Landstar System Reports 24 Percent Increase In Revenue And Record Net Income And Diluted Earnings Per Share
JACKSONVILLE, Fla., July 15 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported a 24 percent increase in revenue to a record $482 million in the 2004 second quarter, up from $390 million in the 2003 second quarter. Net income for the 2004 second quarter was a record $17.6 million, or $.57 per diluted share, compared to net income of $13.6 million, or $.42 per diluted share for the 2003 second quarter. Operating margin was 6.1 percent in the 2004 second quarter, up from 5.8 percent in the 2003 second quarter.
Landstar's carrier group of companies generated $364 million of revenue in the 2004 second quarter, compared with revenue of $303 million in the 2003 second quarter. In the 2004 and 2003 second quarters, the carrier group invoiced customers $13.7 million and $10.0 million, respectively, of fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar's multimodal services group of companies generated $111 million of revenue in the 2004 second quarter compared with $80 million of revenue in the 2003 second quarter.
Net income for the twenty-six-week period ended June 26, 2004 was $25.7 million, or $.84 per diluted share, which included $7.6 million of costs to settle one, previously disclosed, severe accident. This charge, net of related income tax benefits, reduced net income by $4.9 million, or $.16 per diluted share. Net income for the twenty-six-week period ended June 28, 2003 was $23.7 million, or $.73 per diluted share. Revenue was $903 million in the 2004 first half, compared to revenue of $756 million in the 2003 first half. Operating margin for the 2004 twenty-six-week period was 4.8 percent, which was reduced .8 percent by the previously referred to accident, compared with 5.2 percent in the 2003 twenty-six-week period.
Landstar's carrier group of companies generated $685 million of revenue in the twenty-six-week period ended June 26, 2004 compared with $593 million in the twenty-six-week period ended June 28, 2003. In the 2004 and 2003 twenty- six-week periods, the carrier group invoiced customers $22.0 million and $18.6 million, respectively, of fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar's multimodal services group of companies generated $203 million of revenue in the 2004 twenty-six-week period compared with $149 million in the 2003 period.
"I am extremely pleased with Landstar's 2004 second quarter performance," said Landstar President and CEO Henry Gerkens. "Consolidated revenue increased by 24 percent to the highest quarterly revenue in Landstar history, as revenue at the carrier segment increased 20 percent and revenue at the multimodal segment increased 39 percent. The very strong revenue gain in the quarter clearly demonstrates Landstar's ability to source the capacity necessary to meet its customers' needs. During the quarter we increased the number of total approved capacity providers by over 300. Compared to the 2003 second quarter, revenue generated through other third party truck capacity providers (truck brokerage) increased 42 percent and revenue hauled by Landstar BCOs increased 19 percent. This strong increase in revenue was accompanied by a 28 basis point improvement in operating margin and a 36 percent increase in diluted earnings per share."
"Trailing twelve-month return on average equity remained high at 35 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 22 percent. During the 2004 first half, we reduced debt by approximately $5 million, purchased 462,000 shares of common stock at a total cost of $16,407,000 and ended the period with $90 million in cash and short term investments." Gerkens said. "The Company has the ability to purchase an additional 918,140 shares of its common stock under its authorized share repurchase program."
"I anticipate revenue growth for the second half of the 2004 fiscal year to be within a range of 12 to 16 percent. The current range of analysts' earnings estimates, as reported by FIRST CALL, for the third quarter of 2004 is $.50 to $.53 per diluted share and $1.84 to $2.03 per diluted share for the full 2004 fiscal year. I am currently comfortable with the analysts' range of earnings estimates for both the 2004 third quarter and the 2004 full year" said Gerkens.
Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 2 pm ET. To access the webcast, visit the company's website at www.landstar.com. Click on Investors and then the webcast icon.
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," "plans," "predicts," "may," "should," "will," the negative thereof and similar expressions, including any such expressions with respect to the level of comfort with analyst estimates, 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 accident claims; dependence on independent sales agents; dependence on third party capacity providers; disruptions or failures in our computer systems; a downturn in domestic 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 2003 fiscal year, described in the section Factors That May Affect Future Results and/or Forward-Looking Statements, 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.
Landstar System, Inc. is headquartered in Jacksonville, Florida. The Landstar carrier group comprised of Landstar Gemini, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Ranger, Inc. and Landstar Carrier Services, Inc. delivers excellence in safe and complete over-the-road transportation services. The Landstar multimodal group comprised of Landstar Express America, Inc. and Landstar Logistics, Inc. delivers excellence in safe, expedited, contract logistics, intermodal and ocean transportation services. All Landstar operating companies are certified to ISO 9001:2000 quality management system standards. Landstar System, Inc.'s common stock trades on the Nasdaq Stock Market (R) under the symbol LSTR.
