Con-way earnings are down quarterly and up annually

Fourth quarter and full year 2012 results were a mixed bag for transportation and logistics services provider Con-way Inc. in its earnings statement released today.

Net income of $11.8 million—or $0.21 per share—for the fourth quarter was down roughly 50 percent compared to the fourth quarter of 2011 at $23.0 million and $0.41 per share, falling short of Wall Street estimates of $0.28 per share. Quarterly operating income—at $37.8 million—was down compared to $49.9 million the previous year, and revenue—at $1.36 billion—saw a 3.4 percent gain.

Con-way said that the quarter was negatively impacted by certain tax items, adding that the 2011 fourth quarter included a $10.0 million gain from the settlement of a dispute related to the company’s 2007 acquisition of Chic Logistics.

While the fourth quarter was down, full-year 2012 net income of $104.5 million—or $1.85 per share—was up 15 percent compared to $88.4 million—or $1.58 per share—for 2011.

Con-way President and CEO Douglas W. Stotlar said on an investor conference call earlier today that the fourth quarter results showed good cost controls and strong productivity, which helped the company mitigate the effects of weak business conditions, which were influenced by certain macro factors, including an uncertain political climate in Washington and the market disruption caused by Superstorm Sandy.

Quarterly revenue at Con-way’s less-than-truckload unit Con-way Freight—at $824.7 million—was up 3.6 percent, with yield—or revenue per hundredweight—up 5.1 percent year-over-year—4.2 percent excluding fuel surcharge. Tonnage per day decreased 3.5 percent, and operating income of $21.5 million was up 9.9 percent compared to $19.6 million last year. Con-way said that the revenue growth was primarily attributable to improved yield and higher fuel surcharge revenue and partially offset by lower tonnage levels. And it added that the operating income improvement was impacted by an accelerated decline in daily tonnage at the end of the fourth quarter that it said exceeded normal seasonality.

Quarterly revenue at Menlo Worldwide, Con-way’s third-party logistics unit—at $431.2 million—was up 5.5 percent, and net revenue of $161.8 million was up 2.7 percent. Menlo’s operating income of $8.6 million was down 60 percent compared to last year’s $21.3 million and included a $2.3 million increase in reserves for international bad debt, said Con-way, adding that the fourth quarter of 2011 included a $10 million gain from the settlement of a dispute related to the acquisition of Chic Logistics. And Con-way said net revenue grew at a lower rate than gross revenues due mainly to slower growth in warehousing volumes at current accounts and tighter margins on new business. 

Quarterly revenue at Con-way Truckload—at $155.2 million was down slightly compared to last year’s $155.6 million, and operating income at $8.5 million was down compared to $9.5 million the prior year. Loaded miles and empty miles were down 3.7 percent and up 3 percent compared to the fourth quarter of 2011.

Stifel Nicolaus analyst David Ross wrote in a research note that the biggest takeaway of this earnings release was Con-way’s improved performance in its Freight division, which he wrote represents roughly 60 percent of revenue and EBIT.

“While we remain cautious on 1Q13 earnings (as 1Q is always the weakest seasonal quarter for truckers) we believe further productivity improvements underway at Freight should show themselves when tonnage improves (seasonally) in 2Q13,” noted Ross.