LANDSTAR SYSTEM, INC. JACKSONVILLE, Fla., Oct. 23, 2014 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported record third quarter net income of $36.8 million, or $0.82 per diluted share, on record revenue of $819 million in the 2014 third quarter. Revenue and diluted earnings per share for the 2014 third quarter were the highest quarterly revenue and diluted earnings per share in Landstar history. Landstar reported net income from continuing operations of $28.5 million, or $0.62 per diluted share, on revenue of $676 million in the 2013 third quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $121.1 million in the 2014 third quarter compared to $103.8 million in gross profit in the 2013 third quarter. Operating margin, representing operating income divided by gross profit, was 49.2 percent in the 2014 third quarter.
Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2014 third quarter was $767.5 million, or 94 percent of revenue, compared to $627.5 million, or 93 percent of revenue, in the 2013 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $41.7 million, or 5 percent of revenue, in the 2014 third quarter compared to $38.8 million, or 6 percent of revenue, in the 2013 third quarter.
Trailing twelve-month return on average shareholders' equity was 35.1 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 28.6 percent. As of September 27, 2014, the Company had $178 million in cash and short term investments and had $192 million available for borrowing under the Company's senior credit facility. Landstar purchased approximately 940,000 shares of its common stock during the 39 weeks ended September 27, 2014 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 December 5, 2014 to stockholders of record at the close of business on November 11, 2014. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
"Landstar's 2014 third quarter results were again outstanding," said Landstar Chairman and CEO Henry Gerkens. "Revenue, gross profit, operating income, net income, and diluted earnings per share were all third quarter records. Overall, demand for Landstar's truck transportation services in the 2014 third quarter continued to be very strong, as the number of loads hauled via truck increased 11 percent over the 2013 third quarter. Revenue per load hauled via truck also remained very strong and increased 10 percent over the 2013 third quarter. In fact, Landstar's average revenue per load hauled via truck in the 2014 third quarter was the highest quarterly average revenue per load in the Company's history. Landstar experienced very strong revenue growth over the 2013 third quarter with respect to both loads hauled via van equipment and loads hauled via unsided/platform equipment. On a quarter-over-prior-year-quarter basis, revenue hauled via van equipment increased 24 percent and revenue hauled via unsided/platform equipment increased 20 percent. Despite an increased provision for incentive compensation, our operating margin was an impressive 49.2 percent in the 2014 third quarter and was the second highest third quarter operating margin in Landstar's history. And finally, diluted earnings per share from continuing operations in the 2014 third quarter increased a healthy 32 percent over the 2013 third quarter."
Gerkens continued, "The strength in both the number of loads hauled via truck and truck revenue per load experienced in the 2014 third quarter has so far continued through the first several weeks of October. Currently, I would also anticipate that the strength in both load volume and revenue per load from truck transportation services should continue throughout the remainder of the 2014 fourth quarter. I also am aware that historically the back half of any fourth quarter has been somewhat unpredictable. As such, my range of estimated consolidated revenue for the 2014 fourth quarter is from a low end of $800 million to a high end of $840 million. Assuming that range of estimated fourth quarter revenue, I would anticipate fourth quarter diluted earnings per share from continuing operations to be in a range of $0.77 to $0.82 per share compared to $0.55 per diluted share from continuing operations in the 2013 fourth quarter. For the year, I expect consolidated revenue to exceed $3.0 billion for the first time in the Company's history. In addition, I anticipate that gross profit, operating income and diluted earnings per share in 2014 will also achieve full year Company records."
