JACKSONVILLE, Fla., April 24, 2014 /PRNewswire/— Landstar System, Inc. (NASDAQ: LSTR) reported record first quarter net income of $27.6 million, or $0.61 per diluted share, on record first quarter revenue of $688 million in the 2014 first quarter. Landstar reported net income from continuing operations of $25.8 million, or $0.55 per diluted share, on revenue from continuing operations of $623 million in the 2013 first quarter. Gross profit (defined as revenue less the cost of purchased transportation and commissions to agents) was $105 million in the 2014 first quarter compared to $96 million in gross profit from continuing operations in the 2013 first quarter. Operating margin, representing operating income divided by gross profit, was 42.7 percent in the 2014 first quarter. Truck transportation revenue hauled by independent business capacity owners (“BCOs”) and truck brokerage carriers in the 2014 first quarter was $645.2 million, or 94 percent of revenue, compared to $574.7 million, or 92 percent of revenue from continuing operations, in the 2013 first quarter. Revenue hauled by rail, air and ocean cargo carriers was $33.5 million, or 5 percent of revenue, in the 2014 first quarter compared to $39.1 million, or 6 percent of revenue from continuing operations, in the 2013 first 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 March 29, 2014, the Company had $150 million in cash and short term investments. As of March 29, 2014, there was $192 million available for borrowing under the Company’s senior credit facility. Landstar purchased approximately 637,000 shares of its common stock during the 2014 first quarter at an aggregate cost of $37.1 million. Currently, there are approximately 2,131,000 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 $0.06 per share payable on May 30, 2014 to stockholders of record at the close of business on May 8, 2014. It is currently the intention of the Board to pay dividends on a quarterly basis going forward. “I am extremely pleased with the Company’s 2014 first quarter performance,” said Landstar Chairman and CEO Henry Gerkens. “2014 first quarter revenue, gross profit, operating income, net income, and diluted earnings per share were all first quarter records. Strength in demand for truck transportation services that began in the 2013 fourth quarter increased as we moved through the 2014 first quarter. Significant growth in revenue hauled via van equipment outpaced the growth in revenue hauled via unsided/platform equipment, though I believe that the growth in revenue hauled via unsided/platform equipment was slightly reduced due to the harsh weather experienced in January and February. Overall, the number of loads hauled via truck in the 2014 first quarter increased 4 percent over the 2013 first quarter while revenue per load increased 8 percent over the same period. It should also be noted that 2014 first quarter diluted earnings per share was negatively impacted compared to 2013 first quarter diluted earnings per share from continuing operations by approximately $0.03 per diluted share due to the fact that the Company’s annual agent meeting was held in the 2014 first quarter compared to 2013, when it was held in the second quarter. In addition, no provision for incentive compensation was included in the 2013 first quarter, whereas, a provision for incentive compensation of approximately $0.03 per diluted share was recorded in the 2014 first quarter. Operating margin in the first quarter is typically lower than the operating margin of any other quarter. In the 2014 first quarter, operating margin on a quarter over prior year quarter comparison was negatively impacted by the timing of the agent convention and provision for incentive compensation, although in-line with the operating margin anticipated in our previously issued guidance.” Gerkens continued, “As I mentioned earlier, the underlying increase in demand that began in the 2013 fourth quarter accelerated as we moved through the 2014 first quarter. The increase in underlying demand combined with an industry-wide reduction in truck productivity, reflecting regulatory changes and severe weather that impacted the country during the 2014 first quarter, created supply chain disruption, tightening capacity and increasing spot rates. As we move into the second quarter, I expect that normal uptick in seasonal freight patterns will continue to drive strong demand for our truck services. Supporting this expectation, demand for the Company’s truck services accelerated during the first few weeks of the April fiscal period. During this period, the rate of growth in both the number of loads hauled and revenue per load on truck transportation revenue as compared to the comparable period of the prior year has exceeded the rate of growth experienced in the 2014 first quarter compared to the 2013 first quarter. Based on current trends, I anticipate 2014 second quarter revenue to be within a range of $750 million to $800 million. I also anticipate diluted earnings per share in the 2014 second quarter to be in a range of $0.73 to $0.78.” 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 First 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, expectations and intentions. Terms such as “anticipates,” “believes,” “estimates,” “expects,” “plans,” “predicts,” “projects,” “may,” “should,” “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 our computer systems; dependence on key vendors; changes in fuel taxes; status of independent contractors; regulatory and legislative changes; catastrophic loss of a Company facility; acquired businesses; intellectual 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 Landstar 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 RC14001:2008 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)
Thirteen Weeks Ended
March 29, March 30,
2014 2013
Revenue $ 688,197 $ 622,880
Investment income 363 374
Costs and expenses:
Purchased transportation 530,031 477,496
Commissions to agents 52,704 49,032
Other operating costs, net of gains on asset dispositions 6,586 5,240
Insurance and claims 11,857 11,763
Selling, general and administrative 35,600 31,477
Depreciation and amortization 6,768 6,438
Total costs and expenses 643,546 581,446
Operating income 45,014 41,808
Interest and debt expense 768 740
Income from continuing operations before income taxes 44,246 41,068
Income taxes 16,608 15,317
Income from continuing operations 27,638 25,751
Income from discontinued operations, net of income taxes - 1,029
Net income $ 27,638 $ 26,780
Earnings per common share:
Income from continuing operations $ 0.61 $ 0.55
Income from discontinued operations - 0.02
Earnings per common share 0.61 0.58
Diluted earnings per share:
Income from continuing operations $ 0.61 $ 0.55
Income from discontinued operations - 0.02
Diluted earnings per share 0.61 0.57
Average number of shares outstanding:
Earnings per common share 45,407,000 46,507,000
Diluted earnings per share 45,596,000 46,722,000
Dividends per common share $ 0.06 $ -

