ANN ARBOR, Mich., July 30, 2014 /PRNewswire/ -- Con-way Inc.
(NYSE:CNW) today reported 2014 second-quarter net income of
$53.7 million, or 93 cents per diluted share. The results compare
to second-quarter 2013 net income of $42.9
million, or 75 cents per
diluted share.
On a non-GAAP basis, earnings per diluted share in the 2014
second quarter were 91 cents compared
to 68 cents in last year's second
quarter. (Non-GAAP items, consisting of tax-related adjustments and
gains on sales of property for both years, and an increase in
reserves for international bad debt in the prior year, are detailed
in the attached reconciliation.)
Operating income in the second quarter was $102.7 million compared to $76.3 million earned in the second quarter a year
ago. Revenue for the second quarter was $1.49 billion compared to $1.38 billion a year ago.
In conjunction with today's news release, the Board of Directors
has approved two initiatives designed to return cash to
shareholders: a share repurchase program and a dividend
increase. Under the share repurchase program, the company is
authorized to acquire up to $150
million of Con-way common stock in open market transactions.
The quarterly dividend, which is currently $0.10 per common share, will increase to
$0.15, or from $0.40 to $0.60 on
an annual basis.
The company will also make an additional $80 million pre-tax contribution to its defined
benefit pension plans in 2014 in order to further strengthen its
balance sheet and support its credit rating. This incremental
funding is in addition to the $60
million pre-tax contribution previously planned for this
year.
"Our cash balance has supported strategic investments that have
lowered our fleet ages, improved our pension funded status, and
enabled margin expansion," said Douglas W.
Stotlar, Con-way's president and CEO. "Given our progress
towards these objectives, we have reached a point where we can
redeploy a portion of our cash balance to fund expanded shareholder
initiatives, while continuing to support a strong balance
sheet."
Con-way's second-quarter effective tax rate was 40.9 percent,
compared to 31.7 percent for the same period in 2013. Both years
included discrete and other tax adjustments that impacted the
effective tax rate (presented in the attached reconciliation). In
the second quarter of 2013, Con-way recognized $3.8 million of discrete tax benefits, consisting
mainly of the reversal of liabilities for uncertain tax
positions. Discrete tax adjustments in the second quarter of
2014 were primarily for various state income tax adjustments.
Segment results in the second quarter for Con-way's principal
operations were as follows:
FREIGHT
For the second quarter of 2014, Con-way Freight reported:
- Revenue of $940.5 million, a 5.4
percent increase from last year's second quarter revenue of
$892.3 million. Revenue growth in the
quarter was attributable to improved yield and slightly higher
tonnage per day.
- Operating income of $83.0
million, a 51.8 percent increase from the $54.7 million earned in the year-ago period.
Results in the period benefited from revenue management initiatives
that contributed to improved composition of freight in the network,
and included a $3.4 million gain on
the sale of property.
- Revenue per hundredweight, or yield, increased 4.7 percent from
the previous-year second quarter. Excluding fuel surcharge, yield
rose 4.1 percent.
- Tonnage per day increased 1.3 percent compared to the 2013
second quarter.
- Operating ratio of 91.2 in the 2014 second quarter compared to
93.9 in the previous-year period. Excluding the gain on sale
of property, the second quarter operating ratio was 91.5.
"Our strategic focus on revenue management was reinforced by
strong demand and a firming rate environment," said Stotlar.
"Against the backdrop of these industry dynamics, we effectively
employed our proprietary planning and pricing tools to drive profit
improvement."
LOGISTICS
For the second quarter of 2014, Menlo Logistics reported:
- Revenue of $433.7 million, a 17.1
percent increase from the prior year second quarter revenue of
$370.4 million. The higher revenue
reflected increases in both transportation-management and
warehouse-management services.
- Net revenue of $186.7 million, a
15.7 percent increase from $161.4
million in the previous year second quarter. The higher net
revenue was primarily attributable to increased
warehouse-management business.
- Operating income of $6.4 million,
an increase of 6.3 percent over the $6.0
million earned in last year's second quarter. The current
period was affected by lower margins on transportation management
and higher variable compensation expense while the previous-year
quarter included an increase in bad debt reserves for a single
international customer, as well as start-up expenses related to new
and expanded warehouse-management business.
"While Menlo grew its revenue base, tight capacity and rising
rates in the truckload market increased purchased transportation
expense, impacting operating income," Stotlar said. "Menlo remains
focused on reducing costs and improving margins. Following
last year's surge in new warehouse management business, its sales
pipeline has returned to typical levels and a more balanced mix of
services. We're encouraged by an increase in bids for
transportation management projects as well as growth opportunities
in new sectors for us such as oil and gas and health care."
TRUCKLOAD
For the second quarter of 2014, Con-way Truckload reported:
- Revenue of $164.1 million, a 1.4
percent increase over last year's second-quarter revenue of
$161.8 million. Increased revenue was
affected by higher other revenues and an increase in revenue per
loaded mile, partially offset by a decrease in loaded miles.
