Landstar System Reports Record Second Quarter Revenue, Net Income and Diluted Earnings Per Share
JACKSONVILLE, Fla., July 14 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported record second quarter net income in 2005 of $23.5 million, or $.39 per diluted share. Net income in the 2004 second quarter was $17.6 million, or $.29 per diluted share. Revenue increased approximately 12 percent to a record $539 million for the thirteen-week period ended June 25, 2005, up from $482 million for the thirteen-week period ended June 26, 2004. Operating margin was 7.3 percent in the 2005 second quarter, compared to 6.1 percent in the 2004 second quarter.
Landstar's carrier group of companies generated $412 million of revenue in the 2005 second quarter, compared with revenue of $364 million in the 2004 second quarter. In the 2005 and 2004 second quarters, the carrier group invoiced customers $28.7 million and $13.7 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 $119 million of revenue in the 2005 second quarter compared with $111 million of revenue in the 2004 second quarter.
Net income for the twenty-six-week period ended June 25, 2005 was $41.4 million, or $.68 per diluted share, compared to $25.7 million, or $.42 per diluted share, for the twenty-six-week period ended June 26, 2004. The 2004 period included $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 $1.041 billion in the 2005 first half, compared to revenue of $903 million in the 2004 first half. Operating margin for the 2005 twenty-six-week period was 6.6 percent, compared with 4.8 percent in the 2004 twenty-six-week period. Operating Margin in the 2004 twenty-six-week period was reduced .8 percent by the previously referred to accident.
Landstar's carrier group of companies generated $784 million of revenue in the twenty-six-week period ended June 25, 2005, compared with $685 million in the twenty-six-week period ended June 26, 2004. In the 2005 and 2004 twenty- six-week periods, the carrier group invoiced customers $49.3 million and $22.0 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 $243 million of revenue in the 2005 twenty-six-week period compared with $203 million in the 2004 period.
"I am pleased with Landstar's 2005 second quarter performance," said Landstar President and CEO Henry Gerkens. "Consolidated revenue increased 12 percent over the 2004 second quarter, making it the seventh consecutive quarter of double digit revenue growth. Revenue generated through truck brokerage increased 39 percent quarter over quarter. In addition, operating margin improved by 120 basis points and diluted earnings per share increased 34 percent. We increased the number of available third party truck capacity providers to 27,903, an increase of 1,083 since the beginning of the 2005 second quarter and 1,882 since the beginning of the year."
"Trailing twelve-month return on average equity remained high at 46.5 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 31.2 percent. During the second quarter, Landstar purchased 1,428,962 shares of its common stock at a total cost of $45,712,000, bringing the total number of shares purchased during the first half of 2005 to 2,421,380 at a total cost of $80,659,000," Gerkens said. "The Company has the ability to purchase an additional 976,900 shares of its common stock under its authorized share repurchase program.
"Based upon the current operating environment and exclusive of any revenue in the 2005 third quarter generated under the Landstar Express America contract with the FAA relating to disaster relief efforts, I anticipate revenue growth for the third quarter of the 2005 fiscal year to be within a range of 6 to 10 percent and 12 to 16 percent excluding from 2004 third quarter revenue the $27,887,000 of revenue related to disaster relief efforts for the storms that impacted the southeastern United States. I anticipate earnings for the third quarter to be within the current range of analysts' earnings estimates, as reported by FIRST CALL, of $.36 to $.41 per diluted share."
