Celadon Profit Takes a HitPosted: Updated:
Indianapolis-based Celadon Group Inc. (NYSE: CGI) is reporting net income of $3.5 million for its fiscal third quarter, down from $4.4 million during the same period the previous year. Chief Executive Officer Paul Will says expenses increased because of severe weather and recent acquisitions. April 29, 2014
INDIANAPOLIS, Ind. - 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.
Revenue for the quarter increased 29.1 percent 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 percent to $155.6 million in the March 2014 quarter from $118.7 million in the March 2013 quarter. Net income decreased 20.5 percent 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 percent 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 percent to $454.8 million in 2014 from $357.6 million for the same period last year. Net income decreased 24.5 percent 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 percent, 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 percent 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.
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.
Source: Celadon Group Inc.