FORM 8-K

 

 

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) January 29, 2015

 

LOGO

 

 

LANDSTAR SYSTEM, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   021238   06-1313069
(State or other jurisdiction   (Commission   (I.R.S. Employer
of incorporation)   File Number)   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 January 29, 2015, Landstar System, Inc. issued a press release announcing results for the fourth quarter of fiscal 2014. 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(d) On January 29, 2015, the Board of Directors (the “Board”) of Landstar System, Inc. (the “Company”) announced the appointment of James B. Gattoni as a Class I Director, effective immediately. As a Class I Director, the term of Mr. Gattoni will expire at the Company’s 2015 annual meeting of stockholders. The Board has also appointed Mr. Gattoni to the Safety and Risk Committee and the Strategic Planning Committee, in each case effective January 29, 2015.

 

Item 9.01 Financial Statements and Exhibits

Exhibits

 

    99.1    News Release dated January 29, 2015 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: January 29, 2015     By:  

/s/ L. Kevin Stout

      Name: L. Kevin Stout
      Title: Vice President, Chief Financial Officer and Assistant Secretary
EXHIBIT 99.1

Exhibit 99.1

 

LOGO

 

For Immediate Release    Contact: Kevin Stout
   Landstar System, Inc.
   www.landstar.com
January 29, 2015    904-398-9400

LANDSTAR SYSTEM REPORTS RECORD QUARTERLY REVENUE OF

$863 MILLION AND RECORD QUARTERLY DILUTED EARNINGS PER SHARE

FROM CONTINUING OPERATIONS OF $0.86

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported record quarterly revenue of $863 million in the 2014 fourth quarter, the highest quarterly revenue of any quarter in Landstar history. Landstar also reported diluted earnings per share of $0.86 in the 2014 fourth quarter on net income from continuing operations of $38.5 million. This is the highest quarterly diluted earnings per share from continuing operations in Landstar history. With respect to the Company’s results from continuing operations for the 2013 fourth quarter, Landstar reported net income of $25.2 million, or $0.55 per diluted share, on revenue of $692 million. Additionally, the 2013 fourth quarter included $0.75 of diluted earnings per share from income from discontinued operations attributable to the sale of the Landstar Supply Chain Solutions companies. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $124.7 million in the 2014 fourth quarter compared to $102.7 million of gross profit in the 2013 fourth quarter. Operating margin, representing operating income divided by gross profit, was 49.1 percent in the 2014 fourth quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2014 fourth quarter was $811.2 million, or 94 percent of revenue, compared to $643.6 million, or 93 percent of revenue, in the 2013 fourth quarter. Truckload transportation revenue hauled via van equipment in the 2014 fourth quarter was $499.7 million compared to $391.4 million in the 2013 fourth quarter. Truckload revenue hauled via unsided/platform equipment in the 2014 fourth


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quarter was $289.6 million compared to $233.4 million in the 2013 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $41.0 million, or 5 percent of revenue, in the 2014 fourth quarter compared to $39.0 million, or 6 percent of revenue, in the 2013 fourth quarter.

Trailing twelve-month return on average shareholders’ equity was 30 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 24 percent. Landstar purchased approximately 940,000 shares of its common stock during 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.

As previously announced on December 4, 2014, the Company’s Board of Directors declared a special dividend of $1.00 per share payable on January 26, 2015, to stockholders of record as of the close of business on January 12, 2015. In addition, Landstar announced today that its Board of Directors has declared a quarterly dividend of $0.07 per share payable on March 13, 2015, to stockholders of record as of the close of business on February 16, 2015. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

Landstar also announced that effective January 29, 2015, Landstar President and CEO Jim Gattoni has joined the Board of Directors of Landstar System, Inc.