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 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. Landstar System, Inc. delivers safe, specialized transportation services to a broad range of customers throughout North America. 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 multimodal group which is comprised of Landstar Express America, Inc. and Landstar Logistics, Inc. provides expedited, contract logistics and intermodal transportation services. All Landstar operating companies are certified to ISO 9001:2000 quality management system standards. Landstar System, Inc. is headquartered in Jacksonville, Florida and 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 June 25, June 26, June 25, June 26, 2005 2004 2005 2004 Revenue $1,041,316 $903,329 $539,104 $482,303 Investment income 1,235 542 696 239 Costs and expenses: Purchased transportation 783,092 674,093 405,514 360,296 Commissions to agents 82,039 70,637 42,913 38,203 Other operating costs 16,615 18,776 7,917 8,882 Insurance and claims 22,904 33,454 9,779 12,748 Selling, general and administrative 60,823 57,188 30,520 29,778 Depreciation and amortization 7,928 6,566 3,966 3,367 Total costs and expenses 973,401 860,714 500,609 453,274 Operating income 69,150 43,157 39,191 29,268 Interest and debt expense 1,989 1,551 1,052 783 Income before income taxes 67,161 41,606 38,139 28,485 Income taxes 25,790 15,914 14,646 10,895 Net income $41,371 $25,692 $23,493 $17,590 Earnings per common share (1) $0.69 $0.43 $0.40 $0.29 Diluted earnings per share (1) $0.68 $0.42 $0.39 $0.29 Average number of shares outstanding: Earnings per common share (1) 59,878,000 59,786,000 59,402,000 59,863,000 Diluted earnings per share (1) 61,240,000 61,505,000 60,639,000 61,587,000 (1) All 2004 earnings per share amounts and average number of shares outstanding have been adjusted to give retroactive effect to a two-for- one stock split effected in the form of a 100% stock dividend declared December 9, 2004. Landstar System, Inc. Selected Segment Information (Dollars in thousands) (Unaudited) Twenty Six Weeks Ended Thirteen Weeks Ended June 25, June 26, June 25, June 26, 2005 2004 2005 2004 External Revenue Carrier segment $783,521 $685,195 $412,478 $363,587 Multimodal segment 242,588 203,287 118,892 111,273 Insurance segment 15,207 14,847 7,734 7,443 External revenue $1,041,316 $903,329 $539,104 $482,303 Operating Income Carrier segment $70,933 $55,139 $39,575 $31,442 Multimodal segment 9,512 6,013 4,161 3,274 Insurance segment 11,628 3,038 7,536 5,864 Other (22,923) (21,033) (12,081) (11,312) Operating income $69,150 $43,157 $39,191 $29,268 Landstar System, Inc. Consolidated Balance Sheets (Dollars in thousands, except per share amounts) (Unaudited) June 25, December 25, 2005 2004 ASSETS Current assets: Cash and cash equivalents $61,885 $61,684 Short-term investments 25,998 21,942 Trade accounts receivable, less allowance of $4,268 and $4,021 279,840 338,774 Other receivables, including advances to independent contractors, less allowance of $4,382 and $4,245 14,274 13,929 Deferred income taxes and other current assets 24,158 13,503 Total current assets 406,155 449,832 Operating property, less accumulated depreciation and amortization of $66,474 and $65,315 80,604 76,834 Goodwill 31,134 31,134 Other assets 25,490 26,712 Total assets $543,383 $584,512 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Cash overdraft $24,586 $23,547 Accounts payable 104,693 120,197 Current maturities of long-term debt 7,844 8,797 Insurance claims 33,144 32,612 Other current liabilities 52,013 54,926 Total current liabilities 222,280 240,079 Long-term debt, excluding current maturities 93,774 83,293 Insurance claims 33,159 32,430 Deferred income taxes 14,106 15,871 Shareholders' equity: Common stock, $.01 par value, authorized 160,000,000 and 80,000,000 shares, issued 63,605,986 and 63,154,190 shares 636 632 Additional paid-in capital 49,213 43,845 Retained earnings 337,307 295,936 Cost of 4,893,210 and 2,490,930 shares of common stock in treasury (206,835) (127,151) Accumulated other comprehensive income (loss) (62) 47 Notes receivable arising from exercises of stock options (195) (470) Total shareholders' equity 180,064 212,839 Total liabilities and shareholders' equity $543,383 $584,512 Landstar System, Inc. Supplemental Information (Unaudited) Twenty Six Weeks Ended Thirteen Weeks Ended June 25, June 26, June 25, June 26, 2005 2004 2005 2004 Carrier Segment External revenue generated through (in thousands): Business Capacity Owners(1) $599,222 $578,091 $316,547 $305,860 Other third party truck capacity providers 184,299 107,104 95,931 57,727 $783,521 $685,195 $412,478 $363,587 Revenue per revenue mile $1.81 $1.75 $1.82 $1.76 Revenue per load $1,454 $1,315 $1,463 $1,362 Average length of haul (miles) 802 752 802 774 Number of loads 539,000 521,000 282,000 267,000 Multimodal Segment External revenue generated through (in thousands): Business Capacity Owners(1)(2) $35,335 $33,888 $17,497 $18,475 Other third party truck capacity providers 154,665 118,778 75,584 65,294 Rail, Air, and Ocean Carriers 52,588 50,621 25,811 27,504 $242,588 $203,287 $118,892 $111,273 Revenue per load(5) $1,484 $1,374 $1,431 $1,391 Number of loads(5) 158,000 148,000 82,000 80,000 As of As of June 25, June 26, 2005 2004 Capacity Business Capacity Owners(1)(3) 7,840 7,629 Other third party truck capacity providers: Approved and active (4) 12,458 9,800 Approved 7,605 6,416 20,063 16,216 Total available truck capacity providers 27,903 23,845 (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 8,609 and 8,560, respectively. (4) Active refers to other third party truck capacity providers who have moved at least one load in the past 180 days. (5) Number of loads and revenue per load excludes the effect of revenue derived from emergency transportation services provided under the FAA contract.SOURCE Landstar System, Inc.
CONTACT: Bob LaRose, Landstar System, Inc., +1-904-398-9400/ /Web site: http://www.landstar.com / (LSTR)