Landstar System Reports 30 Percent Increase In Revenue And Record Net Income And Diluted Earnings Per Share
JACKSONVILLE, Fla., Oct. 14 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported a 30 percent increase in revenue to a record $527 million in the 2004 third quarter, up from $407 million in the 2003 third quarter. Net income for the 2004 third quarter was a record $21.6 million, or $.70 per diluted share, compared to net income of $11.8 million, or $.38 per diluted share for the 2003 third quarter. Included in the 2004 third quarter revenue was $27.9 million of revenue related to disaster relief efforts for the recent storms that impacted the southeastern United States. These emergency transportation services were provided primarily under a contract between Landstar Express America, Inc. and the United States Federal Aviation Administration (the "FAA"). The revenue recognized under this contract generated $5.1 million of operating income which, net of related income taxes, increased net income by $3.1 million, or $.10 per diluted share, in the 2004 third quarter. As previously disclosed, the 2003 third quarter included $3.2 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 third quarter by $2.0 million, or $.06 per diluted share. Excluding the costs related to that litigation, net income for the 2003 third quarter was $13.9 million, or $.44 per diluted share.
Landstar's carrier group of companies generated $369 million of revenue in the 2004 third quarter, compared with revenue of $308 million in the 2003 third quarter. In the 2004 and 2003 third quarters, the carrier group invoiced customers $15.3 million and $7.8 million, respectively, in fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar's multimodal services group of companies generated $151 million of revenue, including the $27.9 million related to disaster relief services, in the 2004 third quarter compared with $92 million of revenue in the 2003 third quarter. Operating margin in the 2004 third quarter was 6.8 percent compared with 4.9 percent in the 2003 third quarter, 5.7 percent excluding the cost of the Gulf Bridge litigation. The $27.9 million of revenue attributable to emergency transportation services provided primarily under the FAA contract increased operating margin in the 2004 third quarter approximately 0.6 percent.
Net income for the thirty-nine-week period ended September 25, 2004 was $47.3 million, or $1.53 per diluted share, compared to net income of $35.6 million, or $1.10 per diluted share for the 2003 thirty-nine-week period ended September 27, 2003. The 2004 thirty-nine-week period included $7.6 million of costs to settle one, previously disclosed, severe accident. This charge, net of related income tax benefits, reduced net income by $4.9 million, or $.16 per diluted share. Also, included in net income for the 2004 thirty-nine-week period is $5.1 million of operating income related to the $27.9 million of revenue from emergency transportation services provided primarily under the FAA contract. This $5.1 million of operating income, net of related income taxes, increased net income $3.1 million, or $.10 per diluted share. The 2003 thirty-nine-week period 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 thirty-nine-week period by $2.7 million, or $.08 per diluted share. Excluding the costs related to that litigation, net income was $38.2 million, or $1.19 per diluted share in the 2003 period. Revenue was $1,430 million in the 2004 thirty-nine- week period, compared to revenue of $1,163 million in the comparable 2003 period. Landstar's carrier group of companies generated $1,054 million of revenue in the thirty-nine-week period ended September 25, 2004 compared with $901 million in the thirty-nine-week period ended September 27, 2003. In the 2004 and 2003 thirty-nine-week periods, the carrier group invoiced customers $37.4 million and $26.4 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 $354 million of revenue in the 2004 thirty-nine-week period compared with $241 million in the comparable 2003 period.
"I am both pleased with and proud of Landstar's 2004 third quarter performance," said Landstar President and CEO Henry Gerkens. "Consolidated revenue increased by 30 percent, compared to the 2003 third quarter, to the highest quarterly revenue in Landstar history, as revenue at the carrier segment increased 20 percent and revenue at the multimodal segment increased 64 percent. Landstar was able to source the capacity required for disaster relief efforts in Florida and throughout the southeast while providing sufficient capacity to its regular customer base necessary to support a 23 percent increase in revenue. Overall, the increased revenue resulted in an 84 percent increase in diluted earnings per share over the 2003 third quarter."