“Landstar’s 2014 fourth quarter results were record setting,” said Gattoni. “Revenue and diluted earnings per share for the 2014 fourth quarter were quarterly records for continuing operations. Demand for Landstar’s truck transportation services in the 2014 fourth quarter continued to be extremely strong, as the number of loads hauled via truck increased 11 percent over the 2013 fourth quarter. Revenue per load hauled via truck also remained very strong and increased 14 percent over the 2013 fourth quarter. In fact, Landstar’s average revenue per load hauled via truck in the 2014 fourth quarter set a new record and was up four percent over the record set in the Company’s 2014 third quarter. Landstar experienced very strong revenue growth over the 2013 fourth quarter with respect to both loads hauled via van equipment and loads hauled via


LANDSTAR SYSTEM/ 3

 

unsided/platform equipment. On a quarter-over-prior-year-quarter basis, revenue hauled via van equipment increased 28 percent and revenue hauled via unsided/platform equipment increased 24 percent. Despite a significant provision for incentive compensation, operating margin was an impressive 49.1 percent in the 2014 fourth quarter and was the second highest fourth quarter operating margin in Landstar’s history. And finally, diluted earnings per share from continuing operations in the 2014 fourth quarter increased an outstanding 56 percent over the 2013 fourth quarter. 2014 was truly an exceptional year for Landstar as the Company surpassed $3 billion in revenue for the first time in its history. In addition to revenue, annual records were set for many other financial metrics including gross profit, operating income, net income and diluted earnings per share from continuing operations.”

Gattoni continued, “The strength in both the number of loads hauled via truck and truck revenue per load experienced in the 2014 fourth quarter has so far continued through the first several weeks of 2015. Assuming continued strength in both load volume and revenue per load from truck transportation services throughout the remainder of the 2015 first quarter, I anticipate revenue for the 2015 first quarter to be in a range of $750 million to $800 million and, assuming that range of estimated revenue, I would anticipate 2015 first quarter diluted earnings per share to be in a range of $0.71 to $0.76 per share compared to $0.61 per diluted share in the 2014 first quarter.”

PLEASE NOTE: As of the first quarter of 2015, the Company has revised the format of its financial statement supplemental information presentation to include revenue by trailer type. Included with this earnings release are supplemental information presentations in both the historical format and the new format. The Company intends to use only the new supplemental information presentation format on a going forward basis. Management believes this change in reporting supplemental information will allow investors to better understand underlying trends in the Company’s results. This change in the reporting of supplemental information has no impact on reporting with respect to the Company’s consolidated balance sheets, income statements, cash flows or changes in shareholders’ equity for any periods.


LANDSTAR SYSTEM/ 4

 

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 Fourth 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 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


LANDSTAR SYSTEM/ 5

 

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/ 6

 

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     Fiscal Year Ended      Fiscal Quarter Ended  
     December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Revenue

   $ 3,184,790       $ 2,664,780       $ 862,830       $ 691,975   

Investment income

     1,381         1,475         354         364   

Costs and expenses:

           

Purchased transportation

     2,461,143         2,046,927         668,583         534,250   

Commissions to agents

     250,780         211,355         69,584         54,978   

Other operating costs, net of gains on asset dispositions

     25,771         21,568         6,421         6,172   

Insurance and claims

     46,280         50,438         8,548         13,531   

Selling, general and administrative

     150,250         131,710         41,683         36,743   

Depreciation and amortization

     27,575         27,667         7,156         6,924   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total costs and expenses

  2,961,799      2,489,665      801,975      652,598   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

  224,372      176,590      61,209      39,741   

Interest and debt expense

  3,177      3,211      917      844   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from continuing operations before income taxes

  221,195      173,379      60,292      38,897   

Income taxes

  82,386      64,457      21,801      13,721   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from continuing operations

  138,809      108,922      38,491      25,176   

Discontinued operations:

Income from discontinued operations, net of income taxes

  —        4,058      —        1,352   

Gain on sale of discontinued operations, net of income taxes

  —        33,029      —        33,029   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from discontinued operations, net of income taxes

  —        37,087      —        34,381   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

$ 138,809    $ 146,009    $ 38,491    $ 59,557   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per common share:

Income from continuing operations

$ 3.09    $ 2.37    $ 0.86    $ 0.55   

Income from discontinued operations

  —        0.81      —        0.75   

Earnings per common share

  3.09      3.17      0.86      1.30   

Diluted earnings per share:

