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Con-way Reports 2015 Second-Quarter Results - KOAM TV 7

Con-way Reports 2015 Second-Quarter Results

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ANN ARBOR, MI -

Con-way Inc. (NYSE: CNW) today announced second-quarter 2015 net income of $44.0 million, or 76 cents per diluted share. In the second quarter of 2014, Con-way reported net income of $ 53.7 million, or 93 cents per diluted share.

On a non-GAAP basis, earnings per diluted share were 76 cents in the second quarter of 2015, compared to 91 cents in the same period of the prior year. Non-GAAP items, consisting of pension income/expense and tax-related adjustments in both years and a gain from the sale of property in the prior year, are detailed in the attached reconciliation.

Operating income for the second quarter of 2015 was $84.0 million, an 18.2 percent decrease from the $102.7 million earned in the same period a year ago. Second-quarter 2015 operating income included $8.3 million of higher vehicular claims expense ( 9 cents per diluted share), reflecting an uncommon spike in accident severity at Con-way Freight.

Revenue of $1.43 billion for the 2015 second quarter decreased 4.4 percent from last year's second-quarter revenue of $1.49 billion.

Con-way's effective tax rate for the 2015 second quarter was 38.4 percent, compared to 40.9 percent in the same period of the prior year. Both GAAP tax rates include the effect of discrete and other tax adjustments (presented in the attached reconciliation).

During the quarter, Con-way repurchased 460,000 shares of common stock under the company's $150 million stock repurchase program, bringing the year-to-date 2015 total of shares repurchased to 830,000. As of June 30, approximately $98 million in available share repurchase authority remains under this program.

Segment results for Con-way's principal operations were as follows:

FREIGHT

For the second quarter of 2015, Con-way Freight reported:

   -- Revenue of $916.9 million, a 2.5 percent decrease from $940.5 million in the second quarter of the prior year. The revenue decline was primarily attributable to lower fuel surcharges and lower tonnage, partially offset by improved pricing.

   -- Revenue per hundredweight, or yield, increased 0.4 percent compared to the second quarter of the prior year. Excluding the fuel surcharge, yield rose 5.5 percent.

   -- Tonnage per day decreased 3.0 percent compared to last year's second quarter, reflecting softer demand as well as the effects of earlier lane-based pricing and network optimization activities.

   -- Operating income of $69.5 million, a 16.3 percent decrease from $83.0 million in the second quarter of the prior year. Operating income results included the effects of higher driver wages and benefits from earlier announced driver pay increases, as well as the previously mentioned $8.3 million increase in vehicular claims expense, primarily related to accident severity. The prior year second quarter included a $3.4 million gain from the sale of property.

   -- Operating ratio of 92.4 compared to 91.2 in the second quarter of the prior year.

"Yield management and operating efficiencies mitigated much of the impact of increased driver wages in the quarter," said Douglas W. Stotlar, Con-way president and CEO. "Daily tonnage was lower due to softer demand from industrial shippers and the impact of earlier efforts to improve pricing and increase density in the network. Our focus going forward is on continuing to drive benefit from revenue management activities and executing on initiatives for long-term profitable growth."

LOGISTICS

For the second quarter of 2015, Menlo Logistics reported:

   -- Revenue of $405.9 million, a 6.4 percent decrease from $433.7 million in the second quarter of the prior year. The revenue decline was primarily the result of customer-directed changes in operations, as well as decreases in fuel surcharge revenue.

   -- Net revenue of $187.2 million, a slight increase over $186.7 million in the second quarter of the prior year. The mix between transportation management and warehouse management revenues remained relatively consistent in the quarter.

   -- Operating income of $8.0 million, a 24.7 percent increase from $6.4 million in the second quarter of the prior year. The increase was primarily attributable to better pricing and strong cost controls.

"Menlo's focus on margin improvement delivered a solid quarter," said Stotlar. "Our logistics company's lean expertise and continuous improvement processes are a clear competitive advantage. Menlo has secured several wins this year and has a strong prospect pipeline. New projects now moving through start-up are expected to begin revenue and profit contribution early next year."

TRUCKLOAD

For the second quarter of 2015, Con-way Truckload reported:

   -- Revenue of $142.7 million, a 13.0 percent decrease from $164.1 million in last year's second quarter. Results were impacted primarily by lower fuel surcharge revenues and lower total loaded miles, somewhat offset by increased base rates.

   -- Operating income of $9.3 million, a 31.0 percent decrease from $13.5 million in the second quarter of the prior year. Increased drive  pay-per-mile coupled with lower asset utilization was largely responsible for the decline in operating income.

   -- Operating ratio, exclusive of fuel surcharges, of 92.4 compared to 89.4 in the second quarter of the prior year.

"We made consistent progress during the quarter increasing the number of seated tractors in the fleet, however, the market for new drivers remains challenging," said Stotlar. "As we continue to improve asset utilization and complete annual rate negotiations with customers, we expect Con-way Truckload's performance to improve."

CORPORATE AND ELIMINATIONS

Corporate and Eliminations primarily consists of certain corporate activities for which related income or expense was not allocated to the reporting segments. These include the company's defined benefit pension plans, reinsurance operations, corporate properties and results from Con-way's trailer manufacturing unit. These activities produced an operating loss of $2.8 million in the 2015 second quarter, compared to an operating loss of $0.2 million in the second quarter of the prior year, primarily due to higher pension expense.

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