- Operating income of $13.5
million, a 24.2 percent increase over the $10.9 million earned in last year's second
quarter. Results benefited from increased pricing and lower
vehicular claims expense.
- Empty miles of 9.5 percent, compared to 9.4 percent in the
previous-year second quarter.
- Operating ratio, exclusive of fuel surcharges, of 89.4 compared
to 91.4 in the second quarter of 2013.
"Con-way Truckload benefited from solid demand in the second
quarter," noted Stotlar. "Pricing strengthened as the market dealt
with capacity constraints exacerbated by the continuing
industry-wide driver shortage. We made strides in reducing driver
turnover, which spiked last quarter. At the same time, we are
still above our fleet's normal level of unseated trucks, which
adversely impacts revenue and profit. Our safety performance
continued to improve throughout the quarter with June recording the
lowest accident frequency rate in 16 years."
CORPORATE AND ELIMINATIONS
Corporate and Eliminations includes the company's trailer
manufacturing unit as well as other corporate activities. These
activities were essentially breakeven in the 2014 second quarter
compared to income of $4.7 million in
the second quarter of 2013. The 2013 second-quarter
comparative results reflect a $5.6
million gain from the sale of excess corporate
properties.
QUARTERLY DIVIDEND DECLARATION
The first increased dividend of $0.15 per common share will be paid on
September 12, 2014 to shareholders of
record at the close of business on August
15, 2014.
INVESTOR CONFERENCE CALL
Con-way will host a conference call for the investment community
tomorrow, Thursday, July 31,
beginning at 8:30 a.m. Eastern
Time.
The call can be accessed by dialing (877) 874-4749 or (706)
643-3632 (for international callers) and is expected to last
approximately one hour. The call will also be available through a
live internet webcast at www.con-way.com, in the investors section.
An audio replay will be available for two weeks following the call
by dialing (855) 859-2056 or (404) 537-3406 (for international
callers) and using access code 66754764. An Internet
replay and podcast of the presentation will also be available at
the Con-way site.
ABOUT CON-WAY INC. -- Con-way Inc. (NYSE:CNW) is a
$5.5 billion freight transportation
and logistics services company headquartered in Ann Arbor, Mich. Con-way delivers
industry-leading services through its primary operating companies
of Con-way Freight, Con-way Truckload and Menlo Logistics. These
operating units provide high-performance, day-definite
less-than-truckload (LTL), full truckload and multimodal freight
transportation, as well as logistics, warehousing and supply chain
management services. Con-way also operates a trailer refurbishing
and manufacturing company which supplies trailing equipment to the
company's trucking fleets. 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 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 regarding the payment of future dividends, 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 by or 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, intangible assets and other
long-lived assets, the possibility of defaults under Con-way's
revolving 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 1A of Con-way's 2013 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. Any forward-looking statements speak as of
July 30, 2014 and are subject to
change. Con-way does not undertake any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as otherwise
required by law.
Con-way
Inc.
|
Consolidated
Statements of Income
|
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(Dollars in
thousands, except per share data)
|
June
30,
|
|
June
30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
Freight
|
$
|
940,503
|
|
|
$
|
892,275
|
|
|
$
|
1,788,530
|
|
|
$
|
1,719,811
|
|
Logistics
|
433,650
|
|
|
370,378
|
|
|
840,015
|
|
|
762,735
|
|
Truckload
|
164,064
|
|
|
161,804
|
|
|
320,074
|
|
|
318,807
|
|
Corporate and
Eliminations
|
(45,868)
|
|
|
(43,087)
|
|
|
(87,427)
|
|
|
(83,819)
|
|
|
$
|
1,492,349
|
|
|
$
|
1,381,370
|
|
|
$
|
2,861,192
|
|
|
$
|
2,717,534
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
|
|
|
|
|
Freight
[a]
|
$
|
83,021
|
|
|
$
|
54,689
|
|
|
$
|
101,586
|
|
|
$
|
70,713
|
|
Logistics
[b]
|
6,418
|
|
|
6,039
|
|
|
12,592
|
|
|
12,571
|
|
Truckload
|
13,499
|
|
|
10,873
|
|
|
19,879
|
|
|
20,828
|
|
Corporate and
Eliminations [c]
|
(238)
|
|
|
4,698
|
|
|
1,705
|
|
|
3,786
|
|
|
102,700
|
|
|
76,299
|
|
|
135,762
|
|
|
107,898
|
|
Other Income
(Expense)
|
(11,932)
|
|
|
(13,450)
|
|
|
(25,772)
|
|
|
(28,274)
|
|
Income before Income
Tax Provision
|
90,768
|
|
|
62,849
|
|
|
109,990
|
|
|
79,624
|
|
Income Tax
Provision
|
37,101
|
|
|
19,952
|
|
|
43,430
|
|
|
22,722
|
|
Net Income
|
$
|
53,667
|
|
|
$
|
42,897
|
|
|
$
|
66,560
|
|
|
$
|
56,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-Average
Common Shares Outstanding
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
57,128,379
|
|
|
56,354,017
|
|
|
57,043,378
|
|
|
56,226,038
|
|
Diluted
|
57,694,691
|
|
|
56,960,738
|
|
|
57,577,373
|
|
|
56,860,095
|
|
Earnings per Common
Share
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.94
|
|
|
$
|
0.76
|
|
|
$
|
1.17
|
|
|
$
|
1.01
|
|
Diluted
|
$
|
0.93
|
|
|
$
|
0.75
|
|
|
$
|
1.16
|
|
|
$
|
1.00
|
|
|
|
[a]
|
Includes a $3.4
million current-year second-quarter gain from the sale of
property.
