Landstar System Reports Record Thirteen Week Fourth Quarter Revenue And Diluted Earnings Per Share O

JACKSONVILLE, Fla., Jan. 30, 2014 /PRNewswire/— Landstar System, Inc. (NASDAQ: LSTR) reported revenue from continuing operations of $692 million in the 2013 fourth quarter, record revenue from continuing operations for a thirteen week fourth quarter. Revenue from continuing operations in the 2012 fourth quarter was $685 million. Landstar reported diluted earnings per share for the 2013 fourth quarter of $1.30 compared to diluted earnings per share of $0.73 in the 2012 fourth quarter. As previously reported, the Company completed the sale of its Landstar Supply Chain Solutions companies (“LSCS”) on December 28, 2013, the last day of the Company’s 2013 fiscal year, to XPO Logistics, Inc. and as a result, Landstar has reported the historical results of operations of LSCS and gain on sale of LSCS as a discontinued operation. Included in diluted earnings per share in the 2013 fourth quarter was a gain on the sale of LSCS of $0.72.  The results of operations of LSCS contributed earnings per diluted share of $0.03 and $0.02 in the 2013 and 2012 fourth quarters, respectively. The sale of LSCS generated cash proceeds, net of estimated income taxes and transaction costs, of $53 million in the 2013 fourth quarter.  Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2013 fourth quarter was $643.6 million, or 93 percent of revenue from continuing operations, compared to $639.3 million, or 93 percent of revenue from continuing operations, in the 2012 fourth quarter.  Revenue hauled by rail, air and ocean cargo carriers was $39.0 million, or six percent of revenue from continuing operations, in the 2013 fourth quarter compared to $36.6 million, or five percent of revenue from continuing operations, in the 2012 fourth quarter.   Fiscal year 2013 return on average shareholder’s equity was 35 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 28 percent. In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.06 per share payable on March 14, 2014 to stockholders of record at the close of business on February 18, 2014.  It is currently the intention of the Board of Directors to pay dividends on a quarterly basis going forward. Landstar purchased 1,117,000 shares of its common stock during 2013 at an aggregate cost of $59.5 million.  Currently, there are 2,767,654 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase programs.  The Company ended fiscal 2013 with cash and short-term investments of $215.2 million and borrowing capacity available under its senior credit facility of $185.3 million. “I am pleased with the Company’s 2013 fourth quarter performance,” said Landstar Chairman and CEO, Henry Gerkens. “Landstar finished the year strong as revenue from continuing operations in the 2013 fourth quarter exceeded both the prior year fourth quarter and the high end of the revenue guidance provided in our 2013 fourth quarter mid-quarter update call held on December 13th.  In fact, revenue from continuing operations in the 2013 fourth quarter was the highest thirteen week fourth quarter revenue from continuing operations in Landstar’s history.  With respect to volumes, truck transportation revenue in the 2013 fourth quarter exceeded the 2012 fourth quarter primarily due to a 2 percent increase in the number of loads hauled via truck. This was the first and only quarter in 2013 where the number of loads hauled via truck increased on a quarter-over-prior-year-quarter basis.  With respect to pricing, December was the first month during 2013 in which we experienced a month-over-prior-year-month increase in revenue per load on loads hauled via truck.   As we experienced increased demand, however, we also experienced pressure on gross profit margin, representing gross profit (gross profit defined as revenue less the cost of purchased transportation and commission to agents) divided by revenue.  Our gross profit margin of 14.8 percent in the 2013 fourth quarter was slightly lower than expected.  We believe, though, that this margin compression was primarily related to an unanticipated surge in domestic freight activity towards the end of 2013, which, consistent with my prior remarks, reflects a positive overall trend in demand headed into 2014.” With respect to earnings, Gerkens noted, “On our 2013 fourth quarter mid-quarter update call, Landstar provided guidance for 2013 fourth quarter diluted earnings per share to be in a range of $1.25 to $1.28.  On that call, I stated that this estimated range included approximately $0.71 per share attributable to the anticipated gain on sale of LSCS and approximately $0.02 per share attributable to income from LSCS operations.   Accordingly, this guidance pointed to a range of 2013 fourth quarter diluted earnings per share from continuing operations of $0.52 to $0.55.  I had also mentioned on that mid-quarter update call that a provision for bonuses resulting entirely from the sale transaction would result in a $0.07 charge to continuing operations in the 2013 fourth quarter.  Landstar reported diluted earnings per share from continuing operations of $0.55 in the 2013 fourth quarter, at the high end of this range.  Included within this figure were (1) a provision for bonuses entirely attributable to the sale of LSCS that negatively impacted diluted earnings per share of continuing operations by $0.08 in the 2013 fourth quarter and (2) a $0.02 per share positive impact on diluted earnings per share from continuing operations due to favorable outcomes of various tax matters that lowered the Company’s effective tax rate in 2013.  In contrast, the 2012 fourth quarter earnings per diluted share from continuing operations included a provision for bonuses of $0.04 per share and a positive impact of approximately $0.08 per share due to favorable outcomes of various tax matters.”  Gerkens further stated, “Despite the sluggish industrial freight environment that existed throughout almost all of 2013, and the declines in revenue experienced with respect to many of the Company’s top 10 accounts that began in late 2012 and continued throughout 2013, Landstar’s fiscal year 2013 revenue from continuing operations was the second highest fiscal year revenue from continuing operations in Landstar history and its diluted earnings per share from continuing operations was the second highest diluted earnings per share from continuing operations in Landstar history. Furthermore, December’s favorable revenue trends have continued into the first several weeks of January. Assuming these trends continue throughout the 2014 first quarter, I anticipate revenue from continuing operations to be in a range of $640 million to $690 million and diluted earnings per share from continuing operations to be in a range of $0.56 to $0.61. By comparison, revenue from continuing operations was $623 million in the 2013 first quarter and diluted earnings per share from continuing operations was $0.55 in the 2013 first quarter.  In comparing diluted earnings per share guidance for the 2014 first quarter to the 2013 first quarter, it should be noted that the 2014 first quarter will be negatively impacted when compared to the 2013 first quarter by approximately $0.03 per diluted share related to the Company’s annual agent convention scheduled to be held in the Company’s 2014 first fiscal quarter versus being held in the 2013 second quarter. In addition, no provision for incentive compensation was included in the 2013 first quarter, whereas, our guidance includes a provision for incentive compensation in the 2014 first quarter.  From a longer term perspective, on average over a five year period, I expect to grow annual gross profit in the mid-single digits, pass in excess of 70 percent of annual incremental gross profit to operating income and increase diluted earnings per share in a mid-teen range.  And as previously stated, our longer term goal continues to be to achieve a 50 percent operating margin (defined as operating income divided by gross profit).” Landstar will hold a live webcast of its quarterly earnings conference call tomorrow morning, January 31, 2014, at 8:15 a.m. 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 Fourth Quarter 2013 Earnings Release Conference Call.”  The webcast will be available on the Company’s website through Friday, February 7, 2014. 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,” “expects,” “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 2012 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 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 RC14001:2008 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)