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Press release from Business Wire

Celadon Group Reports Third Fiscal Quarter Financial Results and Declares Dividend

Thursday, April 25, 2013

Celadon Group Reports Third Fiscal Quarter Financial Results and Declares Dividend

16:04 EDT Thursday, April 25, 2013

INDIANAPOLIS (Business Wire) -- Celadon Group Inc. (NYSE: CGI) today reported its financial and operating results for the three months ended March 31, 2013, the third fiscal quarter of the Company's fiscal year ending June 30, 2013.

Revenue for the quarter decreased 2.4% to $149.6 million in the 2013 quarter from $153.3 million in the 2012 quarter. Freight revenue decreased 1.9% to $118.7 million in the 2013 quarter from $121.0 million in the 2012 quarter. Net income decreased 22.8% to $4.4 million in the 2013 quarter from $5.7 million for the same quarter last year. Earnings per diluted share decreased 24% to $0.19 in the 2013 quarter from $0.25 for the same quarter last year.

For the nine months ended March 31, 2013, revenue increased 2.2% to $451.0 million in 2013 from $441.5 million for the same period last year. Freight revenue, which excludes fuel surcharges, increased 1.9% to $357.6 million in 2013 from $350.8 million for the same period last year. Net income increased to $20.0 million in 2013 from $16.6 million for the same period last year. Earnings per diluted share increased to $0.86 in 2013 from $0.73 for the same period last year.

Paul Will, President and Chief Executive Officer, made the following comments: “The quarter was impacted by several factors when compared with prior year. Due to leap year in 2012 and an early Easter in 2013, there were basically two fewer business days. In addition, winter weather storms in 2013 resulted in decreased availability for freight movements compared with the prior year. Our benefits expense related to medical claims negatively impacted the 2013 quarter by approximately three cents in earnings per share compared with prior year due to some unusually high medical claims that were incurred in the quarter.

“We are pleased with the increase in average revenue per tractor per week of $99, or 3.5%, to $2,898 in the March 31, 2013 quarter from $2,799 in the prior year period. However, we are disappointed in the decrease in the average seated line-haul tractors of 227, or 8%, to 2,624 in the March 31, 2013 quarter from 2,851 in the March 31, 2012 quarter. To address this shortfall, we have expanded recruiting efforts at terminal locations, as well as established a driving school and training program at our Indianapolis headquarters. These actions have already produced positive results as our seated count has increased by over 70 since March 31, 2013.

“The average age of the Company's tractor fleet was 1.2 years as of March 31, 2013, compared to 1.6 years as of March 31, 2012 and the average age of the trailer fleet was 2.0 years as of March 31, 2013 compared with 3.2 years as of March 31, 2012. The Company has completed its current tractor refresh cycle and will be complete on the trailer side in the June quarter.

“We believe we have put in place a lean cost structure, upgraded and expanded the fleet to one of the newest in the industry, broadened service offerings to customers, and positioned the Company to allow it to expand margins and profitability.

“Our balance sheet remains solid and we retain significant liquidity to support the growth of our business. At March 31, 2013, we had $220.1 million of stockholders' equity, and $4.5 million in cash and cash equivalents.”

On April 25, 2013, the Board of Directors approved a regular cash dividend to shareholders for the quarter ending March 31, 2013. The quarterly cash dividend of two cents ($0.02) per share of common stock will be payable on July 14, 2013 to shareholders of record at the close of business on July 5, 2013.

Conference Call Information

An investor conference call is scheduled for Friday, April, 26, at 11:00 a.m. ET. Steve Russell and other members of management will discuss the results of the quarter. To listen and participate in a questions-and-answers exchange, simply dial855-410-0553 (or 646-583-7389) pin number 234998 a few minutes prior to the start time. A replay will be available through May 26th at http://investors.celadontrucking.com.

Celadon Group Inc. (www.celadongroup.com), through its subsidiaries, primarily provides long-haul, full-truckload freight service across the United States, Canada and Mexico. The company also owns Celadon Logistics Services, which provides freight brokerage; Celadon Dedicated Services, which provides supply chain management solutions, such as warehousing and dedicated fleet services; and owns a minority interest in TruckersB2B (www.truckersb2b.com) which provides cost savings to member fleets.

This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may be identified by their use of terms or phrases such as "expects," "estimates," "projects," "believes," "anticipates," "plans," "intends," and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those in forward-looking statements: the risk that our perception of additional capacity due to seating trucks and perceived benefits thereof are inaccurate; the risk that our perception of changes in our customer base and perceived benefits thereto are inaccurate; the risk that managing our tractor fleet age does not result in greater flexibility and lower operating expenses; excess tractor and trailer capacity in the trucking industry; decreased demand for our services or loss of one or more of our major customers; surplus inventories; recessionary economic cycles and downturns in customers' business cycles; strikes, work slow downs, or work stoppages at our facilities, or at customer, port, border crossing, or other shipping related facilities; increases in compensation for and difficulty in attracting and retaining qualified drivers and independent contractors; increases in insurance premiums and deductible amounts; elevated experience in the frequency or severity of claims relating to accident, cargo, workers' compensation, health, and other matters; fluctuations in claims expenses that result from high self-insured retention amounts and differences between estimates used in establishing and adjusting claims reserves and actual results over time; increases or rapid fluctuations in fuel prices, as well as fluctuations in hedging activities and surcharge collection, the volume and terms of diesel purchase commitment, interest rates, fuel taxes, tolls, and license and registration fees; fluctuations in foreign currency exchange rates; increases in the prices paid for new revenue equipment and changes in the resale value of our used equipment; increases in interest rates or decreased availability of capital or other sources of financing for revenue equipment; seasonal factors such as harsh weather conditions that increase operating costs; competition from trucking, rail, and intermodal competitors; regulatory requirements that increase costs or decrease efficiency, including revised hours-of-service requirements for drivers and new emissions control regulations; our ability to identify acceptable acquisition candidates, consummate acquisitions, and integrate acquired operations; the timing of, and any rules relating to, the opening of the border to Mexican drivers; challenges associated with doing business internationally; our ability to retain key employees; and the effects of actual or threatened military action or terrorist attacks or responses, including security measures that may impede shipping efficiency, especially at border crossings.

