EX-99.1 2 d808322dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

For Immediate Release

Contact: Jim Gattoni

Landstar System, Inc.

www.landstar.com

904-398-9400

October 23, 2014

LANDSTAR SYSTEM REPORTS RECORD QUARTERLY REVENUE OF

$819 MILLION AND RECORD QUARTERLY DILUTED EARNINGS

PER SHARE OF $0.82 IN THE THIRD QUARTER

Jacksonville, FL – Landstar System, Inc. (NASDAQ: LSTR) reported record third quarter net income of $36.8 million, or $0.82 per diluted share, on record revenue of $819 million in the 2014 third quarter. Revenue and diluted earnings per share for the 2014 third quarter were the highest quarterly revenue and diluted earnings per share in Landstar history. Landstar reported net income from continuing operations of $28.5 million, or $0.62 per diluted share, on revenue of $676 million in the 2013 third quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $121.1 million in the 2014 third quarter compared to $103.8 million in gross profit in the 2013 third quarter. Operating margin, representing operating income divided by gross profit, was 49.2 percent in the 2014 third quarter.

Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2014 third quarter was $767.5 million, or 94 percent of revenue, compared to $627.5 million, or 93 percent of revenue, in the 2013 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $41.7 million, or 5 percent of revenue, in the 2014 third quarter compared to $38.8 million, or 6 percent of revenue, in the 2013 third quarter.


LANDSTAR SYSTEM/2

 

 

Trailing twelve-month return on average shareholders’ equity was 35.1 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 28.6 percent. As of September 27, 2014, the Company had $178 million in cash and short term investments and had $192 million available for borrowing under the Company’s senior credit facility. Landstar purchased approximately 940,000 shares of its common stock during the 39 weeks ended September 27, 2014 at an aggregate cost of $56.4 million. Currently, there are approximately 1,828,000 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase program. In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.07 per share payable on December 5, 2014 to stockholders of record at the close of business on November 11, 2014. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

“Landstar’s 2014 third quarter results were again outstanding,” said Landstar Chairman and CEO Henry Gerkens. “Revenue, gross profit, operating income, net income, and diluted earnings per share were all third quarter records. Overall, demand for Landstar’s truck transportation services in the 2014 third quarter continued to be very strong, as the number of loads hauled via truck increased 11 percent over the 2013 third quarter. Revenue per load hauled via truck also remained very strong and increased 10 percent over the 2013 third quarter. In fact, Landstar’s average revenue per load hauled via truck in the 2014 third quarter was the highest quarterly average revenue per load in the Company’s history. Landstar experienced very strong revenue growth over the 2013 third quarter with respect to both loads hauled via van equipment and loads hauled via unsided/platform equipment. On a quarter-over-prior-year-quarter basis, revenue hauled via van equipment increased 24 percent and revenue hauled via unsided/platform equipment increased 20 percent. Despite an increased provision for incentive compensation, our operating margin was an impressive 49.2 percent in the 2014 third quarter and was the second highest third quarter operating margin in Landstar’s history. And finally, diluted earnings per share from continuing operations in the 2014 third quarter increased a healthy 32 percent over the 2013 third quarter.”


LANDSTAR SYSTEM/3

 

 

Gerkens continued, “The strength in both the number of loads hauled via truck and truck revenue per load experienced in the 2014 third quarter has so far continued through the first several weeks of October. Currently, I would also anticipate that the strength in both load volume and revenue per load from truck transportation services should continue throughout the remainder of the 2014 fourth quarter. I also am aware that historically the back half of any fourth quarter has been somewhat unpredictable. As such, my range of estimated consolidated revenue for the 2014 fourth quarter is from a low end of $800 million to a high end of $840 million. Assuming that range of estimated fourth quarter revenue, I would anticipate fourth quarter diluted earnings per share from continuing operations to be in a range of $0.77 to $0.82 per share compared to $0.55 per diluted share from continuing operations in the 2013 fourth quarter. For the year, I expect consolidated revenue to exceed $3.0 billion for the first time in the Company’s history. In addition, I anticipate that gross profit, operating income and diluted earnings per share in 2014 will also achieve full year Company records.”

Landstar will provide 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 2014 Earnings Release Conference Call.”

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,” “intention,” “expects,” “plans,” “predicts,” “may,” “should,” “could,” “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 other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; decreased demand for transportation services; substantial industry competition; disruptions or failures in the Company’s computer systems; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; intellectual property; unclaimed property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10K for the 2013 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 the Company undertakes no obligation to publicly update or revise any forward-looking statements.


LANDSTAR SYSTEM/4

 

 

About Landstar:

Landstar System, Inc. is a worldwide, asset-light provider of integrated transportation management solutions delivering safe, specialized transportation logistics services to a broad range of customers 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 RC14001:2013 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)

 

     Thirty Nine Weeks Ended      Thirteen Weeks Ended  
     September 27,
2014
     September 28,
2013
     September 27,
2014
     September 28,
2013
 

Revenue

   $ 2,321,960       $ 1,972,805       $ 819,320       $ 675,535   

Investment income

     1,027         1,111         332         366   

Costs and expenses:

           

Purchased transportation

     1,792,560         1,512,677         633,596         518,141   

Commissions to agents

     181,196         156,377         64,631         53,630   

Other operating costs, net of gains on asset dispositions

     19,350         15,396         6,521         6,011   

Insurance and claims

     37,732         36,907         12,026         13,335   

Selling, general and administrative

     108,567         94,967         36,215         30,990   

Depreciation and amortization

     20,419         20,743         7,086         7,180   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total costs and expenses

