Con-way Inc. Reports Second-Quarter 2009 Results
SAN MATEO, Calif. -Con-way Inc. (NYSE:CNW) today reported net income to common shareholders for the second quarter of 2009 of $31.5 million (after preferred stock dividends), or 64 cents per diluted share. The results compared to second-quarter 2008 net income to common shareholders (after preferred stock dividends) of $48.7 million, or $1.02 per diluted share. The 2008 second-quarter net income included a net gain from discontinued operations of 4 cents per diluted share.
Revenue in the 2009 second quarter was $1.06 billion, a decrease of 21.2 percent from last year’s revenue of $1.34 billion. Operating income in the 2009 second quarter was $66.0 million, a decrease of 30.5 percent compared to $94.9 million earned in the second quarter a year ago.
Commenting on the quarter, Con-way President and CEO Douglas W. Stotlar said, “Despite the challenges of the recessionary economy and a weak freight market, we returned the company to profitability. These results are a testament to the solid execution by Con-way’s employees at all of our business units, and the benefit of cost-reduction measures implemented in April.”
Con-way Freight, the company’s less-than-truckload (LTL) unit, saw its volumes improve sequentially each month in the quarter. “Con-way Freight’s reliable service performance, coupled with successful sales execution is driving an uptick in market share,” he said. “While there was some benefit from normal seasonality, the consistent month-to-month sequential growth was an encouraging trend. However, until the market’s excess capacity is resolved, we expect the pricing environment to remain competitive.”
Menlo Worldwide Logistics delivered a solid quarter. “Recessionary times provide opportunities for logistics companies, and Menlo has done a good job helping its customers weather the downturn,” Stotlar said. “Menlo’s quarterly performance can be attributed to new contract wins, continued operational excellence and prudent cost management.”
Con-way Truckload continued to manage effectively through a difficult market for full-truckload services. “The volume of shipper bid activity moderated from what we saw in the first quarter but weak demand and over-capacity kept pricing under pressure,” Stotlar noted. “Our truckload unit took steps in the quarter to right-size its fleet, selling 195 older tractors and aligning its resource base closer to market demand. Con-way Truckload remains well positioned as a premium service provider with sound operations, a loyal customer base and excellent cost controls.”
The effective tax rate for the 2009 second quarter was 33.1 percent compared to 39.7 percent in the same period of 2008. The 2009 tax rate was lower due to the effect of discrete tax benefits.
For the 2009 second quarter, Con-way Freight, the company’s less-than-truckload operation, reported:
* Operating income of $49.0 million, a decrease of 36.7 percent from the $77.4 million earned in the year-ago period. The quarter benefited from the earlier-mentioned expense reductions as well as effective sales initiatives and strong operational execution.
* Revenues of $638.0 million, a 22.6 percent decrease from last year’s second-quarter revenues of $824.0 million.
* Tonnage per day handled by Con-way Freight decreased 7.0 percent from the previous-year second quarter, reflecting continued weak demand.
* Yield for Con-way Freight declined 17.4 percent from the previous-year second quarter. Excluding the fuel surcharge, yield decreased 6.7 percent. Competitive pricing conditions driven by excess market capacity continued to dampen yield comparisons.
* Con-way Freight recorded an operating ratio of 92.5 in the 2009 second quarter compared to 90.8 in second-quarter 2008.
For the second quarter of 2009, Menlo Worldwide Logistics, the company’s global logistics and supply chain management operations, reported:
* Operating income of $7.8 million, a 57.4 percent increase from $5.0 million earned in the second quarter of 2008. Excellent cost controls across all of Menlo’s industry vertical groups benefited the 2009 second-quarter operating income, while income for the previous-year second quarter was reduced by write downs on two customer contracts.
* Revenue of $327.0 million, down 13.3 percent from previous-year second-quarter revenue of $377.1 million.
* Net revenue of $126.7 million was essentially flat compared to $126.6 million in the previous-year second quarter. Net revenue performance benefited from new contract wins which helped offset recession-induced declines in transactional volumes and pricing pressures from existing accounts.
For the second quarter of 2009, Con-way Truckload, the company’s full-truckload transportation operation, reported:
* Operating income of $6.9 million, a 44.7 percent decline from last year’s operating income of $12.4 million. Results included an asset disposition loss of $2.5 million from the sale of 195 tractors as fleet capacity was realigned for market conditions, and a $1.0 million write-down related to the 2007 CFI acquisition.
* Revenue of $89.8 million was down 34.6 percent compared to 2008 revenues of $137.4 million. The quarterly revenue reflects the elimination of inter-company revenues of $53.5 million in 2009 and $44.2 million in 2008. The truckload market continued to experience soft demand exacerbated by excess capacity.
* Operating ratio on revenue, before inter-company eliminations and exclusive of fuel surcharges, was 94.7 compared to last year’s operating ratio of 90.6.
Con-way Other includes other corporate activities and its Road Systems, Inc. trailer manufacturing unit. These activities had $2.3 million of income during the current quarter. Income in the previous year quarter was not material.
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