Readers should review and consider these factors along with the various disclosures by the company in its press releases, stockholder reports, and filings with the Securities Exchange Commission. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

CELADON GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars and shares in thousands except per share amounts)
(Unaudited)

   
For the three months ended For the nine months ended
March 31, March 31,
2013   2012 2013   2012
 
REVENUE:
Revenue, before fuel surcharge $ 118,736 $ 120,988 $ 357,647 $ 350,831
Fuel surcharge revenue   30,902     32,321     93,400     90,638  
Total revenue 149,638 153,309 451,047 441,469
 
OPERATING EXPENSES:
Salaries, wages, and employee benefits 40,334 41,720 122,373 116,842
Fuel 35,808 41,253 109,682 116,782
Purchased transportation 32,814 26,833 89,789 81,268
Revenue equipment rentals 1,653 2,332 5,303 4,238
Operations and maintenance 7,912 10,130 23,691 30,110
Insurance and claims 3,495 3,527 10,984 10,245
Depreciation and amortization 13,796 11,563 36,004 35,507
Communications and utilities 1,382 1,080 4,023 2,982
Operating taxes and licenses 2,660 2,531 7,758 7,636
General and other operating   1,748     1,737     5,673     5,035  
Total operating expenses   141,602     142,706     415,280     410,645  
 
Operating income 8,036 10,603 35,767 30,824
 
Interest expense 1,080 1,382 3,743 4,288
Interest income 0 (4 ) 0 (56 )
Other (income) expense, net   (400 )   (199 )   (679 )   (696 )
Income before income taxes 7,356 9,424 32,703 27,288
Income tax expense   2,978     3,766     12,683     10,717  
Net income $ 4,378   $ 5,658   $ 20,020   $ 16,571  
 
Income per common share:
Diluted $ 0.19 $ 0.25 $ 0.86 $ 0.73
Basic $ 0.19 $ 0.25 $ 0.89 $ 0.75
 
Diluted weighted average shares outstanding 23,522 22,974 23,315 22,783
Basic weighted average shares outstanding 22,730 22,235 22,567 22,234
 

Key Operating Statistics

   
For the three months ended For the nine months ended

March 31,

March 31,

2013

 

2012

2013

 

2012

Average revenue per loaded mile (*) $ 1.545 $ 1.529 $ 1.555 $ 1.522
Average revenue per total mile (*) $ 1.374 $ 1.358 $ 1.386 $ 1.356
Average revenue per tractor per week (*) $ 2,898 $ 2,799 $ 2,873 $ 2,858
Average miles per seated tractor per week(**) 2,080 2,051 2,054 2,098
Average seated line-haul tractors (**) 2,624 2,851 2,686 2,671
 
*Freight revenue excluding fuel surcharge and our Mexican subsidiary Jaguar.
**Total seated fleet, including equipment operated by independent contractors and our Mexican subsidiary, Jaguar.
 

CELADON GROUP, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2013 and June 30, 2012
(Dollars and shares in thousands except par value amounts)

 

(unaudited)

March 31, June 30,
ASSETS

2013

2012

 
Current assets:
Cash and cash equivalents $ 4,529 $ 33,646
Trade receivables, net of allowance for doubtful accounts of $924 and $1,007 at March 31, 2013 and June 30, 2012, respectively 66,826 67,615
Prepaid expenses and other current assets 15,036 10,910
Tires in service 959 1,805
Equipment held for resale 12,569 7,908
Deferred income taxes   3,948     4,160  
Total current assets 103,867 126,044
Property and equipment 580,868 483,327
Less accumulated depreciation and amortization   110,184     112,871  
Net property and equipment 470,684 370,456
Tires in service 1,384 2,487
Goodwill 17,483 16,702
Investment in unconsolidated companies 4,266 3,491
Other assets   3,267     1,531  
Total assets $ 600,951   $ 520,711  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,202 $ 7,734
Accrued salaries and benefits 10,472 13,854
Accrued insurance and claims 9,525 10,138
Accrued fuel expense 10,229 6,029
Other accrued expenses 21,018 17,911
Current maturities of capital lease obligations 24,878 45,135
Income taxes payable   927     1,483  
Total current liabilities 82,251 102,284
Capital lease obligations, net of current maturities 187,765 185,436
Long term debt, net of current maturities 64,772 ---
Deferred income taxes 46,047 38,210
Stockholders' equity:
Common stock, $0.033 par value, authorized 40,000 shares; issued and outstanding 23,897 and 23,984 shares at March 31, 2013 and June 30, 2012, respectively 788 791
Treasury stock at cost, 707 and 1,155 shares at March 31, 2013 and June 30, 2012, respectively (4,880 ) (7,966 )
Additional paid-in capital 103,219 101,154
Retained earnings 124,437 105,765
Accumulated other comprehensive loss   (3,448 )   (4,963 )
Total stockholders' equity   220,116     194,781  
Total liabilities and stockholders' equity $ 600,951   $ 520,711  

Celadon Group Inc.
Jeryl Desjarlais, Communications Manager, 800-CELADON Ext. 7070
317-972-7070 Direct
jdesjarlais@celadongroup.com

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