Income from continuing operations

$ 3.07    $ 2.36    $ 0.86    $ 0.55   

Income from discontinued operations

  —        0.80      —        0.75   

Diluted earnings per share

  3.07      3.16      0.86      1.30   

Average number of shares outstanding:

Earnings per common share

  44,956,000      46,039,000      44,770,000      45,689,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

  45,169,000      46,210,000      45,002,000      45,869,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

Dividends per common share

$ 1.26    $ 0.35    $ 1.07    $ 0.35   
  

 

 

    

 

 

    

 

 

    

 

 

 


LANDSTAR SYSTEM/ 7

 

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     December 27,
2014
    December 28,
2013
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 163,944      $ 180,302   

Short-term investments

     37,007        34,939   

Trade accounts receivable, less allowance of $4,338 and $3,773

     492,642        378,732   

Other receivables, including advances to independent contractors, less allowance of $4,189 and $4,253

     15,132        73,903   

Deferred income taxes and other current assets

     23,603        14,592   
  

 

 

   

 

 

 

Total current assets

  732,328      682,468   
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $160,681 and $157,985

  202,203      177,329   

Goodwill

  31,134      31,134   

Other assets

  78,547      79,765   
  

 

 

   

 

 

 

Total assets

$ 1,044,212    $ 970,696   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Cash overdraft

$ 34,629    $ 27,780   

Accounts payable

  220,077      157,796   

Current maturities of long-term debt

  35,064      27,567   

Insurance claims

  24,233      92,280   

Dividends payable

  44,794      15,921   

Other current liabilities

  51,654      54,316   
  

 

 

   

 

 

 

Total current liabilities

  410,451      375,660   
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

  76,257      73,938   

Insurance claims

  21,769      24,171   

Deferred income taxes and other non-current liabilities

  47,474      42,446   

Shareholders’ equity:

Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,268,817 and 67,017,858 shares

  673      670   

Additional paid-in capital

  189,012      179,807   

Retained earnings

  1,255,374      1,173,044   

Cost of 22,474,331 and 21,528,693 shares of common stock in treasury

  (955,613   (899,028

Accumulated other comprehensive loss

  (1,185   (12
  

 

 

   

 

 

 

Total shareholders’ equity

  488,261      454,481   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

$ 1,044,212    $ 970,696   
  

 

 

   

 

 

 


LANDSTAR SYSTEM/ 8

 

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Fiscal Year Ended     Fiscal Quarter Ended  
     December 27,
2014
    December 28,
2013
    December 27,
2014
    December 28,
2013
 

Revenue generated through (in thousands):

        

Truck transportation

        

Truckload:

        

Van equipment

   $ 1,814,195      $ 1,464,558      $ 499,651      $ 391,424   

Unsided/platform equipment

     1,093,999        932,176        289,627        233,366   

Less-than-truckload

     80,384        71,769        21,969        18,794   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     2,988,578        2,468,503        811,247        643,584   

Rail intermodal

     81,220        73,820        22,263        18,370   

Ocean and air cargo carriers

     74,952        85,681        18,784        20,599   

Other (1)

     40,040        36,776        10,536        9,422   
  

 

 

   

 

 

   

 

 

   

 

 

 
   $ 3,184,790      $ 2,664,780      $ 862,830      $ 691,975   
  

 

 

   

 

 

   

 

 

   

 

 

 

Number of loads:

        

Truck transportation

        

Truckload:

        

Van equipment

     1,038,517        935,530        270,875        241,837   

Unsided/platform equipment

     444,852        418,982        112,300        103,484   

Less-than-truckload

     96,541        101,498        26,835        24,249   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total truck transportation

     1,579,910        1,456,010        410,010        369,570   

Rail intermodal

     31,640        29,450        8,800        7,350   

Ocean and air cargo carriers

     16,260        16,660        4,150        4,290   
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,627,810        1,502,120        422,960        381,210   
  

 

 

   

 

 

   

 

 

   

 

 

 

Revenue per load:

