Landstar System, Inc. (LSTR)
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Earnings Call: Q3 2013

Aug 29, 2013

Operator

Good afternoon, and welcome to Landstar System, Inc.'s Third Mid-Quarter 2013 Conference Call. All lines will be in listen-only mode. Today's call is being recorded. If you have any objections, you may disconnect at this time. Joining us today from Landstar, Henry Gerkens, Chairman, President, and CEO. Now, I would like to turn the call over to Mr. Henry Gerkens. Sir, you may begin.

Henry Gerkens
Chairman, President and CEO, Landstar System, Inc.

Thanks, Terry, and good afternoon and welcome to the Landstar 2013 Third Quarter Mid-Quarter Update Conference Call. As a reminder, let me review how our mid-quarter update call works. There is no question-and-answer period during this call. The purpose of the call is to provide a brief update on how management sees the current quarter shaping up as it relates to business levels and earnings projections. The call will last only a couple of minutes. Before we start, let me read the following statement. The following is a safe harbor statement under the Private Securities Litigation Reform Act of 1995. Statements made during this conference call that are not based on historical facts or forward-looking statements. During this conference call, I may make certain statements containing forward-looking statements, such as statements which relate to Landstar's business objectives, plans, strategies, and expectations.

Such statements are, by nature, subject to uncertainties and risks, including, but not limited to, the operational, financial, and legal risks detailed in Landstar's Form 10-K for the 2012 fiscal year, described in the section Risk Factors 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. During our second quarter 2013 earnings conference call, I stated that, one, I anticipated 2013 third quarter revenue to be in a range of $670 million-$715 million.

Two, that I anticipated 2013 third quarter operating margin to be in a range of 46%-48%, and that, 3, I anticipated 2013 third quarter earnings per diluted share to be in a range of $0.67-$0.72. Through the first 8 weeks of the 2013 third quarter, revenue remained somewhat choppy, but improved from the trends experienced in the 2013 second quarter when compared to the 2012 second quarter.

Although total truck transportation revenue through the first eight weeks of the 2013 third quarter continued to be below revenue generated in the comparable eight weeks of the 2012 third quarter, both total load volume and revenue per load trends for the 2013 eight-week period of the third quarter compared to the 2012 eight-week period of the third quarter, was improved from the declines experienced in the 2013 second quarter compared to the 2012 second quarter. To further illustrate the overall improving current year month-over-month prior year consolidated revenue trends, revenue for 2013 in April versus April of 2012 was down 6.9%. May 2013 revenue versus May 2012 revenue declined 8.8%.

June 2013 revenue versus June 2012 revenue declined 7.4%. July 2013 revenue versus July 2012 revenue declined 5.7%. Revenue from the 2013 August period, which ended August 25, 2013, is estimated to decline approximately 3% from the comparable 2012 August period. I'm very encouraged by the improving revenue trends and would anticipate to show continual gradual improvement in revenue trends as we move throughout the balance of the third quarter into the fourth quarter and into 2014. Based upon the results thus far in the 2013 third quarter and a continued improvement in revenue trends, I am tightening my range of estimated revenue for the 2013 third quarter to $680 million-$700 million.

Based upon that range of revenue for the 2013 third quarter, and assuming the same level of insurance and claims expense as a percentage of BCO revenue as incurred in the 2013 second quarter, I now see the 2013 third quarter operating margin to be between 46% and 47%, and the estimated 2013 third quarter earnings per diluted share in a range of $0.67-$0.70. I want to thank you for joining me on this short conference call, and have a great weekend, and I look forward to talking to you again on our October 24th third quarter earnings conference call. Thanks!

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