EX-99.1

EX-99.1 2 d386276dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

LOGO


For Immediate Release		Contact: Jim Gattoni
		Landstar System, Inc.
		www.landstar.com
July 26, 2012		904-398-9400

LANDSTAR SYSTEM REPORTS 23 PERCENT INCREASE IN DILUTED EARNINGS

PER SHARE TO A SECOND QUARTER RECORD OF $0.76

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported 2012 record second quarter diluted earnings per share of $0.76 from net income of $35.9 million, compared to net income of $29.6 million, or $0.62 per diluted share, for the 2011 second 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 50.4 percent in the 2012 second quarter compared to 43.6 percent in the 2011 second quarter. Revenue for the 2012 second quarter was a second quarter record of $736.0 million compared to $675.6 million in the 2011 second quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2012 second quarter was $680.0 million, or 92 percent of revenue, compared to $621.5 million, or 92 percent of revenue, in the 2011 second quarter. In the 2012 and 2011 second quarters, the Company invoiced customers $79.3 million and $78.7 million, respectively, of fuel surcharges that were passed 100 percent to BCOs and excluded from revenue. Included in revenue hauled by third-party truck capacity providers in the 2012 and 2011 second quarters were $30.1 million and $25.9 million, respectively, of fuel surcharges invoiced to customers on revenue hauled by third-party truck brokerage carriers. Revenue hauled by rail, air and ocean cargo carriers was $41.3 million, or 6 percent of revenue, in the 2012 second quarter compared to $39.9 million, or 6 percent of revenue, in the 2011 second quarter.

LANDSTAR SYSTEM/2

Trailing twelve-month return on average shareholder’s equity was 41 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 August 31, 2012 to stockholders of record at the close of business on August 13, 2012. Also during the 2012 second quarter, the Company entered into a new credit agreement to refinance its existing credit facility. The new credit facility will expire in June 2017.

In addition, Landstar announced that its Board of Directors authorized the purchase of 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 2012 second quarter, Landstar purchased 315,600 shares of its common stock at a total cost of $15,752,000. Currently, there are approximately 2,200,000 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase program.

“Landstar’s 2012 second quarter performance was the best second quarter operating performance in Landstar history,” said Landstar Chairman, President and CEO Henry Gerkens. “Revenue in the 2012 second quarter increased approximately $60 million over the 2011 second quarter to record second quarter revenue of $736.0 million. Gross profit in the 2012 second quarter increased 5 percent over the 2011 second quarter to record second quarter gross profit of $116.7 million. Operating income in the 2012 second quarter increased 21 percent over the 2011 second quarter to record second quarter operating income of $58.8 million. Diluted earnings per share in the 2012 second quarter increased 23 percent over the 2011 second quarter to record second quarter diluted earnings per share of $0.76. The record second quarter performance was led by continued strength in demand for Landstar’s truck transportation services as Landstar continues to execute on its solutions oriented approach to customers. The number of loads hauled on truck capacity in the 2012 second quarter increased 8 percent over the 2011 second quarter. As anticipated, the increase in pricing on truck transportation on a quarter over prior year quarter basis has moderated to some degree, but still remained high in relation to historical amounts.”

LANDSTAR SYSTEM/3

Gerkens continued, “Demand for the Company’s truck transportation services continued to be strong throughout the 2012 second quarter. Available truck capacity in the flatbed/unsided trailing equipment market continued to lag demand and available truck capacity in the van arena was in-line with demand. Historically, revenue in the Company’s core business during the fiscal third quarter has been relatively consistent with revenue generated in the Company’s core business during the fiscal second quarter. Assuming the current and historical operating trends continue, I would expect 2012 third quarter diluted earnings per share to be within a range of $0.71 to $0.75.”

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 Second Quarter 2012 Earnings Release Conference Call.” The webcast will be available on the Company’s website through Thursday, August 2, 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.

LANDSTAR SYSTEM/4

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.

(Tables follow)

LANDSTAR SYSTEM/5

Landstar System, Inc. and Subsidiary

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)


	Twenty Six Weeks Ended					Thirteen Weeks Ended
	June 30, 2012		June 25, 2011			June 30, 2012		June 25, 2011
Revenue	$	1,384,996	$	1,247,547		$	735,973	$	675,561
Investment income		792		921			405		393

Costs and expenses:
Purchased transportation		1,055,703		941,360			562,781		509,982
Commissions to agents		106,692		98,175			56,460		54,004
Other operating costs		11,188		15,623			4,716		7,679
Insurance and claims		20,401		24,715			9,306		13,449
Selling, general and administrative		76,461		73,046			37,662		35,782
Depreciation and amortization		13,404		12,787			6,664		6,388


