Henry Gerkens - President and CEO
Landstar System, Inc. (LSTR) F4Q07 Mid-Quarter Update Call December 3, 2007 2:00 PM ET
Good afternoon, and welcome to Landstar System Incorporated’s Fourth Quarter Mid-Quarter Update Conference Call. All lines will be in a listen-only mode. Today's call is being recorded. If you have any objections, you may disconnect at this time.
Now, I'd like to turn the call over to Mr. Henry Gerkens. Sir, you may begin.
Thanks, Josh, and good afternoon, and welcome to the Landstar 2007 fourth 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 in earnings projections. The call will last about five 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 are 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 10K for the 2006 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.
Let me begin by talking about our revenue levels. I stated in our 2007 third quarter update call, that I saw no change in the near-term freight environment, and I did not anticipate a pick-up for any incremental seasonal demand, nor did I anticipate any drop-off from current demand levels in the 2007 fourth quarter.
I also stated that I expected additional revenue contributions in the 2007 fourth quarter--from new agent locations and from increased account penetration--would offset weakness in the accounts that have been weak all year long.
As such, I anticipated revenue in the 2007 fourth quarter to increase in a low to mid single-digit range over the 2006 fourth quarter, excluding FAA-related revenue. Revenue generated under the FAA contract in the fourth quarter of 2006 was $14.7 million. In the 2007 fourth quarter to-date, revenue generated under the FAA contract was $1.8 million.
Excluding FAA related revenue, actual revenue for October of 2007 was approximately 5% greater than October of 2006. Actual revenue for November of 2007 finished almost 10% above the revenue for November of 2006. Increased volume has offset the somewhat weak pricing environment we've experienced all year long.
Assuming a continuation of current trends, and excluding FAA related revenue, I would anticipate revenue for the entire 2007 fourth quarter to finish in the upper end of our previous guidance. As such, I remain very comfortable with the $0.47-$0.52 diluted earnings per share estimate previously provided.
As I said before, through the first two months of the 2007 fourth quarter, Landstar’s business volumes have increased over the first two months of the 2006 fourth quarter, primarily due to the effect of new business brought in by new agents and increased account penetration. We also have seen some life in certain accounts that have been weak all year along.
Through the first two months of the 2007 fourth quarter, Landstar purchased over 1.2 million shares of its stock, bringing the total number of shares purchased in 2007 to over 4 million shares. We currently have 734,000 shares remaining to be purchased under our previously authorized stock purchase plan.
Through the first two months of the 2007 fourth quarter, Landstar’s safety performance continues to be strong. If our accident frequency rate continues, we will finish 2007 with our second best accident frequency rate ever, second only to 2006.
Landstar continues to develop and deepen its commitment to safety. Landstar is, and always has been, a safety first company. As Landstar enters 2008, I anticipate easier revenue comps. In 2008, I believe, we will see an increasing number of trucks exit the marketplace during the first part of the year, which should lead to improved pricing environment in the latter part of 2008.
I look forward to the challenges of 2008 and what that will present, and believe Landstar is well positioned to capitalize on the many opportunities it has in front of it, whether it be in the truckload, expedited, intermodal, ocean, air or warehousing arenas--both domestically and internationally.
In conclusion, it appears 2007 will end on a positive note, which bodes well for 2008.
Thank for your time, and we look forward to talking to you again on our fourth quarter conference call on January 31, 2008. Have a great afternoon and happy holidays.
This concludes today's conference call. Thank you for joining, have a good afternoon. Please disconnect your line at this time.