SAN MATEO, Calif. - February 04, 2010 - Con-way Inc. (NYSE:CNW) today reported a net loss applicable to common shareholders for the fourth quarter of 2009 of $1.9 million, or 4 cents per share. The results compare to a fourth quarter 2008 net loss to common shareholders of $43.0 million, or 94 cents per share.
The net loss to common shareholders in the fourth quarter of 2009 included expenses related to an administrative outsourcing initiative (4 cents per share) while last year’s fourth quarter included operational restructuring costs at Con-way Freight (28 cents per diluted share), impairment and acquisition related charges at Menlo Worldwide Logistics (91 cents per diluted share), and a net gain from discontinued operations (15 cents per diluted share).
Revenue for the 2009 fourth quarter of $1.12 billion was essentially even with last year’s fourth quarter. Operating income in the 2009 fourth quarter was $17.3 million compared to an operating loss of $35.2 million in the fourth quarter a year ago, primarily reflecting the prior year operating losses associated with the special items described above. Excluding these special items, declines in operating income at Con-way Freight and Con-way Truckload were partially offset by improved operating income at Menlo Worldwide Logistics.
In the fourth quarter of 2009, income tax expense of $3.1 million was recognized on $1.1 million of income before taxes, reflecting changes in numerous permanent tax items. In the fourth quarter of 2008, an income tax benefit of $1.6 million was reported on $49.6 million of loss before taxes, primarily reflecting no tax deduction on the impairment and acquisition-related charges and the effect of discrete items.
FULL-YEAR 2009 RESULTS
For the full-year 2009, Con-way reported a net loss applicable to common shareholders of $110.9 million, or $2.33 per share. This compares to full-year 2008 net income to common shareholders of $67.0 million, or $1.40 per diluted share.
Results for full-year 2009 included the earlier mentioned administrative outsourcing expenses (4 cents per share), a first quarter goodwill impairment charge at Con-way Truckload ($2.83 per share) and a third quarter charge for a change in Con-way Freight’s accounting estimate for revenue adjustments (7 cents per share). The 2008 full-year period included the impairment and acquisition related charges noted previously (84 cents per diluted share), two operational restructuring charges at Con-way Freight (33 cents per diluted share) and a gain from discontinued operations (17 cents per diluted share).
Revenues for the full-year 2009 declined to $4.27 billion from $5.04 billion in 2008, primarily reflecting the effect of weak pricing driven by surplus trucking industry capacity. The operating loss of $25.9 million for 2009 compares to operating income in 2008 of $192.6 million, with both periods affected by the special items described above. Excluding these special items, declines in operating income at Con-way Freight and Con-way Truckload were partially offset by improved operating income at Menlo Worldwide Logistics.
In 2009, income tax expense of $17.5 million was recognized on $90.3 million of loss before taxes and, in 2008, income tax expense of $69.5 million was reported on $134.9 million of income before taxes. Both periods primarily reflect no tax deduction on impairment charges and the effect of discrete items.
Commenting on the results, Con-way President and CEO Douglas W. Stotlar said, “Excess capacity remains a problem for the LTL and truckload markets which continues to suppress profit recovery. It will be incumbent upon us to maintain strong liquidity and vigilant cost control while we invest prudently for the strategic needs of our business and customers going forward.”
Con-way Freight, the company’s less-than-truckload operation, saw pricing stabilize somewhat in the fourth quarter, albeit at a lower level. “While yields were down compared to last year, our increased tonnage levels have enabled better utilization of rolling stock capacity,” Stotlar noted. “With the LTL market’s persistent over-supply, opportunities to improve margin will be difficult.” Stotlar added that Con-way Freight will continue to refine its network to drive cost savings and service improvements, through initiatives such as the line-haul re-engineering announced last month which accelerated transit times for 460 U.S. cities while reducing operating expense.
Menlo Worldwide Logistics culminated the year with a solid fourth quarter performance. “2009 was an excellent year for Menlo,” Stotlar noted. “Menlo’s service portfolio and solution approach clearly were on target with customer demand as the company grew both new and existing customer business in 2009. That success coupled with operational improvements and efficiency gains provided a strong finish for the year and positions Menlo with good momentum heading into 2010.”
Con-way Truckload weathered difficult market conditions to turn in a commendable performance for the quarter. “Our truckload company benefited from several strategic decisions that have improved asset utilization and strengthened its position as a premium service provider,” Stotlar said. “Its expansion into regional operations is showing good early returns. We continue to see capacity being rationalized in the truckload industry. Early bid activity in January shows prices firming and demand strengthening. Those are encouraging signals that a recovery is beginning to take hold in this market segment,” he concluded.
