Landstar System Reports Record Fourth Quarter And Full Year
Revenue And Earnings
Revenue And Earnings
JACKSONVILLE, Fla., Jan. 28 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported 2003 record fourth quarter net income of $15.1 million, or $.49 per diluted share, compared to net income of $14.5 million, or $.44 per diluted share, in the 2002 fourth quarter. Revenue was a record $434.0 million for the thirteen-week period ended December 27, 2003, compared with $394.0 million for the thirteen-week period ended December 28, 2002. Landstar's carrier group of companies generated $326.1 million of revenue in the 2003 fourth quarter compared with $299.4 million in the 2002 fourth quarter. In the 2003 and 2002 fourth quarters, the carrier group invoiced customers $8.7 million and $5.5 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 revenue of $100.7 million in the 2003 fourth quarter compared with $87.7 million in the 2002 fourth quarter.
Net income for the 2003 fiscal year was a record $50.7 million, or $1.59 per diluted share. The 2003 fiscal year included $4.2 million of costs to defend and settle the Gulf Bridge lawsuit. These costs, net of related income tax benefits, reduced net income in the 2003 fiscal year by $2.7 million, or $.08 per diluted share. Excluding the costs related to this litigation, net income was $53.4 million, or $1.67 per diluted share, compared to net income of $49.2 million, or $1.47 per diluted share, in the prior year. Revenue in the 2003 fiscal year was a record $1.597 billion, compared to revenue of $1.507 billion in the 2002 year. Landstar's carrier group of companies generated $1.227 billion of revenue in the 2003 full year compared with $1.178 billion in 2002. In the 2003 and 2002 fiscal years, the carrier group invoiced customers $35.1 million and $11.8 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 $341.2 million of revenue in the 2003 fiscal year compared with $300.7 million in 2002.
"I am extremely pleased with Landstar's 2003 fourth quarter and full year performance," said Landstar Chairman and CEO Jeff Crowe. "Consolidated revenue increased by more than 10 percent to the highest fourth quarter revenue in Landstar history. Compared to the 2002 fourth quarter, consolidated brokerage revenue increased 18.6 percent, rail intermodal revenue increased 8.6 percent and revenue hauled by Landstar BCOs increased 8.6 percent. Diluted earnings per share in the fourth quarter of 2003 increased 11 percent over the fourth quarter of 2002. Operating margin declined .3 percent in the 2003 fourth quarter compared to the 2002 fourth quarter as adverse claims experience offset an improvement in selling, general and administrative expense," Crowe said. "Revenue for the full year increased 6 percent as consolidated brokerage revenue increased 26 percent. Excluding the cost of the Gulf Bridge litigation, we increased full year diluted earnings per share by almost 14 percent. Our operating margin for the full 2003 fiscal year was 5.3 percent. Excluding the $4,150,000 cost of the Gulf Bridge litigation, it was 5.6 percent, the same as the 2002 operating margin."
"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 2003, we purchased 1,255,051 shares of common stock at a total cost of $73,844,000, as we used the cash generating power of our variable cost business model to enhance shareholder value. The Company has the ability to purchase an additional 1,380,140 shares of its common stock under its authorized share repurchase program."
Continuing, Crowe said, "From a revenue standpoint, we are off to a very good start in 2004 and based upon the current level of business activity, I anticipate the revenue increase in the 2004 first quarter over the 2003 first quarter to be in the range of 6 to 10 percent and in the range of 8 to 12 percent for the 2004 full year."
"In the first weeks of 2004, a truck operated by a Landstar BCO was involved in a very serious accident resulting in fatalities. We are still in the process of obtaining the facts concerning this incident and evaluating the potential financial cost of this claim to Landstar. While our evaluation is still preliminary, and investigation continues, it is possible that the ultimate resolution of this claim could result in a charge ranging anywhere from $5 million up to an amount equal to our $10 million self-insured retention amount. A $10 million pre-tax charge would reduce first quarter and full year earnings by approximately $.20 per diluted share. Without predicting the cost, if any, of the ultimate resolution of this claim, but assuming it was equal to Landstar's $10 million self-insured retention, I would anticipate Landstar's earnings for the first quarter of 2004 to be within a range of $.15 to $.21 per diluted share and earnings for the full 2004 fiscal year to be within a range of $1.65 to $1.75 per diluted share."
Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 2 p.m. 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," "could", "should," "will," the negative thereof and similar expressions, including any such expressions with respect to our 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; and substantial industry competition. 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's carrier group is comprised of Landstar Gemini, Inc., Landstar Inway, Inc., Landstar Ligon, Inc. and Landstar Ranger, Inc. and delivers excellence in complete over-the-road transportation services. Landstar's multimodal group is comprised of Landstar Express America, Inc. and Landstar Logistics, Inc., providing expedited, contract logistics and intermodal 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)
Fiscal Year Ended Thirteen Weeks Ended
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
2003 2002 2003 2002
Revenue $1,596,571 $1,506,555 $433,997 $393,986
Investment income 1,220 1,950 260 398
Costs and expenses:
Purchased transportation 1,185,043 1,116,009 322,672 293,816
Commissions to agents 125,997 118,864 34,773 31,314
Other operating costs 37,681 34,325 10,110 8,051
Insurance and claims 45,690 42,188 13,503 9,516
Selling, general and
administrative (1) 105,849 101,918 24,845 24,497
Depreciation and
amortization 12,736 11,520 3,178 2,999
Total costs and
expenses 1,512,996 1,424,824 409,081 370,193
Operating income (1) 84,795 83,681 25,176 24,191
Interest and debt expense 3,240 4,292 840 774
Income before income
taxes (1) 81,555 79,389 24,336 23,417
Income taxes 30,855 30,168 9,188 8,899
Net income (1) $50,700 $49,221 $15,148 $14,518
Earnings per common
share (1) (2) $1.65 $1.52 $0.51 $0.46
Diluted earnings
per share (1) (2) $1.59 $1.47 $0.49 $0.44
Average number of shares
outstanding:
Earnings per common
share (2) 30,729,000 32,282,000 29,909,000 31,791,000
Diluted earnings per
share (2) 31,920,000 33,535,000 31,076,000 33,048,000
(1) The fiscal year ended 2003 includes $4,150 of costs to defend and
settle the Gulf Bridge lawsuit. Net of related income tax benefits, these
costs reduced net income by $2,650, or $0.09 per common share ($0.08 per
diluted share).
(2) All 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)
Fiscal Year Ended Thirteen Weeks Ended
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
2003 2002 2003 2002
External Revenue
Carrier segment $1,227,171 $1,178,263 $326,130 $299,427
Multimodal segment 341,241 300,716 100,690 87,698
Insurance segment 28,159 27,576 7,177 6,861
External revenue $1,596,571 $1,506,555 $433,997 $393,986
Operating Income
Carrier segment $94,303 $87,777 $27,905 $23,865
Multimodal segment (1) 6,403 7,793 3,647 2,786
Insurance segment 21,227 22,754 3,397 6,887
Other (37,138) (34,643) (9,773) (9,347)
Operating income (1) $84,795 $83,681 $25,176 $24,191
(1) The fiscal year ended 2003 includes $4,150 of costs to defend and
settle the Gulf Bridge lawsuit.
Landstar System, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
December 27, December 28,
2003 2002
ASSETS
Current assets:
Cash $42,640 $65,447
Short-term investments 30,890 3,130
Trade accounts receivable, less
allowance of $3,410 and $3,953 219,039 190,052
Other receivables, including
advances to independent
contractors, less allowance of
$4,077 and $5,331 13,196 12,640
Deferred income taxes and other
current assets 14,936 3,338
Total current assets 320,701 274,607
Operating property, less
accumulated depreciation and
amortization of $58,480 and $52,841 67,639 76,774
Goodwill 31,134 31,134
Other assets 18,983 18,233
Total assets $438,457 $400,748
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Cash overdraft $20,523 $16,545
Accounts payable 71,713 60,297
Current maturities of long-term
debt 9,434 12,123
Insurance claims 26,293 24,419
Other current liabilities 45,223 40,593
Total current liabilities 173,186 153,977
Long-term debt, excluding current
maturities 82,022 65,237
Insurance claims 27,282 25,276
Deferred income taxes 13,452 7,165
Shareholders' equity:
Common stock, $.01 par value,
authorized 50,000,000 and
20,000,000 shares, issued
31,816,860 and 16,337,506 shares 318 163
Additional paid-in capital 18,382 2,609
Retained earnings 224,368 173,817
Cost of 1,809,930 and 554,879
shares of common stock in treasury (100,150) (26,306)
Accumulated other comprehensive
income 182 --
Notes receivable arising from
exercise of stock options (585) (1,190)
Total shareholders' equity 142,515 149,093
Total liabilities and shareholders'
equity $438,457 $400,748
Landstar System, Inc.
Supplemental Information
December 27, 2003
(Unaudited)
Fiscal Year Ended Thirteen Weeks Ended
Dec. 27, Dec. 28, Dec. 27, Dec. 28,
2003 2002 2003 2002
Carrier Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) $1,052,346 $1,038,298 $276,650 $256,308
Other third party
truck capacity
providers 174,825 139,965 49,480 43,119
$1,227,171 $1,178,263 $326,130 $299,427
Revenue per revenue mile $1.72 $1.67 $1.72 $1.66
Revenue per load $1,223 $1,172 $1,260 $1,202
Average length of haul
(miles) 709 700 731 723
Number of loads 1,004,000 1,005,000 259,000 249,000
Multimodal Segment
External revenue generated
through (in thousands):
Business Capacity
Owners (1) (2) $53,766 $55,816 $16,092 $13,263
Other third party
truck capacity
providers 182,333 143,317 51,178 41,729
Rail and Air Carriers 105,142 101,583 33,420 32,706
$341,241 $300,716 $100,690 $87,698
Revenue per load $1,332 $1,150 $1,399 $1,260
Number of loads 256,000 262,000 72,000 70,000
As of As of
Dec. 27, Dec. 28,
2003 2002
Capacity
Business Capacity Owners
(1) (3) 7,584 7,365
Other third party truck
capacity providers:
Approved and active(4) 9,296 8,610
Approved 6,240 5,310
15,536 13,920
Total available truck
capacity providers 23,120 21,285
(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) Trucks provided by business capacity owners were 8,573 and 8,402,
respectively.
(4) 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.