Landstar posts lower 3Q net income

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Landstar System today, Oct. 18, reported third-quarter net income of $29.3 million, compared to net income of $30.6 million for the 2006 third quarter. Net income included $400,000 in the 2007 third quarter compared to $2.8 million in the 2006 third quarter from revenue of $2.8 million and $29.7 million in the 2007 and 2006 third quarters for services provided under the contract between Landstar Express America and the U.S. Department of Transportation/Federal Aviation Administration.

Operating income in the 2007 third quarter included $600,000 of income related to FAA revenue compared to $4.5 million in the 2006 third quarter. Excluding the revenue and operating income related to the FAA revenue, operating margin was 7.8 percent in the 2007 third quarter compared to 7.6 percent in the 2006 third quarter. Overall, consolidated revenue, including FAA revenue, for the third quarter of 2007 was $635 million compared to $649 million for the 2006 third quarter. Excluding the FAA revenue from both periods, consolidated revenue increased about 2 percent.

Landstar’s carrier group of companies generated $461 million of revenue in both the 2007 and 2006 13-week periods. In the 2007 and 2006 13-week periods, the carrier group invoiced customers $44.1 million and $48.9 million, respectively, in fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar’s global logistics group of companies generated $165 million of revenue in the 2007 13-week period, which included $2.8 million related to transportation services provided under the FAA contract, compared with $180 million of revenue, which included $29.7 million related to transportation services provided under the FAA contract, in the 2006 13-week period.

Net income for the 39-week period ended Sept. 29 was $80.6 million, compared to net income of $84.4 million in the 2006 39-week period. Net income included $1.0 million in the 2007 39-week period compared to $7.5 million in the 2006 39-week period, from revenue of $6.2 million and $86.0 million in the 2007 and 2006 39-week periods, respectively, for services provided under the FAA contract.

Operating income in the 2007 39-week period included $1.6 million of income related to FAA revenue compared to $12.2 million in the 2006 39-week period. Excluding the revenue and operating income related to the services provided under the FAA contract, operating margin was 7.3 percent in the 2007 39-week period compared to 7.2 percent in the 2006 39-week period. Overall, consolidated revenue, including FAA revenue, for the 39-week period of 2007 was $1.844 billion compared to $1.902 billion for the 2006 39-week period.

Landstar’s carrier group of companies generated $1.355 billion of revenue in the 39-week period ended Sept. 29, compared with $1.357 billion in the 39-week period ended Sept. 30, 2006. In the 2007 and 2006 39-week periods, the carrier group invoiced customers $121.5 million and $129.4 million, respectively, in fuel surcharges that were passed on 100 percent to business capacity owners and excluded from revenue. Landstar’s global logistics group of companies generated $462 million of revenue, which included $6.2 million related to transportation services under the FAA contract, in the 2007 39-week period compared with $520 million of revenue, which included $86.0 million related to the transportation services provided under the FAA contract, in the 2006 39-week period.

“Despite a continued unpredictable and sluggish freight environment, Landstar delivered another solid quarterly performance,” said Henry Gerkens, president and chief executive officer of Jacksonville, Fla.-based Landstar. “Excluding the FAA revenue and related net income from both the 2007 and 2006 third quarters, Landstar’s revenue increased 2 percent quarter over quarter, diluted earnings per share increased 10 percent quarter over quarter, and operating margin increased by 14 basis points quarter over quarter.”