Landstar System Reports 2nd Quarter Earnings Of $1.24 Per Diluted Share Before Restructuring Charge
13 July 2000
Landstar System Reports Second Quarter Earnings Of $1.24 Per Diluted Share Before Restructuring Charge
JACKSONVILLE, Fla. - Landstar System, Inc. reported 2000 second quarter net
income excluding a previously announced one-time, $3.0 million pre-tax
restructuring charge related to the relocation of Landstar Ligon, Inc. from
Madisonville, Kentucky to Jacksonville, Florida, of $11.3 million, or
$1.24 per diluted share, compared with net income of $10.8 million, or
$1.05 per diluted share, in the 1999 second quarter. Including the
restructuring charge, net income amounted to $9.4 million, or $1.04 per
diluted share in the 2000 second quarter. Operating margin excluding the
restructuring charge was 5.8 percent in the 2000 second quarter compared to
5.5 percent in the 1999 second quarter. Revenue was $358.6 million for the
quarter ended June 24, 2000 versus revenue of $345.1 million for the quarter
ended June 26, 1999.
Excluding the one time restructuring charge, net income for the 26 weeks
ended June 24, 2000 was $19.6 million, or $2.12 per diluted share, compared
with net income of $18.2 million, or $1.76 per diluted share, for the 26 weeks
ended June 26, 1999. Including the restructuring charge, net income for the
26 week period ended June 24, 2000 was $17.8 million, or $1.92 per diluted
share. The operating margin excluding the restructuring change for the 2000
26 week period was 5.3 percent compared to 4.9 percent in 1999. Revenue was
$685.6 million in the 2000 first half compared with revenue of $656.5 million
in the 1999 first half.
"The 2000 second quarter was a historic quarter for Landstar," said
Landstar Chairman, President and CEO, Jeff Crowe. On June 9, 2000, Landstar
Ligon relocated its offices from Madisonville, Kentucky where it had operated
for over 60 years, to Jacksonville, Florida. Landstar now operates from two
new modern facilities -- one in Jacksonville, the other in Rockford,
Illinois."
"Despite reduced truck count, Landstar generated $358.6 million in
revenue, improved its operating margin excluding the Ligon restructuring
charge, to 5.8% and earned $1.24 per diluted share excluding the restructuring
charge."
"At June 24, 2000, Landstar truck count was 8,563 versus 8,692 one year
ago," Crowe said. "The year-over-year decrease was directly attributable to
the operational restructuring and relocation of Landstar Ligon, coupled with
overall increased fuel prices. During the 26 weeks ended June 24, 2000,
Landstar Ligon truck count declined 371 trucks, which more than offset a net
truck count gain at the rest of Landstar. With the restructuring and
relocation of Landstar Ligon largely completed, I believe Landstar will add at
least 100 trucks in the second half of the year," Crowe said.
As part of a previously announced stock repurchase program, Landstar
repurchased a total of 301,000 shares of its common stock at an average cost
of $55.29 per share during the 2000 second quarter. Landstar has 357,300
shares remaining to be repurchased under its current authorized stock
repurchase program.
"I believe at current valuation levels, that Landstar stock represents an
attractive investment opportunity," said Crowe. "Accordingly, I anticipate to
complete the current authorized share repurchase program in the short term.
The back half of the year has historically been strong for Landstar," said
Crowe. "Assuming economic conditions do not deteriorate, I believe the year
2000 final six months will be no different."
Landstar System, Inc. is headquartered in Jacksonville, Florida. The
Landstar carrier group comprised of Landstar Gemini, Inc., Landstar Inway,
Inc., Landstar Ligon, Inc. and Landstar Ranger, Inc. delivers excellence in
complete over-the-road transportation services. The Landstar multimodal group
comprised of Landstar Express America, Inc. and Landstar Logistics, Inc.
delivers excellence in expedited, contract logistics and intermodal
transportation services. All Landstar operating companies are certified to
ISO 9002 quality management system standards.
Landstar System, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Twenty Six Weeks Ended Thirteen Weeks Ended
June 24, June 26, June 24, June 26,
2000 1999 2000 1999
Revenue $ 685,561 $ 656,499 $ 358,555 $ 345,064
Investment income 1,954 1,118 1,024 574
Costs and expenses:
Purchased transportation 505,108 483,277 264,118 253,847
Commissions to agents 53,938 52,148 28,034 27,877
Other operating costs 15,245 13,769 7,798 7,100
Insurance and claims 19,086 21,963 9,982 11,818
Selling,general and
administrative 51,704 48,731 25,756 23,213
Depreciation and
amortization 6,190 5,431 3,136 2,788
Restructuring costs 3,040 3,040
Total costs and
expenses 654,311 625,319 341,864 326,643
Operating income 33,204 32,298 17,715 18,995
Interest and debt expense 3,823 1,660 2,118 921
Income before income
taxes 29,381 30,638 15,597 18,074
Income taxes 11,605 12,408 6,160 7,319
Net income (1) $ 17,776 $ 18,230 $ 9,437 $ 10,755
Earnings per common
share (1) $ 1.97 $ 1.78 $ 1.06 $ 1.06
Diluted earnings per
share (1) $ 1.92 $ 1.76 $ 1.04 $ 1.05
Average number of shares outstanding:
Earnings per
common share 9,024,000 10,246,000 8,880,000 10,125,000
Diluted earnings
per share 9,237,000 10,366,000 9,104,000 10,242,000
(1) After deducting income tax benefits of $1,225, the restructuring costs
reduced net income by $1,815, or $0.20 per share ($0.20 per diluted
share) in the 2000 thirteen and twenty-six week periods.
Landstar System, Inc.
Selected Segment Information
(Dollars in thousands)
(Unaudited)
Twenty Six Weeks Ended Thirteen Weeks Ended
June 24, June 26, June 24, June 26,
2000 1999 2000 1999
External Revenue
Carrier segment (1) $ 538,509 $ 530,129 $ 282,704 $ 278,498
Multimodal segment (1) 134,847 113,644 69,649 60,072
Insurance segment 12,205 12,726 6,202 6,494
External revenue $ 685,561 $ 656,499 $ 358,555 $ 345,064
Operating Income
Carrier segment (1)(2) $ 38,970 $ 38,947 $ 20,258 $ 22,121
Multimodal segment (1) 3,983 3,495 2,201 2,107
Insurance segment 10,127 8,619 5,328 4,441
Other (19,876) (18,763) (10,072) (9,674)
Operating income (2) $ 33,204 $ 32,298 $ 17,715 $ 18,995
(1) The 1999 results of operations of Landstar Gemini, Inc. have been
reclassified to the carrier segment from the multimodal segment.
(2) The 2000 thirteen and twenty-six week periods include $3,040 of
restructuring costs related to the relocation of Landstar Ligon, Inc.
from Madisonville, KY to Jacksonville, FL.