Landstar System Reports a 35 Percent Increase in Diluted Earnings Per Share, a 19 Percent Increase in Revenue and Raises Its Quarterly Dividend 20 Percent
JACKSONVILLE, Fla., July 20 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR), reported record net income for the 2006 second quarter of $29.5 million, or $.50 per diluted share, compared to net income of $22.4 million, or $.37 per diluted share, for the 2005 second quarter. Revenue for the 2006 second quarter was a record $643 million and increased 19% from $539 million in the 2005 second quarter. Operating margin was 7.7 percent in the 2006 second quarter compared to 7.0 percent in the 2005 second quarter.
Landstar's carrier group of companies generated $468 million of revenue in the 2006 second quarter, compared with revenue of $412 million in the 2005 second quarter. In the 2006 and 2005 second quarters, the carrier group invoiced customers $46.7 million and $28.7 million, respectively, of fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Revenue at Landstar Global Logistics was $167 million in the 2006 second quarter compared with $119 million in the 2005 second quarter. The 2006 second quarter for Landstar Global Logistics included approximately $21 million of revenue from transportation services provided under a contract between Landstar Express America and the United States Department of Transportation/Federal Aviation Administration (the "FAA").
Net income for the twenty-six-week period ended July 1, 2006, was $53.8 million, or $.90 per diluted share, compared to $39.2 million, or $.64 per diluted share, for the twenty-six-week period ended June 25, 2005. Revenue was $1.253 billion in the 2006 first half, compared to revenue of $1.041 billion in the 2005 first half. Operating margin for the 2006 twenty- six-week period was 7.3 percent, compared with 6.3 percent in the 2005 twenty- six-week period.
Landstar's carrier group of companies generated $896 million of revenue in the twenty-six-week period ended July 1, 2006, compared with $784 million in the twenty-six-week period ended June 25, 2005. In the 2006 and 2005 twenty- six-week periods, the carrier group invoiced customers $80.5 million and $49.3 million, respectively, of fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Revenue at Landstar Global Logistics was $340 million in the 2006 twenty-six-week period compared with $243 million in the 2005 period. The 2006 and 2005 twenty-six- week periods for Landstar Global Logistics included approximately $56 million and $8 million of revenue, respectively, provided under the contract with the FAA.
Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.03 per share. This represents a 20 percent increase in the Company's quarterly dividend. The dividend is payable on August 31, 2006, to stockholders of record at the close of business on August 10, 2006. It is the intention of the Board of Directors to continue to pay a quarterly dividend on a go forward basis.
"I am pleased with Landstar's 2006 second quarter performance," said Landstar President and CEO Henry Gerkens. "Consolidated revenue increased 19 percent over the 2005 second quarter, making it the eleventh consecutive quarter of double digit revenue growth. This continued strong revenue growth was accompanied by an even faster growth in earnings as diluted earnings per share for the 2006 second quarter increased 35 percent over the 2005 second quarter. Quarter over quarter, revenue generated through BCOs increased 8 percent, truck brokerage revenue increased 33 percent and rail intermodal revenue increased 56 percent. In addition, operating margin improved by 67 basis points over the 2005 second quarter. I am also pleased to announce that Landstar continues to move forward with the rollout of its new warehousing initiative and has begun providing these services to its first customer. We are very excited about the launch of this new service offering as we apply the Landstar business model to other parts of the supply chain."
"Trailing twelve-month return on average equity remained high at 55 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 37 percent. During the second quarter, Landstar purchased 993,648 shares of its common stock at a total cost of $43,563,000, bringing the total number of shares purchased during the first half of 2006 to 1,242,948 at a total cost of $54,694,000. The Company has the ability to purchase an additional 1,282,279 shares of its common stock under its authorized share repurchase program," Gerkens said.
"Based upon anticipated business levels, I estimate consolidated revenue for the 2006 third quarter to be in a range of $645 to $665 million, including an estimate of $10 million for transportation services that have been requested by the FAA to date. In addition, making no further assumption as to revenue generated under the FAA contract and including an anticipated charge of approximately $.02 per diluted share attributable to the adoption of Statement of Financial Accounting Standards No. 123R, Share-Based Payment, I estimate earnings for the third quarter of 2006 to be within a range of $.45 to $.50 per diluted share." Continuing, Gerkens stated, "Revenue for the 2005 third quarter included approximately $130 million of transportation services revenue provided under the FAA contract. Excluding any revenue generated under the FAA contract from both the 2006 and 2005 third quarters, I anticipate revenue growth in a range of approximately 16 to 20 percent quarter over quarter."
