ANN ARBOR, Mich., July 29, 2015 /PRNewswire/ -- Con-way Inc.
(NYSE: CNW) today announced second-quarter 2015 net income of
$44.0 million, or 76 cents per diluted share. In the second quarter
of 2014, Con-way reported net income of $53.7 million, or 93
cents per diluted share.
On a non-GAAP basis, earnings per diluted share were
76 cents in the second quarter of
2015, compared to 91 cents in the
same period of the prior year. Non-GAAP items, consisting of
pension income/expense and tax-related adjustments in both years
and a gain from the sale of property in the prior year, are
detailed in the attached reconciliation.
Operating income for the second quarter of 2015 was $84.0 million, an 18.2 percent decrease from the
$102.7 million earned in the same
period a year ago. Second-quarter 2015 operating income
included $8.3 million of higher
vehicular claims expense (9 cents per
diluted share), reflecting an uncommon spike in accident severity
at Con-way Freight.
Revenue of $1.43 billion for the
2015 second quarter decreased 4.4 percent from last year's
second-quarter revenue of $1.49
billion.
Con-way's effective tax rate for the 2015 second quarter was
38.4 percent, compared to 40.9 percent in the same period of the
prior year. Both GAAP tax rates include the effect of discrete and
other tax adjustments (presented in the attached
reconciliation).
During the quarter, Con-way repurchased 460,000 shares of common
stock under the company's $150
million stock repurchase program, bringing the year-to-date
2015 total of shares repurchased to 830,000. As of
June 30, approximately $98 million in available share repurchase
authority remains under this program.
Segment results for Con-way's principal operations were as
follows:
FREIGHT
For the second quarter of 2015, Con-way Freight reported:
- Revenue of $916.9 million, a 2.5
percent decrease from $940.5 million
in the second quarter of the prior year. The revenue decline was
primarily attributable to lower fuel surcharges and lower tonnage,
partially offset by improved pricing.
- Revenue per hundredweight, or yield, increased 0.4 percent
compared to the second quarter of the prior year. Excluding the
fuel surcharge, yield rose 5.5 percent.
- Tonnage per day decreased 3.0 percent compared to last year's
second quarter, reflecting softer demand as well as the effects of
earlier lane-based pricing and network optimization
activities.
- Operating income of $69.5
million, a 16.3 percent decrease from $83.0 million in the second quarter of the prior
year. Operating income results included the effects of higher
driver wages and benefits from earlier announced driver pay
increases, as well as the previously mentioned $8.3 million increase in vehicular claims
expense, primarily related to accident severity. The prior year
second quarter included a $3.4
million gain from the sale of property.
- Operating ratio of 92.4 compared to 91.2 in the second quarter
of the prior year.
"Yield management and operating efficiencies mitigated much of
the impact of increased driver wages in the quarter," said
Douglas W. Stotlar, Con-way
president and CEO. "Daily tonnage was lower due to softer demand
from industrial shippers and the impact of earlier efforts to
improve pricing and increase density in the network. Our
focus going forward is on continuing to drive benefit from revenue
management activities and executing on initiatives for long-term
profitable growth."
LOGISTICS
For the second quarter of 2015, Menlo Logistics reported:
- Revenue of $405.9 million, a 6.4
percent decrease from $433.7 million
in the second quarter of the prior year. The revenue decline was
primarily the result of customer-directed changes in operations, as
well as decreases in fuel surcharge revenue.
- Net revenue of $187.2 million, a
slight increase over $186.7 million
in the second quarter of the prior year. The mix between
transportation management and warehouse management revenues
remained relatively consistent in the quarter.
- Operating income of $8.0 million,
a 24.7 percent increase from $6.4
million in the second quarter of the prior year. The
increase was primarily attributable to better pricing and strong
cost controls.
"Menlo's focus on margin improvement delivered a solid quarter,"
said Stotlar. "Our logistics company's lean expertise and
continuous improvement processes are a clear competitive advantage.
Menlo has secured several wins this year and has a strong prospect
pipeline. New projects now moving through start-up are expected to
begin revenue and profit contribution early next year."
TRUCKLOAD
For the second quarter of 2015, Con-way Truckload reported:
- Revenue of $142.7 million, a 13.0
percent decrease from $164.1 million
in last year's second quarter. Results were impacted primarily by
lower fuel surcharge revenues and lower total loaded miles,
somewhat offset by increased base rates.
- Operating income of $9.3 million,
a 31.0 percent decrease from $13.5
million in the second quarter of the prior year. Increased
driver pay-per-mile coupled with lower asset utilization was
largely responsible for the decline in operating income.
