UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 25, 2012
LANDSTAR SYSTEM, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 021238 | 06-1313069 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) | ||
| 13410 Sutton Park Drive South, Jacksonville, Florida | 32224 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(904) 398-9400
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition
On October 25, 2012, Landstar System, Inc. issued a press release announcing results for the third quarter of fiscal 2012. A copy of the press release is attached hereto as Exhibit 99.1.
The information furnished under Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
Item 9.01 Financial Statements and Exhibits
| Exhibits |
||
| 99.1 | News Release dated October 25, 2012 of Landstar System, Inc. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LANDSTAR SYSTEM, INC. | ||||||
| Date: October 25, 2012 | By: | /s/ James B. Gattoni | ||||
| Name: | James B. Gattoni | |||||
| Title: | Vice President and Chief Financial Officer | |||||
Exhibit 99.1
| For Immediate Release | Contact: Jim Gattoni | |
| Landstar System, Inc. | ||
| www.landstar.com | ||
| October 25, 2012 | 904-398-9400 |
LANDSTAR SYSTEM REPORTS 11 PERCENT INCREASE IN DILUTED EARNINGS PER SHARE TO A THIRD QUARTER RECORD OF $0.71
Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported 2012 record third quarter diluted earnings per share of $0.71 from net income of $33.1 million, compared to net income of $30.2 million, or $0.64 per diluted share, for the 2011 third quarter. Operating margin, representing operating income divided by gross profit (gross profit defined as revenue less the cost of purchased transportation and commissions to agents) was 48.1 percent in the 2012 third quarter compared to 44.7 percent in the 2011 third quarter. Revenue for the 2012 third quarter was $717.2 million compared to $684.0 million in the 2011 third quarter.
Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2012 third quarter was $663.5 million, or 93 percent of revenue, compared to $625.8 million, or 91 percent of revenue, in the 2011 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $38.9 million, or five percent of revenue, in the 2012 third quarter compared to $44.5 million, or seven percent of revenue, in the 2011 third quarter.
Trailing twelve-month return on average shareholder’s equity was 39 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 29 percent. Landstar also announced that its Board of Directors has declared a quarterly dividend of $0.06 per share. The dividend is payable on December 7, 2012 to stockholders of record at the close of business on November 13, 2012. During the 2012 third quarter, Landstar purchased 183,800 shares
LANDSTAR SYSTEM/2
of its common stock at a total cost of $8.8 million bringing the total number of shares purchased during the first three quarters of 2012 to 499,400 at an aggregate cost of $24.6 million. Currently, there are 2,017,000 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase programs.
“Landstar produced solid operating results in the 2012 third quarter, despite inconsistent demand and a tougher quarter over prior year quarter revenue per load comparison,” said Landstar Chairman, President and Chief Executive Officer Henry Gerkens. “Loads hauled via truck capacity in the 2012 third quarter increased a healthy seven percent over the 2011 third quarter. Average truck revenue per load in the 2012 third quarter remained relatively high at $1,756 per load compared to historical amounts but was slightly lower than the $1,768 revenue per load amount in the 2011 third quarter. After amounts paid for purchased transportation and agent commissions were deducted from revenue in the 2012 third quarter, the resulting gross profit amount was the second highest third quarter gross profit amount in Landstar history. Landstar continued to demonstrate its operating leverage as it passed the increase in gross profit through to operating income, resulting in an operating margin of 48.1 percent in the 2012 third quarter. Third quarter 2012 diluted earnings per share of $0.71 was a third quarter record.”
Gerkens continued, “As I look at the 2012 fourth quarter, it is important to note that the 2012 fourth quarter is a thirteen week quarter whereas the 2011 fourth quarter was a fourteen week quarter. I estimate that the extra week in the 2011 fourth quarter contributed approximately $25 to $30 million in additional revenue. Using the 2011 fourth quarter gross profit margin of 15.8 percent, the increase in diluted earnings per share attributable to that additional revenue is estimated to be approximately $0.06 per diluted share. In addition, the 2011 fourth quarter included a favorable income tax benefit of approximately $0.03 per diluted share.