(Tables follow)
Landstar System, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Twenty Six Weeks Ended Thirteen Weeks Ended
June 26, June 28, June 26, June 28,
2004 2003 2004 2003
Revenue $903,329 $755,802 $482,303 $390,084
Investment income 542 623 239 299
Costs and expenses:
Purchased transportation 674,093 561,464 360,296 290,002
Commissions to agents 70,637 58,623 38,203 30,539
Other operating costs 18,776 17,840 8,882 8,609
Insurance and claims 33,454 22,161 12,748 11,533
Selling, general and
administrative 57,188 50,336 29,778 23,955
Depreciation and
amortization 6,566 6,345 3,367 3,179
Total costs and
expenses 860,714 716,769 453,274 367,817
Operating income 43,157 39,656 29,268 22,566
Interest and debt expense 1,551 1,544 783 774
Income before income taxes 41,606 38,112 28,485 21,792
Income taxes 15,914 14,387 10,895 8,226
Net income $25,692 $23,725 $17,590 $13,566
Earnings per
common share (1) $0.86 $0.75 $0.59 $0.43
Diluted earnings
per share (1) $0.84 $0.73 $0.57 $0.42
Average number of shares
outstanding:
Earnings per common
share (1) 29,893,000 31,426,000 29,932,000 31,304,000
Diluted earnings per
share (1) 30,753,000 32,644,000 30,794,000 32,454,000
(1) 2003 earnings per share amounts and average number of shares
outstanding have been restated to give retroactive effect to a two-
for-one stock split effected in the form of a 100% stock dividend
declared October 15, 2003.
Landstar System, Inc.
Selected Segment Information
(Dollars in thousands)
(Unaudited)
Twenty Six Weeks Ended Thirteen Weeks Ended
June 26, June 28, June 26, June 28,
2004 2003 2004 2003
External Revenue
Carrier segment $685,195 $593,286 $363,587 $303,241
Multimodal segment 203,287 148,640 111,273 79,931
Insurance segment 14,847 13,876 7,443 6,912
External revenue $903,329 $755,802 $482,303 $390,084
Operating Income
Carrier segment $55,139 $42,856 $31,442 $24,360
Multimodal segment 6,013 2,991 3,274 1,067
Insurance segment 3,038 11,061 5,864 5,626
Other (21,033) (17,252) (11,312) (8,487)
Operating income $43,157 $39,656 $29,268 $22,566
Landstar System, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
June 26, December 27,
2004 2003
ASSETS
Current assets:
Cash and cash equivalents $58,321 $42,640
Short-term investments 31,713 30,890
Trade accounts receivable, less
allowance of $3,939 and $3,410 240,930 219,039
Other receivables, including
advances to independent
contractors, less allowance of
$4,876 and $4,077 16,913 13,196
Deferred income taxes and other
current assets 18,758 14,936
Total current assets 366,635 320,701
Operating property, less accumulated
depreciation and amortization of
$61,086 and $58,480 72,842 67,639
Goodwill 31,134 31,134
Other assets 23,450 18,983
Total assets $494,061 $438,457
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $19,853 $20,523
Accounts payable 102,337 71,713
Current maturities of long-term
debt 9,194 9,434
Insurance claims 29,185 26,293
Other current liabilities 50,546 45,223
Total current liabilities 211,115 173,186
Long-term debt, excluding current
maturities 77,446 82,022
Insurance claims 29,179 27,282
Deferred income taxes 12,681 13,452
Shareholders' equity:
Common stock, $.01 par value,
authorized 80,000,000 and
50,000,000 shares, issued
32,379,728 and 31,816,860
shares 324 318
Additional paid-in capital 30,354 18,382
Retained earnings 250,060 224,368
Cost of 2,271,930 and 1,809,930
shares of common stock in treasury (116,557) (100,150)
Accumulated other comprehensive
income 44 182
Notes receivable arising from
exercises of stock options (585) (585)
Total shareholders' equity 163,640 142,515
Total liabilities and shareholders'
equity $494,061 $438,457
Landstar System, Inc.
Supplemental Information
(Unaudited)
Twenty Six Weeks Thirteen Weeks
Ended Ended
June 26, June 28, June 26, June 28,
2004 2003 2004 2003
Carrier Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) $578,091 $509,872 $305,860 $260,348
Other third party truck
capacity providers 107,104 83,414 57,727 42,893
$685,195 $593,286 $363,587 $303,241
Revenue per revenue mile $1.75 $1.73 $1.76 $1.73
Revenue per load $1,315 $1,187 $1,362 $1,189
Average length of haul (miles) 752 686 774 687
Number of loads (2) 521,000 500,000 267,000 255,000
Multimodal Segment
External revenue generated
through (in thousands):
Business Capacity Owners
(1) (3) $33,888 $22,753 $18,475 $11,995
Other third party truck
capacity providers 118,778 80,801 65,294 43,852
Rail, Air, and Ocean
Carriers 50,621 45,086 27,504 24,084
$203,287 $148,640 $111,273 $79,931
Revenue per load $1,374 $1,281 $1,391 $1,310
Number of loads 148,000 116,000 80,000 61,000
As of As of
June 26, June 28,
2004 2003
Capacity
Business Capacity Owners (1)(4) 7,629 7,271
Other third party truck
capacity providers:
Approved and active (5) 9,800 8,872
Approved 6,416 6,093
16,216 14,965
Total available truck capacity
providers 23,845 22,236
(1) Business Capacity Owners are independent contractors who provide truck
capacity to the Company under exclusive lease arrangements.
(2) Effective with the 2004 second quarter, the Company has modified its
methodology for reporting loads. Had this methodology been applied to
the 2004 first quarter, loads for the 2004 first quarter would have
been 254,000, as opposed to 244,000, as was reported.
The application of this new methodology to the 2003 twenty six-week
period resulted in an increase of 3,000 loads. This change in
load recognition has no impact on reported revenue in any period.
(3) Includes revenue generated through Carrier Segment Business Capacity
Owners.
(4) Trucks provided by business capacity owners were 8,560 and 8,263,
respectively.
(5) Active refers to other third party truck capacity providers who have
moved at least one load in the past 180 days.
SOURCE Landstar System, Inc.