Landstar System Reports Fourth Quarter Results
Revenue hauled by third-party truck capacity providers in the 2009 fourth quarter was $498.4 million, or 91 percent of revenue, compared to $547.4 million, or 91 percent of revenue, in the 2008 fourth quarter. Included in revenue hauled by third-party truck capacity providers in the 2009 and 2008 fourth quarters were $16.8 million and $24.6 million, respectively, of fuel surcharges invoiced to customers on revenue hauled by third-party truck brokerage carriers. In the 2009 and 2008 fourth quarters, the Company also invoiced customers $40.7 million and $54.5 million, respectively, of fuel surcharges that were passed 100 percent to third-party BCO Independent Contractors and excluded from revenue. Revenue hauled by rail, air and ocean cargo carriers was $35.0 million, or 6 percent of revenue, in the 2009 fourth quarter compared to $47.0 million, or 8 percent of revenue, in the 2008 fourth quarter. Transportation management fee revenue was $4.4 million, or 1 percent of revenue, in the 2009 fourth quarter.
Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.045 per share. The dividend is payable on February 26, 2010 to stockholders of record at the close of business on February 5, 2010. It is the intention of the Board of Directors to continue to pay a quarterly dividend. During the 2009 fourth quarter, Landstar purchased 665,000 shares of its common stock at a total cost of $24.1 million.
The Company's variable cost business model continues to generate significant cash flow. During 2009, the Company purchased 1,625,000 shares of its common stock at a total cost of $55.8 million and completed two acquisitions, while at the same time reduced borrowings on its senior credit facility by $30 million. Under the Company's authorized share purchase program, the Company currently has a total of 1,375,000 shares of its common stock available for purchase.
Commenting on Landstar's 2009 fourth quarter, Landstar's Chairman, President and CEO, Henry Gerkens said, "I am pleased with the way the Company finished 2009, particularly as it relates to revenue. Sequentially, Landstar was able to increase revenue by 9 percent over the 2009 third quarter, and that was significantly better than has been experienced in the fourth quarter compared to the third quarter in each of the prior three years. The increased revenue was primarily the result of a general increase in rate per load of approximately 4 percent, combined with increased loadings of approximately 6 percent over the 2009 third quarter. 2009 fourth quarter revenue compared to the 2008 fourth quarter decreased 9 percent, significantly better than the 28 percent decrease experienced during the first nine months of 2009 compared to the first nine months of 2008.
Gerkens continued, "Diluted earnings per share in the 2009 fourth quarter compared to the 2008 fourth quarter was negatively impacted by $0.10 per diluted share due to increased insurance and claims expense attributable to an unusual amount of adverse development of commercial trucking claims in the 2009 fourth quarter, partly offset by $0.03 per diluted share from a lower provision for taxes. Although the cost of insurance and claims in the quarter was much higher than a typical quarter, our 2009 accident frequency rate was the lowest in Landstar history, demonstrating the Company's continued emphasis on safety. Operating margin was 5.0 percent in the 2009 fourth quarter compared to 6.8 percent in the 2008 fourth quarter, primarily as a result of the adverse development of commercial trucking claims."
"As we moved through the 2009 fourth quarter, both the number of loads and rate per load continued to show signs of strengthening. Through the first several weeks of January, I have seen daily volume increases of approximately five to ten percent compared to January 2009, while rate per load continues to show improvement. Assuming these trends continue for the balance of the quarter, I would anticipate 2010 first quarter revenue to increase over the 2009 first quarter revenue in a mid to upper single digit range. As a result, I anticipate Landstar's earnings to be within a range of $0.28 to $0.32 per diluted share. Although I remain cautiously optimistic about 2010, I will not be providing specific annual revenue and earnings guidance. From a longer term perspective, our goals are to achieve a cumulative average growth rate in revenue over a three to five year period in a mid-teen range, to increase annual operating margins and to grow earnings per share at a slightly higher rate than the rate of revenue increase."
Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 5 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 2009 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, 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 2008 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. is a non-asset based provider of integrated supply chain solutions. Landstar delivers safe, specialized transportation, warehousing and logistics services to a broad range of customers worldwide utilizing a network of agents, third-party capacity owners and employees. All Landstar transportation 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. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Fiscal Year End Thirteen Weeks Ended
--------------- --------------------
Dec. 26, Dec. 27, Dec. 26, Dec. 27,
2009 2008 2009 2008
-------- -------- -------- --------
Revenue $2,008,796 $2,643,069 $547,715 $603,837
Investment income 1,268 3,339 314 653
Costs and expenses:
Purchased
transportation 1,503,520 2,033,384 413,301 460,175
Commissions to agents 160,571 203,058 42,836 49,201
Other operating costs 29,173 28,033 7,424 7,219
Insurance and claims 45,918 36,374 16,862 9,215
Selling, general and
administrative 133,612 137,758 33,922 32,301
Depreciation and
amortization 23,528 20,960 6,114 5,402
--------- --------- ------- -------
Total costs and
expenses 1,896,322 2,459,567 520,459 563,513
--------- --------- ------- -------
Operating income 113,742 186,841 27,570 40,977
Interest and debt
expense 4,030 7,351 937 1,716
--------- --------- ------- -------
Income before income
taxes 109,712 179,490 26,633 39,261
Income taxes 39,762 68,560 8,296 14,656
--------- --------- ------- -------
Net income 69,950 110,930 18,337 24,605
Less: Net loss
attributable to
noncontrolling
interest (445) - (231) -
--------- --------- ------- -------
Net income
attributable to
Landstar System,
Inc. and subsidiary $70,395 $110,930 $18,568 $24,605
========= ========= ======= =======
Earnings per common
share attributable to
Landstar System, Inc.