        

Truck transportation

        

Truckload:

        

Van equipment

   $ 1,747      $ 1,565      $ 1,845      $ 1,619   

Unsided/platform equipment

     2,459        2,225        2,579        2,255   

Less-than-truckload

     833        707        819        775   

Total truck transportation

     1,892        1,695        1,979        1,741   

Rail intermodal

     2,567        2,507        2,530        2,499   

Ocean and air cargo carriers

     4,610        5,143        4,526        4,802   

Revenue by capacity type (as a % of total revenue);

        

Truck capacity providers

        

BCO independent contractors (2)

     48     50     45     49

Truck brokerage carriers

     46     43     49     44

Rail intermodal

     3     3     3     3

Ocean and air cargo carriers

     2     3     2     3

Other

     1     1     1     1
                 December 27,
2014
    December 28,
2013
 

Truck Capacity Providers

        

Business Capacity Owners (2) (3)

         8,372        7,927   
      

 

 

   

 

 

 

Truck Brokerage Carriers:

        

Approved and active (4)

         26,222        21,183   

Approved

         12,135        10,933   
      

 

 

   

 

 

 
         38,357        32,116   
      

 

 

   

 

 

 

Total available truck capacity providers

         46,729        40,043   
      

 

 

   

 

 

 
(1) Includes primarily premium revenue generated by the insurance segment.

 

(2) Business Capacity Owners are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.

 

(3) Trucks provided by Business Capacity Owners were 8,932 and 8,432 at December 27, 2014 and December 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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Landstar System, Inc. and Subsidiary

Supplemental Information by Capacity Providers

(Unaudited)

 

 

 

     Fiscal Year Ended      Fiscal Quarter Ended  
     December 27,
2014
     December 28,
2013
     December 27,
2014
     December 28,
2013
 

Revenue generated through (in thousands):

           

Business Capacity Owners (1)

   $ 1,514,254       $ 1,327,458       $ 388,041       $ 339,544   

Truck Brokerage Carriers

     1,474,324         1,141,045         423,206         304,040   

Rail intermodal

     81,220         73,820         22,263         18,370   

Ocean and air cargo carriers

     74,952         85,681         18,784         20,599   

Other (2)

     40,040         36,776         10,536         9,422   
  

 

 

    

 

 

    

 

 

    

 

 

 
$ 3,184,790    $ 2,664,780    $ 862,830    $ 691,975   
  

 

 

    

 

 

    

 

 

    

 

 

 

Number of loads:

Business Capacity Owners (1)

  818,480      790,690      203,680      199,490   

Truck Brokerage Carriers

  761,430      665,320      206,330      170,080   

Rail intermodal

  31,640      29,450      8,800      7,350   

Ocean and air cargo carriers

  16,260      16,660      4,150      4,290   
  

 

 

    

 

 

    

 

 

    

 

 

 
  1,627,810      1,502,120      422,960      381,210   
  

 

 

    

 

 

    

 

 

    

 

 

 

Revenue per load:

Business Capacity Owners (1)

$ 1,850    $ 1,679    $ 1,905    $ 1,702   

Truck Brokerage Carriers

  1,936      1,715      2,051      1,788   

Rail intermodal

  2,567      2,507      2,530      2,499   

Ocean and air cargo carriers

  4,610      5,143      4,526      4,802   
                   December 27,
2014
     December 28,
2013
 

Truck Capacity Providers

           

Business Capacity Owners (1) (3)

           8,372         7,927   
        

 

 

    

 

 

 

Truck Brokerage Carriers:

Approved and active (4)

  26,222      21,183   

Approved

  12,135      10,933   
        

 

 

    

 

 

 
  38,357      32,116   
        

 

 

    

 

 

 

Total available truck capacity providers

  46,729      40,043   
        

 

 

    

 

 

 
(1) Business Capacity Owners are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.
(2) Includes primarily premium revenue generated by the insurance segment.
(3) Trucks provided by Business Capacity Owners were 8,932 and 8,432 at December 27, 2014 and December 28, 2013, respectively.
(4) Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.