Con-way Inc. on Wednesday, July 18, reported net income from continuing operations for the second quarter of 2007 of $47.7 million. The results compared with second-quarter 2006 net income from continuing operations of $74.1 million.
Operating income in the 2007 second quarter was $77.6 million, down 30.6 percent from $111.8 million earned in the second quarter a year ago. Revenue was $1.07 billion, a decrease of 2.4 percent from last year’s second-quarter revenue of $1.10 billion.
Earnings from continuing operations in the 2007 second quarter included a charge of 10 cents per diluted share for costs from litigation of a vehicular casualty claim. Results for both the 2007 and 2006 second quarters also included the effect of discrete tax items, which reduced the tax provision by $2.5 million, increasing earnings by 5 cents per diluted share in 2007; and $6.9 million, adding 13 cents per diluted share to earnings in 2006. The 2006 second-quarter results from continuing operations also included $4.7 million in earnings, or 8 cents per diluted share, from Vector SCM, LLC, the former logistics joint venture with General Motors, which was sold at the end of 2006.
“The soft market for less-than-truckload freight remains highly competitive and price-sensitive, which has put pressure on yields,” said Douglas W. Stotlar, president and chief executive officer of San Mateo, Calif.-based Con-way. “Given the market conditions we have been experiencing, we expect LTL freight demand to remain restrained through the remainder of 2007, leading to moderate year-over- year volume growth.”
Stotlar noted that the company’s recently announced agreement to acquire Contract Freighters Inc. — a North American truckload carrier with more than 3,000 employees, and a fleet of 2,600 tractors and 7,000 trailers — was being well received. “I have been very encouraged with the positive feedback from the CFI team, as well as our customers, employees and the financial markets,” Stotlar said. “We’re excited about this acquisition and the strategic growth opportunities it presents. We expect the transaction to close in the third quarter.”
Stotlat added that the company’s Menlo Logistics unit continues to perform well and is on track to achieve low double-digit year-over-year growth in net revenues and operating income. Menlo earlier announced an agreement to acquire Cougar Holdings Pte. Ltd., a Singapore-based third-party logistics provider with $22 million in annual revenues and operations throughout Southeast Asia. The company expects the transaction to close during the third quarter.
The effective tax rate for the 2007 second quarter was 34.2 percent compared to 31.2 percent in the same period of 2006, with both periods affected by the previously mentioned discrete tax items. The company completed its stock repurchase program on June 29, as authorized by Con-way’s Board in April 2006. Under the program, the company acquired 7.3 million shares and utilized substantially all of the funding authorization of $400 million.