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8-K - FORM 8-K - LANDSTAR SYSTEM INCg26860e8vk.htm
Exhibit 99.1
(LANDSTAR LOGO)
     
For Immediate Release
  Contact: Jim Gattoni
 
  Landstar System, Inc.
 
  www.landstar.com
April 21, 2011
  904-398-9400
LANDSTAR SYSTEM REPORTS FIRST QUARTER DILUTED EARNINGS PER SHARE INCREASE OF 26 PERCENT TO $0.43
PER DILUTED SHARE
Jacksonville, FL — Landstar System, Inc. (NASDAQ: LSTR) reported 2011 first quarter net income of $20.6 million, or $0.43 per diluted share, compared to net income of $17.2 million, or $0.34 per diluted share, for the 2010 first quarter. Operating margin was 35.4 percent in the 2011 first quarter compared to 31.3 percent in the 2010 first quarter. Revenue for the 2011 first quarter was $572.0 million compared to $548.1 million in the 2010 first quarter.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2011 first quarter was $520.6 million, or 91 percent of revenue, compared to $505.9 million, or 92 percent of revenue, in the 2010 first quarter. In the 2011 and 2010 first quarters, the Company invoiced customers $58.1 million and $41.3 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 first quarters were $19.3 million and $19.0 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 $19.4 million and $77.2 million in the 2011 and 2010 first quarters, respectively. Revenue hauled by rail, air and ocean cargo carriers was $37.9 million, or 7 percent of revenue, in the 2011 first quarter compared to $28.5 million, or 5 percent of revenue, in the 2010 first quarter. Transportation

 


 

LANDSTAR SYSTEM/2
management fee revenue generated by the supply chain solutions companies was $4.8 million and $4.1 million in the 2011 and 2010 first quarters, respectively.
Trailing twelve-month return on average shareholder’s equity was 33 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 23 percent. Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.05 per share. The dividend is payable on May 27, 2011 to stockholders of record at the close of business on May 5, 2011. It is the intention of the Board of Directors to continue to pay a quarterly dividend.
“I am very pleased with the Company’s 2011 first quarter performance,” said Henry Gerkens, Landstar’s Chairman, President and CEO. “Despite the anticipated revenue decline in our substitute line haul service offering and the adverse effects of some inclement weather in the 2011 first quarter, revenue increased four percent over the 2010 first quarter. Gross profit, defined as revenue less the cost of purchased transportation and commissions to agents, increased 7 percent in the 2011 first quarter over the 2010 first quarter, operating income increased 20 percent and earnings per diluted share increased 26 percent. Excluding the substitute line haul revenue from both the 2011 and 2010 first quarters, revenue increased 17 percent, as demand and pricing were both strong in the 2011 first quarter.”
Gerkens continued, “In the 2011 first quarter, overall truckload capacity was seasonally tighter than experienced during prior year first quarters, which led to improved pricing. So far, in April, truckload pricing has continued to increase from the 2011 first quarter. I anticipate that trend to continue throughout the second quarter as freight demand increases over the 2011 first quarter. Assuming those operating trends continue throughout the quarter, I would expect operating margin in the 2011 second quarter to be about 42 percent and 2011 second quarter earnings to be in a range of $0.56 to $0.61 per diluted share.”
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 First 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.
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/4
Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
                 
    Thirteen Weeks Ended  
    March 26,     March 27,  
    2011     2010  
Revenue
  $ 571,986     $ 548,088  
Investment income
    528       285  
 
               
Costs and expenses:
               
Purchased transportation
    431,378       417,201  
Commissions to agents
    44,171       40,408  
Other operating costs
    7,944       7,536  
Insurance and claims
    11,266       12,298  
Selling, general and administrative
    37,264       36,843  
Depreciation and amortization
    6,399       5,792  
 
           
Total costs and expenses
    538,422       520,078  
 
           
 
               
Operating income
    34,092       28,295  
Interest and debt expense
    828       854  
 
           
Income before income taxes
    33,264       27,441  
Income taxes
    12,707       10,484  
 
           
Net income
    20,557       16,957  
Less: Net loss attributable to noncontrolling interest
    (62 )     (219 )
 
           
Net income attributable to Landstar System, Inc. and subsidiary
  $ 20,619     $ 17,176  
 
           
 
