SAN MATEO, Calif.
Con-way Inc. today reported net income available to common shareholders for the third quarter
of 2008 of $38.8 million, or 81 cents per
diluted share. The results compare to third-quarter 2007 net income available to
common shareholders (after preferred stock dividends) of $37.3 million, or 78
cents per diluted share.
Con-way Inc. today reported net income available to common
shareholders for the third quarter of 2008 of $38.8 million (after preferred
stock dividends), or 81 cents per diluted share. The results compare to
third-quarter 2007 net income available to common shareholders (after preferred
stock dividends) of $37.3 million, or 78 cents per diluted share.
In the 2007 third quarter, earnings available to common shareholders included
an after-tax charge of 9 cents per diluted share for costs related to business
transformation initiatives and acquisitions.
Operating income in the 2008 third quarter was $78.9 million, an increase of
16.6 percent compared to $67.7 million earned in the third quarter a year ago.
Revenue in the 2008 third quarter was $1.37 billion, an increase of 23.3 percent
from last year’s third quarter revenue of $1.11 billion, reflecting organic
growth and the effect of acquisitions completed in 2007.
Commenting on the quarter, Con-way President and CEO Douglas W. Stotlar said,
“Our core operations turned in results that were consistent with our updated
earnings guidance, and as expected, were affected by weakening demand and a
difficult pricing environment,” he noted. “Lower-than-anticipated
employee-related costs and a lower tax rate in the quarter led to results that
were somewhat better than earlier expectations.”
Con-way Freight, the company’s less-than-truckload and largest business unit,
recorded an increase in tonnage for the quarter but profit growth remained
constrained by weakening demand and pricing in a highly competitive business
climate. “Demand decelerated as the quarter proceeded, which created additional
pressure on pricing. Productivity measures remained strong as we saw good
operational execution. Our Freight team is doing an excellent job delivering
consistent, reliable service to customers in a very challenging
Menlo Worldwide Logistics achieved double-digit growth in net revenues but
saw income decline below last year’s third quarter. Among the factors was an
operating loss in China as integration expense exceeded expectations.
“Additional costs for operational integration have extended the profit horizon
in China, but we are making progress and expect to turn the corner by the end of
the year,” Stotlar said. He added that Menlo’s results in the quarter also were
affected as customers experienced continuing pressures to reduce supply chain
costs in response to the economic downturn.
Con-way Truckload turned in a commendable performance in a weakening
environment for truckload freight, Stotlar noted. “We continued to realize the
benefits of synergy between Con-way Truckload, and our freight and logistics
units,” he said. “The declining cost of fuel also aided Truckload’s earnings
given the nature of their fuel cost recovery mechanisms.”
The effective tax rate for the 2008 third quarter was 36.5 percent compared
to 37.1 percent in the same period of 2007. The 2008 tax rate was affected by
discrete tax adjustments which decreased the effective tax rate.
For the 2008 third quarter, Con-way Freight, the company’s regional
less-than-truckload operations, reported:
Operating income of $61.1 million, an increase of 1.8 percent from the $60.0
million earned in the year-ago period. The 2007 third quarter was inclusive of
$5.5 million in expense for Con-way’s business transformation initiative in the
quarter, and $3.2 million of rebranding expense.
Revenues of $808.3 million, a 9.1 percent increase over last year’s
third-quarter revenues of $740.8 million.
Tonnage per day handled by Con-way Freight increased 2.3 percent over the
previous-year third quarter.
Yield for Con-way Freight improved 7.0 percent from the previous-year third
quarter. Excluding the fuel surcharge, yield declined 1.0 percent.
Con-way Freight recorded an operating ratio of 92.6 in the 2008 third
quarter compared to 92.0 in third-quarter 2007, which included the
earlier-mentioned business transformation expenses and rebranding costs.
For the third quarter of 2008, Menlo Worldwide Logistics, the company’s
global logistics and supply chain management operations, reported:
Operating income of $3.7 million, a 40.6 percent decrease from $6.2 million
earned in the third quarter of 2007. Income was affected primarily by the
previously mentioned costs for operations integration in China.
Revenue of $419.9 million, up 34.3 percent from the previous-year
third-quarter revenue of $312.6 million. The increase reflects contributions
from acquisitions, as well as new transportation management revenues from
several new customer engagements and the Defense Transportation Coordination
Net revenue of $127.9 million, an increase of 16.8 percent compared to
$109.6 million in the previous-year third quarter. The increase in net revenue
was primarily attributable to organic growth in revenue from
warehouse-management services and from the Asia acquisitions completed last
Results for the Truckload segment reflect the operations of Con-way
Truckload. For the third quarter of 2008, the company’s full-truckload
transportation operations reported:
Operating income of $15.2 million, compared to $3.0 million in the
previous-year period, during which Con-way completed its acquisition of Contract
Freighters, Inc. (CFI). This business unit was subsequently renamed Con-way
Truckload. Earnings for the 2007 third quarter had a $4.7 million operating loss
from Con-way’s pre-acquisition truckload business, including $1.5 million for
the closure of its former Memphis headquarters. The 2007 quarterly period also
benefited from earnings of CFI from close of the acquisition on August 23, 2007
to the quarter’s end.
Revenue of $140.9 million, after the elimination of $42.7 million in
Operating ratio before inter-company eliminations and exclusive of fuel
surcharges was 88.6.
Con-way Other includes the company’s Road Systems, Inc. trailer manufacturing
unit as well as other corporate activities. These activities produced a small
loss during both the 2008 and 2007 third quarters.
Con-way is maintaining its outlook for 2008 full-year diluted earnings per
share from continuing operations at between $2.60 and $2.80 based on an assumed
number of diluted shares outstanding of 48.3 million.
Con-way’s effective tax rate is expected to be 38.5 percent for the fourth
quarter and the year, including discrete tax items.
Con-way Inc. (NYSE:CNW) is a $4.7 billion freight transportation and
logistics services company headquartered in San Mateo, Calif. A diversified
transportation company, Con-way delivers industry-leading services through three
primary operating companies: Con-way Freight, Con-way Truckload and Menlo
Worldwide Logistics. These operating units provide high-performance,
day-definite less-than-truckload and full truckload and intermodal freight
transportation, as well as logistics, warehousing and supply chain management
services, and trailer manufacturing. Con-way Inc. and its subsidiaries operate
from more than 500 locations across North America and in 20 countries. For more
information about Con-way, visit us on the Web at http://www.con-way.com.