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Landstar System, Inc.$97.75($.50)(.51%)

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 Landstar System Reports Fourth Quarter Revenue Of $849 Million And Record Fourth Quarter Diluted Earnings Per Share From Continuing Operations Of $0.88
   Thursday, January 28, 2016 4:05:00 PM ET

Landstar System, Inc. (LSTR ) reported fourth quarter net income of $37.9 million, or $0.88 per diluted share, on fourth quarter revenue of $849 million. Diluted earnings per share for the 2015 fourth quarter was the highest fourth quarter diluted earnings per share from continuing operations in Landstar history. Landstar reported net income of $38.5 million, or $0.86 per diluted share, on revenue of $863 million in the 2014 fourth quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $126.4 million in the 2015 fourth quarter compared to $124.7 million in gross profit in the 2014 fourth quarter. Operating income was $62.6 million in the 2015 fourth quarter and operating margin, representing operating income divided by gross profit, was 49.6 percent.

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2015 fourth quarter was $786.4 million, or 93 percent of revenue, compared to $811.2 million, or 94 percent of revenue, in the 2014 fourth quarter. Truckload transportation revenue hauled via van equipment in the 2015 fourth quarter was $481.4 million compared to $499.7 million in the 2014 fourth quarter. Truckload transportation revenue hauled via unsided/platform equipment in the 2015 fourth quarter was $285.6 million compared to $289.6 million in the 2014 fourth quarter. Revenue hauled by rail, air and ocean cargo carriers was $50.6 million, or 6 percent of revenue, in the 2015 fourth quarter compared to $41.0 million, or 5 percent of revenue, in the 2014 fourth quarter.

Return on average shareholders’ equity was 31 percent and return on invested capital, representing net income divided by the sum of average equity plus average debt, was 25 percent in fiscal year 2015. Landstar purchased approximately 779,000 shares of its common stock during the fiscal quarter ended December 26, 2015 at an aggregate cost of $48.5 million. Landstar purchased approximately 2,498,000 shares of its common stock during the fiscal year ended December 26, 2015 at an aggregate cost of $161.2 million. Currently, there are approximately 1,809,000 shares of the Company’s common stock available for purchase under Landstar’s authorized share purchase program. As of December 26, 2015, the Company had $163 million in cash and short term investments and $192 million available for borrowing under the Company’s senior credit facility.

In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.08 per share payable on March 11, 2016 to stockholders of record at the close of business on February 15, 2016. It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

"Given the backdrop of a low growth macro environment and very difficult year-over-year comparisons, I am very pleased with our 2015 fourth quarter operating performance," said Landstar’s President and Chief Executive Officer, Jim Gattoni. "The number of loads hauled via truck in the 2015 fourth quarter increased 7 percent over the 2014 fourth quarter, while the number of loads hauled via railroads, ocean cargo carriers and air cargo carriers increased 35 percent over the 2014 fourth quarter. The growth in the number of loads hauled via truck was driven by increased volumes from unsided/platform equipment, van equipment and less-than-truckload services of 12 percent, 4 percent, and 6 percent, respectively. The growth in the number of loads hauled via unsided/platform equipment in the 2015 fourth quarter was entirely due to the continuation of demand from one shipper in the automotive sector for a project that began in April 2015. Otherwise, unsided/platform volumes were 4 percent lower in the 2015 fourth quarter compared to the 2014 fourth quarter. We expect the number of loads hauled on behalf of that shipper for this project to be insignificant in the 2016 first quarter. As expected, revenue per load on loads hauled via truck was lower in the 2015 fourth quarter as compared to the 2014 fourth quarter. Truck revenue per load in the 2015 fourth quarter was 9 percent lower as compared to the 2014 fourth quarter, mostly due to the impact of lower diesel fuel costs on loads hauled via truck brokerage carriers, the difficult comparison to record truck revenue per load experienced in the 2014 fourth quarter and a somewhat softer freight environment."

Gattoni continued, "In terms of annual performance, 2015 included a number of tremendous achievements. The Company established a new record for annual revenue, surpassing $3.3 billion for the first time in its history. Landstar also set new annual records for many other financial metrics including gross profit, operating income, net income and diluted earnings per share. The Company achieved these milestones against a backdrop of a low growth macro environment, declining fuel prices which impacted top-line growth and very tough comparisons to the previous record performance of fiscal year 2014. These fiscal year 2015 achievements speak to the continued strength of our variable cost business model and ability to execute in almost any environment. In particular, I am pleased by our continued organic load volume growth across all of the Company’s service offerings with increases in truck, rail, air and ocean shipments of 8 percent, 42 percent, 13 percent and 10 percent, respectively, in fiscal year 2015 compared to fiscal year 2014. We continue to invest in the agent network and are currently underway in a multi-year project aimed at increasing efficiencies, primarily through technology, at both Landstar and across all of our agent offices that we believe will continue to fuel growth in the years to come. We expect costs associated with this initiative to impact diluted earnings per share by approximately $0.05 to $0.10 in fiscal year 2016."

