Landstar System Reports Record Quarterly Revenue Of $814 Million And Record Quarterly Diluted Earnings Per Share Of $0.80 In The Second Quarter

JACKSONVILLE, Fla., July 23, 2014 -- Landstar System, Inc. (LSTR) reported record second quarter net income of $35.9 million, or $0.80 per diluted share, on record revenue of $814 million in the 2014 second quarter. Revenue and diluted earnings per share for the 2014 second quarter were the highest quarterly revenue and diluted earnings per share in Landstar history.  Landstar reported net income from continuing operations of $29.5 million, or $0.64 per diluted share, on revenue from continuing operations of $674 million in the 2013 second quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $121.6 million in the 2014 second quarter compared to $103.6 million in gross profit from continuing operations in the 2013 second quarter. Operating margin, representing operating income divided by gross profit, was 48.1 percent in the 2014 second quarter.       

Truck transportation revenue hauled by independent business capacity owners ("BCOs") and truck brokerage carriers in the 2014 second quarter was $764.7 million, or 94 percent of revenue, compared to $622.7 million, or 92 percent of revenue from continuing operations, in the 2013 second quarter.  Revenue hauled by rail, air and ocean cargo carriers was $39.9 million, or 5 percent of revenue, in the 2014 second quarter compared to $42.6 million, or 6 percent of revenue from continuing operations, in the 2013 second quarter. 

Trailing twelve-month return on average shareholder's equity was 35 percent and trailing twelve-month return on invested capital, net income divided by the sum of average equity plus average debt, was 28 percent.  As of June 28, 2014, the Company had $130 million in cash and short term investments. As of June 28, 2014, there was $192 million available for borrowing under the Company's senior credit facility.  Landstar purchased approximately 940,000 shares of its common stock during the 2014 first half at an aggregate cost of $56.4 million. Currently, there are approximately 1,828,000 shares of the Company's common stock available for purchase under Landstar's authorized share purchase program.  In addition, Landstar announced that its Board of Directors has declared a quarterly dividend of $0.07 per share payable on August 29, 2014 to stockholders of record at the close of business on August 11, 2014.  This represents a 17 percent increase to the Company's previous quarterly dividend.  It is currently the intention of the Board to pay dividends on a quarterly basis going forward.

"Landstar's 2014 second quarter results were outstanding," said Landstar Chairman and CEO Henry Gerkens. "Revenue, gross profit, operating income, net income, and diluted earnings per share were all second quarter records. Overall, demand for Landstar's truck transportation services in the 2014 second quarter was very strong, as the number of loads hauled via truck increased 9 percent over the 2013 second quarter.  Even stronger was the revenue per load hauled via truck which increased 13 percent over the 2013 second quarter. Both the number of loads hauled via truck and the related average revenue per load were the highest quarterly amounts in the Company's history.  From an equipment standpoint, revenue hauled via van equipment during the 2014 second quarter increased 26 percent compared to revenue hauled via van equipment in the 2013 second quarter while revenue hauled via unsided/platform equipment, in the 2014 second quarter exceeded the 2013 second quarter by 18 percent. Despite an increased provision for incentive compensation, our operating margin was an impressive 48.1 percent in the 2014 second quarter, the second highest second quarter operating margin in Landstar's history. And finally, diluted earnings per share from continuing operations in the 2014 second quarter increased 25 percent over the 2013 second quarter."

Gerkens continued, "At this point, I believe the current operating environment will remain very much intact throughout the balance of 2014.  The increase in underlying demand as well as industry-wide truck productivity issues should continue to contribute to the very healthy pricing environment for spot market transactions. Although the 2014 third quarter is only several weeks old, the strong trends have continued.  Based on the continuation of these positive trends through the 2014 third quarter and given that the revenue generated in the Company's third quarter has historically been very similar to revenue generated in the Company's second quarter, I would expect 2014 third quarter revenue, gross profit, operating income and diluted earnings per share to be similar with those experienced in the 2014 second quarter."

Landstar will provide a live webcast of its quarterly earnings conference call this afternoon at 2:00 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 Second Quarter 2014 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 2013 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.

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