Con-way Inc. (CNW)
Q2 2012 Earnings Conference Call
August 1, 2012 08:30 AM ET
Patrick Fossenier – Vice President of Investor Relation
Douglas Stotlar - President and Chief Executive Officer
Stephen Bruffett - Executive Vice President and Chief Financial Officer
Gregory Lehmkuhl - President (Executive Vice President, Con-way Inc.)
Robert Bianco - President (Executive Vice President, Con-way Inc.)
Herb Schmidt - President (Executive Vice President, Con-way Inc.)
Saul Gonzalez - Chief Operating Officer
Matt Alcalf [ph] - Dahlman Rose & Co.
Matt Troy – Susquehanna
Justin Yagerman - Deutsche Bank
Todd Fowler - Key Banc Capital Markets
Bill Greene – Morgan Stanley
Chris Ceraso – Credit Suisse
David Ross – Stifel Nicolaus
Seth Lowry – Citi
Ben Hartford – Baird
Tom Wadewitz – JP Morgan
Ken Hoexter – Bank of America
Scott Group – Wolfe Trahan
Tom Albrecht – BB&T Capital Markets
Good morning. My name is Brandy and I will be your conference operator today. At this time, I would like to welcome everyone to Con-way Inc.’s Second Quarter 2012 Earnings Review Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)
Thank you. I would now like to turn the call over to Patrick Fossenier, Vice President of Investor Relations. Please go ahead.
Thank you, Brandy. Welcome to the Con-way’s Second Quarter 2012 conference call for shareholders and the investment community. In a minute, I’ll turn it over to Con-way President and CEO, Doug Stotlar.
Before we get into the call, I would like to offer a few reminders. First, certain statements in this conference, including statements regarding anticipated results of operation and financial condition constitute forward-looking statements and are subject to a number of risks and uncertainties. Actual results of operations and financial condition might differ materially from those projected in such forward-looking statements, and no assurance can be given as the future results. Additional information concerning factors that could cause actual results and other matters to differ materially from those in the forward-looking statements and the inherent limitations of such forward-looking statements is contained in our Forms 10-K and 10-Q and other filings with the SEC.
Second, today’s prepared remarks contain non-GAAP financial measures. Reconciliations of GAAP to non-GAAP financial measures are found within the financial tables of our earnings release, which is available on our website at con-way.com.
I would also like to note that we have a lot of people on the call today, so we would appreciate it if you would limit yourself to a couple questions then return to the queue.
Now without further due, I’m pleased to turn it over to Doug Stotlar.
Thanks, Pat. Good morning. On the call today, I’m joined by members of our senior leadership team, including Con-way’s CFO, Steve Bruffett; Con-way Freight President, Greg Lehmkuhl; Menlo Logistics President, Bob Bianco; and from Con-way Truckload President, Herb Schmidt and Chief Operating Officer, Saul Gonzalez. Steve will provide some commentary on our financial picture, and then in the Q&A portion of the call, Greg and Bob will review highlights at Freight and Menlo and Herb and Saul will comment on Con-way Truckloads results.
Our second quarter performance reflected disciplined operations, good cost controls and margin expansion at all of our business units. The consistent execution of our strategy is delivering the intended results. The key to improvement of our process has been a focus on our fundamentals which remain improving safety, applying lean practices, leveraging technology, and managing price. Progress in each of these areas provided the momentum for an improved second quarter and remain our strategic priorities going forward.
Turning to our consolidated financial results for the second quarter of 2012, Con-way reported revenues of $1.45 billion, a 7.2% increase over last year’s second quarter revenues of $1.35 billion. Our operating income was $80.1 million in the 2012 second quarter, a 33.2% improvement over the $60.2 million earned in the prior year period. Diluted earnings per share were $0.74 compared to $0.52 per share in the second quarter of last year. On a non-GAAP basis, earnings per diluted share in the 2012 second quarter were $0.66 compared to $0.50 in the prior year. The non-GAAP items consisted of gains on facility sales in the current period and tax related adjustments for both years.
Moving now to review of our business segments, I’ll start with Con-way Freight, our LTL operation and largest revenue segment. Con-way Freight posted second quarter operating income of $53.4 million, a 36.5% improvement over the $39.2 million earned in the same period a year-ago. Revenue of $878.5 million, a 4.6% increase over last year’s second quarter revenue of $839.8 million. Con-way Freight’s operating ratio this period was $93.9 million, improving from last year’s second quarter OR of $95.3 million. Excluding the gain from the sale of excess properties, the operating ratio for this year’s second quarter came in at $94.4 million. Tonnage per day increased 0.9% over last year’s second quarter. Second quarter revenue per hundredweight or yield increased 3.2% with and without fuel surcharge compared to the prior year.
The yield adjusted for length of haul and weight per shipment was up 4.1% in the second quarter compared to last year. It was a steady performance highlighted by improving operational efficiency and consistent service execution for Con-way Freight. Our focus on safety continue to return encouraging results as the number of accidents and injuries year-to-date were down 13% and 25%, respectively compared to the first half of 2011. We remain diligent in managing our cost and our lean continuous improvement practices are helping our employees aim more opportunities to eliminate waste and increase efficiencies.
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