Gattoni further stated, "During the first three weeks of the 2016 first quarter, growth in the number of loads hauled via truck has softened somewhat as compared to the quarter over quarter growth rates experienced during 2015. I expect the number of loads hauled via truck in the 2016 first quarter to increase in a low to mid-single digit range over the 2015 first quarter. As it pertains to revenue per load on loads hauled via truck, a low growth environment and looser capacity is putting further pressure on rates. However, I do not expect a significant change in the rate environment over the balance of the 2016 first quarter. As such, I expect revenue per load on loads hauled via truck in the 2016 first quarter to be below the 2015 first quarter in a mid-single digit percentage range. Assuming the current environment continues throughout the 2016 first quarter, I anticipate revenue for the 2016 first quarter to be in a range of $720 million to $770 million and, assuming that range of estimated revenue, I would anticipate 2016 first quarter diluted earnings per share to be in a range of $0.70 to $0.75 per share, compared to $0.67 per diluted share in the 2015 first quarter. From a longer term perspective, recent turmoil in world markets, the impact of a slowing global economy and uncertainty surrounding the 2016 election cycle all contribute to a highly unpredictable environment for our industry. As such, we will not be providing annual guidance. Nevertheless, regardless of these challenges, Landstar’s variable cost business model performs well in almost any environment and I would expect Landstar to outperform industry fundamentals in the years ahead."

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 5:00 pm 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 2015 Earnings Release Conference Call."

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 and expectations. Terms such as "anticipates," "believes," "estimates," "intention," "expects," "plans," "predicts," "may," "should," "could," "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 other claims; unfavorable development of existing accident claims; dependence on third party insurance companies; dependence on independent commission sales agents; dependence on third party capacity providers; decreased demand for transportation services; substantial industry competition; disruptions or failures in the Company’s computer systems; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; intellectual property; unclaimed property; and other operational, financial or legal risks or uncertainties detailed in Landstar’s Form 10K for the 2014 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 the Company 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 RC14001:2013 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)