     2,159,824         1,837,067         760,075         629,287   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     163,163         136,849         59,577         46,614   

Interest and debt expense

     2,260         2,367         774         856   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from continuing operations before income taxes

     160,903         134,482         58,803         45,758   

Income taxes

     60,585         50,736         22,048         17,255   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income from continuing operations

     100,318         83,746         36,755         28,503   

Income from discontinued operations, net of income taxes

     —           2,706         —           743   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 100,318       $ 86,452       $ 36,755       $ 29,246   
  

 

 

    

 

 

    

 

 

    

 

 

 

Earnings per common share:

           

Income from continuing operations

   $ 2.23       $ 1.81       $ 0.82       $ 0.62   

Income from discontinued operations

     —           0.06         —           0.02   

Earnings per common share

     2.23         1.87         0.82         0.64   

Diluted earnings per share:

           

Income from continuing operations

   $ 2.22       $ 1.81       $ 0.82       $ 0.62   

Income from discontinued operations

     —           0.06         —           0.02   

Diluted earnings per share

     2.22         1.87         0.82         0.64   

Average number of shares outstanding:

           

Earnings per common share

     45,018,000         46,156,000         44,713,000         45,708,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

     45,222,000         46,323,000         44,937,000         45,856,000   
  

 

 

    

 

 

    

 

 

    

 

 

 

Dividends per common share

   $ 0.19       $ —         $ 0.07       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 


LANDSTAR SYSTEM/6

Landstar System, Inc. and Subsidiary

Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

(Unaudited)

 

     September 27,
2014
    December 28,
2013
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 140,591      $ 180,302   

Short-term investments

     37,664        34,939   

Trade accounts receivable, less allowance of $4,687 and $3,773

     455,478        378,732   

Other receivables, including advances to independent contractors, less allowance of $3,449 and $4,253

     12,355        73,903   

Deferred income taxes and other current assets

     16,322        14,592   
  

 

 

   

 

 

 

Total current assets

     662,410        682,468   
  

 

 

   

 

 

 

Operating property, less accumulated depreciation and amortization of $157,379 and $157,985

     203,568        177,329   

Goodwill

     31,134        31,134   

Other assets

     83,113        79,765   
  

 

 

   

 

 

 

Total assets

   $ 980,225      $ 970,696   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Cash overdraft

   $ 32,232      $ 27,780   

Accounts payable

     203,203        157,796   

Current maturities of long-term debt

     34,619        27,567   

Insurance claims

     29,153        92,280   

Other current liabilities

     43,120        70,237   
  

 

 

   

 

 

 

Total current liabilities

     342,327        375,660   
  

 

 

   

 

 

 

Long-term debt, excluding current maturities

     80,507        73,938   

Insurance claims

     23,293        24,171   

Deferred income taxes and other non-current liabilities

     38,426        42,446   

Shareholders’ equity:

    

Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,211,626 and 67,017,858 shares

     672        670   

Additional paid-in capital

     186,097        179,807   

Retained earnings

     1,264,811        1,173,044   

Cost of 22,474,331 and 21,528,693 shares of common stock in treasury

     (955,613     (899,028

Accumulated other comprehensive loss

     (295     (12
  

 

 

   

 

 

 

Total shareholders’ equity

     495,672        454,481   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 980,225      $ 970,696   
  

 

 

   

 

 

 


LANDSTAR SYSTEM/7

Landstar System, Inc. and Subsidiary

Supplemental Information

(Unaudited)

 

     Thirty Nine Weeks Ended      Thirteen Weeks Ended  
     September 27,
2014
     September 28,
2013
     September 27,
2014
     September 28,
2013
 

Revenue generated through (in thousands):

           

Business Capacity Owners (1)

   $ 1,126,213       $ 987,914       $ 385,524       $ 342,366   

Truck Brokerage Carriers

     1,051,118         837,005         381,964         285,183   

Rail intermodal

     58,957         55,450         21,936         18,762   

Ocean and air cargo carriers

     56,168         65,082         19,731         20,061   

Other (2)

     29,504         27,354         10,165         9,163   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 2,321,960       $ 1,972,805       $ 819,320       $ 675,535   
  

 

 

    

 

 

    

 

 

    

 

 

 

Number of loads:

           

Business Capacity Owners (1)

     614,800         591,200         203,430         198,830   

Truck Brokerage Carriers

     555,100         495,240         197,930         163,500   

Rail intermodal

     22,840         22,100         8,560         7,710   

Ocean and air cargo carriers

     12,110         12,370         4,100         4,330   
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,204,850         1,120,910         414,020         374,370   
  

 

 

    

 

 

    

 

 

    

 

 

 

Revenue per load:

           

Business Capacity Owners (1)

   $ 1,832       $ 1,671       $ 1,895       $ 1,722   

Truck Brokerage Carriers

     1,894         1,690         1,930         1,744   

Rail intermodal

     2,581         2,509         2,563         2,433   

Ocean and air cargo carriers

     4,638         5,261         4,812         4,633   
                   September 27,
2014
     September 28,
2013
 

Truck Capacity Providers

           

Business Capacity Owners (1) (3)

           8,252         7,890   
        

 

 

    

 

 

 

Truck Brokerage Carriers:

           

Approved and active (4)

           25,250         21,171   

Approved

           11,884         11,143   
        

 

 

    

 

 

 
           37,134         32,314   
        

 

 

    

 

 

 

Total available truck capacity providers

           45,386         40,204   
        

 

 

    

 

 

 

 

(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 revenue generated by the transportation logistics segment.

 

(3) Trucks provided by Business Capacity Owners were 8,792 and 8,410 at September 27, 2014 and September 28, 2013, respectively.

 

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