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 environment.”
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 Initiative.
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 year.
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 inter-company revenues.
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.