Total costs and expenses		1,283,849		1,165,706			677,589		627,284


Operating income		101,939		82,762			58,789		48,670
Interest and debt expense		1,494		1,605			770		777


Income before income taxes		100,445		81,157			58,019		47,893
Income taxes		37,743		31,002			22,164		18,295

Net income		62,702		50,155			35,855		29,598
Less: Net loss attributable to noncontrolling interest		—		(62	)		—		—

Net income attributable to Landstar System, Inc. and subsidiary	$	62,702	$	50,217		$	35,855	$	29,598


Earnings per common share attributable to Landstar System, Inc. and subsidiary	$	1.34	$	1.05		$	0.76	$	0.62


Diluted earnings per share attributable to Landstar System, Inc. and subsidiary	$	1.33	$	1.05		$	0.76	$	0.62


Average number of shares outstanding:
Earnings per common share		46,856,000		47,826,000			46,915,000		47,782,000

Diluted earnings per share		47,083,000		47,907,000			47,104,000		47,912,000


Dividends paid per common share	$	0.110	$	0.100		$	0.055	$	0.050

LANDSTAR SYSTEM/6

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)


	June 30, 2012			Dec. 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	64,395		$	80,900
Short-term investments		36,601			27,944
Trade accounts receivable, less allowance of $7,379 and $6,591		423,059			368,377
Other receivables, including advances to independent contractors, less allowance of $4,727 and $5,384		54,938			53,263
Deferred income taxes and other current assets		23,089			21,308

Total current assets		602,082			551,792


Operating property, less accumulated depreciation and amortization of $150,687 and $145,804		152,059			142,146
Goodwill		57,470			57,470
Other assets		71,687			57,041

Total assets	$	883,298		$	808,449


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Cash overdraft	$	24,072		$	25,905
Accounts payable		203,919			163,307
Current maturities of long-term debt		16,937			17,212
Insurance claims		69,156			76,624
Other current liabilities		46,984			48,065

Total current liabilities		361,068			331,113


Long-term debt, excluding current maturities		108,617			115,130
Insurance claims		25,297			27,494
Deferred income taxes and other non-current liabilities		40,557			34,135

Shareholders’ equity:
Common stock, $0.01 par value, authorized 160,000,000 shares, issued 66,851,672 and 66,602,486 shares		669			666
Additional paid-in capital		170,921			165,712
Retained earnings		1,004,701			947,156
Cost of 20,202,662 and 19,882,289 shares of common stock in treasury		(829,443	)		(813,684	)
Accumulated other comprehensive income		911			727

Total shareholders’ equity		347,759			300,577

Total liabilities and shareholders’ equity	$	883,298		$	808,449

LANDSTAR SYSTEM/7

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)


	Twenty Six Weeks Ended				Thirteen Weeks Ended
	June 30, 2012		June 25, 2011		June 30, 2012		June 25, 2011
Revenue generated through (in thousands):
Business Capacity Owners ⁽¹⁾	$	701,248	$	669,748	$	371,886	$	362,854
Truck Brokerage Carriers		578,932		472,391		308,090		258,668
Rail intermodal		36,220		34,832		18,838		18,367
Ocean and air cargo carriers		40,127		42,931		22,458		21,538
Other ⁽²⁾		28,469		27,645		14,701		14,134

	$	1,384,996	$	1,247,547	$	735,973	$	675,561


Number of loads:
Business Capacity Owners ⁽¹⁾		415,150		402,730		215,950		210,690
Truck Brokerage Carriers		333,600		287,210		175,570		151,470
Rail intermodal		14,820		14,830		7,660		7,570
Ocean and air cargo carriers		7,910		7,950		3,930		4,170

		771,480		712,720		403,110		373,900


Revenue per load:
Business Capacity Owners ⁽¹⁾	$	1,689	$	1,663	$	1,722	$	1,722
Truck Brokerage Carriers		1,735		1,645		1,755		1,708
Rail intermodal		2,444		2,349		2,459		2,426
Ocean and air cargo carriers		5,073		5,400		5,715		5,165

					June 30, 2012		June 25, 2011
Truck Capacity Providers
Business Capacity Owners ^{(1) (3)}						7,959		7,711
Truck Brokerage Carriers:
Approved and active ⁽⁴⁾						19,283		17,696
Approved						9,051		8,984

						28,334		26,680

Total available truck capacity providers						36,293		34,391

(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 revenue generated by the transportation logistics segment.

(3)	Trucks provided by Business Capacity Owners were 8,478 and 8,231 at June 30, 2012 and June 25, 2011, respectively.

(4)	Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.