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 http://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 2005 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. delivers safe, specialized transportation services to a broad range of customers worldwide. The Company identifies and fulfills shippers' needs through the coordination of individual businesses comprised of independent sales agents and third-party transportation capacity providers. Landstar's carrier group, which is comprised of Landstar Gemini, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Ranger, Inc. and Landstar Carrier Services, Inc., delivers excellence in complete over-the-road transportation services. Landstar's global logistics group, which is comprised of Landstar Global Logistics, Inc. and its subsidiaries Landstar Express America, Inc. and Landstar Logistics, Inc., provides international and domestic multimodal (over-the-road, air, ocean and rail) transportation, expedited, contract logistics and warehousing services. All Landstar operating companies are certified to ISO 9001:2000 quality management system standards. Landstar System, Inc. is headquartered in Jacksonville, Florida. Its 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
July 1, June 25, July 1, June 25,
2006 2005 2006 2005
Revenue $1,253,280 $1,041,316 $643,238 $539,104
Investment income 1,252 1,235 873 696
Costs and expenses:
Purchased transportation 944,309 783,092 486,059 405,514
Commissions to agents 97,521 82,039 50,510 42,913
Other operating costs 22,288 16,615 10,220 7,917
Insurance and claims 20,574 22,904 9,022 9,779
Selling, general and
administrative (1) 70,924 63,851 35,088 32,036
Depreciation and
amortization 8,050 7,928 3,957 3,966
Total costs and
expenses (1) 1,163,666 976,429 594,856 502,125
Operating income (1) 90,866 66,122 49,255 37,675
Interest and debt expense 3,142 1,989 1,292 1,052
Income before income taxes
(1) 87,724 64,133 47,963 36,623
Income taxes (1) 33,909 24,891 18,498 14,199
Net income (1) $53,815 $39,242 $29,465 $22,424
Earnings per common share
(1) $0.92 $0.66 $0.50 $0.38
Diluted earnings per share
(1) $0.90 $0.64 $0.50 $0.37
Average number of shares
outstanding:
Earnings per common
share 58,700,000 59,878,000 58,499,000 59,402,000
Diluted earnings per
share (1) 59,665,000 61,137,000 59,287,000 60,421,000
Dividends paid per common
share $0.050 $0.025
(1) On January 1, 2006, the Company adopted the provisions of Statement of
Financial Accounting Standard No. 123R, Share-Based Payment ("FAS 123R"),
under the modified retrospective method. The adoption of FAS 123R resulted
in the recognition of a $3,297,000 pretax charge for the twenty six week
period ended July 1, 2006, which net of related income tax benefits,
reduced net income by $2,234,000, or $.04 per common share ($.04 per
diluted share). In the thirteen week period ended July 1, 2006, the
implementation of FAS 123R resulted in the recognition of a $1,886,000
pretax charge, which net of related income tax benefits, reduced net
income by $1,290,000, or $.02 per common share ($.02 per diluted share).
In the twenty six week period ended June 25, 2005, the implementation of
FAS 123R resulted in the recognition of a $3,028,000 pretax charge, which
net of related income tax benefits, reduced net income by $2,129,000, or
$.04 per common share ($.03 per diluted share). In the thirteen week
period ended June 25, 2005, the implementation of FAS 123R resulted in the
recognition of a $1,516,000 pretax charge, which net of related income tax
benefits, reduced net income by $1,069,000, or $.02 per common share ($.02
per diluted share).
Landstar System, Inc.
Selected Segment Information
(Dollars in thousands)
(Unaudited)
Twenty Six Weeks Ended Thirteen Weeks Ended
July 1, June 25, July 1, June 25,
2006 2005 2006 2005
External Revenue
Carrier segment $895,933 $783,521 $467,620 $412,478
Global Logistics segment 340,467 242,588 167,042 118,892
Insurance segment 16,880 15,207 8,576 7,734
External revenue $1,253,280 $1,041,316 $643,238 $539,104
Operating Income
Carrier segment (1) $88,064 $70,279 $47,493 $39,248
Global Logistics segment (1) 17,022 9,142 8,295 3,976
Insurance segment 15,089 11,628 8,413 7,536
Other (1) (29,309) (24,927) (14,946) (13,085)
Operating income (1) $90,866 $66,122 $49,255 $37,675
(1) Amounts for the periods ended June 25, 2005, have been adjusted to
reflect the provisions of Statement of Financial Accounting Standard No.
