Celadon Group Reports March Quarter Results And Declares Dividend

INDIANAPOLIS, May 8, 2014 /PRNewswire/ — Celadon Group Inc. (NYSE: CGI)
today reported its financial and operating results for the three months ended
March 31, 2014, the third fiscal quarter of the Company’s fiscal year ending
June 30, 2014.

http://photos.prnewswire.com/prnvar/20140416/75696

Revenue for the quarter increased 29.1% to $193.2 million in the March 2014
quarter from $149.6 million in the March 2013 quarter. Freight revenue, which
excludes fuel surcharges, increased 31.0% to $155.6 million in the March 2014
quarter from $118.7 million in the March 2013 quarter. Net income decreased
20.5% to $3.5 million in the 2014 quarter from $4.4 million for the same quarter
last year. Earnings per diluted share decreased to $0.15 in the March 2014
period from $0.19 for the same quarter last year.

For the nine months ended March 31, 2014, revenue increased 24.5% to $561.9
million in 2014 from $451.0 million for the same period last year. Freight
revenue, which excludes fuel surcharges, increased 27.2% to $454.8 million in
2014 from $357.6 million for the same period last year. Net income decreased
24.5% to $15.2 million in 2014 from $20.0 million for the same period last year.
Earnings per diluted share decreased to $0.64 in 2014 from $0.86 for the same
period last year.

Paul Will, President and Chief Executive Officer, made the following comments:
“Severe weather conditions negatively impacted our results for the March 2014
quarter. The winter storms encountered were widespread and significantly
affected both fleet utilization and operating costs. Operations, maintenance and
fuel expenses increased primarily due to the weather and to older equipment
associated with our most recent acquisitions, which will be somewhat alleviated
in future periods when those assets are refreshed in a similar fashion to the
remaining Celadon fleet.

“The average age of the Company’s tractor fleet, which includes over 400
tractors from recent acquisitions, has increased to 2.2 years as of March 2014.
We have on order 800 trucks to replace the acquisition equipment and begin to
refresh the remaining fleet, which we expect will improve fuel economy and help
bring down our overall maintenance costs to more historical levels. Gains on
sales of assets were $2.3 million in the March 2014 quarter compared with $0.3
million in the March 2013 quarter. This was primarily the result of the sale of
the Company’s independent contractor lease portfolio and associated assets,
which represented approximately 600 tractors.

“Although we had operating challenges during the March 2014 quarter, we believe
we have taken the right steps to position the Company for future growth. We
increased our average seated tractor count by 816, or 31%, to 3,440 in the March
2014 quarter compared to 2,624 in the March 2013 quarter, a significant
operating metric improvement that resulted in increased revenue for the quarter.
This increase was a result of expanding our recruiting efforts at terminal
locations, having established a driving school as well as our previously
announced acquisitions over the past year.

“Our primary focus over the past year has been to expand our service offerings
to our customers and grow our capacity of seated tractors, which has resulted in
freight revenue growth for the March 2014 quarter of approximately 31% over the
March 2013 quarter. This growth strategy should position Celadon to better serve
our customers now and especially in the near future as we believe truck capacity
will continue to tighten for the truckload industry. The business generated from
these acquisitions has been instrumental in our ability to add truck capacity
and density in our current operating lanes. Although we have incurred
acquisition, transition and weather related costs in the March 2014 quarter that
should abate and we believe these costs and future synergies related to the
acquisitions should benefit Celadon in future quarters.

“Our average revenue per tractor per week decreased $132, or 4.6%, to $2,752 in
the March 2014 quarter, from $2,884 in the March 2013 quarter. This was
attributable to the decreased tractor utilization during the March 2014 quarter
due to severe weather. Our average revenue per loaded mile increased to $1.60
per mile in the March 2014 quarter from $1.56 in the March 2013 quarter.

“Our balance sheet remains solid and we retain significant liquidity to support
the growth of our business. At March 31, 2014 we had $239.0 million of
stockholders equity. Our cash flow generated from operations will allow us to
effectively continue to execute on our growth strategy.”

On April 29, 2014, the Board of Directors approved a regular cash dividend to
shareholders for the quarter ending June 30, 2014. The quarterly cash dividend
of two cents ($0.02) per share of common stock will be payable on July 18, 2014
to shareholders of record at the close of business on July 3, 2014.

Conference Call Information

An investor conference call is scheduled for Wednesday, April 30 at 11:00 a.m.
ET. Management will discuss the results of the quarter. To pre-register for the
call please follow the links on our website at
http://investors.celadontrucking.com. For those without internet access or
unable to pre-register, please dial in by calling 1-866-652-5200 (or
412-317-6060) a few minutes prior to the start time. A replay will be available
through May 28 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.

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.