Segment results in the 2009 fourth quarter for Con-way’s principal operations were as follows:
FREIGHT
For the 2009 fourth quarter, Con-way Freight, the company’s less-than-truckload operation, reported:
Operating income of $2.8 million compared to an operating loss of $9.4 million in the year-ago period. Results were adversely affected by $2.6 million of costs for the administrative outsourcing initiative, and from continued weak LTL industry pricing, but benefited from employee-related cost saving initiatives implemented earlier in the year. Operating income in the same period of 2008 was lower due to $21.3 million of operational restructuring charges.
Revenue of $683.9 million, a 6.8 percent increase over last year’s fourth quarter revenue of $640.3 million.
Tonnage per day increased 20.6 percent over the previous year fourth quarter.
Yield declined 14.4 percent from the previous year fourth quarter, primarily reflecting the supply/demand imbalance and the resulting impact on pricing. Excluding the fuel surcharge, yield declined 11.7 percent.
Operating ratio was 99.6 in the 2009 fourth quarter compared to 101.4 in the previous year period. Excluding the operational restructuring charges in the 2008 fourth quarter, the operating ratio for this period was 98.2.
LOGISTICS
For the fourth quarter of 2009, Menlo Worldwide Logistics, the company’s global logistics and supply chain management operations, reported:
Operating income of $5.9 million compared to an operating loss of $38.6 million in the fourth quarter of 2008. The 2008 period included $42.7 million for impairment and acquisition related charges.
Revenue of $338.2 million, down 9.4 percent from the prior year fourth quarter revenue of $373.1 million. The decrease primarily reflects lower transportation management revenues.
Net revenue of $133.1 million, a 2.9 percent increase from $129.3 million in the previous year fourth quarter. The increase primarily reflects higher net revenue from warehouse management services.
TRUCKLOAD
For the fourth quarter of 2009, Con-way Truckload, the company’s full-truckload transportation operation, reported:
Operating income of $8.2 million, a decrease of 43.3 percent compared to $14.5 million in the previous year period, primarily reflecting lower recovery of fuel surcharge revenue and weaker pricing due to excess industry capacity during the quarter.
Revenue of $93.6 million, after the elimination of $46.1 million in inter-company revenues. This compares to 2008 fourth quarter revenue of $110.9 million (after elimination of $38.4 million in inter-company revenues) and reflects lower fuel surcharge recovery and the ongoing effects of the competitive pricing environment experienced throughout the year.
Operating ratio before inter-company eliminations and exclusive of fuel surcharges was 93.2, compared to 88.1 in the fourth quarter of 2008.
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 a small amount of income in the 2009 fourth quarter compared to a $1.7 million loss in the previous-year period.
INVESTOR CONFERENCE CALL
Con-way will host a conference call for the investment community tomorrow, Friday, February 5 beginning at 8:30 a.m. Eastern Standard Time (5:30 a.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 by dialing (800) 642-1687 or (706) 645-9291 (for international callers) and using access code 48324685. 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 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.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release constitute "forward-looking statements" and are subject to a number of risks and uncertainties and should not be relied upon as predictions of future events. All statements other than statements of historical fact are forward-looking statements, including: any projections of earnings, revenues, weight, yield, volumes, income or other financial or operating items, all statements of the plans, strategies, expectations or objectives of Con-way’s management for future operations or other future items, any statements concerning proposed new products or services, any statements regarding Con-way's estimated future contributions to pension plans, any statements as to the adequacy of reserves, any statements regarding the outcome of any legal and other claims and proceedings that may be brought against Con-way, any statements regarding future economic conditions or performance, any statements regarding strategic acquisitions, any statements of estimates or belief, and any statements or assumptions underlying the foregoing. Specific factors that could cause actual results and other matters to differ materially from those discussed in such forward-looking statements include: changes in general business and economic conditions, increasing competition and pricing pressure, the creditworthiness of Con-way's customers and their ability to pay for services rendered, changes in fuel prices or fuel surcharges, the possibility that Con-way may, from time to time, be required to record impairment charges for goodwill, in tangible assets and other long-lived assets, the possibility of defaults under Con-way's $400 million credit agreement and other debt instruments (including without limitation defaults resulting from unusual charges), uncertainty in the credit markets, including the effect on Con-way’s ability to refinance indebtedness as and when it becomes due, labor matters, enforcement of and changes in governmental regulations or legislation which potentially could result in an adverse impact on the company, environmental and tax matters, and matters relating to Con-way's defined benefit pension plans, including the effect on the plans of changes in discount rates and in the value of plan assets. The factors included herein and in Item 7 of Con-way's 2008 Annual Report on Form 10-K as well as other filings with the Securities and Exchange Commission could cause actual results and other matters to differ materially from those in such forward-looking statements. As a result, no assurance can be given as to future financial condition, cash flows, or results of operations.
Click for PDF versions of the following:
4th Quarter 2009 Statements of Operating Results
4th Quarter 2009 Condensed Balance Sheet
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