Celadon Group Reports December Quarter Results And Declares Dividend

27 Jan, 2016, 16:38 ET from Celadon Group, Inc.

INDIANAPOLIS, Jan. 27, 2016 /PRNewswire/ -- Celadon Group Inc. (NYSE: CGI) today reported its financial and operating results for the three months and six months ended December 31, 2015, the second fiscal quarter of the Company's fiscal year ending June 30, 2016.

Revenue for the quarter increased 23.8% to $275.4 million in the 2016 quarter from $222.4 million in the 2015 quarter.  Freight revenue, which excludes fuel surcharges, increased 33.2% to $249.3 million in the 2016 quarter from $187.2 million in the 2015 quarter.  Net income decreased 22.4% to $6.6 million in the 2016 quarter from $8.5 million for the same quarter last year.  Earnings per diluted share decreased 33.3% to $0.24 in the 2016 quarter from $0.36 for the same quarter last year.

Revenue for the six months ended December 31, 2015 increased 30.2% to $541.5 million from $415.8 million for the same period last year.  Freight revenue, which excludes fuel surcharges, increased 41.2% to $487.1 million in the December 2015 period from $344.9 million in the December 2014 period.  Net income increased 8.4% to $18.0 million in the December 2015 period from $16.6 million for the same period last year.  Earnings per diluted share decreased 7.2% to $0.64 in the December 2015 period from $0.69 for the same period last year.

Paul Will, Chief Executive Officer, made the following comments:  "We had great success in the quarter growing top line revenues in a less than robust freight environment.  We believe these efforts position us well to continue to focus on improving our key operating metrics.  We saw improvement in some of our key operating statistics that we believe will be beneficial long term as capacity is challenged by a very competitive driver recruiting market, in addition to the numerous pending and proposed federal safety initiatives such as electronic logging devices (ELD's) and mandatory truck speed limiters.  The increase in average seated tractor count of 1,693 or 46.8%, to 5,314 in the December 2015 quarter compared with 3,621 in the December 2014 quarter was a significant operating metric improvement that resulted in increased revenue for the quarter, although the ending seated tractor count decreased sequentially to 5,337 at the end of December, from 5,375 at the end of September.  Our average revenue per tractor per week decreased $374, or 11.9%, to $2,775 in the December 2015 quarter, from $3,149 in the December 2014 quarter.  This decrease is a result of a lackluster freight environment coupled with the significant growth in our seated tractor count.  We continue to increase our customer freight to better align with our increased fleet size.  In addition, our average revenue per loaded mile increased to $1.917 per mile in the December 2015 quarter from $1.798 in the December 2014 quarter, which is a 6.6% increase.

"Included in our December 2015 operating results were two items that negatively impacted our earnings.  We incurred approximately $1.2 million of transition related expenses from our previously announced acquisition of the truckload assets of Tango Transport during the quarter.  These costs related to the transitioning of customer freight and the assisting in the wind down of the Tango operations.  We have retained a large portion of the selected business from the transaction to date.  The second item was associated with decreased earnings related to the lower sales volume of assets in the quarter related primarily to the holiday season as well as the timing of funding within the period.

"We continue to work on driver recruitment and retention as the market remains challenging for qualified drivers.  As a result, our costs related to driver training, advertising for experienced drivers, and other recruitment and retention efforts have continued to increase, however, we have taken steps to more efficiently recruit drivers that will result in a reduction of these costs in the coming quarters.  This, along with economic and safety regulatory issues, should result in a more constrained truckload capacity for shippers in the future.  In addition to initiating and implementing sustainable rate increases, we are continuing to work on cost reduction initiatives as we strive to improve our operating results."

"The average age of the Company's tractor fleet was 1.6 years as of December 2015.  Gains on sales of assets were $5.5 million in the December 2015 quarter compared with $4.0 million in the December 2014 quarter.   The gain on sale of equipment in the quarter, which is net of any trade expenses, resulted primarily from the sale of third party equipment by our sales and leasing division.  As Celadon has completed its tractor refresh cycle, we expect all gains going forward to be related to third party sales and leasing.

"Our balance sheet remains solid and we retain significant liquidity to support the growth of our business. At December 31, 2015, we had $369.1 million of stockholders' equity and our earnings before interest, taxes, depreciation and amortization was $33.3 million in the current December 2015 quarter.  At December 31, 2015, we had $126.9 million outstanding borrowings on our operating bank line of $300 million, leaving $173.1 million of available borrowings to fund operations.  Our increased cash flow generated from operations will allow us to effectively continue to execute on our growth strategy."

On January 27, 2016, the Board of Directors approved a regular cash dividend to shareholders for the quarter ending March 31, 2016.  The quarterly cash dividend of two cents ($0.02) per share of common stock will be payable on April 22, 2016 to shareholders of record at the close of business on April 8, 2016.

Conference Call Information

Participants can pre-register for the conference call by navigating to Celadon's Investor Relations website, http://investors.celadontrucking.com, under the Report Center menu option.  Those without Internet access or unable to pre-register may join the conference by dialing 1-800-659-2953.  A replay of the webcast will be available through February 28, 2016 at http://investors.celadontrucking.com.

Celadon Group, Inc. (www.celadongroup.com), through its subsidiaries, provides long-haul, regional, local, dedicated, intermodal, temperature-protect, flatbed and expedited freight service across the United States, Canada and Mexico.  The company also owns Celadon Logistics Services, which provides freight brokerage services, freight management, as well as supply chain management solutions, including warehousing and distribution.

