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8-K - 8-K - LANDSTAR SYSTEM INCd763548d8k.htm

Exhibit 99.1

 

 

LOGO

 

For Immediate Release   Contact: Jim Gattoni
  Landstar System, Inc.
  www.landstar.com
July 23, 2014   904-398-9400

LANDSTAR SYSTEM REPORTS RECORD QUARTERLY REVENUE OF $814 MILLION AND RECORD QUARTERLY DILUTED EARNINGS PER SHARE

OF $0.80 IN THE SECOND QUARTER

Jacksonville, FL – 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.


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 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.”


LANDSTAR SYSTEM/3

 

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


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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/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 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       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 


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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/7

 

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.