Con-way Inc., San Mateo, Calif., reported increased revenue, operating income and earnings for the third quarter compared to a year earlier, despite weakening demand.


Con-way reported net income available to common shareholders for the third quarter of 2008 of $38.8 million (after preferred stock dividends), or 81 cents per diluted share. The results compare to third-quarter 2007 numbers of $37.3 million, or 78 cents per diluted share.

Operating income in the 2008 third quarter was $78.9 million, an increase of 16.6 percent compared to $67.7 million earned in the third quarter a year ago. Revenue in the 2008 third quarter was $1.37 billion, an increase of 23.3 percent from last year's third quarter revenue of $1.11 billion, reflecting organic growth and the effect of acquisitions completed in 2007.

"Our core operations turned in results that were consistent with our updated earnings guidance, and as expected, were affected by weakening demand and a difficult pricing environment," said Con-way President and CEO Douglas W. Stotlar. "Lower-than-anticipated employee-related costs and a lower tax rate in the quarter led to results that were somewhat better than earlier expectations."

Con-way Freight, the company's less-than-truckload and largest business unit, recorded an increase in tonnage for the quarter, but profit growth remained constrained by weakening demand and pricing in a highly competitive business climate. "Demand decelerated as the quarter proceeded, which created additional pressure on pricing," Stotlar said. "Productivity measures remained strong as we saw good operational execution. Our Freight team is doing an excellent job delivering consistent, reliable service to customers in a very challenging environment."

Menlo Worldwide Logistics achieved double-digit growth in net revenues but saw income decline below last year's third quarter. Among the factors was an operating loss in China as integration expense exceeded expectations.

Con-way Truckload turned in a commendable performance in a weakening environment for truckload freight, Stotlar noted. "We continued to realize the benefits of synergy between Con-way Truckload, and our freight and logistics units," he said. "The declining cost of fuel also aided Truckload's earnings given the nature of their fuel cost recovery mechanisms."

The Truckload unit reported operating income of $15.2 million, compared to $3 million in the previous-year period, during which Con-way completed its acquisition of Contract Freighters Inc. (CFI). This business unit was subsequently renamed Con-way Truckload. Earnings for the 2007 third quarter had a $4.7 million operating loss from Con-way's pre-acquisition truckload business, including $1.5 million for the closure of its former Memphis headquarters. The 2007 quarterly period also benefited from earnings of CFI from close of the acquisition on August 23, 2007, to the quarter's end.