- Operating ratio, exclusive of fuel surcharges, of 92.4 compared
to 89.4 in the second quarter of the prior year.
"We made consistent progress during the quarter increasing the
number of seated tractors in the fleet, however, the market for new
drivers remains challenging," said Stotlar. "As we continue to
improve asset utilization and complete annual rate negotiations
with customers, we expect Con-way Truckload's performance to
improve."
CORPORATE AND ELIMINATIONS
Corporate and Eliminations primarily consists of certain
corporate activities for which related income or expense was not
allocated to the reporting segments. These include the company's
defined benefit pension plans, reinsurance operations, corporate
properties and results from Con-way's trailer manufacturing unit.
These activities produced an operating loss of $2.8 million in the 2015 second quarter, compared
to an operating loss of $0.2 million
in the second quarter of the prior year, primarily due to higher
pension expense.
INVESTOR CONFERENCE CALL
Con-way will host a conference call for the investment community
tomorrow, Thursday July 30, 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). Please reference access code 78322087. The
call is expected to last approximately one hour, and will also be
available through a live Internet webcast at www.con-way.com, in
the Investors section.
An Internet replay and podcast of the presentation will also be
available at the Con-way web site.
About Con-way Inc. -- Con-way Inc. (NYSE:CNW) is a
$5.8 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, revenue, capital and software expenditures, weight,
yield, volumes, income or other financial or operating items, any
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, administrative 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, enforcement of and changes in governmental
regulations or taxes that could impact the company, environmental,
tax and other matters, disruptions or volatility in capital
markets, including the effect on Con-way's ability to refinance
indebtedness as and when it becomes due, changes in fuel prices or
fuel surcharges, increasing competition for qualified drivers or
increases in driver compensation and benefits, cyber attacks, data
losses and security breaches or business interruption due to a
catastrophic event, labor matters, the possibility that Con-way
may, from time to time, be required to record impairment charges
for goodwill and other long-lived assets, 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, changes in liability for Con-way's self-retained insurance
claims, a significant loss of business from one of Menlo's major
customers, the creditworthiness of Con-way's customers and their
ability to pay for services rendered, and the possibility of
defaults under Con-way's revolving credit agreement and other debt
instruments. The factors included herein and in Item 1A of
Con-way's 2014 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 29, 2015, 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
|
|
June
30,
|
|
June
30,
|
(Dollars in
thousands, except per share data)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue
|
|
|
|
|
|
|
|
Freight
|
$
|
916,906
|
|
|
$
|
940,503
|
|
|
$
|
1,772,518
|
|
|
$
|
1,788,530
|
|
Logistics
|
405,936
|
|
|
433,650
|
|
|
823,006
|
|
|
840,015
|
|
Truckload
|
142,748
|
|
|
164,064
|
|
|
281,473
|
|
|
320,074
|
|
Corporate and
Eliminations
|
(38,276)
|
|
|
(45,868)
|
|
|
(77,252)
|
|
|
(87,427)
|
|
|
$
|
1,427,314
|
|
|
$
|
1,492,349
|
|
|
$
|
2,799,745
|
|
|
$
|
2,861,192
|
|
Operating Income
(Loss)
|
|
|
|
|
|
|
|
Freight
[a]
|
$
|
69,516
|
|
|
$
|
83,021
|
|
|
$
|
106,892
|
|
|
$
|
101,586
|
|
Logistics
|
8,004
|
|
|
6,418
|
|
|
16,620
|
|
|
12,592
|
|
Truckload
|
9,313
|
|
|
13,499
|
|
|
16,874
|
|
|
19,879
|
|
