Landstar System Reports 36 Percent Increase in Revenue, an 80 Percent Increase In Diluted Earnings Per Share and Declares Quarterly Dividend
JACKSONVILLE, Fla., Feb. 2 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported a 36 percent increase in revenue to a record $800 million in the fourteen-week 2005 fourth quarter, up from $590 million in the thirteen-week 2004 fourth quarter. Net income for the 2005 fourth quarter was a record $43.0 million, or $.72 per diluted share, compared to net income of $24.6 million, or $.40 per diluted share, in the 2004 fourth quarter. Operating margin in the 2005 fourth quarter was 8.9 percent compared with 6.9 percent in the 2004 fourth quarter.
Included in the 2005 fourth quarter revenue was $138 million of revenue related to disaster relief efforts for the various hurricanes that impacted the United States during the second half of 2005. These emergency transportation services were provided primarily under a contract between Landstar Express America, Inc. and the United States Department of Transportation/Federal Aviation Administration (the "FAA"). The revenue recognized under this contract during the 2005 fourth quarter generated $27.8 million of operating income which, net of related income taxes, increased net income by $16.7 million, or $.28 per diluted share. Included in the 2004 fourth quarter revenue was $35.9 million of revenue related to disaster relief efforts provided primarily under the contract with the FAA. The revenue recognized under the FAA contract during the 2004 fourth quarter generated $6.8 million of operating income which, net of related income taxes, increased net income by $4.2 million, or $.07 per diluted share. Revenue attributable to emergency transportation services provided primarily under the FAA contract increased operating margin in the 2005 and 2004 fourth quarters approximately 2.3 percent and 0.8 percent, respectively.
Landstar's carrier group of companies generated $494 million of revenue in the 2005 fourth quarter, compared with revenue of $401 million in the 2004 fourth quarter. In the 2005 and 2004 fourth quarters, the carrier group invoiced customers $45.4 million and $23.2 million, respectively, in fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar Global Logistics, comprised of Landstar Express America and Landstar Logistics, generated $298 million of revenue, which included $138 million related to disaster relief services, in the 2005 fourth quarter compared with $181 million of revenue, which included $35.9 million related to disaster relief services, in the 2004 fourth quarter.
Net income for the 2005 fiscal year was $120.0 million, or $1.98 per diluted share, compared to net income of $71.9 million, or $1.16 per diluted share for the 2004 fiscal year. Operating margin for the 2005 fiscal year was 7.9 percent compared to 5.9 percent for the 2004 fiscal year. Included in net income for the 2005 fiscal year was $51.9 million of operating income related to $275.9 million of revenue from emergency transportation services provided under the FAA contract. This $51.9 million of operating income, net of related income taxes, increased net income $31.6 million, or $.52 per diluted share. Included in net income for the 2004 fiscal year was $11.8 million of operating income related to $63.8 million of revenue from emergency transportation services provided primarily under the FAA contract. This $11.8 million of operating income, net of related income taxes, increased net income $7.3 million, or $.12 per diluted share. Also included in the 2004 fiscal year was $7.6 million of costs to settle one severe accident. This charge, net of related income tax benefits, reduced net income by $4.9 million, or $.08 per diluted share.
Revenue was $2.518 billion in the fifty-three week 2005 fiscal year, compared to revenue of $2.020 billion in the fifty-two week 2004 fiscal year. Landstar's carrier group of companies generated $1.692 billion of revenue in the 2005 fiscal year, compared with $1.455 billion in the 2004 fiscal year. In the 2005 and 2004 fiscal years, the carrier group invoiced customers $126.9 million and $60.5 million, respectively, of fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar Global Logistics generated $795 million of revenue, which included $275.9 million of revenue related to disaster relief services, in the 2005 fiscal year compared with $535 million of revenue, which included $63.8 million related to disaster relief services, in the 2004 fiscal year.
Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.025 per share. The dividend is payable on February 28, 2006, to stockholders of record at the close of business on February 14, 2006. It is the intention of the Board of Directors to continue to pay a quarterly dividend on a go forward basis.