Landstar System, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
                                                                                     Fiscal Years Ended                             Fiscal Quarters Ended
                                                                                     December 26,           December 27,            December 26,          December 27,
                                                                                     2015                   2014                    2015                  2014
Revenue                                                                              $        3,321,091     $         3,184,790     $          848,602    $       862,830
Investment income                                                                    1,396                  1,381                   353                   354
Costs and expenses:
             Purchased transportation                                                2,551,343              2,461,143               651,030               668,583
             Commissions to agents                                                   270,260                250,780                 71,147                69,584
             Other operating costs, net of gains/losses on asset sales/dispositions  31,618                 25,771                  7,230                 6,421
             Insurance and claims                                                    48,754                 46,280                  11,144                8,548
             Selling, general and administrative                                     149,704                150,250                 37,907                41,683
             Depreciation and amortization                                           29,102                 27,575                  7,849                 7,156
                                                 Total costs and expenses            3,080,781              2,961,799               786,307               801,975
Operating income                                                                     241,706                224,372                 62,648                61,209
Interest and debt expense                                                            2,949                  3,177                   741                   917
Income before income taxes                                                           238,757                221,195                 61,907                60,292
Income taxes                                                                         91,068                 82,386                  24,052                21,801
Net income                                                                           $          147,689     $           138,809     $           37,855    $         38,491
Earnings per common share                                                            $                3.38  $                 3.09  $               0.89  $             0.86
Diluted earnings per share                                                           $                3.37  $                 3.07  $               0.88  $             0.86
Average number of shares outstanding:
             Earnings per common share                                               43,664,000             44,956,000              42,729,000            44,770,000
             Diluted earnings per share                                              43,813,000             45,169,000              42,849,000            45,002,000
Dividends per common share                                                           $                0.30  $                 1.26  $               0.08  $             1.07
Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
(Unaudited)
                                                                                                                                     December 26,     December 27,
                                                                                                                                     2015             2014
ASSETS
Current assets:
                               Cash and cash equivalents                                                                             $      114,520   $      163,944
                               Short-term investments                                                                                48,823           37,007
                               Trade accounts receivable, less allowance of $4,327 and $4,338                                        462,699          492,642
                               Other receivables, including advances to independent contractors, less allowance of $4,143 and $4,189
                                                                                                                                     18,472           15,132
                               Deferred income taxes and other current assets                                                        18,156           23,603
                                                                                  Total current assets                               662,670          732,328
Operating property, less accumulated depreciation and amortization of $182,591 and $160,681                                          225,927          202,203
Goodwill                                                                                                                             31,134           31,134
Other assets                                                                                                                         78,339           78,547
Total assets                                                                                                                         $      998,070   $   1,044,212
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
                               Cash overdraft                                                                                        $        35,609  $        34,629
                               Accounts payable                                                                                      223,709          220,077
                               Current maturities of long-term debt                                                                  42,499           35,064
                               Insurance claims                                                                                      19,757           24,233
                               Dividends payable                                                                                     -                44,794
                               Other current liabilities                                                                             47,963           51,654
                                                                                  Total current liabilities                          369,537          410,451
Long-term debt, excluding current maturities                                                                                         81,793           76,257
Insurance claims                                                                                                                     21,477           21,769
Deferred income taxes and other non-current liabilities                                                                              59,026           47,474
Shareholders’ equity:
                               Common stock, $0.01 par value, authorized 160,000,000 shares, issued 67,391,616 and 67,268,817 shares
                                                                                                                                     674              673
                               Additional paid-in capital                                                                            195,841          189,012
                               Retained earnings                                                                                     1,389,975        1,255,374
                               Cost of 24,972,079 and 22,474,331 shares of common stock in treasury                                  (1,116,765)      (955,613)
                               Accumulated other comprehensive loss                                                                  (3,488)          (1,185)
                                                                                  Total shareholders’ equity                         466,237          488,261
Total liabilities and shareholders’ equity                                                                                           $      998,070   $   1,044,212
Landstar System, Inc. and Subsidiary
Supplemental Information
(Unaudited)
                                                                                      Fiscal Years Ended                   Fiscal Quarters Ended
                                                                                      December 26,      December 27,       December 26,     December 27,
                                                                                      2015              2014               2015             2014
Revenue generated through (in thousands):
             Truck transportation
                                    Truckload:
                                                           Van equipment              $  1,894,221      $  1,814,195       $     481,397    $      499,651
                                                           Unsided/platform equipment 1,109,356         1,093,999          285,589          289,627
                                    Less-than-truckload                               80,687            80,384             19,390           21,969
                                                           Total truck transportation 3,084,264         2,988,578          786,376          811,247
             Rail intermodal                                                          105,347           81,220             28,659           22,263
             Ocean and air cargo carriers                                             86,664            74,952             21,939           18,784
             Other (1)                                                                44,816            40,040             11,628           10,536
                                                                                      $  3,321,091      $  3,184,790       $     848,602    $      862,830
             Revenue on loads hauled via BCO Independent Contractors (2)
                                    included in total truck transportation            $  1,522,513      $  1,514,254       $     381,643    $      388,041
Number of loads:
             Truck transportation
                                    Truckload:
                                                           Van equipment              1,102,654         1,038,517          282,431          270,875
                                                           Unsided/platform equipment 485,993           444,852            126,224          112,300
                                    Less-than-truckload                               112,363           96,541             28,525           26,835
                                                           Total truck transportation 1,701,010         1,579,910          437,180          410,010
             Rail intermodal                                                          45,060            31,640             12,710           8,800
             Ocean and air cargo carriers                                             18,060            16,260             4,740            4,150
                                                                                      1,764,130         1,627,810          454,630          422,960
             Loads hauled via BCO Independent Contractors (2)
                                    included in total truck transportation            826,600           818,480            210,190          203,680
Revenue per load:
             Truck transportation
                                    Truckload:
                                                           Van equipment              $          1,718  $          1,747   $         1,704  $          1,845
                                                           Unsided/platform equipment 2,283             2,459              2,263            2,579
                                    Less-than-truckload                               718               833                680              819
                                                           Total truck transportation 1,813             1,892              1,799            1,979
             Rail intermodal                                                          2,338             2,567              2,255            2,530
             Ocean and air cargo carriers                                             4,799             4,610              4,628            4,526
             Revenue per load on loads hauled via BCO Independent Contractors (2)     $          1,842  $          1,850   $         1,816  $          1,905
Revenue by capacity type (as a % of total revenue);
             Truck capacity providers:
                                    BCO Independent Contractors (2)                   46%               48%                45%              45%
                                    Truck Brokerage Carriers                          47%               46%                48%              49%
             Rail intermodal                                                          3%                3%                 3%               3%
             Ocean and air cargo carriers                                             3%                2%                 3%               2%
             Other                                                                    1%                1%                 1%               1%
                                                                                                                           December 26,     December 27,
                                                                                                                           2015             2014
Truck Capacity Providers
             BCO Independent Contractors (2)                                                                               8,907            8,372
             Truck Brokerage Carriers:
                                    Approved and active (3)                                                                29,728           26,222
                                    Other approved                                                                         14,715           12,135
                                                                                                                           44,443           38,357
             Total available truck capacity providers                                                                      53,350           46,729
             Trucks provided by BCO Independent Contractors (2)                                                            9,500            8,932
(1) Includes primarily premium revenue generated by the insurance segment.
(2) BCO Independent Contractors are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.
(3) Active refers to Truck Brokerage Carriers who have moved at least one load in the 180 days immediately preceeding the fiscal quarter end.

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/landstar-system-reports-fourth-quarter-revenue-of-849-million-and-record-fourth-quarter-diluted-earnings-per-share-from-continuing-operations-of-088-300211536.html

SOURCE Landstar System, Inc.

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