For more information:
Joe Weigel
Director of Marketing & Communications
(800) CELADON Ext. 7006
(317) 972-7006 Direct
jweigel@celadontrucking.com

– tables follow –

CELADON GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands except per share amounts)

(Unaudited)

For the three months ended For the nine months ended

March 31, March 31,
——— ———

2014 2013 2014 2013
—- —- —- —-

REVENUE:

Freight revenue $155,552 $118,736 $454,750 $357,647

Fuel surcharge revenue 37,676 30,902 107,176 93,400
—— —— ——- ——

Total revenue 193,228 149,638 561,926 451,047

OPERATING EXPENSES:

Salaries, wages, and employee benefits 52,948 40,334 153,506 122,373

Fuel 46,782 35,808 127,304 109,682

Purchased transportation 43,263 32,814 130,606 89,789

Revenue equipment rentals 1,760 1,653 4,989 5,303

Operations and maintenance 14,449 7,912 37,375 23,691

Insurance and claims 5,617 3,495 14,352 10,984

Depreciation and amortization 13,568 13,796 44,417 36,004

Communications and utilities 1,837 1,382 4,676 4,023

Operating taxes and licenses 3,414 2,660 9,539 7,758

General and other operating 2,808 1,748 7,906 5,673
—– —– —– —–

Total operating expenses 186,446 141,602 534,670 415,280
——- ——- ——- ——-

Operating income 6,782 8,036 27,256 35,767

Interest expense 1,357 1,080 3,844 3,743

Interest income (4) — (8) —

Other income, net (300) (400) (701) (679)
—- —- —- —-

Income before income taxes 5,729 7,356 24,121 32,703

Income tax expense 2,247 2,978 8,947 12,683
—– —– —– ——

Net income $3,482 $4,378 $15,174 $20,020
====== ====== ======= =======

Income per common share:

Diluted $0.15 $0.19 $0.64 $0.86

Basic $0.15 $0.19 $0.66 $0.89

Diluted weighted average shares outstanding 23,803 23,522 23,715 23,318

Basic weighted average shares outstanding 23,006 22,730 22,977 22,567

CELADON GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2014 and June 30, 2013

(Dollars and shares in thousands except par value)

(unaudited)
———-

March 31, June 30,

ASSETS 2014 2013
—- —-

Current assets:

Cash and cash
equivalents $4,635 $1,315

Trade receivables, net
of allowance for
doubtful accounts of
$882 and 109,350 77,623

$919 at March 31, 2014 and June 30, 2013, respectively

Prepaid expenses and
other current assets 25,336 13,434

Tires in service 1,624 1,245

Equipment for resale 4,097 9,923

Income tax receivable 5,780 9,506

Deferred income taxes 4,096 4,342
—– —–

Total current assets 154,918 117,388

Property and equipment 640,679 612,236

Less accumulated
depreciation and
amortization 138,158 115,366
——- ——-

Net property and
equipment 502,521 496,870

Tires in service 2,300 1,785

Goodwill 23,679 17,730

Investment in joint
venture 4,184 4,604

Other assets 4,045 2,785
—– —–

Total assets $691,647 $641,162
======== ========

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable $8,560 $10,401

Accrued salaries and
benefits 10,839 11,197

Accrued insurance and
claims 11,653 10,092

Accrued fuel expense 12,741 7,461

Other accrued expenses 35,105 20,070

Current maturities of
capital lease
obligations 56,259 25,669
—— ——

Total current
liabilities 135,157 84,890

Long-term debt 105,930 78,137

Capital lease
obligations, net of
current maturities 140,480 190,625

Deferred income taxes 71,176 61,821

Stockholders’ equity:

Common stock, $0.033
par value, authorized
40,000 shares;
issued and 791 788

outstanding 23,959 and 23,887
shares at March 31, 2014 and
June

30, 2013, respectively

Treasury stock at
cost; 500 and 696
shares at March 31,
2014 and June (3,453) (4,811)

30, 2013, respectively

Additional paid-in
capital 105,583 103,749

Retained earnings 145,023 131,224

Accumulated other
comprehensive loss (9,040) (5,261)
—— ——

Total stockholders’
equity 238,904 225,689
——- ——-

Total liabilities and
stockholders’ equity $691,647 $641,162
======== ========

Key Operating Statistics

For the three months ended For the nine months ended

March 31, March 31,
——— ———

2014 2013 2014 2013
—- —- —- —-

Average revenue per loaded mile (*) $1.597 $1.558 $1.609 $1.564

Average revenue per total mile (*) $1.402 $1.386 $1.413 $1.396

Average revenue per tractor per week (*) $2,752 $2,884 $2,846 $2,866

Average miles per seated tractor per week(**) 1,963 2,080 2,014 2,054

Average seated line-haul tractors (**) 3,440 2,624 3,294 2,686

*Freight revenue excluding fuel surcharge.

**Total seated fleet, including equipment operated by independent contractors and our Mexican subsidiary, Jaguar.

Adjusted Trucking Revenue (^) $160,634 $129,273 $472,405 $393,632

Asset Light Revenue 14,410 10,493 41,669 32,032

Intermodal Revenue 10,475 5,932 27,733 15,453

Other Revenue 7,708 3,940 20,119 9,929
—– —– —— —–

Total Revenue $193,228 $149,638 $561,926 $460.976
======== ======== ======== ========

^Trucking Revenue for US, Canada, Mexico. Includes Fuel Surcharge.

Logo – http://photos.prnewswire.com/prnh/20140416/75696

SOURCE Celadon Group Inc.

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