274 255,689
Total liabilities and shareholders'
equity (1) $646,651 $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)
Fiscal Year Ended Fiscal Quarter Ended
Dec 30, Dec 31, Dec 30, Dec 31,
2006 2005 2006 2005
Carrier Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) $1,270,649 $1,249,159 $306,389 $342,578
Other third party
truck capacity
providers 525,967 442,509 133,447 151,476
$1,796,616 $1,691,668 $439,836 $494,054
Revenue per revenue mile $2.02 $1.92 $2.02 $2.11
Revenue per load $1,621 $1,542 $1,647 $1,704
Average length of haul
(miles) 803 804 814 806
Number of loads 1,108,000 1,097,000 267,000 290,000
Global Logistics Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) (2) $103,588 $159,273 $25,280 $67,765
Other third party
truck capacity
providers 396,141 439,604 93,395 154,235
Rail, Air, Ocean and
Bus Carriers (3) 182,813 196,259 43,787 76,367
$682,542 $795,136 $162,462 $298,367
Revenue per load (4) $1,504 $1,555 $1,589 $1,724
Number of loads (4) 387,000 334,000 93,000 93,000
As of As of
Dec 30, Dec 31,
2006 2005
Capacity
Business Capacity
Owners (1) (5) 8,516 8,011
Other third party truck
capacity providers:
Approved and active (6) 15,247 14,014
Approved 8,574 8,497
23,821 22,511
Total available truck
capacity providers 32,337 30,522
Agent Locations 1,345 1,150
(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 fiscal year and fiscal quarter periods was
$25,067,000 and $2,035,000, respectively, of revenue attributable to buses
provided under the FAA contract. Included in the 2005 fiscal year and
fiscal quarter periods was $44,007,000 and $19,536,000, respectively, 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 9,205 and 8,728,
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
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