Landstar System Reports First Quarter Earnings Per Diluted Share of $0.38
Net income for the thirteen-week period ended April 1, 2006 was $24.4 million, or $0.41 per diluted share, on revenue of $610 million. Included in the 2006 first quarter was $35.4 million of revenue related to disaster relief efforts for the various hurricanes that impacted the United States during the second half of 2005. These transportation services were provided primarily under the FAA contract. The revenue recognized under this contract during the 2006 first quarter generated $5.0 million of operating income which, net of related income taxes, increased net income by $3.1 million, or $0.05 per diluted share. Operating margin in the 2006 first quarter was 6.8 percent. The revenue generated under the FAA contract increased operating margin by 45 basis points in the 2006 period.
Landstar's carrier group of companies generated $424 million of revenue in the thirteen-week period ended March 31, 2007, compared with revenue of $428 million in the thirteen-week period ended April 1, 2006. In the 2007 and 2006 first quarters, the carrier group invoiced customers $33.7 million and $33.8 million, respectively, in fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar's global logistics group of companies generated $144 million of revenue, which included the $3.4 million related to transportation services provided primarily under the FAA contract, in the 2007 thirteen-week period compared with $173 million of revenue, which included $35.4 million related to transportation services provided primarily under the FAA contract, in the 2006 thirteen-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. During the 2007 first quarter, Landstar purchased 555,952 shares of its common stock at a total cost of $23,585,000. The Company may purchase an additional 271,549 shares of its common stock under its previously authorized share purchase program.
Landstar System, Inc. also announced that its Board of Directors has declared a quarterly dividend of $0.03 per share. The dividend is payable on May 31, 2007 to stockholders of record at the close of business on May 10, 2007. It is the intention of the Board of Directors to continue to pay a quarterly dividend on a go forward basis.
Commenting on Landstar's 2007 first quarter performance, Landstar President and CEO Henry Gerkens said, "Excluding the estimated impact of the severe accident in the 2007 first quarter, Landstar delivered earnings per diluted share of $0.43, which was at the upper end of our original estimated range of earnings. As anticipated, revenue for the quarter was slightly lower than the prior year quarter due to the lower revenue derived under the FAA contract and the continuation of softer demand in the domestic freight transportation industry. Once again however, our non-asset based variable cost business model achieved high financial returns as it adapted to the slower 2007 first quarter economy."
"Trailing twelve month return on average shareholders' equity remained high at 44 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 31 percent. During the quarter Landstar purchased $23,585,000 of its common stock, reduced debt by $31.3 million and ended the 2007 first quarter with cash and short term investments of $98.5 million."
Gerkens continued, "During the first month and a half of the 2007 first quarter, there was downward pressure on price caused by lower volumes and more available capacity. However, as we moved into the second half of the quarter pricing began to stabilize and volume levels improved. In fact, as it relates to pricing, revenue per load in March of 2007 was higher than in March 2006. This is an encouraging trend as we move into the 2007 second quarter. I anticipate the 2007 second quarter to be another challenging quarter due to uncertain economic conditions. In addition, the 2006 second quarter results included $20.8 million of revenue generated under the FAA contract. We are not forecasting any such revenue in the 2007 second quarter even though the contract has been extended through June 30, 2007 and the FAA has the option to extend the contract for the balance of the year. Given the comments above, I anticipate revenue growth for the second quarter of 2007 to be in a mid single digit range over the revenue generated in the second quarter of 2006, and I anticipate Landstar's earnings per diluted share to be within a range of $0.49 to $0.54 for the 2007 second quarter."