Corporate and
Eliminations
|
(2,827)
|
|
|
(238)
|
|
|
(4,453)
|
|
|
1,705
|
|
|
84,006
|
|
|
102,700
|
|
|
135,933
|
|
|
135,762
|
|
Other Income
(Expense)
|
(12,553)
|
|
|
(11,932)
|
|
|
(28,085)
|
|
|
(25,772)
|
|
Income before Income
Tax Provision
|
71,453
|
|
|
90,768
|
|
|
107,848
|
|
|
109,990
|
|
Income Tax
Provision
|
27,418
|
|
|
37,101
|
|
|
42,021
|
|
|
43,430
|
|
Net Income
|
$
|
44,035
|
|
|
$
|
53,667
|
|
|
$
|
65,827
|
|
|
$
|
66,560
|
|
|
|
|
|
|
|
|
|
Weighted-Average
Common Shares Outstanding
|
|
|
|
|
|
|
|
Basic
|
57,419,971
|
|
|
57,128,379
|
|
|
57,526,585
|
|
|
57,043,378
|
|
Diluted
|
57,805,354
|
|
|
57,694,691
|
|
|
58,013,169
|
|
|
57,577,373
|
|
Earnings per Common
Share
|
|
|
|
|
|
|
|
Basic
|
$
|
0.77
|
|
|
$
|
0.94
|
|
|
$
|
1.14
|
|
|
$
|
1.17
|
|
Diluted
|
$
|
0.76
|
|
|
$
|
0.93
|
|
|
$
|
1.13
|
|
|
$
|
1.16
|
|
|
|
[a]
|
Includes a
$3.4 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
|
|
June
30,
|
|
June
30,
|
(Dollars in
thousands, except per share data)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net Income and
Earnings per Common Share:
|
|
|
|
|
|
|
|
Net Income
(GAAP)
|
$
|
44,035
|
|
|
$
|
53,667
|
|
|
$
|
65,827
|
|
|
$
|
66,560
|
|
Before-Tax
Reconciling Items
|
|
|
|
|
|
|
|
Gain on sale of
property
|
—
|
|
|
3,397
|
|
|
—
|
|
|
3,397
|
|
Defined benefit
pension income (expense) [b]
|
(1,211)
|
|
|
679
|
|
|
(2,333)
|
|
|
1,174
|
|
|
(1,211)
|
|
|
4,076
|
|
|
(2,333)
|
|
|
4,571
|
|
Tax-Related
Reconciling Items
|
|
|
|
|
|
|
|
Tax effect of items
above
|
464
|
|
|
(1,626)
|
|
|
894
|
|
|
(1,819)
|
|
Discrete and other
tax adjustments [c]
|
1,092
|
|
|
(1,066)
|
|
|
865
|
|
|
294
|
|
|
1,556
|
|
|
(2,692)
|
|
|
1,759
|
|
|
(1,525)
|
|
Net Income (Adjusted
Non-GAAP)
|
$
|
43,690
|
|
|
$
|
52,283
|
|
|
$
|
66,401
|
|
|
$
|
63,514
|
|
|
|
|
|
|
|
|
|
Diluted Shares
Outstanding
|
57,805,354
|
|
|
57,694,691
|
|
|
58,013,169
|
|
|
57,577,373
|
|
Earnings per Diluted
Common Share (Adjusted Non-GAAP)
|
$
|
0.76
|
|
|
$
|
0.91
|
|
|
$
|
1.14
|
|
|
$
|
1.10
|
|
|
|
|
|
|
|
|
|
Logistics' Net
Revenue:
|
|
|
|
|
|
|
|
Revenue
(GAAP)
|
$
|
405,936
|
|
|
$
|
433,650
|
|
|
$
|
823,006
|
|
|
$
|
840,015
|
|
Purchased
transportation expense
|
(218,715)
|
|
|
(246,963)
|
|
|
(445,630)
|
|
|
(470,838)
|
|
Net revenue (Adjusted
Non-GAAP)
|
$
|
187,221
|
|
|
$
|
186,687
|
|
|
$
|
377,376
|
|
|
$
|
369,177
|
|
[b]
|
Pension income
(expense) is excluded from net income to determine non-GAAP results
as the defined benefit pension plans are frozen and pension
income (expense) is predominately driven by long-term discount
rates and, to a lesser degree, corporate decisions regarding
future funding and asset allocation. The related results are not
relevant to the ongoing operations of Con-way's
businesses.
|
|
|
[c]
|
The "Discrete and
other tax adjustments" line quantifies the variance in the income
tax provision or benefit resulting from differences in the actual
effective tax rate for the period from the effective tax rate
forecasted at the beginning of the period.
|
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,
|
|
2015
|
|
2014
|
(Dollars in
thousands)
|
(Unaudited)
|
|
|
Assets
|
|
|
|
Current
assets
|
$
|
1,282,553
|
|
|
$
|
1,261,400
|
|
Property, plant and
equipment, net
|
1,647,568
|
|
|
1,654,211
|
|
Other
assets
|
421,600
|
|
|
420,007
|
|
Total
Assets
|
$
|
3,351,721
|
|
|
$
|
3,335,618
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities
|
$
|
778,058
|
|
|
$
|
742,120
|
|
Long-term debt and
capital leases
|
728,192
|
|
|
729,890
|
|
Other long-term
liabilities and deferred credits
|
642,577
|
|
|
667,770
|
|
Shareholders'
equity
|
1,202,894
|
|
|
1,195,838
|
|
Total Liabilities and
Shareholders' Equity
|
$
|
3,351,721
|
|
|
$
|
3,335,618
|
|
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SOURCE Con-way Inc.