Landstar System, Inc. and Subsidiary
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
March 29, Dec. 28,
2014 2013
Current assets:
Cash and cash equivalents $ 114,166 $ 180,302
Short-term investments 35,560 34,939
Trade accounts receivable, less allowance
of $3,594 and $3,773 411,545 378,732
Other receivables, including advances to independent
contractors, less allowance of $4,212 and $4,253 81,986 73,903
Deferred income taxes and other current assets 14,778 14,592
Total current assets 658,035 682,468
Operating property, less accumulated depreciation
and amortization of $160,307 and $157,985 171,717 177,329
Goodwill 31,134 31,134
Other assets 83,236 79,765
Total assets $ 944,122 $ 970,696
Current liabilities:
Cash overdraft $ 21,179 $ 27,780
Accounts payable 171,085 157,796
Current maturities of long-term debt 27,685 27,567
Insurance claims 93,790 92,280
Other current liabilities 62,308 70,237
Total current liabilities 376,047 375,660
Long-term debt, excluding current maturities 61,599 73,938
Insurance claims 23,912 24,171
Deferred income taxes and other non-current liabilities 39,387 42,446
Shareholders’ equity:
Common stock, $0.01 par value, authorized 160,000,000
shares, issued 67,121,124 and 67,017,858 shares 671 670
Additional paid-in capital 180,979 179,807
Retained earnings 1,197,962 1,173,044
Cost of 22,168,803 and 21,528,693 shares of common
stock in treasury (936,101) (899,028)
Accumulated other comprehensive loss (334) (12)
Total shareholders’ equity 443,177 454,481
Total liabilities and shareholders’ equity $ 944,122 $ 970,696

Landstar System, Inc. and Subsidiary
Supplemental Information
Thirteen Weeks Ended
March 29, March 30,
2014 2013
Revenue generated through (in thousands):
Business Capacity Owners (1) $ 343,652 $ 304,049
Truck Brokerage Carriers 301,513 270,641
Rail intermodal 16,495 18,011
Ocean and air cargo carriers 17,016 21,103
Other (2) 9,521 9,076
$ 688,197 $ 622,880
Number of loads:
Business Capacity Owners (1) 198,870 187,770
Truck Brokerage Carriers 165,450 163,960
Rail intermodal 6,410 7,020
Ocean and air cargo carriers 3,890 3,970
374,620 362,720
Revenue per load:
Business Capacity Owners (1) $ 1,728 $ 1,619
Truck Brokerage Carriers 1,822 1,651
Rail intermodal 2,573 2,566
Ocean and air cargo carriers 4,374 5,316
March 29, March 30,
2014 2013
Truck Capacity Providers
Business Capacity Owners (1) (3) 7,922 7,851
Truck Brokerage Carriers:
Approved and active (4) 21,588 20,571
Approved 11,291 11,200
32,879 31,771
Total available truck capacity providers 40,801 39,622

(1) Business Capacity Owners are independent contractors who provide truck capacity to the Company under exclusive lease arrangements.
(2) Includes premium revenue generated by the insurance segment and warehousing revenue generated by the transportation logistics segment.
(3) Trucks provided by Business Capacity Owners were 8,424 and 8,348 at March 29, 2014 and March 30, 2013, respectively.
(4) Active refers to Truck Brokerage Carriers who have moved at least one load in the past 180 days.

SOURCE Landstar System, Inc.