Con-way reported net income from continuing operations for the second quarter of 2008 of $47.1 million (after preferred stock dividends), or 98 cents per diluted share. The results compared to second-quarter 2007 net income from continuing operations (after preferred stock dividends) of $47.7 million, or 99 cents per diluted share.
Earnings from continuing operations in the 2007 second quarter included a charge of 10 cents per diluted share for vehicle casualty claims costs, and a benefit of 5 cents per diluted share from the effect of discrete tax items.
Revenue in the 2008 second quarter was $1.34 billion, an increase of 24.8 percent from last year's revenue of $1.07 billion, complemented by acquisitions completed in 2007, and reflecting organic growth. Operating income in the 2008 second quarter was $94.9 million, an increase of 22.2 percent compared to $77.6 million earned in the second quarter a year ago.
Net income to common shareholders in the 2008 second quarter was $48.7 million, or $1.02 per diluted share. This compares to previous-year net income of $46.4 million, or 96 cents per diluted share. The 2008 second-quarter net income included a net gain of 4 cents per diluted share from discontinued operations. The 2007 second-quarter net income included a loss from discontinued operations of 3 cents per diluted share.
Con-way Freight, the company's less-than-truckload (LTL) unit, posted solid revenue and yield gains, benefiting from improved market responsiveness and increasing customer recognition of its transit time performance advantage. "Targeted growth initiatives, implemented late last year at our LTL unit, continued to produce market share gains," said Stotlar. "We also began to see indications of a more stable pricing environment in the quarter."
In the truckload sector, the weak economy drove a reduction in capacity as carriers continued to exit the market throughout the first half of 2008. "The trend of capacity leaving the market is improving the supply/demand balance which is benefiting Con-way Truckload," Stotlar said. "Our Truckload unit did an excellent job in managing costs, and taking advantage of synergy opportunities with its sister companies to reduce empty miles and improve asset utilization."
Menlo Worldwide Logistics recorded a double-digit increase in net revenue for the quarter, reflecting a combination of revenues from 2007 acquisitions, organic growth and a consistent win rate for new projects. While overall Menlo managed its core business operations well, profits were affected by higher than expected costs related to China activities, and two customer-specific issues which were resolved in the quarter. "Integration of our acquisition in China is proceeding at a slower pace than planned, so our expectations for profit from this operation will take a longer time horizon to realize," Stotlar noted. "Our expansion strategy in Asia is playing out from a growth perspective; we expect to see operating results improve through the remainder of the year."
For the 2008 second quarter, Con-way Freight, the company's regional less-than-truckload operations, reported:
-- Operating income of $77.4 million, an increase of 7.2 percent from the $72.2 million earned in the year-ago period.
-- Revenues of $824.0 million, a 10.6 percent increase over last year's second-quarter revenues of $744.9 million.
-- Tonnage per day handled by Con-way Freight increased 1.9 percent over the previous-year second quarter.
-- Yield for Con-way Freight improved 9.6 percent from the previous-year second quarter. Excluding the fuel surcharge, yield improved 1.2 percent.
-- Con-way Freight recorded an operating ratio of 90.8 in the 2008 second quarter compared to 90.5 in second-quarter 2007.
The 2008 second quarter had rebranding expense of $1.3 million compared to $2.9 million in 2007. The company completed Con-way Freight's rebranding in the second quarter.
For the second quarter of 2008, Menlo Worldwide Logistics, the company's global logistics and supply chain management operations, reported:
-- Operating income of $5.0 million, a 28.6 percent decrease from $6.9 million earned in the second quarter of 2007. Income decreased due to an operating loss in China, a charge related to a current customer, and a bad debt write-off.
-- Revenue of $377.1 million, up 16.4 percent from the previous-year second-quarter revenue of $323.9 million.
-- Net revenue of $126.6 million, an increase of 19.6 percent compared to $105.9 million in the previous-year second quarter. Net revenue increased primarily from organic growth and new revenues gained from Asia acquisitions completed late last year.
Results for the Truckload segment reflect the combined operations of Con-way's former truckload division and Contract Freighters Inc., which Con-way acquired in August 2007, and renamed Con-way Truckload in January 2008. For the second quarter of 2008, the company's full-truckload transportation operations reported:
-- Operating income of $12.4 million.
-- Revenue of $137.4 million, after the elimination of $44.2 million in inter-company revenues.
-- Operating ratio before inter-company eliminations and exclusive of fuel surcharges was 90.6.