Landstar System Reports Record Second Quarter Results, Increased Share Purchase Authorization and Increased Dividend
JACKSONVILLE, Fla., July 16 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported record second quarter revenue, operating income, net income and diluted earnings per share in the 2008 thirteen-week period ended June 28, 2008. Revenue in the 2008 second quarter increased approximately 10 percent to $698 million compared to $633 million for the 2007 second quarter. Net income for the thirteen-week period ended June 28, 2008 was $29.8 million, or $0.56 per diluted share, compared to net income of $29.7 million, or $0.53 per diluted share, for the thirteen-week period ended June 30, 2007.
Revenue hauled by BCO Independent Contractors in the second quarter of 2008 was $375.4 million, or 54 percent of revenue, compared to $364.2 million, or 58 percent of revenue, in the 2007 second quarter. Moreover, in the second quarters of 2008 and 2007, the Company invoiced customers $90.3 million and $45.1 million, respectively, in fuel surcharges that were passed on 100 percent to BCO Independent Contractors and excluded from revenue. Revenue hauled by third-party truck brokerage carriers was $261.7 million, or 38 percent of revenue, in the 2008 second quarter compared to $217.1 million, or 34 percent of revenue, in the 2007 second quarter. Revenue hauled by rail, air, and ocean cargo carriers was $51.5 million, or 7 percent of revenue, in the 2008 second quarter compared to $42.5 million, or 7 percent of revenue, in the 2007 second quarter.
Revenue in the twenty-six-week period ended June 28, 2008 increased approximately 8 percent to $1.306 billion compared to $1.210 billion for the 2007 twenty-six-week period. Net income for the twenty-six-week period ended June 28, 2008 was $53.5 million, or $1.01 per diluted share, compared to net income of $51.3 million, or $0.91 per diluted share, for the twenty-six-week period ended June 30, 2007.
Revenue hauled by BCO Independent Contractors in the 2008 twenty-six-week period was $700.2 million, or 54 percent of revenue, compared to $684.7 million, or 57 percent of revenue, in the 2007 twenty-six-week period. In the twenty-six-week periods of 2008 and 2007, the Company invoiced customers $148.1 million and $79.8 million, respectively, in fuel surcharges that were passed on 100 percent to BCO Independent Contractors and excluded from revenue. Revenue hauled by third-party truck brokerage carriers was $490.3 million, or 38 percent of revenue, in the 2008 twenty-six-week period compared to $423.0 million, or 35 percent of revenue, in the 2007 twenty-six-week period. Revenue hauled by rail, air, and ocean cargo carriers was $97.3 million, or 7 percent of revenue, in the 2008 twenty-six-week period compared to $80.0 million, or 7 percent of revenue, in the 2007 twenty-six-week period.
Landstar System, Inc. announced that its Board of Directors authorized the purchase of up to an additional 2,000,000 shares of its common stock from time to time in the open market and in privately negotiated transactions. The Company may purchase up to an additional 734,400 shares of its common stock under its previously authorized share purchase program. The Company now has a total of 2,734,400 shares of its common stock available for purchase.
Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.04 per share. This represents a 7 percent increase in the Company's quarterly dividend. The dividend is payable on August 29, 2008 to stockholders of record at the close of business on August 11, 2008. It is the intention of the Board of Directors to continue to pay a quarterly dividend.
"I continue to be pleased with the Company's 2008 performance," said Landstar President and Chief Executive Officer Henry Gerkens. "In the 2008 second quarter, Landstar delivered double digit revenue growth and experienced strong revenue increases across multiple service offerings, as revenue hauled by BCO Independent Contractors increased over 3 percent, revenue hauled by truck brokerage carriers increased 21 percent, revenue hauled by rail carriers increased 23 percent and revenue hauled by ocean cargo carriers increased 76 percent. Landstar's operating margin was 7.2 percent in the 2008 second quarter compared to 7.8 percent in the 2007 second quarter. Despite increased rates for purchased transportation paid to third-party truck brokerage carriers, rail carriers and air and ocean cargo carriers in the 2008 second quarter, the Company generated record second quarter operating income of $50.2 million, which is the fourth highest quarterly operating income in any quarter in Landstar's history."
