LANDSTAR SYSTEM, INC. JACKSONVILLE, Fla., Oct. 22, 2015 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported record third quarter net income of $39.3 million, or $0.90 per diluted share, on record third quarter revenue of $842 million in the 2015 third quarter. Revenue and diluted earnings per share for the 2015 third quarter were the highest third quarter revenue and diluted earnings per share amounts in Landstar history. Landstar reported net income of $36.8 million, or $0.82 per diluted share, on revenue of $819 million in the 2014 third quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $126.8 million in the 2015 third quarter compared to $121.1 million in gross profit in the 2014 third quarter. Operating margin, representing operating income divided by gross profit, was 50.4 percent in the 2015 third quarter. Gross profit and operating margin for the 2015 third quarter were also the highest third quarter amounts in Landstar history.
Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2015 third quarter was $779.8 million, or 93 percent of revenue, compared to $767.5 million, or 94 percent of revenue, in the 2014 third quarter. Truckload transportation revenue hauled via van equipment in the 2015 third quarter was $466.2 million compared to $458.5 million in the 2014 third quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2015 third quarter was $293.3 million compared to $287.9 million in the 2014 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $50.5 million, or 6 percent of revenue, in the 2015 third quarter compared to $41.7 million, or 5 percent of revenue, in the 2014 third quarter.
Trailing twelve-month return on average shareholders' equity was 31 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 purchased approximately 412,000 shares of its common stock during the 13 weeks ended September 26, 2015 at an aggregate cost of $28.0 million. Landstar purchased approximately 1,719,000 shares of its common stock during the 39 weeks ended September 26, 2015 at an aggregate cost of $112.7 million. Currently, there are approximately 2,588,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program. As of September 26, 2015, the Company had $158 million in cash and short term investments and had $192 million available for borrowing under the Company's senior credit facility.
In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.08 per share payable on December 4, 2015 to stockholders of record at the close of business on November 10, 2015. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.
"Landstar's 2015 third quarter results were again outstanding," said Landstar's President and Chief Executive Officer, Jim Gattoni. "Revenue, gross profit, operating income, operating margin, net income, and diluted earnings per share were all third quarter records. Overall, demand for Landstar's truck transportation services in the 2015 third quarter continued to be strong, as the number of loads hauled via truck increased 8 percent over the 2014 third quarter. In addition, the number of loads hauled via railroads, ocean cargo carriers and air cargo carriers increased 29 percent over the 2014 third quarter. The growth in the number of loads hauled via truck was driven by increased volumes for unsided/platform equipment, van equipment and less-than-truckload of 14 percent, 6 percent, and 12 percent, respectively. The growth in the number of loads hauled via unsided/platform equipment in the 2015 third quarter was entirely driven by demand from one shipper in the automotive sector. Otherwise, unsided/platform volumes softened during the third quarter. We expect the strong volumes from that shipper to continue throughout the 2015 fourth quarter, keeping unsided/platform volumes elevated for the remainder of 2015. As expected, revenue per load on loads hauled via truck was lower in the 2015 third quarter as compared to the 2014 third quarter. Truck revenue per load in the 2015 third quarter was 6 percent lower as compared to the 2014 third quarter mostly due to the impact of lower diesel fuel costs on loads hauled via truck brokerage carriers and the difficult comparison to record truck revenue per load experienced in 2014. Operating income for the 2015 third quarter was $64.0 million, the highest third quarter operating income in Landstar history, and operating margin was 50.4 percent. Finally, diluted earnings per share in the 2015 third quarter increased 10 percent over the 2014 third quarter."
Gattoni continued, "Demand for Landstar's services thus far in October remains strong. I expect the number of loads hauled via truck in the 2015 fourth quarter to increase in a mid-single digit percentage range over the 2014 fourth quarter. As it pertains to revenue per load on loads hauled via truck, year-over-prior-year comparisons continue to be difficult due to the all-time high revenue per load reported in the 2014 fourth quarter along with the effect of lower diesel fuel costs on loads hauled via truck brokerage carriers in 2015. During the first few weeks of fiscal October, revenue per load on loads hauled via truck is consistent with that experienced in fiscal September, yet lower than that of fiscal October 2014. I do not expect a significant change in these recent trends over the balance of the 2015 fourth quarter. As such, I expect revenue per load on loads hauled via truck in the 2015 fourth quarter to be below the 2014 fourth quarter in an upper-single digit percentage range. Assuming the current environment continues throughout the 2015 fourth quarter, I anticipate revenue for the 2015 fourth quarter to be in a range of $815 million to $865 million and, assuming that range of estimated revenue, I would anticipate 2015 fourth quarter diluted earnings per share to be in a range of $0.85 to $0.90 per share."
Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 5:00 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 2015 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 2014 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)
Thirty Nine Weeks Ended Thirteen Weeks Ended
----------------------- --------------------
September 26, September 27, September 26, September 27,
2015 2014 2015 2014
---- ---- ---- ----
Revenue $2,472,489 $2,321,960 $841,726 $819,320
Investment income 1,043 1,027 350 332
Costs and expenses:
Purchased
transportation 1,900,313 1,792,560 645,583 633,596
Commissions to
agents 199,113 181,196 69,297 64,631
Other operating
costs, net of
gains on asset
sales/
dispositions 24,388 19,350 8,718 6,521
Insurance and
claims 37,610 37,732 10,502 12,026
Selling, general
and
administrative 111,797 108,567 36,811 36,215
Depreciation and
amortization 21,253 20,419 7,185 7,086
Total costs
and
expenses 2,294,474 2,159,824 778,096 760,075
--------- --------- ------- -------
Operating income 179,058 163,163 63,980 59,577
Interest and debt expense 2,208 2,260 714 774
----- ----- --- ---
Income before income taxes 176,850 160,903 63,266 58,803
Income taxes 67,016 60,585 23,918 22,048
------ ------ ------ ------
Net income $109,834 $100,318 $39,348 $36,755
======== ======== ======= =======
Earnings per common share $2.50 $2.23 $0.91 $0.82
===== ===== ===== =====
Diluted earnings per share $2.49 $2.22 $0.90 $0.82
===== ===== ===== =====
Average number of shares outstanding:
Earnings per
common share 43,975,000 45,018,000 43,446,000 44,713,000
Diluted earnings
per share 44,134,000 45,222,000 43,607,000 44,937,000
Dividends per common share $0.22 $0.19 $0.08 $0.07
===== ===== ===== =====
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
September 26, December 27,
2015 2014
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $108,899 $163,944
Short-term
investments 48,955 37,007
Trade accounts
receivable, less
allowance
of $4,287 and
$4,338 462,163 492,642
Other receivables,
including advances to
independent
contractors, less
allowance of $4,306
and $4,189 17,682 15,132
Deferred income taxes
and other current
assets 17,558 23,603
655,257 732,328
Total current assets
Operating property, less accumulated depreciation
195,328 202,203
and amortization of $175,310 and $160,681
Goodwill 31,134 31,134
Other assets 71,303 78,547
------
Total assets $953,022 $1,044,212
======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash
overdraft $29,666 $34,629
Accounts payable 205,514 220,077
Current maturities
of long-term debt 36,259 35,064
Insurance claims 19,438 24,233
Dividends payable - 44,794
Other current
liabilities 53,077 51,654
Total current
liabilities 343,954 410,451
------- -------
Long-term debt, excluding current maturities 59,959 76,257
Insurance claims 22,432 21,769
Deferred income taxes and other non-current
liabilities 47,976 47,474
Shareholders' equity:
Common stock, $0.01 par
value, authorized
160,000,000
shares, issued
67,379,568 and
67,268,817 shares 674 673
Additional paid-
in capital 193,502 189,012
Retained earnings 1,355,535 1,255,374
Cost of 24,193,516 and
22,474,331 shares of
common
stock in
treasury (1,068,267) (955,613)
Accumulated other
comprehensive loss (2,743) (1,185)
-------
Total
shareholders'
equity 478,701 488,261
------- -------
Total liabilities and shareholders' equity $953,022 $1,044,212
======== ==========
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
Thirty Nine Weeks Ended Thirteen Weeks Ended
----------------------- --------------------
September 26, September 27, September 26, September 27,
2015 2014 2015 2014
---- ---- ---- ----
Revenue generated through (in thousands):
-----------------------------------------
Truck transportation
Truckload:
Van equipment $1,412,824 $1,314,544 $466,226 $458,534
Unsided/platform equipment 823,767 804,372 293,252 287,876
Less-than-truckload 61,297 58,415 20,341 21,078
------ ------ ------ ------
Total truck transportation 2,297,888 2,177,331 779,819 767,488
Rail intermodal 76,688 58,957 27,166 21,936
Ocean and air cargo carriers 64,725 56,168 23,315 19,731
Other (1) 33,188 29,504 11,426 10,165
$2,472,489 $2,321,960 $841,726 $819,320
========== ========== ======== ========
Revenue on loads hauled via BCO Independent Contractors (2)
included in total truck transportation $1,140,870 $1,126,213 $388,840 $385,524
Number of loads:
----------------
Truck transportation
Truckload:
Van equipment 820,223 767,642 275,509 260,721
Unsided/platform equipment 359,769 332,552 130,317 114,758
Less-than-truckload 83,838 69,706 28,934 25,881
------ ------ ------ ------
Total truck transportation 1,263,830 1,169,900 434,760 401,360
Rail intermodal 32,350 22,840 11,670 8,560
Ocean and air cargo carriers 13,320 12,110 4,700 4,100
1,309,500 1,204,850 451,130 414,020
========= ========= ======= =======
Loads hauled via BCO Independent Contractors (2)
included in total truck transportation 616,410 614,800 210,180 203,430
Revenue per load:
-----------------
Truck transportation
Truckload:
Van equipment $1,722 $1,712 $1,692 $1,759
Unsided/platform equipment 2,290 2,419 2,250 2,509
Less-than-truckload 731 838 703 814
Total truck transportation 1,818 1,861 1,794 1,912
Rail intermodal 2,371 2,581 2,328 2,563
Ocean and air cargo carriers 4,859 4,638 4,961 4,812
Revenue per load on loads hauled via BCO Independent
Contractors (2) $1,851 $1,832 $1,850 $1,895
Revenue by capacity type (as a % of total revenue);
---------------------------------------------------
Truck capacity providers:
BCO Independent Contractors (2) 46% 49% 46% 47%
Truck Brokerage Carriers 47% 45% 46% 47%
Rail intermodal 3% 3% 3% 3%
Ocean and air cargo carriers 3% 2% 3% 2%
Other 1% 1% 1% 1%
September 26, September 27,
2015 2014
---- ----
Truck Capacity Providers
------------------------
BCO Independent Contractors (2) 8,869 8,252
Truck Brokerage Carriers:
Approved and active (3) 29,127 25,250
Other approved 13,813 11,884
42,940 37,134
------ ------
Total available truck capacity providers 51,809 45,386
Trucks provided by BCO Independent Contractors (2) 9,441 8,792
(1) Includes primarily premium revenue generated by the insurance segment.
(2) BCO Independent Contractors are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.
(3) Active refers to Truck Brokerage Carriers who have moved at least one load in the 180 days immediately preceding the fiscal quarter end.
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SOURCE Landstar System, Inc.