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 Third 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/5
Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Thirty Nine Weeks Ended Thirteen Weeks Ended
----------------------- --------------------
September 27, September 28, September 27, September 28,
2014 2013 2014 2013
---- ---- ---- ----
Revenue $2,321,960 $1,972,805 $819,320 $675,535
Investment income 1,027 1,111 332 366
Costs and expenses:
Purchased transportation 1,792,560 1,512,677 633,596 518,141
Commissions to agents 181,196 156,377 64,631 53,630
Other operating costs, net of gains on asset
dispositions 19,350 15,396 6,521 6,011
Insurance and claims 37,732 36,907 12,026 13,335
Selling, general and administrative 108,567 94,967 36,215 30,990
Depreciation and amortization 20,419 20,743 7,086 7,180
2,159,824 1,837,067 760,075 629,287
Total costs and expenses
Operating income 163,163 136,849 59,577 46,614
Interest and debt expense 2,260 2,367 774 856
----- ----- --- ---
Income from continuing operations before income taxes 160,903 134,482 58,803 45,758
Income taxes 60,585 50,736 22,048 17,255
------ ------ ------ ------
Income from continuing operations 100,318 83,746 36,755 28,503
Income from discontinued operations, net of income taxes - 2,706 - 743
Net income $100,318 $86,452 $36,755 $29,246
======== ======= ======= =======
Earnings per common share:
Income from continuing operations $2.23 $1.81 $0.82 $0.62
Income from discontinued operations - 0.06 - 0.02
Earnings per common share 2.23 1.87 0.82 0.64
Diluted earnings per share:
Income from continuing operations $2.22 $1.81 $0.82 $0.62
Income from discontinued operations - 0.06 - 0.02
Diluted earnings per share 2.22 1.87 0.82 0.64
Average number of shares outstanding:
Earnings per common share 45,018,000 46,156,000 44,713,000 45,708,000
Diluted earnings per share 45,222,000 46,323,000 44,937,000 45,856,000
Dividends per common share $0.19 $ - $0.07 $ -
===== ====================== ===== ==================
LANDSTAR SYSTEM/6
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
September 27, December 28,
2014 2013
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $140,591 $180,302
Short-term
investments 37,664 34,939
Trade accounts
receivable, less
allowance
455,478 378,732
of $4,687 and
$3,773
Other receivables,
including advances
to independent
12,355 73,903
contractors, less
allowance of $3,449
and $4,253
Deferred income
taxes and other
current assets 16,322 14,592
662,410 682,468
Total current
assets
Operating property, less accumulated depreciation
203,568 177,329
and amortization of
$157,379 and
$157,985
Goodwill 31,134 31,134
Other assets 83,113 79,765
Total assets $980,225 $970,696
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash
overdraft $32,232 $27,780
Accounts
payable 203,203 157,796
Current
maturities of
long-term debt 34,619 27,567
Insurance
claims 29,153 92,280
Other current
liabilities 43,120 70,237
342,327 375,660
Total current
liabilities
Long-term debt, excluding current
maturities 80,507 73,938
Insurance claims 23,293 24,171
Deferred income taxes and other non-
current liabilities 38,426 42,446
Shareholders' equity:
Common stock, $0.01
par value,
authorized
160,000,000
672 670
shares, issued
67,211,626 and
67,017,858 shares
Additional
paid-in
capital 186,097 179,807
Retained
earnings 1,264,811 1,173,044
Cost of 22,474,331
and 21,528,693
shares of common
(955,613) (899,028)
stock in
treasury
Accumulated other
comprehensive loss (295) (12)
495,672 454,481
Total
shareholders'
equity
Total liabilities and shareholders' equity $980,225 $970,696
======== ========
LANDSTAR SYSTEM/7
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
Thirty Nine Weeks Ended Thirteen Weeks Ended
----------------------- --------------------
September 27, September 28, September 27, September 28,
2014 2013 2014 2013
---- ---- ---- ----
Revenue generated through (in thousands):
-----------------------------------------
Business Capacity Owners (1) $1,126,213 $987,914 $385,524 $342,366
Truck Brokerage Carriers 1,051,118 837,005 381,964 285,183
Rail intermodal 58,957 55,450 21,936 18,762
Ocean and air cargo carriers 56,168 65,082 19,731 20,061
Other (2) 29,504 27,354 10,165 9,163
$2,321,960 $1,972,805 $819,320 $675,535
========== ========== ======== ========
Number of loads:
----------------
Business Capacity Owners (1) 614,800 591,200 203,430 198,830
Truck Brokerage Carriers 555,100 495,240 197,930 163,500
Rail intermodal 22,840 22,100 8,560 7,710
Ocean and air cargo carriers 12,110 12,370 4,100 4,330
1,204,850 1,120,910 414,020 374,370
========= ========= ======= =======
Revenue per load:
-----------------
Business Capacity Owners (1) $1,832 $1,671 $1,895 $1,722
Truck Brokerage Carriers 1,894 1,690 1,930 1,744
Rail intermodal 2,581 2,509 2,563 2,433
Ocean and air cargo carriers 4,638 5,261 4,812 4,633
September 27, September 28,
2014 2013
---- ----
Truck Capacity Providers
------------------------
Business Capacity Owners (1) (3) 8,252 7,890
Truck Brokerage Carriers:
Approved and active (4) 25,250 21,171
Approved 11,884 11,143
37,134 32,314
------ ------
Total available truck capacity providers 45,386 40,204
(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 8,792 and 8,410 at September 27, 2014 and September 28, 2013, respectively.
(4) Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.
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SOURCE Landstar System, Inc.