"Landstar's 2008 second quarter diluted earnings per share of $0.56 compared to 2007 second quarter diluted earnings per share of $0.53 represented an increase of 6 percent quarter over quarter. For comparative purposes, it should be noted that the 2008 second quarter included approximately $0.03 per diluted share of costs related to employee bonus accruals not included in the 2007 second quarter. Landstar's solid results once again demonstrate the strength and consistency of its non-asset based variable cost business model."
"Landstar continues to generate outstanding returns. Trailing twelve month return on average shareholders' equity remained high at 52 percent and trailing twelve month return on invested capital, net income divided by the sum of average equity plus average debt, was 32 percent. Additionally, during the 2008 second quarter, the Company entered into a new senior credit facility in the form of a five year $225 million revolving credit agreement to refinance its existing credit facility. The new credit facility will expire in June 2013."
Gerkens continued, "I anticipate the freight environment in the third quarter of 2008 to be similar to that of the 2008 second quarter. As such, I would anticipate revenue for the third quarter of 2008 as compared to the third quarter of 2007 to increase in a range from the upper single to lower double digits. Based upon the above revenue forecast, I would anticipate Landstar's earnings for the 2008 third quarter to be within a range of $0.54 to $0.60 per diluted share."
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 Second Quarter 2008 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 2007 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 and logistics 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 and logistics capacity providers. Through its operating subsidiaries, Landstar delivers excellence in complete transportation logistics services and solutions. 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) Twenty Six Weeks Ended Thirteen Weeks Ended June 28, June 30, June 28, June 30, 2008 2007 2008 2007 Revenue $1,306,479 $1,209,601 $697,651 $632,952 Investment income 1,869 2,997 773 1,257 Costs and expenses: Purchased transportation 1,003,345 912,835 538,316 478,777 Commissions to agents 99,590 97,404 52,776 50,772 Other operating costs 13,940 13,222 7,356 7,716 Insurance and claims 19,034 29,559 9,513 12,019 Selling, general and administrative 70,958 63,920 35,101 30,755 Depreciation and amortization 10,307 9,279 5,177 4,662 Total costs and expenses 1,217,174 1,126,219 648,239 584,701 Operating income 91,174 86,379 50,185 49,508 Interest and debt expense 3,878 2,700 1,736 1,108 Income before income taxes 87,296 83,679 48,449 48,400 Income taxes 33,788 32,405 18,684 18,730 Net income $53,508 $51,274 $29,765 $29,670 Earnings per common share $1.01 $0.92 $0.56 $0.53 Diluted earnings per share $1.01 $0.91 $0.56 $0.53 Average number of shares outstanding: Earnings per common share 52,726,000 55,761,000 52,851,000 55,597,000 Diluted earnings per share 53,198,000 56,328,000 53,373,000 56,191,000 Dividends paid per common share $0.0750 $0.0600 $0.0375 $0.0300 Landstar System, Inc. Selected Segment Information (Dollars in thousands) (Unaudited) Twenty Six Weeks Ended Thirteen Weeks Ended June 28, June 30, June 28, June 30, 2008 2007 2008 2007 Revenue Transportation logistics segment $1,288,231 $1,191,170 $688,631 $623,731 Insurance segment 18,248 18,431 9,020 9,221 Revenue $1,306,479 $1,209,601 $697,651 $632,952 Operating Income Transportation logistics segment $73,560 $72,370 $41,174 $38,858 Insurance segment 17,614 14,009 9,011 10,650 Operating