Roadway Q2 Earnings Meet Consensus

7 July 1998

Roadway Second Quarter Earnings Meet Consensus

    AKRON, Ohio--July 7, 1998--Roadway Express, Inc. today reported net income of $5,307,000, or $0.27 per share (diluted) for its second quarter, which ended June 20, 1998. This compares to net income of $7,767,000, or $0.38 per share (diluted), in the second quarter of 1997. Revenues were $609,352,000 for the second quarter of 1998, compared to $609,374,000 for the second quarter of 1997.
    For the 24 weeks constituting the Company's first half, net income was $11,916,000, or $0.59 per share (diluted), compared with a net income of $13,289,000, or $0.65 per share (diluted), for the same period in 1997. For the first half of this year, revenues were $1,231,015,000 compared to revenues of $1,200,049,000 for the first half of last year.
    In the second quarter, total tonnage was down 2.4% compared to second quarter 1997. Less-than-truckload (LTL) tons were down 2.6% and truckload tonnage was down 1.7%. Revenue per ton for the quarter was up 2.5%, while operating expenses per ton increased 3.3%, due primarily to operational inefficiencies and labor cost increases related to the new union contract.
    Michael W. Wickham, Chairman of the Board of Directors and CEO of Roadway Express, said, "Despite an early labor agreement, customers concerned about a potential service disruption diverted freight to non-union carriers. This diversion, which began in the first quarter and unexpectedly continued into the second, has abated and some of the freight has already started to return to us. However, the reduced volumes resulted in operational inefficiencies and negatively impacted our earnings for the quarter."
    "Our strategy will be to continue offering the highest levels of service and reliability, even at a short-term cost. Our outstanding customer service, combined with focused sales and marketing efforts, remains the key to regaining the diverted tonnage," Wickham stated.
    The Company's cash position continued to improve and cash flows from operations are sufficient to meet working capital needs and planned capital expenditures. The Company entered into a third operating lease agreement to replace an additional 10% of its linehaul trailers during 1998. Under these agreements, approximately 7,200 of a planned total of 10,000 trailers have been replaced with leased units through the end of second quarter, 1998. During the third quarter, approximately 400 new, leased tractors will be brought online.
    Additionally, an accounting change requiring the capitalization of some internally-developed computer software, resulted in a $.03 per share earnings increase through the second quarter of 1998.
    Revenue and earnings (unaudited) for the twelve weeks constituting the Company's second quarter, with comparable figures for 1997, are as follows: