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Landstar System Reports Fourth Quarter Diluted Earnings Per Share of $0.47

January 28, 2009 | About:

Press Release: Landstar System Reports Fourth Quarter Diluted Earnings Per Share of $0.47

JACKSONVILLE, Fla., Jan. 28 /PRNewswire-FirstCall/ -- Landstar System,Inc. (Nasdaq: LSTR) reported 2008 fourth quarter net income of $24.6 million,or $0.47 per diluted share, on revenue of $603.8 million compared to netincome of $29.0 million, or $0.54 per diluted share, on revenue of $642.9million in the 2007 fourth quarter. Revenue hauled by BCO Independent Contractors in the fourth quarter of2008 was $317 million, or 53 percent of revenue, compared to $341 million, or53 percent of revenue, in the 2007 fourth quarter. In the 2008 and 2007fourth quarters, the Company invoiced customers $55 million and $54 million,respectively, in fuel surcharges that were passed on 100 percent to BCOIndependent Contractors and excluded from revenue. Revenue hauled by third-party truck brokerage carriers was $230 million, or 38 percent of revenue, inthe 2008 fourth quarter compared to $236 million, or 37 percent of revenue, inthe 2007 fourth quarter. Revenue hauled by rail, air and ocean cargo carrierswas $47 million, or 8 percent of revenue, in the 2008 fourth quarter comparedto $54 million, or 8 percent of revenue, in the 2007 fourth quarter. Revenue in the fiscal year ended December 27, 2008 was $2.643 billioncompared to $2.487 billion in the 2007 fiscal year. Net income for the 2008fiscal year was $110.9 million, or $2.10 per diluted share, compared to netincome of $109.7 million, or $1.99 per diluted share, for fiscal year 2007. Revenue hauled by BCO Independent Contractors in the 2008 fiscal year was$1.388 billion, or 53 percent of revenue, compared to $1.377 billion, or 55percent of revenue, in 2007. In fiscal years 2008 and 2007, the Companyinvoiced customers $295 million and $179 million, respectively, in fuelsurcharges that were passed on 100 percent to BCO Independent Contractors andexcluded from revenue. Revenue hauled by third-party truck brokerage carrierswas $996 million, or 38 percent of revenue, in fiscal year 2008 compared to$885 million, or 36 percent of revenue, in fiscal year 2007. Revenue hauledby rail, air and ocean cargo carriers was $193 million, or 7 percent ofrevenue, in fiscal year 2008 compared to $180 million, or 7 percent ofrevenue, in fiscal year 2007. Landstar System, Inc. announced that its Board of Directors has declared aquarterly dividend of $0.04 per share. The dividend is payable on February27, 2009 to stockholders of record at the close of business on February 6,2009. It is the intention of the Board of Directors to continue to pay aquarterly dividend. In addition, Landstar System, Inc. announced that itsBoard of Directors authorized the purchase of an additional 1,569,000 sharesof its common stock from time to time in the open market and in privatelynegotiated transactions. During the 2008 fourth quarter, Landstar purchasedapproximately 724,000 shares of its common stock at a total cost of $23.1million bringing the total number of shares purchased during fiscal year 2008to 1,304,000 at an aggregate cost of $51.6 million. Currently, there areapproximately 3,000,000 shares of the Company's common stock available forpurchase under Landstar's authorized share purchase program. "Landstar's 2008 fourth quarter revenue was significantly impacted bylower freight demand related to the severe downturn in the domestic and globaleconomies," said Landstar President and Chief Executive Officer Henry Gerkens."The number of loads hauled by BCO Independent Contractors, truck brokeragecarriers and rail intermodal carriers were each below the number of loadshauled by each of these modes during the 2007 fourth quarter. Pricing, basedon rate per load, also softened throughout the quarter as weak freight demandcreated additional excess capacity. However, rate per load in the 2008 fourthquarter continued to exceed prior year rates, and the current environmentcontinues to present Landstar with great opportunities in adding new agentsand capacity." "Regardless of the current economic environment, Landstar's non-assetbased variable cost business model continues to generate significant cash flowand outstanding returns. During the 2008 fourth quarter, cash from operationswas $69 million, compared to $29 million in the 2007 fourth quarter. Duringthe 2008 fourth quarter, the Company purchased $23 million of its common stockin the open market while, at the same time, it reduced borrowings on itssenior credit facility by $21 million. At December 27, 2008, there was $127million available for borrowings under the Company's senior credit facility,while the ratio of debt to capital was 35 percent. Since September 2008, cashand short term investments increased $19 million to $122 million at December27, 2008. Return on average equity for fiscal year 2008 was 48 percent andreturn on invested capital, net income divided by the sum of average equityplus average debt was 29 percent. Landstar's balance sheet remains strong." Gerkens continued, "In the last four weeks of 2008, consolidated loadvolume was 15 percent below the load volumes reported in the correspondingperiod of 2007. This downward revenue trend has continued into the first fewweeks of January but is not necessarily an accurate indicator of the revenuethat might be expected for the entire fiscal year. At this time, due to theuncertainty of the current economic environment and related weak freightdemand, and the difficulty in forecasting when there may be a pickup inoverall economic activity, Landstar will not be providing 2009 revenue andearnings guidance. However, as an example of how Landstar's variable costbusiness model would react under certain negative assumptions, it is worthnoting that if one were to assume fiscal year 2009 Company revenue performanceof a twenty percent decline to flat compared to fiscal year 2008, and takinginto account certain cost reduction actions taken by the Company, Landstarshould generate diluted earnings per share in a range of $1.65 to $2.12. Thisin no way should be interpreted as any sort of guidance, but rather ademonstration of the resiliency of our model and that Landstar's ability togenerate earnings is somewhat insulated from possible effects of a prolongedrecession." Landstar will provide a live webcast of its quarterly earnings conferencecall this afternoon at 4:15 pm ET. To access the webcast, visit the Company'swebsite at; click on "Investor Relations" and "Webcasts,"then click on "Landstar's Fourth Quarter 2008 Earnings Release ConferenceCall." The following is a "safe harbor" statement under the Private SecuritiesLitigation Reform Act of 1995. Statements contained in this press releasethat are not based on historical facts are "forward-looking statements". Thispress release contains forward-looking statements, such as statements whichrelate to Landstar's business objectives, plans, strategies, expectations andintentions. Terms such as "anticipates," "believes," "estimates,""intention," "plans," "predicts," "may," "should," "will," the negativethereof and similar expressions are intended to identify forward-lookingstatements. Such statements are by nature subject to uncertainties and risks,including but not limited to: an increase in the frequency or severity ofaccidents or workers' compensation claims; unfavorable development of existingclaims; dependence on independent sales agents; dependence on third-partycapacity providers; disruptions or failures in our computer systems; adownturn in domestic or international economic growth or growth in thetransportation sector; substantial industry competition; and otheroperational, financial or legal risks or uncertainties detailed in Landstar'sForm 10K for the 2007 fiscal year, described in Item 1A Risk Factors, andother SEC filings from time to time. These risks and uncertainties couldcause actual results or events to differ materially from historical results orthose anticipated. Investors should not place undue reliance on such forward-looking statements, and Landstar undertakes no obligation to publicly updateor revise any forward-looking statements. About Landstar: Landstar System, Inc. delivers safe, specialized transportation andlogistics services to a broad range of customers worldwide. The Companyidentifies and fulfills shippers' needs through the coordination of individualbusinesses comprised of independent sales agents and third-partytransportation and logistics capacity providers. Through its operatingsubsidiaries, Landstar delivers excellence in complete transportationlogistics services and solutions. All Landstar operating companies arecertified to ISO 9001:2000 quality management system standards. LandstarSystem, Inc. is headquartered in Jacksonville, Florida. Its common stocktrades 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)                                 Fiscal Year Ended      Thirteen Weeks Ended                                Dec. 27,    Dec. 29,    Dec. 27,    Dec. 29,                                  2008        2007        2008        2007    Revenue                    $2,643,069  $2,487,277    $603,837    $642,865    Investment income               3,339       5,347         653       1,244    Costs and expenses:      Purchased transportation  2,033,384   1,884,207     460,175     489,426      Commissions to agents       203,058     200,630      49,201      52,056      Other operating costs        28,033      28,997       7,219       7,789      Insurance and claims         36,374      49,832       9,215      10,954      Selling, general and       administrative             137,758     125,177      32,301      30,175      Depreciation and       amortization                20,960      19,088       5,402       5,043         Total costs and          expenses              2,459,567   2,307,931     563,513     595,443    Operating income              186,841     184,693      40,977      48,666    Interest and debt expense       7,351       6,685       1,716       2,221    Income before income taxes    179,490     178,008      39,261      46,445    Income taxes                   68,560      68,355      14,656      17,414    Net income                   $110,930    $109,653     $24,605     $29,031    Earnings per common share       $2.11       $2.01       $0.47       $0.55    Diluted earnings per share      $2.10       $1.99       $0.47       $0.54    Average number of shares     outstanding:      Earnings per common       share                   52,503,000  54,681,000  51,973,000  53,062,000      Diluted earnings per       share                   52,854,000  55,156,000  52,197,000  53,422,000    Dividends paid per common     share                        $0.1550     $0.1350     $0.0400     $0.0375                            Landstar System, Inc.                         Selected Segment Information                            (Dollars in thousands)                                 (Unaudited)                                     Fiscal Year Ended    Thirteen Weeks Ended                                    Dec. 27,    Dec. 29,   Dec. 27,  Dec. 29,                                      2008        2007       2008      2007     Revenue     Transportation logistics      segment                      $2,606,216  $2,450,411  $594,450  $633,660     Insurance segment                 36,853      36,866     9,387     9,205        Revenue                    $2,643,069  $2,487,277  $603,837  $642,865     Operating Income     Transportation logistics      segment                        $148,385    $150,638   $30,214   $40,197     Insurance segment                 38,456      34,055    10,763     8,469        Operating income             $186,841    $184,693   $40,977   $48,666                            Landstar System, Inc.                         