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Press release from PR Newswire

Landstar System Reports 11 Percent Increase in Diluted Earnings Per Share to a Third Quarter Record of $0.71

Thursday, October 25, 2012

Landstar System Reports 11 Percent Increase in Diluted Earnings Per Share to a Third Quarter Record of $0.7107:50 EDT Thursday, October 25, 2012JACKSONVILLE, Fla., Oct. 25, 2012 /PRNewswire/ -- Landstar System, Inc. (NASDAQ: LSTR) reported 2012 record third quarter diluted earnings per share of $0.71 from net income of $33.1 million, compared to net income of $30.2 million, or $0.64 per diluted share, for the 2011 third quarter.  Operating margin, representing operating income divided by gross profit (gross profit defined as revenue less the cost of purchased transportation and commissions to agents) was 48.1 percent in the 2012 third quarter compared to 44.7 percent in the 2011 third quarter.  Revenue for the 2012 third quarter was $717.2 million compared to $684.0 million in the 2011 third quarter.  Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2012 third quarter was $663.5 million, or 93 percent of revenue, compared to $625.8 million, or 91 percent of revenue, in the 2011 third quarter.  Revenue hauled by rail, air and ocean cargo carriers was $38.9 million, or five percent of revenue, in the 2012 third quarter compared to $44.5 million, or seven percent of revenue, in the 2011 third quarter.  Trailing twelve-month return on average shareholder's equity was 39 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 29 percent.  Landstar also announced that its Board of Directors has declared a quarterly dividend of $0.06 per share.  The dividend is payable on December 7, 2012 to stockholders of record at the close of business on November 13, 2012.  During the 2012 third quarter, Landstar purchased 183,800 shares of its common stock at a total cost of $8.8 million bringing the total number of shares purchased during the first three quarters of 2012 to 499,400 at an aggregate cost of $24.6 million.  Currently, there are 2,017,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase programs.  "Landstar produced solid operating results in the 2012 third quarter, despite inconsistent demand and a tougher quarter over prior year quarter revenue per load comparison," said Landstar Chairman, President and Chief Executive Officer Henry Gerkens.  "Loads hauled via truck capacity in the 2012 third quarter increased a healthy seven percent over the 2011 third quarter.  Average truck revenue per load in the 2012 third quarter remained relatively high at $1,756 per load compared to historical amounts but was slightly lower than the $1,768 revenue per load amount in the 2011 third quarter.  After amounts paid for purchased transportation and agent commissions were deducted from revenue in the 2012 third quarter, the resulting gross profit amount was the second highest third quarter gross profit amount in Landstar history.  Landstar continued to demonstrate its operating leverage as it passed the increase in gross profit through to operating income, resulting in an operating margin of 48.1 percent in the 2012 third quarter.  Third quarter 2012 diluted earnings per share of $0.71 was a third quarter record."Gerkens continued, "As I look at the 2012 fourth quarter, it is important to note that the 2012 fourth quarter is a thirteen week quarter whereas the 2011 fourth quarter was a fourteen week quarter.  I estimate that the extra week in the 2011 fourth quarter contributed approximately $25 to $30 million in additional revenue.  Using the 2011 fourth quarter gross profit margin of 15.8 percent, the increase in diluted earnings per share attributable to that additional revenue is estimated to be approximately $0.06 per diluted share.  In addition, the 2011 fourth quarter included a favorable income tax benefit of approximately $0.03 per diluted share.  Although I am very confident in the long term outlook for Landstar, I am also somewhat cautious in the short term.  I believe that until the uncertainty surrounding the current political environment and tax and budgetary issues are resolved, the economy will continue to grow, but at a sluggish pace.  In the first few weeks of the 2012 fourth quarter, we have seen a slowing in demand beyond the choppiness experienced during the 2012 third quarter. Despite the slowing demand, revenue in the first several weeks of the 2012 fourth quarter continues to run above revenue of the first several weeks of the 2011 fourth quarter.  Given the uncertain economic environment and current revenue trends, I anticipate earnings per diluted share for the 2012 fourth quarter to be in a range of $0.63 to $0.68 per share."Landstar will hold a live webcast of its quarterly earnings conference call this afternoon at 2:00 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 Third Quarter 2012 Earnings Release Conference Call."  The webcast will be available on the Company's website through Thursday, November 1, 2012.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 2011 fiscal year, described in Item 1A Risk Factors, and in 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. is a non-asset based provider of integrated supply chain solutions.  Landstar delivers safe, specialized transportation and logistics services to a broad range of customers worldwide utilizing a network of agents, third-party capacity owners and employees.  