"I am extremely pleased with Landstar's fourth quarter performance," said Landstar President and CEO Henry Gerkens. "Consolidated revenue for the 2005 fourth quarter was the highest quarterly revenue in Landstar history and represented a 36 percent increase over the 2004 fourth quarter. In the 2005 fourth quarter, Landstar provided $138 million of transportation services in support of disaster relief efforts, including $19.5 million related to buses and $14.5 million for air transportation services. All of our contractors, agents and employees involved in the relief effort did an outstanding job. Overall, revenue at the carrier segment increased 23 percent and revenue at the global logistics segment increased 65 percent. Quarter over quarter revenue generated through other third party truck capacity providers (truck brokerage) increased 57 percent and revenue hauled by Landstar BCOs increased 19 percent. Excluding the revenue from hurricane relief efforts from both the 2005 and 2004 fourth quarters, revenue increased an impressive 20 percent."
"Earnings per diluted share increased 80 percent over the 2004 fourth quarter, as Landstar's operating margin improved to 8.9 percent, a 200 basis point increase over the 2004 fourth quarter. Excluding the effect of the revenue attributable to disaster relief efforts from both periods, operating margin increased 46 basis points to 6.6 percent in the 2005 fourth quarter."
"For the 2005 full fiscal year, consolidated revenue increased 25 percent over the 2004 fiscal year and diluted earnings per share increased 71 percent. Excluding the effect of the revenue attributable to disaster relief efforts from both years, revenue increased 15 percent and diluted earnings per share increased 40 percent over the 2004 fiscal year."
"We continued to add capacity in the quarter as the total number of approved capacity providers increased by more than 1,000 over the third quarter of 2005. Landstar continued to generate strong financial returns as the trailing twelve-month return on average equity remained high at 57 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 37 percent. During the 2005 fiscal year, we purchased 2,873,053 shares of Landstar common stock at a total cost of $95,600,000," Gerkens said. "The Company may purchase up to an additional 2,525,227 shares of its common stock under its authorized share repurchase programs."
Gerkens continued, "Demand for our services remained strong throughout January. Based upon the current level of business activity, I anticipate revenue growth for the 2006 first quarter as compared to the 2005 first quarter to be within a range of 18 to 22 percent, which includes revenue of $8 million attributable to emergency transportation services anticipated to be recognized in the 2006 first quarter. It is anticipated that the impact from the adoption of Statement of Financial Accounting Standard ("FAS") No. 123 (revised), Share-Based Payment, will reduce earnings per diluted share by approximately $.02 per share in the first quarter of 2006 and approximately $.09 per share for the 2006 full fiscal year. Based upon the current operating environment, a continued favorable economic environment and the projected impact of the adoption of FAS No. 123 (revised), I anticipate Landstar's earnings for the 2006 first quarter to be within a range of $.35 to $.40 per diluted share. Although Landstar Express America continues to have the FAA contract to provide emergency transportation services in 2006, it is not practical to project any such revenue for the full 2006 year. Making no estimate for such revenue in 2006 and excluding such revenue from the 2005 fiscal year, I expect our full year 2006 revenue growth over 2005 to be consistent with our year over year strategic goals of mid-teen revenue growth. In addition, based upon the previously mentioned revenue assumptions and before the adoption of FAS No. 123 (revised), I anticipate growth in diluted earnings per share for the full year 2006 over 2005 to be above the revenue growth rate for the year, again consistent with our long term goal."
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, expectations and intentions. Terms such as "anticipates," "believes," "estimates," "intention", "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 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 2004 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.
About Landstar:
Landstar System, Inc. delivers safe, specialized transportation services to a broad range of customers world-wide. 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, warehousing and contract logistics 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.
Landstar System, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Fiscal Year Ended Fiscal Quarter Ended
Dec. 31, Dec. 25, Dec. 31, Dec. 25,
2005 2004 2005 2004
Revenue $2,517,828 $2,019,936 $800,442 $589,724
Investment income 2,695 1,346 608 467
Costs and expenses:
Purchased transportation 1,880,431 1,510,963 594,415 444,224
Commissions to agents 203,730 161,011 68,041 47,597
Other operating costs 36,709 37,130 9,309 9,817
Insurance and claims 50,166 60,339 15,316 13,588
Selling, general and
administrative 134,085 118,461 38,680 30,630
Depreciation and
amortization 15,920 13,959 3,994 3,739
Total costs and
expenses 2,321,041 1,901,863 729,755 549,595
Operating income 199,482 119,419 71,295 40,596
Interest and debt expense 4,744 3,025 1,550 812
Income before income taxes 194,738 116,394 69,745 39,784
Income taxes 74,782 44,522 26,785 15,218
Net income $119,956 $71,872 $42,960 $24,566
Earnings per common share $2.03 $1.19 $0.73 $0.41
Diluted earnings per share $1.98 $1.16 $0.72 $0.40
Average number of shares
outstanding:
Earnings per common
share 59,199,000 60,154,000 58,610,000 60,609,000
Diluted earnings per
share 60,492,000 61,800,000 59,862,000 62,141,000
Dividends paid per common
share $0.050 $0.025
Landstar System, Inc.