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, 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 2006 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 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 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 global logistics group, which is comprised of Landstar Global Logistics, Inc. and its subsidiary Landstar Express America, Inc., provides international and domestic multimodal (over-the-road, air, ocean and rail) transportation, expedited, contract logistics and warehousing services. 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) Thirteen Weeks Ended March 31, April 1, 2007 2006 Revenue $576,649 $610,042 Investment income 1,740 379 Costs and expenses: Purchased transportation 434,058 458,250 Commissions to agents 46,632 47,011 Other operating costs 5,506 12,068 Insurance and claims 17,540 11,552 Selling, general and administrative 33,165 35,836 Depreciation and amortization 4,617 4,093 Total costs and expenses 541,518 568,810 Operating income 36,871 41,611 Interest and debt expense 1,592 1,850 Income before income taxes 35,279 39,761 Income taxes 13,675 15,411 Net income $21,604 $24,350 Earnings per common share $0.39 $0.41 Diluted earnings per share $0.38 $0.41 Average number of shares outstanding: Earnings per common share 55,926,000 58,901,000 Diluted earnings per share 56,470,000 59,919,000 Dividends paid per common share $0.030 $0.025 Landstar System, Inc. Selected Segment Information (Dollars in thousands) (Unaudited) Thirteen Weeks Ended March 31, April 1, 2007 2006 External Revenue Carrier segment $423,574 $428,313 Global Logistics segment 143,865 173,425 Insurance segment 9,210 8,304 External revenue $576,649 $610,042 Operating Income Carrier segment $41,409 $40,571 Global Logistics segment 4,688 8,727 Insurance segment 3,359 6,676 Other (12,585) (14,363) Operating income $36,871 $41,611 Landstar System, Inc. Consolidated Balance Sheets (Dollars in thousands, except per share amounts) (Unaudited) March 31, Dec 30, 2007 2006 ASSETS Current assets: Cash and cash equivalents $77,780 $91,491 Short-term investments 20,701 21,548 Trade accounts receivable, less allowance of $4,589 and $4,834 300,255 318,983 Other receivables, including advances to independent contractors, less allowance of $3,987 and $4,512 22,053 14,198 Deferred income taxes and other current assets 17,154 25,142 Total current assets 437,943 471,362 Operating property, less accumulated depreciation and amortization of $78,307 and $77,938 115,501 110,957 Goodwill 31,134 31,134 Other assets 36,006 33,198 Total assets $620,584 $646,651 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Cash overdraft $25,160 $25,435 Accounts payable 120,404 122,313 Current maturities of long-term debt 19,578 18,730 Insurance claims 27,386 25,238 Other current liabilities 55,138 58,478 Total current liabilities 247,666 250,194 Long-term debt, excluding current maturities 78,415 110,591 Insurance claims 43,127 36,232 Deferred income taxes 20,424 19,360 Shareholders' equity: Common stock, $.01 par value, authorized 160,000,000 shares, issued 65,127,496 and 64,993,143 shares 651 650 Additional paid-in capital 112,345 108,020 Retained earnings 519,195 499,273 Cost of 9,583,961 and 9,028,009 shares of common stock in treasury (401,247) (377,662) Accumulated other comprehensive income (loss) 8 (7) Total shareholders' equity 230,952 230,274 Total liabilities and shareholders' equity $620,584 $646,651 Landstar System, Inc. Supplemental Information (Unaudited) Thirteen Weeks Ended March 31, April 1, 2007 2006 Carrier Segment External revenue generated through (in thousands): Business Capacity Owners (1) $299,398 $303,793 Other third party truck capacity providers 124,176 124,520 $423,574 $428,313 Revenue per revenue mile $1.98 $1.99 Revenue per load $1,569 $1,580 Average length of haul (miles) 792 793 Number of loads 270,000 271,000 Global Logistics Segment External revenue generated through (in thousands): Business Capacity Owners (1) (2) $26,841 $24,832 Other third party truck capacity providers 79,953 100,627 Rail, Air, Ocean and Bus Carriers (3) 37,071 47,966 $143,865 $173,425 Revenue per load (4) $1,560 $1,500 Number of loads (4) 90,000 92,000 As of As of March 31, April 1, 2007 2006 Capacity Business Capacity Owners (1) (5) 8,510 8,219 Other third party truck capacity providers: Approved and active (6) 14,784 13,698 Approved 8,758 8,381 23,542 22,079 Total available truck capacity providers 32,052 30,298 Agent Locations 1,338 1,196 (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) Included in the 2007 and 2006 thirteen week period was $481,000 and $10,856,000, respectively, of revenue attributable to buses provided under the FAA contract. (4) Number of loads and revenue per load exclude the effect of revenue derived from emergency transportation services provided under the FAA contract. (5) Trucks provided by business capacity owners were 9,158 and 8,932, respectively. (6) 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.
CONTACT:
Jim Gattoni of Landstar System, Inc.,
+1-904-398-9400
http://www.landstar.com/