Con-Way records first quarter loss

Con-Way records first quarter loss

Stotlar

   Con-way Inc. reported a first quarter net loss to common shareholders of $154 million, compared to profit of $22.5 million in the same 2008 period.
   The loss included a goodwill impairment charge of $134.8 million associated with Con-way Truckload, formerly Contract Freighters Inc., which the company purchased in August 2007. The company said the charge was non-cash in nature and does not impact the company’s revolving credit covenants.
   Con-way' revenue in the period was $963 million, a nearly 20 percent decrease from $1.2 billion in the first quarter of 2007.
   Con-way Freight, the company’s regional less-than-truckload operation, had an operating loss of $23.4 million compared to operating income of $36.1 million in the year-ago period. Revenue was $559.7 million, down 25 percent from last year’s first quarter. The company attributed the drop to “recession-driven business declines and significantly lower fuel surcharge revenue.”
   “While Con-way Freight posted losses in January and February, it returned to profitability in March, as we saw the benefit of some seasonal upturn in business and modest market share gains,' said Douglas W. Stotlar, Con-way’s president and chief executive officer.
   “There are some signs that our freight volumes may be nearing a bottom,” he said. “Feedback from our customers as well as trend data for industrial output and inventory levels indicate that shipping volumes are likely to remain restrained, certainly for the short term.”
   Menlo Worldwide Logistics, the company’s global logistics and supply chain management operations had operating income of $5 million, a 21 percent decrease from $6.3 million in the first quarter of 2008. Revenue was $316.5 million, down 7 percent.
   The company said Menlo was a “bright spot as tight cost controls and prudent business development strategies sustained profitability and delivered solid growth in customer wins.”
   Con-way Truckload had an operating loss of $132.7 million, including the impairment charge of $134.8 million, which was triggered by a first quarter decline in truckload market values due to current economic conditions. Excluding the impairment charge, operating income was $2.1 million for the 2009 first quarter. This compared to operating income of $10.3 million in the year-ago period. Truckload revenue was $86 million, down about 26 percent from the 2008 first quarter, reflecting soft demand, market overcapacity and lower fuel surcharge levels.
   The company noted it has taken steps to cut costs and conserve cash including workforce reductions and network adjustments in the 2008 fourth quarter and wage reductions, and suspension of certain 401(k) contributions this year that are expected to produce cost savings in 2009 of between $100 million and $130 million.