"During the quarter, we increased the total number of approved capacity providers by over 1,100. Compared to the 2003 third quarter, revenue generated through other third party truck capacity providers (truck brokerage) increased 63 percent and revenue hauled by Landstar BCOs increased 21 percent. Trailing twelve-month return on average equity remained high at 41 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 26 percent. During the thirty-nine-week period ended September 25, 2004, we reduced debt by approximately $6 million, purchased 681,000 shares of common stock at a total cost of $27,001,000 and ended the period with $101 million in cash and short-term investments," Gerkens said. "The Company has the ability to purchase an additional 699,140 shares of its common stock under its authorized share repurchase program."
"I anticipate revenue growth for the 2004 fourth quarter to be within a range of 16 to 21 percent. This estimate includes additional anticipated emergency transportation services revenue to be provided under the FAA contract within a range of $9 million to $14 million. The current range of analysts' earnings estimates, as reported by FIRST CALL, for the fourth quarter of 2004 is $.57 to $.68 per diluted share. Given the current operating environment, I anticipate earnings for the 2004 fourth quarter to be within a range of $.63 to $.71 per diluted share, including $.03 to $.05 per diluted share attributable to the anticipated revenue related to disaster relief efforts to be provided under the FAA contract," said Gerkens.
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 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 2003 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. is headquartered in Jacksonville, Florida. The Landstar carrier group comprised of Landstar Gemini, Inc., Landstar Inway, Inc., Landstar Ligon, Inc., Landstar Ranger, Inc. and Landstar Carrier Services, Inc. delivers excellence in safe and complete over-the-road transportation services. The Landstar multimodal group comprised of Landstar Express America, Inc. and Landstar Logistics, Inc. delivers excellence in safe, expedited, contract logistics, intermodal and ocean 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) Thirty Nine Weeks Ended Thirteen Weeks Ended Sept. 25, Sept. 27, Sept. 25, Sept. 27, 2004 2003 2004 2003 Revenue $1,430,212 $1,162,574 $526,883 $406,772 Investment income 879 960 337 337 Costs and expenses: Purchased transportation 1,066,739 862,371 392,646 300,907 Commissions to agents 113,414 91,224 42,777 32,601 Other operating costs 27,313 27,571 8,537 9,731 Insurance and claims 46,751 32,187 13,297 10,026 Selling, general and administrative (1) 87,831 81,004 30,643 30,668 Depreciation and amortization 10,220 9,558 3,654 3,213 Total costs and expenses 1,352,268 1,103,915 491,554 387,146 Operating income (1) 78,823 59,619 35,666 19,963 Interest and debt expense 2,213 2,400 662 856 Income before income taxes (1) 76,610 57,219 35,004 19,107 Income taxes 29,304 21,667 13,390 7,280 Net income (1) $47,306 $35,552 $21,614 $11,827 Earnings per common share (1) $1.58 $1.15 $0.72 $0.39 Diluted earnings per share (1) $1.53 $1.10 $0.70 $0.38 Average number of shares outstanding: Earnings per common share (1) 30,001,000 31,002,000 30,218,000 30,155,000 Diluted earnings per share (1) 30,827,000 32,193,000 30,954,000 31,287,000 (1) The 2003 thirty-nine and thirteen-week periods include $4,150 and $3,180, respectively, of costs to defend and settle the Gulf Bridge lawsuit. Net of related income tax benefits, these costs reduced net income for the thirty-nine and thirteen-week periods ended September 27, 2003 by $2,650, or $0.09 per common share ($0.08 per diluted share), and $2,030, or $0.07 per common share ($0.06 per diluted share), respectively. Landstar System, Inc. Selected Segment Information (Dollars in thousands) (Unaudited) Thirty Nine Weeks Ended Thirteen Weeks Ended Sept. 25, Sept. 27, Sept. 25, Sept. 27, 2004 2003 2004 2003 External Revenue Carrier segment $1,054,016 $901,041 $368,821 $307,755 Multimodal segment 353,794 240,551 150,507 91,911 Insurance segment 22,402 20,982 7,555 7,106 External revenue $1,430,212 $1,162,574 $526,883 $406,772 Operating Income Carrier segment $91,631 $66,398 $36,492 $23,542 Multimodal segment (1) 14,290 2,756 8,277 (235) Insurance segment 7,164 17,830 4,126 6,769 Other (34,262) (27,365) (13,229) (10,113) Operating income (1) $78,823 $59,619 $35,666 $19,963 (1) The 2003 thirty-nine and thirteen-week periods include $4,150 and $3,180, respectively, of costs to defend and settle the Gulf Bridge lawsuit. Landstar System, Inc. Consolidated Balance Sheets (Dollars in thousands, except per share amounts) (Unaudited) September 25, December 27, 2004 2003 ASSETS Current assets: Cash and cash equivalents $68,173 $42,640 Short-term investments 32,865 30,890 Trade accounts receivable, less allowance of $4,564 and $3,410 287,241 219,039 Other receivables, including advances to independent contractors, less allowance of $4,725 and $4,077 13,228 13,196 Deferred income taxes and other current assets 17,425 14,936 Total current assets 418,932 320,701 Operating property, less accumulated depreciation and amortization of $63,780 and $58,480 69,567 67,639 Goodwill 31,134 31,134 Other assets 19,309 18,983 Total assets $538,942 $438,457 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Cash overdraft $20,576 $20,523 Accounts payable 119,961 71,713 Current maturities of long-term debt 8,322 9,434 Insurance claims 31,351 26,293 Other current liabilities 53,129 45,223 Total current liabilities 233,339 173,186 Long-term debt, excluding current maturities 76,772 82,022 Insurance claims 31,498 27,282 Deferred income taxes 12,709 13,452 Shareholders' equity: Common stock, $.01 par value, authorized 80,000,000 and 50,000,000 shares, issued 32,724,160 and 31,816,860 shares 327 318 Additional paid-in capital 40,307 18,382 Retained earnings 271,674 224,368 Cost of 2,490,930 and 1,809,930 shares of common stock in treasury (127,151) (100,150) Accumulated other comprehensive income 52 182 Notes receivable arising from exercises of stock options (585) (585) Total shareholders' equity 184,624 142,515 Total liabilities and shareholders' equity $538,942 $438,457 Landstar System, Inc. Supplemental Information (Unaudited) Thirty Nine Weeks Thirteen Weeks Ended Ended Sept. 25, Sept. 27, Sept. 25, Sept. 27, 2004 2003 2004 2003 Carrier Segment External revenue generated through (in thousands): Business Capacity Owners (1) $879,730 $775,696 $301,639 $265,824 Other third party truck capacity providers 174,286 125,345 67,182 41,931 $1,054,016 $901,041 $368,821 $307,755 Revenue per revenue mile $1.76 $1.72 $1.78 $1.70 Revenue per load $1,351 $1,197 $1,424 $1,216 Average length of haul (miles) 766 695 798 716 Number of loads (2) 780,000 753,000 259,000 253,000 Multimodal Segment External revenue generated through (in thousands): Business Capacity Owners (1) (3) $72,066 $37,674 $38,178 $14,921 Other third party truck capacity providers 201,882 131,155 83,104 50,354 Rail, Air, and Ocean Carriers 79,846 71,722 29,225 26,636 $353,794 $240,551 $150,507 $91,911 Revenue per load (6) $1,399 $1,307 $1,443 $1,352 Number of loads (6) 233,000 184,000 85,000 68,000 As of As of September 25, September 27, 2004 2003 Capacity Business Capacity Owners (1) (4) 7,758 7,461 Other third party truck capacity providers: Approved and active(5) 10,324 9,139 Approved 6,870 6,204 17,194 15,343 Total available truck capacity providers 24,952 22,804 (1) Business Capacity Owners are independent contractors who provide truck capacity to the Company under exclusive lease arrangements. (2) Effective with the 2004 second quarter, the Company has modified its methodology for reporting loads. The application of this new methodology to the 2003 thirty-nine and thirteen week period resulted in an increase of 8,000 and 5,000 loads, respectively. This change in load recognition has no impact on reported revenue in any period. (3) Includes revenue generated through Carrier Segment Business Capacity Owners. (4) Trucks provided by business capacity owners were 8,644 and 8,451, respectively. (5) Active refers to other third party truck capacity providers who have moved at least one load in the past 180 days. (6) Number of loads and revenue per load for the 2004 thirty-nine and thirteen week periods exclude the effect of revenue derived from disaster relief efforts provided under the FAA contract.
SOURCE Landstar System, Inc.