income $91,174 $86,379 $50,185 $49,508 Landstar System, Inc. Consolidated Balance Sheets (Dollars in thousands, except per share amounts) (Unaudited) June 28, Dec 29, 2008 2007 ASSETS Current assets: Cash and cash equivalents $78,792 $60,750 Short-term investments 24,023 22,921 Trade accounts receivable, less allowance of $4,858 and $4,469 351,422 310,258 Other receivables, including advances to independent contractors, less allowance of $4,446 and $4,792 14,259 11,170 Deferred income taxes and other current assets 33,840 28,554 Total current assets 502,336 433,653 Operating property, less accumulated depreciation and amortization of $97,363 and $88,284 126,732 132,369 Goodwill 31,134 31,134 Other assets 33,863 31,845 Total assets $694,065 $629,001 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Cash overdraft $30,137 $25,769 Accounts payable 132,786 117,122 Current maturities of long-term debt 23,514 23,155 Insurance claims 28,113 28,163 Accrued income taxes 13,666 14,865 Other current liabilities 40,219 40,501 Total current liabilities 268,435 249,575 Long-term debt, excluding current maturities 117,469 141,598 Insurance claims 37,241 37,631 Deferred income taxes 23,109 19,411 Shareholders' equity: Common stock, $0.01 par value, authorized 160,000,000 shares, issued 66,073,547 and 65,630,383 shares 661 656 Additional paid-in capital 150,392 132,788 Retained earnings 651,090 601,537 Cost of 13,121,109 shares of common stock in treasury (554,252) (554,252) Accumulated other comprehensive income/(loss) (80) 57 Total shareholders' equity 247,811 180,786 Total liabilities and shareholders' equity $694,065 $629,001 Landstar System, Inc. Supplemental Information (Unaudited) Twenty Six Weeks Ended Thirteen Weeks Ended June 28, June 30, June 28, June 30, 2008 2007 2008 2007 Revenue generated through (in thousands): Business Capacity Owners (1) $700,195 $684,704 $375,391 $364,171 Truck Brokerage Carriers 490,334 422,967 261,701 217,070 Rail intermodal 71,598 57,677 37,809 30,706 Ocean carriers 18,220 11,539 9,786 5,569 Air carriers 7,449 10,806 3,860 6,191 Other (2) 18,683 21,908 9,104 9,245 $1,306,479 $1,209,601 $697,651 $632,952 Number of loads: Business Capacity Owners (1) 429,080 433,370 225,880 227,770 Truck Brokerage Carriers 288,970 288,850 146,940 151,030 Rail intermodal 31,000 26,760 16,020 14,660 Ocean carriers 2,590 2,100 1,340 1,060 Air carriers 3,870 6,440 1,880 3,160 755,510 757,520 392,060 397,680 Revenue per load: Business Capacity Owners (1) $1,632 $1,580 $1,662 $1,599 Truck Brokerage Carriers 1,697 1,464 1,781 1,437 Rail intermodal 2,310 2,155 2,360 2,095 Ocean carriers 7,035 5,495 7,303 5,254 Air carriers 1,925 1,678 2,053 1,959 June 28, June 30, 2008 2007 Truck Capacity Business Capacity Owners (1) (3) 8,222 8,431 Truck Brokerage Carriers: Approved and active (4) 16,080 15,100 Approved 9,219 8,700 25,299 23,800 Total available truck capacity providers 33,521 32,231 Agent Locations 1,409 1,381
(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, warehousing revenue generated by the Transportation Logistics segment and revenue, if any for the periods presented, derived from transportation services provided in support of disaster relief efforts provided primarily under a contract between Landstar Express America, Inc. and the United States Department of Transportation/Federal Aviation Administration.
(3) Trucks provided by Business Capacity Owners were 8,804 and 9,036 at June 28, 2008 and June 30, 2007, respectively.
(4) Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.
SOURCE Landstar System, Inc.
CONTACT:
Jim Gattoni of Landstar System, Inc.,
+1-904-398-9400
Web site: http://www.landstar.com
(LSTR)