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.

- Tables Follow -

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 six months ended

December 31,

December 31,

2015

2014

2015

2014

REVENUE:

        Freight revenue

$249,311

$187,205

487,123

$344,909

        Fuel surcharge revenue

26,088

35,166

54,397

70,878

                Total revenue

275,399

222,371

541,520

415,787

OPERATING EXPENSES:

        Salaries, wages, and employee benefits

85,877

63,569

167,354

120,791

        Fuel                                                                                                               

26,688

39,199

54,416

79,184

        Purchased transportation

93,948

58,228

182,978

101,865

        Revenue equipment rentals

2,201

2,648

4,423

5,238

        Operations and maintenance

18,243

12,990

35,849

24,229

        Insurance and claims

7,709

7,221

14,637

12,898

        Depreciation and amortization

19,187

17,734

40,788

33,291

        Communications and utilities

2,611

2,097

4,955

3,927

        Operating taxes and licenses

5,532

3,699

10,504

7,013

        General and other operating

4,803

3,427

9,085

6,882

        Gain on disposition of equipment

(5,479)

(4,010)

(18,721)

(8,568)

                Total operating expenses

261,320

206,802

506,268

386,750

                Operating income

14,079

15,569

35,252

29,037

Interest expense

3,758

2,008

6,910

3,177

Interest income

---

(3)

---

(7)

Other income

21

(36)

121

(110)

                Income before income taxes

10,300

13,600

28,221

25,977

Income tax expense

3,685

5,057

10,239

9,387

Net income

$6,615

$8,543

$17,982

$16,590

Income per common share:

        Diluted 

$0.24

$0.36

$0.64

$0.69

        Basic 

$0.24

$0.37

$0.65

$0.71

        Diluted weighted average shares  outstanding

27,940

23,991

27,953

23,963

        Basic weighted average shares outstanding

27,480

23,327

27,467

23,284

 

 

CELADON GROUP, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2015 and June 30, 2015

(Dollars and shares in thousands except par value amounts)

(unaudited)

December 31,

June 30,

ASSETS

2015

2015

Current assets:

Cash and cash equivalents

$7,728

$24,699

Trade receivables, net of allowance for doubtful accounts of $1,446      and $1,002 at December 31, 2015 and June 30, 2015, respectively

135,544

130,892

Prepaid expenses and other current assets

43,143

33,267

Tires in service

2,471

1,857

Leased revenue equipment held for sale

49,298

52,591

Revenue equipment held for sale

81,016

49,856

Income Tax Receivable

15,228

17,926

Deferred income taxes

6,401

7,083

Total current assets

340,829

318,171

Property and equipment

900,051

935,976

Less accumulated depreciation and amortization

147,242

147,446

Net property and equipment

752,809

788,530

Tires in service

2,871

2,173

Goodwill

58,919

55,357

Investment in unconsolidated companies

2,000

---

Other assets

11,951

11,458

Total assets

$1,169,379

$1,175,689

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$22,747

$13,699

Accrued salaries and benefits

14,452

16,329

Accrued insurance and claims

17,180

14,808

Accrued fuel expense

8,717

10,979

Accrued purchase transportation

18,194

16,259

Accrued equipment purchases

15,264

775

Deferred leasing revenue

26,828

31,872

Other accrued expenses

25,550

31,835

Current maturities of long term debt

616

948

Current maturities of capital lease obligations

57,762

62,992

Total current liabilities

207,310

200,496

Capital lease obligations, net of current maturities

344,541

366,452

Long term debt, net of current maturities

127,496

133,199

Other long term liabilities

---

953

Deferred income taxes

120,904

108,246

Stockholders' equity:

Common stock, $0.033 par value, authorized  40,000 shares; issued      and outstanding 28,375 and 28,342 shares at December 31, 2015      and June 30, 2015, respectively

936

935

Treasury stock at cost; 500 and 500 shares at December 31, 2015 and June 30, 2015, respectively       

(3,453)

(3,453)

Additional paid-in capital

197,194

195,682

Retained earnings

212,295

195,412

Accumulated other comprehensive loss

(37,844)

(22,233)

Total stockholders' equity

369,128

366,343

Total liabilities and stockholders' equity

$1,169,379

$1,175,689

 

 

Key Operating Statistics

For the three months ended

For the six months ended

December 31,

December 31,

2015

2014

2015

2014

Average revenue per loaded mile (*)

$1.917

$1.798

$1.891

$1.718

Average revenue per total mile (*)

$1.629

$1.598

$1.621

$1.523

Average revenue per tractor per week (*)

$2,775

$3,149

$2,842

$3,067

Average miles per seated tractor per week(**)

1,704

1,971

1,753

2,015

Average seated line-haul tractors (**)

5,314

3,621

5,128

3,438

*Freight revenue excluding fuel surcharge.

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

Adjusted Trucking Revenue (^)

$217,816

$183,394

$433,279

$345,044

Asset Light Revenue

32,943

21,775

63,527

38,322

Intermodal Revenue

10,177

8,607

21,308

17,847

Other Revenue

14,463

8,8596

23,406

14,574

Total Revenue

$275,399

$222,372

$541,520

$415,787

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

For more information:                                                                                    Joe Weigel Director of Marketing and Communications (800) CELADON Ext. 27006 (317) 972-7006 Direct jweigel@celadongroup.com

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SOURCE Celadon Group, Inc.



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