JACKSONVILLE, Fla., Oct. 13 /PRNewswire-FirstCall/ -- Landstar System, Inc. (Nasdaq: LSTR) reported a 28 percent increase in revenue to a record $676 million in the 2005 third quarter, up from $527 million in the 2004 third quarter. Net income for the 2005 third quarter was a record $35.6 million, or $.60 per diluted share, compared to net income of $21.6 million, or $.35 per diluted share, for the 2004 third quarter. Operating margin in the 2005 third quarter was 8.7 percent compared with 6.8 percent in the 2004 third quarter.
Included in the 2005 third quarter revenue was $129.8 million of revenue related to disaster relief efforts for the various hurricanes that impacted the United States during the quarter. These emergency transportation services were provided primarily under a contract between Landstar Express America, Inc. and the United States Department of Transportation/Federal Aviation Administration (the "FAA"). The revenue recognized under this contract during the 2005 third quarter generated $22.7 million of operating income which, net of related income taxes, increased net income by $14.0 million, or $.23 per diluted share. Included in the 2004 third quarter revenue was $27.9 million of revenue related to disaster relief efforts provided primarily under the contract with the FAA. The revenue recognized under the contract during the 2004 third quarter generated $5.1 million of operating income which, net of related income taxes, increased net income by $3.1 million, or $.05 per diluted share. Revenue attributable to emergency transportation services provided primarily under the FAA contract increased operating margin in the 2005 and 2004 third quarters approximately 2.1 percent and 0.6 percent, respectively.
Landstar's carrier group of companies generated $414 million of revenue in the 2005 third quarter, compared with revenue of $369 million in the 2004 third quarter. In the 2005 and 2004 third quarters, the carrier group invoiced customers $32.2 million and $15.3 million, respectively, in fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar's newly named global logistics group of companies, comprised of Landstar Express America and Landstar Logistics, generated $254 million of revenue, which included the $129.8 million related to disaster relief services, in the 2005 third quarter compared with $151 million of revenue, which included $27.9 million related to disaster relief services, in the 2004 third quarter.
Net income for the thirty-nine-week period ended September 24, 2005 was $77.0 million, or $1.27 per diluted share, compared to net income of $47.3 million, or $.77 per diluted share for the 2004 thirty-nine-week period ended September 25, 2004. Included in net income for the 2005 thirty-nine- week period was $24.2 million of operating income related to $137.9 million of revenue from emergency transportation services provided under the FAA contract. This $24.2 million of operating income, net of related income taxes, increased net income $14.9 million, or $.25 per diluted share. Included in net income for the 2004 thirty-nine-week period was $5.1 million of operating income related to the $27.9 million of revenue from emergency transportation services provided primarily under the FAA contract. This $5.1 million of operating income, net of related income taxes, increased net income $3.1 million, or $.05 per diluted share. Also included in the 2004 thirty-nine-week period was $7.6 million of costs to settle one severe accident. This charge, net of related income tax benefits, reduced net income by $4.9 million, or $.08 per diluted share. Revenue was $1,717 million in the 2005 thirty-nine-week period, compared to revenue of $1,430 million in the corresponding 2004 period. Landstar's carrier group of companies generated $1,198 million of revenue in the thirty-nine-week period ended September 24, 2005, compared with $1,054 million in the thirty-nine-week period ended September 25, 2004. In the 2005 and 2004 thirty-nine-week periods, the carrier group invoiced customers $81.5 million and $37.4 million, respectively, of fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar's global logistics group of companies generated $497 million of revenue, which included the $137.9 million related to disaster relief services, in the 2005 thirty-nine- week period compared with $354 million of revenue, which included $27.9 million related to disaster relief services, in the comparable 2004 period.
Landstar System, Inc. also announced that its Board of Directors has declared its second quarterly dividend of $0.025 per share. The dividend is payable on November 30, 2005, to stockholders of record at the close of business on November 10, 2005, and would pay out approximately $5,841,000 per year if continued quarterly. It is the intention of the Board of Directors to pay a comparable quarterly dividend going forward.
"I am very pleased with Landstar's 2005 third quarter performance," said Landstar President and CEO Henry Gerkens. "Consolidated revenue increased by 28 percent, compared to the 2004 third quarter, to the highest quarterly revenue in Landstar history. Revenue at the carrier segment increased 12 percent and revenue at the global logistics segment increased 69 percent. Landstar was not only able to source the necessary capacity required for the disaster relief efforts but was also able to source sufficient capacity to support a 9.5 percent increase in revenue, excluding the revenue from hurricane relief efforts in both periods. Landstar provided $129.8 million of transportation services in support of disaster relief efforts during the 2005 third quarter, including $24.5 million related to buses and $15.7 million for air transportation services. In addition, earnings per diluted share increased 71 percent over the 2004 third quarter."
"During the quarter, we increased the total number of approved capacity providers by over 1,400. Compared to the 2004 third quarter, revenue generated through other third party truck capacity providers (truck brokerage) increased 58 percent and revenue hauled by Landstar BCOs increased 7 percent. Trailing twelve-month return on average equity remained high at 52 percent and return on invested capital, net income divided by the sum of average equity plus average debt, was 35 percent. During the thirty-nine-week period ended September 24, 2005, we purchased 2,873,053 shares of Landstar common stock at a total cost of $95,600,000 and ended the period with $135 million in cash and short-term investments," Gerkens said. "The Company may purchase up to an additional 2,525,227 shares of its common stock under its authorized share repurchase program."
"The ongoing execution of our share purchase program combined with the Board of Directors' declaration of the quarterly dividend reflects both the ability of the Landstar business model to generate free cash flow and the Board's commitment to returning value to the Company's stockholders."
"I anticipate the revenue increase for the 2005 fourth quarter over the 2004 fourth quarter to be within a range of 10 to 14 percent. This estimate includes additional anticipated emergency transportation services revenue to be provided under the FAA contract within a range of $40 million to $50 million. The 2004 fourth quarter included $35.9 million of such emergency transportation services revenue. Given the current operating environment, I anticipate earnings for the 2005 fourth quarter to be within a range of $.46 to $.51 per diluted share," said Gerkens.
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," "intention", "plans," "predicts," "may," "should," "will," the negative thereof and similar expressions, including any such expressions with respect to the level of comfort with analyst estimates, 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 workers' compensation claims; unfavorable development of existing accident claims; dependence on independent sales agents; dependence on third party capacity providers; disruptions or failures in our computer systems; a downturn in domestic economic growth or growth in the transportation sector; substantial industry competition; and other operational, financial or legal risks or uncertainties detailed in Landstar's Form 10K for the 2004 fiscal year, described in the section Factors That May Affect Future Results and/or Forward-Looking Statements, and 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.