Consolidated Balance Sheets               (Dollars in thousands, except per share amounts)                                 (Unaudited)                                                 Dec. 27,           Dec. 29,                                                   2008               2007    ASSETS    Current assets:      Cash and cash equivalents                    $98,904            $60,750      Short-term investments                        23,479             22,921      Trade accounts receivable, less       allowance of $6,230 and $4,469              315,065            310,258      Other receivables, including       advances to independent        contractors, less allowance of         $4,298 and $4,792                          10,083             11,170      Deferred income taxes and other       current assets                               27,871             28,554        Total current assets                       475,402            433,653    Operating property, less accumulated     depreciation and amortization of     $106,635 and $88,284                          124,178            132,369    Goodwill                                        31,134             31,134    Other assets                                    32,816             31,845    Total assets                                  $663,530           $629,001    LIABILITIES AND SHAREHOLDERS' EQUITY    Current liabilities:      Cash overdraft                               $32,065            $25,769      Accounts payable                             105,882            117,122      Current maturities of long-term debt          24,693             23,155      Insurance claims                              23,545             28,163      Accrued income taxes                          12,239             14,865      Other current liabilities                     38,161             40,501        Total current liabilities                  236,585            249,575    Long-term debt, excluding current     maturities                                    111,752            141,598    Insurance claims                                38,278             37,631    Deferred income taxes                           23,779             19,411    Shareholders' equity:      Common stock, $0.01 par value,       authorized 160,000,000 shares,       issued 66,109,547 and 65,630,383       shares                                          661                656      Additional paid-in capital                   154,533            132,788      Retained earnings                            704,331            601,537      Cost of 14,424,887 and 13,121,109       shares of common stock in treasury         (605,828)          (554,252)      Accumulated other comprehensive       income/(loss)                                  (561)                57        Total shareholders' equity                 253,136            180,786    Total liabilities and shareholders'     equity                                       $663,530           $629,001                            Landstar System, Inc.                           Supplemental Information                                 (Unaudited)                                     Fiscal Year Ended    Thirteen Weeks Ended                                    Dec. 27,    Dec. 29,   Dec. 27,  Dec. 29,                                      2008        2007       2008      2007    Revenue generated through     (in thousands):       Business Capacity Owners        (1)                        $1,388,353  $1,377,083  $317,371  $340,928       Truck Brokerage Carriers       996,269     884,577   230,007   236,310       Rail intermodal                136,367     133,878    29,431    41,947       Ocean cargo carriers            42,153      26,498    12,824     7,807       Air cargo carriers              14,891      19,692     4,756     4,280       Other (2)                       65,036      45,549     9,448    11,593                                   $2,643,069  $2,487,277  $603,837  $642,865    Number of loads:       Business Capacity Owners        (1)                           820,680     857,200   182,350   210,480       Truck Brokerage Carriers       571,600     588,660   136,350   147,650       Rail intermodal                 58,510      62,720    12,900    19,480       Ocean cargo carriers             5,380       4,620     1,390     1,290       Air cargo carriers               8,260      11,600     2,740     2,340                                    1,464,430   1,524,800   335,730   381,240    Revenue per load:       Business Capacity Owners        (1)                            $1,692      $1,606    $1,740    $1,620       Truck Brokerage Carriers         1,743       1,503     1,687     1,600       Rail intermodal                  2,331       2,135     2,281     2,153       Ocean cargo carriers             7,835       5,735     9,226     6,052       Air cargo carriers               1,803       1,698     1,736     1,829                                                           Dec. 27,  Dec. 29,                                                             2008      2007    Truck Capacity       Business Capacity Owners (1) (3)                       8,455     8,403       Truck Brokerage Carriers:            Approved and active (4)                          16,135    16,053            Approved                                         10,036     9,362                                                             26,171    25,415       Total available truck capacity providers              34,626    33,818    Agent Locations                                           1,428     1,397    (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.        Also, included in the 2008 fiscal year was $27,638 of revenue for bus        capacity provided for evacuation assistance related to the storms that        impacted the Gulf Coast in September 2008. Included in the 2007 fiscal        year and thirteen-week periods was $8,511 and $2,302, respectively, of        revenue derived from transportation services provided in support of        disaster relief efforts provided under a contract between Landstar        Express America, Inc. and the United States Department of        Transportation/Federal Aviation Administration.    (3) Trucks provided by Business Capacity Owners were 9,039 and 8,993 at        December 27, 2008 and December 29, 2007, respectively.    (4) Active refers to Truck Brokerage Carriers who have moved at least one        load in the past 180 days.
Source: PRNewsWire

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