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8-K - FORM 8-K - LANDSTAR SYSTEM INCg27707e8vk.htm
Exhibit 99.1
(Landstar Letterhead)
For Immediate Release   Contact: Jim Gattoni
    Landstar System, Inc.
    www.landstar.com
July 21, 2011   904-398-9400
LANDSTAR SYSTEM REPORTS 27 PERCENT INCREASE IN DILUTED EARNINGS
PER SHARE TO A SECOND QUARTER RECORD OF $0.62
Jacksonville, FL — Landstar System, Inc. (NASDAQ: LSTR) reported 2011 record second quarter diluted earnings per share of $0.62 per diluted share, from net income of $29.6 million, compared to net income of $24.4 million, or $0.49 per diluted share, for the 2010 second quarter. Operating margin was 43.6 percent in the 2011 second quarter compared to 38.2 percent in the 2010 second quarter. Revenue for the 2011 second quarter was $675.6 million compared to $641.7 million in the 2010 second quarter.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2011 second quarter was $621.5 million, or 92 percent of revenue, compared to $592.0 million, or 92 percent of revenue, in the 2010 second quarter. In the 2011 and 2010 second quarters, the Company invoiced customers $78.7 million and $53.1 million, respectively, of fuel surcharges that were passed 100 percent to BCOs and excluded from revenue. Included in revenue hauled by third-party truck capacity providers in the 2011 and 2010 second quarters were $25.9 million and $23.1 million, respectively, of fuel surcharges invoiced to customers on revenue hauled by third-party truck brokerage carriers. Also included in revenue hauled by third-party truck capacity providers was revenue generated under the Company’s less-than-truckload substitute line haul service offering of $18.8 million and $70.5 million in the 2011 and 2010 second quarters, respectively. Revenue hauled by rail, air and ocean cargo carriers was $39.9 million, or 6 percent of revenue, in the 2011 second quarter compared to $35.0 million, or 5 percent of revenue, in the 2010 second quarter. Transportation management fee revenue generated by the supply chain solutions companies was $5.6 million and $4.9 million in the 2011 and 2010 second quarters, respectively.

 


 

LANDSTAR SYSTEM/2
 
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 25 percent. Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.055 per share. This represents a 10 percent increase in the Company’s quarterly dividend. The dividend is payable on August 26, 2011 to stockholders of record at the close of business on August 8, 2011. It is the intention of the Board of Directors to continue to pay a quarterly dividend. During the 2011 second quarter, Landstar purchased 196,693 shares of its common stock at a total cost of $9.3 million. Under the Company’s authorized share purchase program, the Company currently has a total of 526,000 shares of its common stock available for purchase.
“I am extremely pleased with the Company’s 2011 second quarter operating performance,” said Henry Gerkens, Landstar’s Chairman, President and CEO. “Despite the anticipated revenue decline in our substitute line haul service offering, revenue increased five percent over the 2010 second quarter. Excluding the substitute line haul revenue from both the 2011 and 2010 second quarters, revenue increased 15 percent. I would characterize the overall second quarter freight environment as a little choppy, but moving in an upward direction. Pricing continued to be strong. Consolidated operating income increased 22 percent, while earnings per diluted share increased 27 percent to $0.62 per diluted share, the best second quarter diluted earnings per share in Landstar history.”
Gerkens continued, “Recent trends in June, and thus far in July, indicate continued strength in revenue per load with a relatively stable increase in the number of loads hauled month over prior year month. I expect these trends to continue throughout the 2011 third quarter. In addition, excluding disaster relief service revenue, revenue generated in the Company’s third quarter has historically been very similar to revenue generated in the Company’s second quarter. As such, I would expect revenue, gross profit, operating income and diluted earnings per share to be similar to those experienced during the 2011 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 2011 Earnings Release Conference Call.”

 


 

LANDSTAR SYSTEM/3
 
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 2010 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.

 


 

LANDSTAR SYSTEM/4
 
About Landstar:
Landstar System, Inc. is a non-asset based provider of integrated supply chain solutions. Landstar delivers safe, specialized transportation, warehousing and logistics services to a broad range of customers worldwide utilizing a network of agents, third-party capacity owners and employees. All Landstar transportation 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/5

 
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 25,     June 26,     June 25,     June 26,  
    2011     2010     2011     2010  
 
Revenue
  $ 1,247,547     $ 1,189,809     $ 675,561     $ 641,721  
Investment income
    921       574       393       289  
 
                               
Costs and expenses:
                               
Purchased transportation
    941,360       907,290       509,982       490,089  
Commissions to agents
    98,175       87,379       54,004       46,971  
Other operating costs
    15,623       15,504       7,679       7,968  
Insurance and claims
    24,715       26,129       13,449       13,831  
Selling, general and administrative
    73,046       73,816       35,782       36,973  
Depreciation and amortization
    12,787       11,988       6,388       6,196  
 
                       
 
                               
Total costs and expenses
    1,165,706       1,122,106       627,284       602,028  
 
                       
 
                               
Operating income
    82,762       68,277       48,670       39,982  
Interest and debt expense
    1,605       1,664       777       810  
 
                       
 
                               
Income before income taxes
    81,157       66,613       47,893       39,172  
Income taxes
    31,002       25,446       18,295       14,962  
 
                               
 
