On a non-GAAP basis, earnings per diluted share were 26 cents in the 2012 fourth quarter compared to 27 cents in last year’s fourth quarter. The fourth quarter of 2012 was negatively impacted by certain tax items while the 2011 fourth quarter included a $10.0 million gain from the settlement of a dispute related to the 2007 acquisition of Chic Logistics.
Operating income in the fourth quarter was $37.8 million compared to $49.9 million earned in the fourth quarter a year ago, which included the Chic Logistics gain. Revenue for the fourth quarter was $1.36 billion, a 3.4 percent increase from last year’s fourth quarter revenue of $1.32 billion.
Commenting on the quarter’s results, Douglas W. Stotlar, Con-way’s president and CEO, said, “Good cost controls and strong productivity during the quarter helped to mitigate the impact of a generally weak economic environment.”
Con-way Freight, the company’s less-than-truckload unit, realized an increase in operating income compared to last year’s fourth quarter. “While the unsettled economic conditions contributed to declining tonnage trends throughout the quarter, our LTL company increased yield and improved operational efficiency,” Stotlar said. “We remain on track with the key elements of our three-year plan, and we expect the investments that we have made will improve our operational performance and financial results, particularly over the second half of this year.”
Menlo Worldwide Logistics, the company’s global logistics and supply chain management operation, posted higher revenues and net revenues. Operating income, which in the 2012 fourth quarter included an increase in reserves for international bad debt, came in below the 2011 period, which included the gain related to Chic Logistics. “As the quarter progressed, Menlo experienced lower volumes from some larger warehousing and transportation management customers as they experienced slowing business levels,” Stotlar said. “Going into 2013, volumes are beginning to rebound from some existing accounts and we are encouraged by the strength of Menlo’s new business pipeline.”
Con-way Truckload’s fourth quarter revenue was essentially flat with 2011 while operating income recorded a slight decline. “In the fourth quarter of 2011, Con-way Truckload experienced a surge in business that lasted late into the quarter, whereas fourth quarter 2012 volumes reflected weaker demand patterns,” Stotlar said. “Our truckload company benefited from consistent operational execution, low driver turnover and a rate environment that remained stable. With its focus on delivering premium service while effectively managing costs, Con-way Truckload is well positioned for further margin expansion in 2013,” he concluded.
Con-way’s fourth-quarter effective tax rate was 50.2 percent, compared to 31.8 percent for the same period in 2011. The 2012 fourth-quarter tax provision included increased state and foreign income taxes, while discrete and other tax adjustments were included in the fourth quarter for both 2011 and 2012 (see the attached reconciliation). Additionally, the 2011 fourth quarter included the gain from the Chic Logistics settlement, for which there was a $1.1 million tax provision. Excluding these items, the fourth-quarter effective tax rate would have been 38.1 percent in 2012 compared to 37.0 percent in 2011.