and subsidiary $1.38 $2.11 $0.37 $0.47
========= ========= ======= =======
Diluted earnings per
share attributable to
Landstar System, Inc.
and subsidiary $1.37 $2.10 $0.37 $0.47
========= ========= ======= =======
Average number of
shares outstanding:
Earnings per common
share 51,095,000 52,503,000 50,404,000 51,973,000
========== ========== ========== ==========
Diluted earnings per
share 51,280,000 52,854,000 50,594,000 52,197,000
========== ========== ========== ==========
Dividends paid per
common share $0.1700 $0.1550 $0.0450 $0.0400
========== ========== ========== ==========
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
Dec. 26, Dec. 27,
2009 2008
-------- --------
ASSETS
Current assets:
Cash and cash equivalents $85,719 $98,904
Short-term investments 24,325 23,479
Trade accounts receivable, less allowance
of $5,547 and $6,230 278,854 315,065
Other receivables, including advances to
independent contractors, less allowance
of $5,797 and $4,298 18,149 10,083
Deferred income taxes and other current
assets 19,565 27,871
------- -------
Total current assets 426,612 475,402
------- -------
Operating property, less accumulated
Depreciation and amortization
of $124,810 and $106,635 116,656 124,178
Goodwill 57,470 31,134
Other assets 48,054 32,816
-------- --------
Total assets $648,792 $663,530
======== ========
LIABILITIES AND EQUITY
Current liabilities:
Cash overdraft $28,919 $32,065
Accounts payable 121,030 105,882
Current maturities of long-term debt 24,585 24,693
Insurance claims 41,627 23,545
Accrued income taxes 9,957 12,239
Other current liabilities 32,517 38,161
------- -------
Total current liabilities 258,635 236,585
------- -------
Long-term debt, excluding current maturities 68,313 111,752
Insurance claims 30,680 38,278
Deferred income taxes 23,013 23,779
Equity
Landstar System, Inc. and subsidiary
shareholders' equity
Common stock, $0.01 par value, authorized
160,000,000 shares, issued 66,255,358
and 66,109,547 shares 663 661
Additional paid-in capital 161,261 154,533
Retained earnings 766,040 704,331
Cost of 16,022,111 and 14,424,887 shares
of common stock in treasury (660,446) (605,828)
Accumulated other comprehensive income
(loss) 498 (561)
-------- --------
Total Landstar System, Inc. and subsidiary
shareholders' equity 268,016 253,136
-------- --------
Noncontrolling interest 135 -
-------- --------
Total equity 268,151 253,136
-------- --------
Total liabilities and equity $648,792 $663,530
======== ========
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
Fiscal Year End Thirteen Weeks Ended
------------------ --------------------
Dec. 26, Dec. 27, Dec. 26, Dec. 27,
2009 2008 2009 2008
-------- --------- -------- -------
Revenue generated
through (in thousands):
------------------------
Business Capacity
Owners (1) $1,140,004 $1,388,353 $299,613 $317,371
Truck Brokerage
Carriers 694,467 996,269 198,806 230,007
Rail intermodal 76,346 136,367 19,252 29,431
Ocean cargo carriers 33,835 42,153 8,376 12,824
Air cargo carriers 17,621 14,891 7,362 4,756
Other (2) 46,523 65,036 14,306 9,448
---------- ---------- -------- --------
$2,008,796 $2,643,069 $547,715 $603,837
========== ========== ======== ========
Number of loads:
----------------
Business Capacity
Owners (1) 761,940 820,680 200,100 182,350
Truck Brokerage
Carriers 501,980 571,600 138,980 136,350
Rail intermodal 37,890 58,510 9,290 12,900
Ocean cargo carriers 5,370 5,380 1,450 1,390
Air cargo carriers 7,780 8,260 1,340 2,740
--------- --------- ------- -------
1,314,960 1,464,430 351,160 335,730
========= ========= ======= =======
Revenue per load:
-----------------
Business Capacity
Owners (1) $1,496 $1,692 $1,497 $1,740
Truck Brokerage
Carriers 1,383 1,743 1,430 1,687
Rail intermodal 2,015 2,331 2,072 2,281
Ocean cargo carriers 6,301 7,835 5,777 9,226
Air cargo carriers 2,265 1,803 5,494 1,736
Dec. 26, Dec. 27,
2009 2008
-------- --------
Truck Capacity
--------------
Business Capacity Owners (1) (3) 7,926 8,455
------ ------
Truck Brokerage Carriers:
Approved and active (4) 14,887 16,135
Approved 9,886 10,036
------ ------
24,773 26,171
------ ------
Total available truck capacity providers 32,699 34,626
====== ======
Agent Locations 1,366 1,428
--------------- ====== ======
(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. Also, included in the 2008 fiscal
year was $27,638 of revenue for bus capacity provided for evacuation
assistance related to the storms that impacted the Gulf Coast in the
third quarter of 2008.
(3) Trucks provided by Business Capacity Owners were 8,519 and 9,039
at December 26, 2009 and December 27, 2008, respectively.
(4) Active refers to Truck Brokerage Carriers who have moved at least
one load in the past 180 days.
SOURCE Landstar System, Inc.