                       
Net income
    50,155       41,167       29,598       24,210  
Less: Net loss attributable to noncontrolling interest
    (62 )     (446 )           (227 )
 
                       
Net income attributable to Landstar System, Inc. and subsidiary
  $ 50,217     $ 41,613     $ 29,598     $ 24,437  
 
                       
 
                               
Earnings per common share attributable to Landstar System, Inc. and subsidiary
  $ 1.05     $ 0.83     $ 0.62     $ 0.49  
 
                       
 
                               
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary
  $ 1.05     $ 0.83     $ 0.62     $ 0.49  
 
                       
 
                               
Average number of shares outstanding:
                               
Earnings per common share
    47,826,000       50,165,000       47,782,000       50,123,000  
 
                       
Diluted earnings per share
    47,907,000       50,259,000       47,912,000       50,215,000  
 
                       
 
                               
Dividends paid per common share
  $ 0.100     $ 0.090     $ 0.050     $ 0.045  
 
                       

 


 

LANDSTAR SYSTEM/6
 
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)
(Unaudited)
                 
    June 25,     Dec. 25,  
    2011     2010  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 39,544     $ 44,706  
Short-term investments
    30,489       23,266  
Trade accounts receivable, less allowance of $4,155 and $5,324
    385,540       307,350  
Other receivables, including advances to independent contractors, less allowance of $4,987 and $5,511
    25,493       23,943  
Deferred income taxes and other current assets
    21,008       21,652  
 
           
Total current assets
    502,074       420,917  
 
           
 
               
Operating property, less accumulated depreciation and amortization of $146,476 and $137,830
    123,895       132,649  
Goodwill
    57,470       57,470  
Other assets
    60,873       72,846  
 
           
Total assets
  $ 744,312     $ 683,882  
 
           
 
               
LIABILITIES AND EQUITY
               
Current liabilities:
               
Cash overdraft
  $ 26,347     $ 24,877  
Accounts payable
    175,325       137,297  
Current maturities of long-term debt
    17,260       22,172  
Insurance claims
    44,442       40,215  
Other current liabilities
    53,077       53,785  
 
           
Total current liabilities
    316,451       278,346  
 
           
 
               
Long-term debt, excluding current maturities
    93,894       99,439  
Insurance claims
    31,273       31,468  
Deferred income taxes
    20,214       23,662  
 
               
Equity
               
Landstar System, Inc. and subsidiary shareholders’ equity Common stock, $0.01 par value, authorized 160,000,000 shares, issued 66,589,780 and 66,535,169 shares
    666       665  
Additional paid-in capital
    163,355       169,268  
Retained earnings
    889,561       844,132  
Cost of 18,872,652 and 18,674,902 shares of common stock in treasury
    (772,489 )     (763,182 )
Accumulated other comprehensive income
    1,387       881  
 
           
Total Landstar System, Inc. and subsidiary shareholders’ equity
    282,480       251,764  
 
           
Noncontrolling interest
          (797 )
 
           
Total equity
    282,480       250,967  
 
           
Total liabilities and equity
  $ 744,312     $ 683,882  
 
           

 


 

LANDSTAR SYSTEM/7
 
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
                                 
    Twenty Six Weeks Ended     Thirteen Weeks Ended  
    June 25,     June 26,     June 25,     June 26,  
    2011     2010     2011     2010  
Revenue generated through (in thousands):
                               
Business Capacity Owners (1)
  $ 669,748     $ 631,736     $ 362,854     $ 345,595  
Truck Brokerage Carriers
    472,391       466,163       258,668       246,408  
Rail intermodal
    34,832       34,092       18,367       19,316  
Ocean cargo carriers
    26,031       20,835       12,198       11,700  
Air cargo carriers
    16,900       8,562       9,340       3,959  
Other (2)
    27,645       28,421       14,134       14,743  
 
                       
 
  $ 1,247,547     $ 1,189,809     $ 675,561     $ 641,721  
 
                       
 
                               
Number of loads:
                               
Business Capacity Owners (1)
    402,730       420,770       210,690       223,020  
Truck Brokerage Carriers
    287,210       308,330       151,470       158,980  
Rail intermodal
    14,830       15,490       7,570       8,620  
Ocean cargo carriers
    3,950       3,110       2,120       1,650  
Air cargo carriers
    4,000       3,130       2,050       1,630  
 
                       
 
    712,720       750,830       373,900       393,900  
 
                       
 
                               
Revenue per load:
                               
Business Capacity Owners (1)
  $ 1,663     $ 1,501     $ 1,722     $ 1,550  
Truck Brokerage Carriers
    1,645       1,512       1,708       1,550  
Rail intermodal
    2,349       2,201       2,426       2,241  
Ocean cargo carriers
    6,590       6,699       5,754       7,091  
Air cargo carriers
    4,225       2,735       4,556       2,429  
                 
    June 25,     June 26,  
    2011     2010  
Truck Capacity
               
Business Capacity Owners (1) (3)
    7,711       7,818  
 
           
Truck Brokerage Carriers:
               
Approved and active (4)
    17,696       16,670  
Approved
    8,984       9,047  
 
           
 
    26,680       25,717  
 
           
Total available truck capacity providers
    34,391       33,535  
 
           
 
(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 8,231 and 8,399 at June 25, 2011 and June 26, 2010, respectively.
 
(4)   Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.