LANDSTAR SYSTEM, INC. JACKSONVILLE, Fla., July 23, 2014 /PRNewswire/ -- 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.
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."
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 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, 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 $ -
===== ================= ===== =================
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, 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.
SOURCE Landstar System, Inc.