Although I am very confident in the long term outlook for Landstar, I am also somewhat cautious in the short term. I believe that until the uncertainty surrounding the current political environment and tax and budgetary issues are resolved, the economy will
LANDSTAR SYSTEM/3
continue to grow, but at a sluggish pace. In the first few weeks of the 2012 fourth quarter, we have seen a slowing in demand beyond the choppiness experienced during the 2012 third quarter. Despite the slowing demand, revenue in the first several weeks of the 2012 fourth quarter continues to run above revenue of the first several weeks of the 2011 fourth quarter. Given the uncertain economic environment and current revenue trends, I anticipate earnings per diluted share for the 2012 fourth quarter to be in a range of $0.63 to $0.68 per share.”
Landstar will hold 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 2012 Earnings Release Conference Call.” The webcast will be available on the Company’s website through Thursday, November 1, 2012.
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 2011 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 Landstar undertakes no obligation to publicly update or revise any forward-looking statements.
LANDSTAR SYSTEM/4
About Landstar:
Landstar System, Inc. is a non-asset based provider of integrated supply chain solutions. Landstar delivers safe, specialized transportation and logistics services to a broad range of customers worldwide 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 RC14001:2008 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/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 29, 2012 |
September 24, 2011 |
September 29, 2012 |
September 24, 2011 |
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| Revenue |
$ | 2,102,164 | $ | 1,931,560 | $ | 717,168 | $ | 684,013 | ||||||||
| Investment income |
1,185 | 1,294 | 393 | 373 | ||||||||||||
| Costs and expenses: |
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| Purchased transportation |
1,603,865 | 1,459,660 | 548,162 | 518,300 | ||||||||||||
| Commissions to agents |
162,728 | 153,165 | 56,036 | 54,990 | ||||||||||||
| Other operating costs |
17,635 | 22,050 | 6,447 | 6,427 | ||||||||||||
| Insurance and claims |
28,411 | 34,096 | 8,010 | 9,381 | ||||||||||||
| Selling, general and administrative |
113,916 | 112,252 | 37,455 | 39,206 | ||||||||||||
| Depreciation and amortization |
20,476 | 19,336 | 7,072 | 6,549 | ||||||||||||
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| Total costs and expenses |
1,947,031 | 1,800,559 | 663,182 | 634,853 | ||||||||||||
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| Operating income |
156,318 | 132,295 | 54,379 | 49,533 | ||||||||||||
| Interest and debt expense |
2,312 | 2,340 | 818 | 735 | ||||||||||||
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| Income before income taxes |
154,006 | 129,955 | 53,561 | 48,798 | ||||||||||||
| Income taxes |
58,203 | 49,642 | 20,460 | 18,640 | ||||||||||||
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| Net income |
95,803 | 80,313 | 33,101 | 30,158 | ||||||||||||
| Less: Net loss attributable to noncontrolling interest |
— | (62 | ) | — | — | |||||||||||
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| Net income attributable to Landstar System, Inc. and subsidiary |
$ | 95,803 | $ | 80,375 | $ | 33,101 | $ | 30,158 | ||||||||
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| Earnings per common share attributable to Landstar System, Inc. and subsidiary |
$ | 2.05 | $ | 1.69 | $ | 0.71 | $ | 0.64 | ||||||||
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| Diluted earnings per share attributable to Landstar System, Inc. and subsidiary |
$ | 2.04 | $ | 1.68 | $ | 0.71 | $ | 0.64 | ||||||||
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| Average number of shares outstanding: |
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| Earnings per common share |
46,775,000 | 47,670,000 | 46,614,000 | 47,358,000 | ||||||||||||
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| Diluted earnings per share |
46,964,000 | 47,735,000 | 46,732,000 | 47,387,000 | ||||||||||||
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| Dividends paid per common share |
$ | 0.170 | $ | 0.155 | $ | 0.060 | $ | 0.055 | ||||||||
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LANDSTAR SYSTEM/6
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
| Sept. 29, 2012 |
Dec. 31, 2011 |
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| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 79,961 | $ | 80,900 | ||||
| Short-term investments |
38,112 | 27,944 | ||||||
| Trade accounts receivable, less allowance of $8,299 and $6,591 |
429,684 | 368,377 | ||||||
| Other receivables, including advances to independent contractors, less allowance of $4,951 and $5,384 |
