Landstar posts lower 4Q net income, revenue

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Landstar System on Wednesday, Jan. 28, reported 2008 fourth-quarter net income of $24.6 million on revenue of $603.8 million compared to net income of $29.0 million on revenue of $642.9 million in the 2007 fourth quarter. Revenue in the fiscal year ended Dec. 27 was $2.643 billion compared to $2.487 billion in the 2007 fiscal year, while net income was $110.9 million compared to $109.7 million.

“Landstar’s 2008 fourth-quarter revenue was significantly impacted by lower freight demand related to the severe downturn in the domestic and global economies,” said Henry Gerkens, president and chief executive officer of the Jacksonville, Fla.-based company. “The number of loads hauled by BCO independent contractors, truck brokerage carriers and rail intermodal carriers were each below the number of loads hauled by each of these modes during the 2007 fourth quarter. Pricing, based on rate per load, also softened throughout the quarter as weak freight demand created additional excess capacity. However, rate per load in the 2008 fourth quarter continued to exceed prior-year rates, and the current environment continues to present Landstar with great opportunities in adding new agents and capacity.”

Gerkens said that regardless of the current economic environment, Landstar’s nonasset-based variable cost business model continues to generate solid cash flow and returns. “During the 2008 fourth quarter, cash from operations was $69 million, compared to $29 million in the 2007 fourth quarter,” he said. “During the 2008 fourth quarter, the company purchased $23 million of its common stock in the open market, while at the same time it reduced borrowings on its senior credit facility by $21 million. At December 27, 2008, there was $127 million available for borrowings under the company’s senior credit facility, while the ratio of debt to capital was 35 percent. Since September 2008, cash and short-term investments increased $19 million to $122 million at December 27, 2008. Return on average equity for fiscal year 2008 was 48 percent, and return on invested capital – net income divided by the sum of average equity plus average debt – was 29 percent. Landstar’s balance sheet remains strong.”

Gerkens said that in the last four weeks of 2008, consolidated load volume was 15 percent below the load volumes reported in the corresponding period of 2007. “This downward revenue trend has continued into the first few weeks of January, but is not necessarily an accurate indicator of the revenue that might be expected for the entire fiscal year,” he said.