SAN MATEO, Calif. – November 02, 2010
Con-way Inc. (NYSE:CNW) today reported a net loss to common shareholders for the third quarter of 2010 of $8.2 million (15 cents per share). The results compared to third-quarter 2009 net income to common shareholders of $13.5 million (27 cents per diluted share).
On a non-GAAP basis, third-quarter earnings per diluted share were 22 cents in 2010 compared to 38 cents in 2009, excluding the following items:
- 2010 — a $16.4 million goodwill-impairment charge related to the 2007 acquisition of Chic Logistics, and $5.5 million of expense for recent employee severances and the planned consolidation of Con-way’s executive offices;
- 2009 — a change in the accounting estimate for revenue adjustments, which reduced revenue and operating income at Con-way Freight by $5.4 million.
Both years also included discrete tax adjustments. Additional information is provided in the attached reconciliation.
Revenue in the third quarter of 2010 was $1.27 billion, a 12.1 percent increase from last year’s third quarter. Operating income in the 2010 third quarter was $12.5 million, compared to $41.1 million in the third quarter a year ago.
The third-quarter tax provision in 2010 was $6.7 million and in 2009 was $11.5 million. There was no tax benefit in 2010 from the non-deductible goodwill impairment charge. Excluding the effect of goodwill impairment and discrete items, the third-quarter effective tax rate was 42.6 percent in 2010 compared to 37.0 percent in 2009.
Douglas W. Stotlar, Con-way’s president and CEO, noted that while corporate office consolidation and severance costs reduced current-quarter profits, key operating metrics for Con-way Freight improved as the quarter progressed.
“The lingering effects of the LTL tonnage surge from earlier this year left our LTL business with higher variable costs as we entered the quarter,” Stotlar noted. “In August, we implemented specific actions to improve performance at Con-way Freight. As a result, we’ve seen variable costs decline, pricing improve and tonnage levels moderate.”
“We came out of the quarter with positive momentum,” he added. “We have set a deliberate course for improvement and we are making steady progress which we expect will continue through the fourth quarter.”
Menlo Worldwide Logistics posted its third consecutive quarterly improvement over 2009, excluding impairment charges. “Menlo once again delivered solid growth in revenues, net revenues and operating income. Our supply chain and logistics company is executing well across all of its principal business lines,” Stotlar said.
Con-way Truckload’s results were affected by external factors which raised operating costs, and shipper demand that moderated toward the end of the quarter. “Revenue per loaded mile improved as pricing remained relatively stable. We expect results to improve as Con-way Truckload continues to focus on higher-margin opportunities and increasing asset utilization,” Stotlar concluded.
Operating results in the 2010 third quarter for Con-way’s reporting segments were as follows:
FREIGHT
For the 2010 third quarter, Con-way Freight, the company’s less-than-truckload (LTL) operation, reported:
- Revenue of $797.1 million, a 13.1 percent increase over last year’s third-quarter revenue of $704.5 million.
- Yield increased 3.1 percent from the previous-year third quarter. Excluding the fuel surcharge, yield increased 0.9 percent.
- Weight per day increased 8.7 percent over the previous-year third quarter.
- Operating income of $13.1 million, compared to $22.8 million in the year-ago period. Higher purchased transportation, temporary labor and rental equipment expense in the first half of the quarter adversely affected results. Severance and office consolidation costs and the partial reinstatement of 2009’s employee wage and benefit reductions also added $4.4 million and approximately $19 million, respectively, to operating expense. The 2009 third quarter included the $5.4 million effect of the change in accounting estimate related to revenue adjustments.
- Operating ratio of 98.4 in the 2010 third quarter compared to 96.8 in the previous-year period.
LOGISTICS
For the third quarter of 2010, Menlo Worldwide Logistics, the company’s global logistics and supply chain management operation, reported:
- Revenue of $370.0 million, up 6.8 percent from the prior-year third-quarter revenue of $346.4 million.
- Net revenue of $140.7 million, which increased 7.2 percent from $131.3 million in the same period of last year, due primarily to an increase in revenue from warehouse management services.
- Operating loss of $6.3 million, compared to operating income of $9.5 million earned in the third quarter of 2009. Excluding the $16.4 million goodwill-impairment charge, third-quarter operating income in 2010 was $10.1 million, a 6.3 percent increase from $9.5 million in 2009, due largely to the growth in net revenue.
TRUCKLOAD
For the third quarter of 2010, Con-way Truckload, the company’s full-truckload transportation operation, reported:
- Revenue of $140.7 million, a 3.8 percent decline from the prior-year third-quarter revenue of $146.3 million. Lower total miles and a higher proportion of empty miles led to a decline in tractor productivity, reflecting changes in fleet composition that had fewer higher-mileage driver teams and proportionally more single drivers. Partially offsetting the decline were higher fuel surcharges and improved revenue per loaded mile (excluding fuel surcharges).
- Operating income of $5.5 million, compared to $10.6 million earned in last year’s third quarter, which included a $2.3 million loss from the sale of tractors.
- Operating ratio on revenue, exclusive of fuel surcharges, was 95.3 in the third quarter of 2010, compared to 91.7 in the third quarter of 2009.
Revenue and operating income also were adversely affected, to a lesser extent, by Hurricane Alex, which in July flooded the Mexico border and stranded portions of Con-way Truckload’s trailer fleet.
CON-WAY OTHER
Con-way Other includes the company’s Road Systems, Inc. trailer-manufacturing unit as well as other corporate activities. These activities produced essentially break-even results in the 2010 third quarter compared to a prior-year third-quarter operating loss of $1.8 million, which relates primarily to corporate reinsurance activities.
INVESTOR CONFERENCE CALL
Con-way will host a conference call for the investment community later today, Wednesday, November 3, beginning at 4:00 p.m. Eastern Daylight Time (1:00 p.m. Pacific).
The call can be accessed by dialing (866) 264-3634 or (706) 643-3632 (for international callers) and is expected to last approximately one hour. Callers are requested to dial in at least five minutes before the start of the call. The call will also be available through a live internet webcast at www.con-way.com, in the investor relations section.
An audio replay will be available for two weeks following the call dialing (800) 642-1687 or (706) 645-9291 (for international callers) and using access code 16993950. An Internet replay of the presentation will also be available at the Con-way website.
About Con-way
Con-way Inc. (NYSE:CNW) is a $4.3 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 freight transportation, as well as logistics, warehousing, multimodal 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 www.con-way.com.
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