Con-way reports lower 1Q income, revenue

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Con-way Inc. on Monday, April 16, reported net income from continuing operations for the first quarter of 2007 of $29.0 million (after preferred stock dividends), compared to first-quarter 2006 net income from continuing operations of $46.2 million. Operating income in the 2007 first quarter was $55.7 million, down 28.5 percent compared to $77.9 million earned in the first quarter a year ago. Revenue was $1.00 billion, a decrease of 4.2 percent from last year’s revenue of $1.05 billion.

Net income to common shareholders in the 2007 first quarter was $31.9 million, compared to previous year net income of $44.7 million. The 2006 first-quarter results from continuing operations also included $4.2 million in earnings from Vector SCM, which subsequently was sold later in the year. In continuing operations for the 2007 first quarter, the company recorded a charge of $2.7 million for the post-closing settlement of outstanding items related to the Vector sale.

For the first quarter of 2007, Con-way Freight, the company’s regional less-than-truckload operation, and Con-way Transportation, which consists of the company’s full-truckload and trailer manufacturing divisions, reported the following results:

  • Operating income of $53.9 million, a decrease of 19.4 percent versus $66.8 million earned in the year-ago period;
  • Revenues of $681.7 million, down 2.1 percent compared to the prior-year revenues of $696.1 million;
  • Tonnage per day handled by Con-way Freight decreased 2.3 percent versus the previous-year quarter;
  • Yield for Con-way Freight was up 1.2 percent from the previous-year quarter, both with and without fuel surcharge;
  • Con-way Freight’s operating ratio was 92.3 in the 2007 first quarter compared to 90.5 in first-quarter 2006. The 2007 first quarter was affected by rebranding expense, health care and vehicular insurance costs, and severe winter weather; and
  • On March 19, Con-way Freight implemented a general rate increase of 4.9 percent.
  • “We’re executing on our plan,” said Douglas W. Stotlar, president and chief executive officer of San Mateo, Calif.-based Con-way. “The targeted sales initiatives we put in place last year are producing tangible results for Con-way Freight. While operating results were down year over year, we saw business increase each month in the quarter, with March showing growth over the same period last year. I’m encouraged by the resourcefulness of our people in maintaining productivity and service excellence as we reinvigorate our growth.”

    For the first quarter of 2007, Menlo Logistics reported:

  • Operating income of $6.5 million, a 5.7 percent increase from $6.2 million in the first quarter of 2006;
  • Revenue of $320.5 million, down 8.4 percent from the previous-year quarterly revenue of $349.9 million; and
  • Net revenue of $104.1 million, a 10.3 percent increase compared to $94.4 million in the 2006 first quarter.
  • Throughout 2006, Menlo Worldwide consisted of Menlo Logistics and Vector SCM, the company’s logistics joint venture with General Motors. The company sold its membership interest in Vector, which was an equity-method investment, to GM at the end of 2006. Menlo Worldwide’s results last year included $4.2 million in earnings from Vector. The 2007 first-quarter results for Menlo Worldwide included a $2.7 million charge for the post-closing settlement of outstanding items from the Vector sale.

    “Our global logistics company continues to gain momentum,” Stotlar said. “We’ve had a surge in project awards and expect to see the revenue effect as these come online during the year. Menlo is doing a superb job managing its margins. Globally, logistics outsourcing is increasing. Menlo is well positioned around the world to capitalize on this trend with its industry vertical approach, multiclient facilities and cost-effective, scalable solutions.”

    The Con-way Other segment, which contains various corporate activities, included a $1.8 million loss in the quarter resulting from higher claims from a reinsurance pool in which the company participates.