Selected Segment Information
(Dollars in thousands)
(Unaudited)
Fiscal Year Ended Fiscal Quarter Ended
Dec. 31, Dec. 25, Dec. 31, Dec. 25,
2005 2004 2005 2004
External Revenue
Carrier segment $1,691,668 $1,454,862 $494,054 $400,846
Global Logistics segment 795,136 534,922 298,367 181,128
Insurance segment 31,024 30,152 8,021 7,750
External revenue $2,517,828 $2,019,936 $800,442 $589,724
Operating Income
Carrier segment $171,236 $128,400 $57,276 $36,769
Global Logistics segment 60,856 26,211 26,898 11,921
Insurance segment 19,374 12,456 1,677 5,292
Other (51,984) (47,648) (14,556) (13,386)
Operating income $199,482 $119,419 $71,295 $40,596
Landstar System, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
Dec. 31, Dec. 25,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $29,398 $61,684
Short-term investments 20,693 21,942
Trade accounts receivable, less
allowance of $4,655 and $4,021 534,274 338,774
Other receivables, including
advances to independent
contractors, less allowance of
$4,342 and $4,245 11,384 13,929
Deferred income taxes and other
current assets 18,052 13,503
Total current assets 613,801 449,832
Operating property, less accumulated
depreciation and amortization of $68,561
and $65,315 89,131 76,834
Goodwill 31,134 31,134
Other assets 28,694 26,712
Total assets $762,760 $584,512
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $29,829 $23,547
Accounts payable 164,509 120,197
Current maturities of long-term
debt 12,122 8,797
Insurance claims 27,887 32,612
Accrued compensation 20,299 14,609
Other current liabilities 44,850 40,317
Total current liabilities 299,496 240,079
Long-term debt, excluding current
maturities 154,851 83,293
Insurance claims 37,840 32,430
Deferred income taxes 17,938 15,871
Shareholders' equity:
Common stock, $.01 par value,
authorized 160,000,000 and
80,000,000 shares, issued
64,151,902 and 63,154,190
shares 642 632
Additional paid-in capital 61,057 43,845
Retained earnings 412,970 295,936
Cost of 5,344,883 and 2,490,930
shares of common stock in treasury (221,776) (127,151)
Accumulated other comprehensive
income (loss) (211) 47
Notes receivable arising from
exercises of stock options (47) (470)
Total shareholders' equity 252,635 212,839
Total liabilities and shareholders'
equity $762,760 $584,512
Landstar System, Inc.
Supplemental Information
(Unaudited)
Fiscal Year Ended Fiscal Quarter Ended
Dec. 31, Dec. 25, Dec. 31, Dec. 25,
2005 2004 2005 2004
Carrier Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) $1,249,159 $1,191,605 $342,578 $311,875
Other third party
truck capacity
providers 442,509 263,257 151,476 88,971
$1,691,668 $1,454,862 $494,054 $400,846
Revenue per revenue mile $1.92 $1.79 $2.11 $1.85
Revenue per load $1,542 $1,391 $1,704 $1,507
Average length of haul
(miles) 804 779 806 815
Number of loads 1,097,000 1,046,000 290,000 266,000
Global Logistics Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) (2) $159,273 $105,815 $67,765 $33,749
Other third party
truck capacity
providers 439,604 308,106 154,235 106,224
Rail, Air, Ocean and
Bus Carriers (3) 196,259 121,001 76,367 41,155
$795,136 $534,922 $298,367 $181,128
Revenue per load (4) $1,555 $1,454 $1,724 $1,597
Number of loads (4) 334,000 324,000 93,000 91,000
As of As of
Dec. 31, Dec. 25,
2005 2004
Capacity
Business Capacity Owners
(1) (5) 8,011 7,800
Other third party truck
capacity providers:
Approved and active(6) 14,014 11,077
Approved 8,497 7,144
22,511 18,221
Total available truck
capacity providers 30,522 26,021
(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 2005 fiscal year and fiscal quarter periods was
$44,007,000 and $19,536,000 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 emergency transportation
services provided under the FAA contract.
(5) Trucks provided by business capacity owners were 8,728 and 8,677,
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.