ANN ARBOR, Mich. - Con-way Inc. (NYSE:CNW) today reported 2012 fourth-quarter net income of $11.8 million, or 21 cents per diluted share. The results compare to fourth-quarter 2011 net income of $23.0 million, or 41 cents per diluted share.
On a non-GAAP basis, earnings per diluted share were 26 cents in the 2012 fourth quarter compared to 27 cents in last year's fourth quarter. The fourth quarter of 2012 was negatively impacted by certain tax items while the 2011 fourth quarter included a $10.0 million gain from the settlement of a dispute related to the 2007 acquisition of Chic Logistics.
Operating income in the fourth quarter was $37.8 million compared to $49.9 million earned in the fourth quarter a year ago, which included the Chic Logistics gain. Revenue for the fourth quarter was $1.36 billion, a 3.4 percent increase from last year's fourth quarter revenue of $1.32 billion.
Commenting on the quarter's results, Douglas W. Stotlar, Con-way's president and CEO, said, "Good cost controls and strong productivity during the quarter helped to mitigate the impact of a generally weak economic environment."
Con-way Freight, the company's less-than-truckload unit, realized an increase in operating income compared to last year's fourth quarter. "While the unsettled economic conditions contributed to declining tonnage trends throughout the quarter, our LTL company increased yield and improved operational efficiency," Stotlar said. "We remain on track with the key elements of our three-year plan, and we expect the investments that we have made will improve our operational performance and financial results, particularly over the second half of this year."
Menlo Worldwide Logistics, the company's global logistics and supply chain management operation, posted higher revenues and net revenues. Operating income, which in the 2012 fourth quarter included an increase in reserves for international bad debt, came in below the 2011 period, which included the gain related to Chic Logistics. "As the quarter progressed, Menlo experienced lower volumes from some larger warehousing and transportation management customers as they experienced slowing business levels," Stotlar said. "Going into 2013, volumes are beginning to rebound from some existing accounts and we are encouraged by the strength of Menlo's new business pipeline."
Con-way Truckload's fourth quarter revenue was essentially flat with 2011 while operating income recorded a slight decline. "In the fourth quarter of 2011, Con-way Truckload experienced a surge in business that lasted late into the quarter, whereas fourth quarter 2012 volumes reflected weaker demand patterns," Stotlar said. "Our truckload company benefited from consistent operational execution, low driver turnover and a rate environment that remained stable. With its focus on delivering premium service while effectively managing costs, Con-way Truckload is well positioned for further margin expansion in 2013," he concluded.
Con-way's fourth-quarter effective tax rate was 50.2 percent, compared to 31.8 percent for the same period in 2011. The 2012 fourth-quarter tax provision included increased state and foreign income taxes, while discrete and other tax adjustments were included in the fourth quarter for both 2011 and 2012 (see the attached reconciliation). Additionally, the 2011 fourth quarter included the gain from the Chic Logistics settlement, for which there was a $1.1 million tax provision. Excluding these items, the fourth-quarter effective tax rate would have been 38.1 percent in 2012 compared to 37.0 percent in 2011.
FULL-YEAR 2012 RESULTS
For the full-year 2012, Con-way reported net income of $104.5 million, or $1.85 per diluted share, an increase from full-year 2011 net income of $88.4 million, or $1.58 per diluted share.
Full-year 2011 results included the $10.0 million gain from the purchase-price settlement related to Chic Logistics and $6.7 million of tax adjustments.
On a non-GAAP basis, full-year earnings per diluted share were $1.86 in 2012 compared to $1.54 in 2011.
Operating income of $228.8 million in 2012 increased 10.1 percent from the $207.9 million earned in 2011. Revenue for the full-year 2012 was $5.58 billion, a 5.5 percent increase from 2011.
The full-year effective tax rate was 38.8 percent in 2012, compared to 40.3 percent in 2011. Both years included tax adjustments (see the attached reconciliation). Excluding the effect of the Chic Logistics settlement and tax adjustments, the effective tax rate would have been 38.7 percent in 2012 and 37.5 percent in 2011. The lower 2011 tax rate benefited in part from a fuel-related tax credit which expired and was not available for 2012.
Segment results in the fourth quarter for Con-way's principal operations were as follows:
For the fourth quarter of 2012, Con-way Freight reported:
· Revenue of $824.7 million, a 3.6 percent increase over last year's fourth-quarter revenue of $796.2 million. The revenue growth, which was primarily attributable to improved yield and higher fuel surcharge revenue, was partially offset by lower tonnage levels.
· Operating income of $21.5 million, a 9.9 percent increase over the $19.6 million earned in the year-ago period. The improvement in operating income was affected by an accelerated decline in daily tonnage at the close of the fourth quarter which exceeded normal seasonality.
· Revenue per hundredweight, or yield, increased 5.1 percent from the previous-year fourth quarter. Excluding the fuel surcharge, yield rose 4.2 percent.
· Tonnage per day declined 3.5 percent compared to the 2011 fourth quarter.• Operating ratio of 97.4 in the 2012 fourth quarter compared to 97.5 in the previous-year period.
For the fourth quarter of 2012, Menlo Worldwide Logistics reported:
· Revenue of $431.2 million, an increase of 5.5 percent from the prior year fourth-quarter revenue of $408.9 million.
· Net revenue of $161.8 million, a 2.7 percent increase from $157.6 million in the previous year fourth quarter. Net revenue grew at a lower rate than gross revenue, primarily due to slower growth in warehousing volumes at current accounts, and tighter margins on new business.• Operating income of $8.6 million, compared to last year's fourth quarter operating income of $21.3 million. The 2012 fourth quarter included a $2.3 million increase in reserves for international bad debt, while the 2011 period included a $10.0 million gain from the settlement of the dispute related to the Chic Logistics acquisition.
For the fourth quarter of 2012, Con-way Truckload reported:
· Revenue of $155.2 million, compared to last year's fourth-quarter revenue of $155.6 million. Revenue per loaded mile, excluding fuel surcharge, was up 2.3 percent from the fourth quarter of 2011.
· Operating income of $8.5 million, compared to $9.5 million in the previous-year period. Fourth-quarter 2012 operating income results included $2.2 million in additional costs for vehicular claims.
· Loaded miles declined 3.7 percent compared to last year's fourth quarter.
· Empty miles were 9.9 percent, compared to 9.6 percent in the previous-year fourth quarter.• Operating ratio exclusive of fuel surcharges of 92.9, compared to 92.1 in the fourth quarter of 2011.
The Con-way Other segment includes the company's Road Systems, Inc. trailer manufacturing unit as well as other corporate activities. These activities produced operating losses of $0.8 million in the fourth quarter of 2012 and $0.5 million in the fourth quarter of 2011.
INVESTOR CONFERENCE CALL
Con-way will host a conference call for the investment community tomorrow, Thursday, February 7, beginning at 8:30 a.m. Eastern Time.
The call can be accessed by dialing (866) 264-3634 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 83474931. 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 $5.6 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 Worldwide 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 Road Systems Inc., 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.