51,766 | 53,263 | ||||||
| Deferred income taxes and other current assets |
20,202 | 21,308 | ||||||
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| Total current assets |
619,725 | 551,792 | ||||||
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| Operating property, less accumulated depreciation and amortization of $154,657 and $145,804 |
163,569 | 142,146 | ||||||
| Goodwill |
57,470 | 57,470 | ||||||
| Other assets |
68,618 | 57,041 | ||||||
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| Total assets |
$ | 909,382 | $ | 808,449 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Current liabilities: |
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| Cash overdraft |
$ | 26,719 | $ | 25,905 | ||||
| Accounts payable |
212,653 | 163,307 | ||||||
| Current maturities of long-term debt |
19,366 | 17,212 | ||||||
| Insurance claims |
68,410 | 76,624 | ||||||
| Other current liabilities |
45,526 | 48,065 | ||||||
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| Total current liabilities |
372,674 | 331,113 | ||||||
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| Long-term debt, excluding current maturities |
99,748 | 115,130 | ||||||
| Insurance claims |
25,386 | 27,494 | ||||||
| Deferred income taxes and other non-current liabilities |
40,141 | 34,135 | ||||||
| Shareholders’ equity: |
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| Common stock, $0.01 par value, authorized 160,000,000 shares, issued 66,855,922 and 66,602,486 shares |
669 | 666 | ||||||
| Additional paid-in capital |
172,455 | 165,712 | ||||||
| Retained earnings |
1,035,003 | 947,156 | ||||||
| Cost of 20,386,462 and 19,882,289 shares of common stock in treasury |
(838,273 | ) | (813,684 | ) | ||||
| Accumulated other comprehensive income |
1,579 | 727 | ||||||
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| Total shareholders’ equity |
371,433 | 300,577 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 909,382 | $ | 808,449 | ||||
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LANDSTAR SYSTEM/7
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
| Thirty Nine Weeks Ended | Thirteen Weeks Ended | |||||||||||||||
| September 29, 2012 |
September 24, 2011 |
September 29, 2012 |
September 24, 2011 |
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| Revenue generated through (in thousands): |
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| Business Capacity Owners (1) |
$ | 1,057,109 | $ | 1,020,856 | $ | 355,861 | $ | 351,108 | ||||||||
| Truck Brokerage Carriers |
886,532 | 747,122 | 307,600 | 274,731 | ||||||||||||
| Rail intermodal |
55,002 | 53,991 | 18,782 | 19,159 | ||||||||||||
| Ocean and air cargo carriers |
60,227 | 68,261 | 20,100 | 25,330 | ||||||||||||
| Other (2) |
43,294 | 41,330 | 14,825 | 13,685 | ||||||||||||
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| $ | 2,102,164 | $ | 1,931,560 | $ | 717,168 | $ | 684,013 | |||||||||
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| Number of loads: |
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| Business Capacity Owners (1) |
616,200 | 601,990 | 201,050 | 199,260 | ||||||||||||
| Truck Brokerage Carriers |
510,360 | 441,930 | 176,760 | 154,720 | ||||||||||||
| Rail intermodal |
22,290 | 22,750 | 7,470 | 7,920 | ||||||||||||
| Ocean and air cargo carriers |
11,760 | 12,150 | 3,850 | 4,200 | ||||||||||||
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| 1,160,610 | 1,078,820 | 389,130 | 366,100 | |||||||||||||
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| Revenue per load: |
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| Business Capacity Owners (1) |
$ | 1,716 | $ | 1,696 | $ | 1,770 | $ | 1,762 | ||||||||
| Truck Brokerage Carriers |
1,737 | 1,691 | 1,740 | 1,776 | ||||||||||||
| Rail intermodal |
2,468 | 2,373 | 2,514 | 2,419 | ||||||||||||
| Ocean and air cargo carriers |
5,121 | 5,618 | 5,221 | 6,031 | ||||||||||||
| September 29, 2012 |
September 24, 2011 |
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| Truck Capacity Providers |
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| Business Capacity Owners (1) (3) |
8,074 | 7,798 | ||||||
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| Truck Brokerage Carriers: |
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| Approved and active (4) |
20,474 | 18,402 | ||||||
| Approved |
9,315 | 9,088 | ||||||
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| 29,789 | 27,490 | |||||||
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| Total available truck capacity providers |
37,863 | 35,288 | ||||||
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| (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 8,596 and 8,314 at September 29, 2012 and September 24, 2011, respectively. |
| (4) | Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days. |