               
Earnings per common share attributable to Landstar System, Inc. and subsidiary
  $ 0.43     $ 0.34  
 
           
 
               
Diluted earnings per share attributable to Landstar System, Inc. and subsidiary
  $ 0.43     $ 0.34  
 
           
 
               
Average number of shares outstanding:
               
Earnings per common share
    47,870,000       50,207,000  
 
           
Diluted earnings per share
    47,900,000       50,318,000  
 
           
 
               
Dividends paid per common share
  $ 0.050     $ 0.045  
 
           

 


 

LANDSTAR SYSTEM/5
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
                 
    Mar. 26,     Dec. 25,  
    2011     2010  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 45,230     $ 44,706  
Short-term investments
    30,756       23,266  
Trade accounts receivable, less allowance of $5,525 and $5,324
    344,459       307,350  
Other receivables, including advances to independent contractors, less allowance of $5,018 and $5,511
    30,972       23,943  
Deferred income taxes and other current assets
    15,218       21,652  
 
           
Total current assets
    466,635       420,917  
 
           
 
               
Operating property, less accumulated depreciation and amortization of $142,330 and $137,830
    127,957       132,649  
Goodwill
    57,470       57,470  
Other assets
    62,373       72,846  
 
           
Total assets
  $ 714,435     $ 683,882  
 
           
 
               
LIABILITIES AND EQUITY
               
Current liabilities:
               
Cash overdraft
  $ 23,407     $ 24,877  
Accounts payable
    160,704       137,297  
Current maturities of long-term debt
    19,878       22,172  
Insurance claims
    43,027       40,215  
Other current liabilities
    55,072       53,785  
 
           
Total current liabilities
    302,088       278,346  
 
           
 
               
Long-term debt, excluding current maturities
    95,710       99,439  
Insurance claims
    31,627       31,468  
Deferred income taxes
    22,573       23,662  
 
               
Equity
               
Landstar System, Inc. and subsidiary shareholders’ equity
               
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 66,553,099 and 66,535,169 shares
    666       665  
Additional paid-in capital
    161,502       169,268  
Retained earnings
    862,357       844,132  
Cost of 18,674,902 shares of common stock in treasury
    (763,182 )     (763,182 )
Accumulated other comprehensive income
    1,094       881  
 
           
Total Landstar System, Inc. and subsidiary shareholders’ equity
    262,437       251,764  
 
           
Noncontrolling interest
          (797 )
 
           
Total equity
    262,437       250,967  
 
           
Total liabilities and equity
  $ 714,435     $ 683,882  
 
           

 


 

LANDSTAR SYSTEM/6
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
                 
    Thirteen Weeks Ended  
    March 26,     March 27,  
    2011     2010  
Revenue generated through (in thousands):
               
Business Capacity Owners (1)
  $ 306,894     $ 286,141  
Truck Brokerage Carriers
    213,723       219,755  
Rail intermodal
    16,465       14,776  
Ocean cargo carriers
    13,833       9,135  
Air cargo carriers
    7,560       4,603  
Other (2)
    13,511       13,678  
 
           
 
  $ 571,986     $ 548,088  
 
           
 
               
Number of loads:
               
Business Capacity Owners (1)
    192,040       197,750  
Truck Brokerage Carriers
    135,740       149,350  
Rail intermodal
    7,260       6,870  
Ocean cargo carriers
    1,830       1,460  
Air cargo carriers
    1,950       1,500  
 
           
 
    338,820       356,930  
 
           
 
               
Revenue per load:
               
Business Capacity Owners (1)
  $ 1,598     $ 1,447  
Truck Brokerage Carriers
    1,575       1,471  
Rail intermodal
    2,268       2,151  
Ocean cargo carriers
    7,559       6,257  
Air cargo carriers
    3,877       3,069  
                 
    March 26,     March 27,  
    2011     2010  
Truck Capacity
               
Business Capacity Owners (1) (3)
    7,697       7,800  
 
           
Truck Brokerage Carriers:
               
Approved and active (4)
    16,773       15,644  
Approved
    9,347       9,674  
 
           
 
    26,120       25,318  
 
           
Total available truck capacity providers
    33,817       33,118  
 
           
 
(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 8,226 and 8,384 at March 26, 2011 and March 27, 2010, respectively.
 
(4)   Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.