|
[b]
|
Includes a $3.7
million prior-year second-quarter charge for an increased reserve
on international accounts receivable.
|
[c]
|
Includes a $5.6
million prior-year second-quarter gain from the sale of
property.
|
|
|
Con-way
Inc.
|
Reconciliation of
GAAP Financial Measures to Non-GAAP Financial
Measures
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
(Dollars in
thousands, except per share data)
|
June
30,
|
|
June
30,
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net Income and
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(GAAP)
|
$
|
53,667
|
|
|
$
|
42,897
|
|
|
$
|
66,560
|
|
|
$
|
56,902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Before-Tax
Reconciling Items
|
|
|
|
|
|
|
|
|
|
|
|
Gains on sales of
properties
|
3,397
|
|
|
5,612
|
|
|
3,397
|
|
|
5,612
|
|
Reserve on
international accounts receivable
|
—
|
|
|
(3,736)
|
|
|
—
|
|
|
(3,736)
|
|
|
3,397
|
|
|
1,876
|
|
|
3,397
|
|
|
1,876
|
|
Tax-Related
Reconciling Items
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect of items
above
|
(1,361)
|
|
|
(732)
|
|
|
(1,361)
|
|
|
(732)
|
|
Discrete and other
tax adjustments
|
(1,066)
|
|
|
3,302
|
|
|
294
|
|
|
6,823
|
|
|
(2,427)
|
|
|
2,570
|
|
|
(1,067)
|
|
|
6,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Adjusted
Non-GAAP)
|
$
|
52,697
|
|
|
$
|
38,451
|
|
|
$
|
64,230
|
|
|
$
|
48,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Shares
Outstanding
|
57,694,691
|
|
|
56,960,738
|
|
|
57,577,373
|
|
|
56,860,095
|
|
Earnings per Diluted
Common Share (Adjusted Non-GAAP)
|
$
|
0.91
|
|
|
$
|
0.68
|
|
|
$
|
1.12
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Logistics' Net
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
(GAAP)
|
$
|
433,650
|
|
|
$
|
370,378
|
|
|
$
|
840,015
|
|
|
$
|
762,735
|
|
Purchased
transportation expense
|
(246,963)
|
|
|
(209,008)
|
|
|
(470,838)
|
|
|
(444,208)
|
|
Net revenue (Adjusted
Non-GAAP)
|
$
|
186,687
|
|
|
$
|
161,370
|
|
|
$
|
369,177
|
|
|
$
|
318,527
|
|
Information About
Non-GAAP Financial Measures:
|
|
Con-way provides financial measures such as adjusted
net income, adjusted earnings per share and net revenue as
additional information to investors. These measures are not in
accordance with generally accepted accounting principles in the
United States ("GAAP"). Con-way's non-GAAP financial measures are
intended to supplement, but not substitute for, the most directly
comparable GAAP measures. Con-way believes that the non-GAAP
financial measures provide meaningful information to assist
management, investors and analysts in understanding Con-way's
financial results because they exclude items that may not be
indicative or are unrelated to Con-way's core operating results.
However, because non-GAAP financial measures are not standardized,
it may not be possible to compare these financial measures across
companies. Investors are strongly encouraged to review Con-way's
financial statements and publicly filed reports in their entirety
and not to rely on any single financial measure.
|
Con-way
Inc.
|
Consolidated
Condensed Balance Sheets
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
(Dollars in
thousands)
|
2014
|
|
|
2013
|
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
Current
assets
|
$
|
1,345,579
|
|
|
$
|
1,207,781
|
|
Property, plant and
equipment, net
|
1,628,421
|
|
|
1,656,833
|
|
Other
assets
|
416,216
|
|
|
415,317
|
|
Total
Assets
|
$
|
3,390,216
|
|
|
$
|
3,279,931
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities
|
$
|
795,730
|
|
|
$
|
745,951
|
|
Long-term debt and
capital leases
|
728,755
|
|
|
735,340
|
|
Other long-term
liabilities and deferred credits
|
655,137
|
|
|
659,951
|
|
Shareholders'
equity
|
1,210,594
|
|
|
1,138,689
|
|
Total Liabilities and
Shareholders' Equity
|
$
|
3,390,216
|
|
|
$
|
3,279,931
|
|
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SOURCE Con-way Inc.