Landstar System reports 11% increase in diluted earnings per share
"Landstar produced solid operating results in the 2012 third quarter, despite inconsistent demand and a tougher quarter over prior year quarter revenue per load comparison," said Landstar Chairman, President and CEO Henry Gerkens.
The Trucker News Services
JACKSONVILLE, Fla. — Landstar System Inc. reported 2012 record third-quarter diluted earnings per share of $0.71 from net income of $33.1 million, compared to net income of $30.2 million, or $0.64 per diluted share, for the 2011 third 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 48.1 percent in the 2012 third quarter compared to 44.7 percent in the 2011 third quarter. Revenue for the 2012 third quarter was $717.2 million compared to $684.0 million in the 2011 third quarter.
Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2012 third quarter was $663.5 million, or 93 percent of revenue, compared to $625.8 million, or 91 percent of revenue, in the 2011 third quarter. Revenue hauled by rail, air and ocean cargo carriers was $38.9 million, or five percent of revenue, in the 2012 third quarter compared to $44.5 million, or seven percent of revenue, in the 2011 third quarter.
Trailing 12-month return on average shareholder's equity was 39 percent and trailing 12-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 December 7, 2012 to stockholders of record at the close of business on November 13, 2012.
During the 2012 third quarter, Landstar purchased 183,800 shares of its common stock at a total cost of $8.8 million bringing the total number of shares purchased during the first three quarters of 2012 to 499,400 at an aggregate cost of $24.6 million. Currently, there are 2,017,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase programs.
"Landstar produced solid operating results in the 2012 third quarter, despite inconsistent demand and a tougher quarter over prior year quarter revenue per load comparison," said Landstar Chairman, President and CEO Henry Gerkens. "Loads hauled via truck capacity in the 2012 third quarter increased a healthy seven percent over the 2011 third quarter. Average truck revenue per load in the 2012 third quarter remained relatively high at $1,756 per load compared to historical amounts but was slightly lower than the $1,768 revenue per load amount in the 2011 third quarter.
After amounts paid for purchased transportation and agent commissions were deducted from revenue in the 2012 third quarter, the resulting gross profit amount was the second highest third quarter gross profit amount in Landstar history. Landstar continued to demonstrate its operating leverage as it passed the increase in gross profit through to operating income, resulting in an operating margin of 48.1 percent in the 2012 third quarter. Third quarter 2012 diluted earnings per share of $0.71 was a third quarter record."
Gerkens continued, "As I look at the 2012 fourth quarter, it is important to note that the 2012 fourth quarter is a thirteen week quarter whereas the 2011 fourth quarter was a fourteen week quarter. I estimate that the extra week in the 2011 fourth quarter contributed approximately $25 to $30 million in additional revenue. Using the 2011 fourth quarter gross profit margin of 15.8 percent, the increase in diluted earnings per share attributable to that additional revenue is estimated to be approximately $0.06 per diluted share. In addition, the 2011 fourth quarter included a favorable income tax benefit of approximately $0.03 per diluted share.
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Although I am very confident in the long term outlook for Landstar, I am also somewhat cautious in the short term. I believe that until the uncertainty surrounding the current political environment and tax and budgetary issues are resolved, the economy will continue to grow, but at a sluggish pace. In the first few weeks of the 2012 fourth quarter, we have seen a slowing in demand beyond the choppiness experienced during the 2012 third quarter. Despite the slowing demand, revenue in the first several weeks of the 2012 fourth quarter continues to run above revenue of the first several weeks of the 2011 fourth quarter. Given the uncertain economic environment and current revenue trends, I anticipate earnings per diluted share for the 2012 fourth quarter to be in a range of $0.63 to $0.68 per share."
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, Fla.
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