Standard & Poor’s Revises Con-way Outlook to Stable From Negative, Affirms ‘BBB-‘ Rating

NEW YORK (Standard & Poor’s) – September 08, 2011

The following is a press release from Standard & Poor’s:

  • Con-way’s credit measures have improved due to earnings improvement and debt reduction, resulting in funds from operations to total debt, EBITDA interest coverage, and total debt to EBITDA of 34%, 5.6x, and 3.8x, respectively, for the 12 months ended June 30, 2011.
  • We are revising our outlook on Con-way to stable from negative, while< affirming our ratings, including the ‘BBB-‘ corporate credit rating.
  • Despite a sluggish economy, less-than-truckload pricing has improved from depressed levels and industry conditions have strengthened, and we expect these trends to continue for the remainder of 2011, though at a slower pace.

Standard & Poor’s Ratings Services said today that it revised its outlook on freight transportation and logistics carrier Con-way Inc.

At the same time, we affirmed our ratings, including the ‘BBB-‘ corporate credit rating, on the Ann Arbor, Mich.-based company.

“The outlook revision reflects improving pricing trends particularly in the less-than-truckload segment, stronger operating performance, and strengthening credit metrics,” said Standard & Poor’s credit analyst Anita Ogbara.

Our ratings on Con-way reflect its substantial market positions in the less-than-truckload (LTL) and logistics segments and strong liquidity. The capital-intensive, cyclical, and competitive nature of the freight transportation industry somewhat offsets these positive credit characteristics.

Con-way is one of the largest freight transportation and logistics operators in the U.S., generating about $5.1 billion in consolidated revenues for the 12 months ended June 30, 2011.

The company’s operating subsidiaries include Con-way Freight (61% of consolidated revenues for the six months ended June 30), which provides LTL freight trucking services; Con-way Truckload (10%), which consists of Con-way’s truckload (TL) business and Contract Freighters Inc. (CFI; acquired in August 2007); and Menlo Worldwide Logistics (29%), which provides logistics services, including arranging freight transportation and warehouse and supply chain management.

The stable outlook reflects our expectation that credit measures will continue to improve in response to pricing initiatives, margin improvement, and gradually increasing freight demand.

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