All Landstar transportation services companies are certified to ISO 9001:2008 quality management system standards and RC14001:2008 environmental, health, safety and security management system standards.  Landstar System, Inc. is headquartered in Jacksonville, Florida. Its common stock trades on The NASDAQ Stock Market® under the symbol LSTR. Landstar System, Inc. and SubsidiaryConsolidated Statements of Income(Dollars in thousands, except per share amounts)(Unaudited)Thirty Nine Weeks EndedThirteen Weeks EndedSeptember 29,September 24,September 29,September 24,2012201120122011Revenue$        2,102,164$         1,931,560$          717,168$       684,013Investment income1,1851,294393373Costs and expenses:Purchased transportation1,603,8651,459,660548,162518,300Commissions to agents162,728153,16556,03654,990Other operating costs17,63522,0506,4476,427Insurance and claims28,41134,0968,0109,381Selling, general and administrative113,916112,25237,45539,206Depreciation and amortization20,47619,3367,0726,549Total costs and expenses1,947,0311,800,559663,182634,853Operating income156,318132,29554,37949,533Interest and debt expense2,3122,340818735Income before income taxes154,006129,95553,56148,798Income taxes 58,20349,64220,46018,640Net income95,80380,31333,10130,158Less: Net loss attributable to noncontrolling interest-(62)--Net income attributable to Landstar System,Inc. and subsidiary$            95,803$             80,375$           33,101$         30,158Earnings per common share attributable toLandstar System, Inc. and subsidiary$                2.05$                 1.69$               0.71$             0.64Diluted earnings per share attributable to Landstar System, Inc. and subsidiary$                2.04$                 1.68$               0.71$             0.64Average number of shares outstanding:Earnings per common share  46,775,00047,670,00046,614,00047,358,000Diluted earnings per share46,964,00047,735,00046,732,00047,387,000Dividends paid per common share$              0.170$               0.155$             0.060$           0.055  Landstar System, Inc. and SubsidiaryConsolidated Balance Sheets(Dollars in thousands, except per share amounts)(Unaudited)Sept. 29,Dec. 31,20122011ASSETSCurrent assets:Cash and cash equivalents$        79,961$        80,900Short-term investments38,11227,944Trade accounts receivable, less allowanceof $8,299 and $6,591429,684368,377Other receivables, including advances to independentcontractors, less allowance of $4,951 and $5,38451,76653,263Deferred income taxes and other current assets20,20221,308Total current assets619,725551,792Operating property, less accumulated depreciationand amortization of $154,657 and $145,804163,569142,146Goodwill57,47057,470Other assets68,61857,041Total assets$      909,382$      808,449LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Cash overdraft$        26,719$        25,905Accounts payable212,653163,307Current maturities of long-term debt19,36617,212Insurance claims68,41076,624Other current liabilities45,52648,065Total current liabilities372,674331,113Long-term debt, excluding current maturities99,748115,130Insurance claims25,38627,494Deferred income taxes and other non-current liabilities40,14134,135Shareholders' equity:Common stock, $0.01 par value, authorized 160,000,000 shares, issued 66,855,922 and 66,602,486 shares669666Additional paid-in capital172,455165,712Retained earnings1,035,003947,156Cost of 20,386,462 and 19,882,289 shares of commonstock in treasury(838,273)(813,684)Accumulated other comprehensive income1,579727Total shareholders' equity371,433300,577Total liabilities and shareholders' equity $      909,382$      808,449  Landstar System, Inc. and SubsidiarySupplemental Information(Unaudited)Thirty Nine Weeks EndedThirteen Weeks EndedSeptember 29,September 24,September 29,September 24,2012201120122011Revenue generated through (in thousands):Business Capacity Owners (1)$  1,057,109$  1,020,856$     355,861$      351,108Truck Brokerage Carriers886,532747,122307,600274,731Rail intermodal55,00253,99118,78219,159Ocean and air cargo carriers60,22768,26120,10025,330Other (2)   43,29441,33014,82513,685$  2,102,164$  1,931,560$     717,168$      684,013Number of loads:Business Capacity Owners (1)616,200601,990201,050199,260Truck Brokerage Carriers510,360441,930176,760154,720Rail intermodal22,29022,7507,4707,920Ocean and air cargo carriers11,76012,1503,8504,2001,160,6101,078,820389,130366,100Revenue per load:Business Capacity Owners (1)$          1,716$          1,696$         1,770$          1,762Truck Brokerage Carriers1,7371,6911,7401,776Rail intermodal2,4682,3732,5142,419Ocean and air cargo carriers5,1215,6185,2216,031September 29,September 24,20122011Truck Capacity ProvidersBusiness Capacity Owners (1) (3)8,0747,798Truck Brokerage Carriers:     Approved and active (4)20,47418,402     Approved9,3159,08829,78927,490Total available truck capacity providers37,86335,288(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 and warehousing and transportation management fee revenuegenerated by the transportation logistics segment.(3) Trucks provided by Business Capacity Owners were 8,596 and 8,314 at September 29, 2012 and September 24, 2011, respectively.(4) Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.SOURCE Landstar System, Inc.For further information: Jim Gattoni, Landstar System, Inc., +1-904-398-9400