Profits at Con-way plunged 37 percent in the first quarter, the company said. Bad weather, increased costs and lower freight volume hit the San Mateo, Calif.-based trucking and logistics company hard. But falling margins hurt worse. The operating ratio at the regional less than truckload segment Con-way Freight went up from 90.5 in the first quarter 2006 to 92.3 in the 2007 first quarter.
"While operating results were down year over year, we saw business increase each month in the quarter, with March showing growth over the same period last year," said President and CEO Douglas W. Stotlar.
Net income from continuing operations for the first quarter was $29 million, compared with $46.2 million in the first quarter a year ago. Overall net income was $31.9 million, compared with previous year net income of $44.7 million. Operating income was $55.7 million, down 28.5 percent compared with $77.9 million earned in the first quarter a year ago. Revenue was $1 billion, a decrease of 4.2 percent from last year's revenue of $1.05 billion.
A part of the difference was attributed to the sale of Vector SCM, which earned $4.2 million in the first quarter last year, was sold later in the year and left until the first quarter this year a charge of $2.7 million for post-closing settlement.
Menlo Worldwide, the unit which contained Vector SCM, was the segment of the business which did best in the first quarter. Menlo Logistics reported operating income of $6.5 million, a 5.7 percent increase from $6.2 million in the first quarter of 2006. Revenue of $320.5 million was down 8.4 percent from the previous-year quarterly revenue of $349.9 million. Net revenue was up 10.3 percent to $104.1 million, compared with $94.4 million in the 2006 first quarter.
"Our global logistics company continues to gain momentum," said Stotlar. "We've had a surge in project awards and expect to see the revenue effect as these come online during the year. Menlo is doing a superb job managing its margins."
The problems in the first quarter were at Con-way Freight, the company's regional less-than-truckload operation, and Con-way Transportation, which consists of the company's full-truckload and trailer manufacturing divisions.
Together they reported operating income of $53.9 million, a decrease of 19.4 percent versus $66.8 million earned in the year-ago period and revenues of $681.7 million, down 2.1 percent compared to the prior-year revenues of $696.1 million.
Tonnage per day was down 2.3 percent at Con-way Freight. Yield for Con-way Freight was up 1.2 percent from the previous-year quarter. The 2007 first quarter was affected by rebranding expense, health care and vehicular insurance costs, and severe winter weather, Con-way said.
On March 19, Con-way Freight implemented a general rate increase of 4.9 percent.