123R, Share-based Payment, under the modified retrospective method
implemented by the Company January 1, 2006.
Landstar System, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
July 1, Dec. 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $80,815 $29,398
Short-term investments 21,699 20,693
Trade accounts receivable, less
allowance of $5,484 and $4,655 369,300 534,274
Other receivables, including
advances to independent contractors,
less allowance of $4,718 and $4,342 16,086 11,384
Deferred income taxes and other
current assets (1) 29,695 21,106
Total current assets (1) 517,595 616,855
Operating property, less accumulated
depreciation and amortization of
$72,881 and $68,561 88,614 89,131
Goodwill 31,134 31,134
Other assets 32,391 28,694
Total assets (1) $669,734 $765,814
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $24,812 $29,829
Accounts payable 134,284 164,509
Current maturities of long-term debt 13,704 12,122
Insurance claims 27,459 27,887
Other current liabilities 55,268 65,149
Total current liabilities 255,527 299,496
Long-term debt, excluding current
maturities 94,625 154,851
Insurance claims 36,417 37,840
Deferred income taxes 17,702 17,938
Shareholders' equity:
Common stock, $.01 par value,
authorized 160,000,000 shares,
issued 64,666,698 and
64,151,902 shares 647 642
Additional paid-in capital (1) 97,365 84,532
Retained earnings (1) 443,420 392,549
Cost of 6,573,231 and 5,344,883
shares of common stock in treasury (275,864) (221,776)
Accumulated other comprehensive loss (58) (211)
Notes receivable arising from
exercise of stock options (47) (47)
Total shareholders' equity (1) 265,463 255,689
Total liabilities and shareholders'
equity (1) $669,734 $765,814
(1) Amounts as of December 31, 2005, have been adjusted to reflect the
provisions of Statement of Financial Accounting Standard No. 123R, Share-
based Payment, under the modified retrospective method implemented by the
Company January 1, 2006.
Landstar System, Inc.
Supplemental Information
(Unaudited)
Twenty Six Weeks Ended Thirteen Weeks Ended
July 1, June 25, July 1, June 25,
2006 2005 2006 2005
Carrier Segment
External revenue
generated through
(in thousands):
Business Capacity
Owners (1) $640,596 $599,222 $336,803 $316,547
Other third party
truck capacity
providers 255,337 184,299 130,817 95,931
$895,933 $783,521 $467,620 $412,478
Revenue per revenue mile $2.00 $1.81 $2.01 $1.82
Revenue per load $1,594 $1,454 $1,607 $1,463
Average length of haul
(miles) 797 802 800 802
Number of loads 562,000 539,000 291,000 282,000
Global Logistics Segment
External revenue generated
through (in thousands):
Business Capacity Owners
(1) (2) $47,163 $35,335 $22,331 $17,497
Other third party
truck capacity
providers 198,301 154,665 97,674 75,584
Rail, Air, Ocean
and Bus Carriers
(3) 95,003 52,588 47,037 25,811
$340,467 $242,588 $167,042 $118,892
Revenue per load (4) $1,504 $1,484 $1,507 $1,431
Number of loads (4) 189,000 158,000 97,000 82,000
As of As of
July 1, June 25,
2006 2005
Capacity
Business Capacity Owners
(1) (5) 8,347 7,840
Other third party truck
capacity providers:
Approved and active (6) 14,034 12,458
Approved 7,977 7,605
22,011 20,063
Total available truck capacity
providers 30,358 27,903
Agent Locations 1,249 1,106
(1) Business Capacity Owners are independent contractors who provide
truck capacity to the Company under exclusive lease arrangements.
(2) Includes revenue generated through Carrier Segment Business Capacity
Owners.
(3) Included in the 2006 twenty six and thirteen week periods was
$19,438,000 and $8,582,000, respectively, of revenue
attributable to buses provided under the FAA contract.
(4) Number of loads and revenue per load exclude the effect of revenue
derived from transportation services provided under the FAA contract.
(5) Trucks provided by business capacity owners were 9,047 and 8,609,
respectively.
(6) 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.
CONTACT: Bob LaRose, Landstar System, Inc., +1-904-398-9400