Roadway Corp. said Thursday it expects to report second quarter earnings of $0.33 per share -- 50% under the low end of the range of expectations previously set for the quarter.

The primary causes are revenue shortfalls driven by softer than anticipated tonnage levels, pricing pressures and a shift in freight mix.
Increased business activity in March resulted in a strong finish for the first quarter. Volumes to date in the second quarter have not kept pace with March's seasonal recovery. That has resulted in lower revenues and negatively impacted freight rates.
Following the September 2002 closure of Consolidated Freightways, Roadway Express experienced two quarters of significantly increased tonnage and stable pricing. It appears the longevity of the weak economy and excess capacity that still remains in the industry have begun to dilute those gains. And although the long-haul industry has experienced significant capacity contraction, regional markets remain extremely competitive and Roadway Express' volumes and rates for its business in those segments have also been negatively impacted.
Additionally, early in the second quarter, Roadway Express began to experience a shift in its freight mix. This was particularly evident in the retail segment where the motor carrier saw some loss of higher-yielding time-critical freight and changes in shipment size and length-of-haul that resulted in yield deterioration.
"The demise of Consolidated Freightways has proven to be a double-edged sword," said James D. Staley, president and chief executive officer of Roadway Corp. "The business made available was welcome, but quickly absorbed due to surplus capacity. Consolidated's departure brought a new wave of 'carrier shopping' into the marketplace. That activity gained momentum in the second quarter with detrimental impact. We are committed to compensatory rate levels and will readjust our pricing through a mid-July implementation of Roadway Express' annual general freight rate increase."
Looking forward, revised expectations are that second quarter 2003 revenue growth will be near 13% over the same period in 2002. The second quarter's earnings-per-share from continuing operations are anticipated to be $0.33, an increase of 32% compared to last year. For full-year 2003, earnings-per-share from continuing operations are now expected to be in the range of $2.36 to $2.60compared to $1.85 in 2002.