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 ChargeJACKSONVILLE, 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.