Celadon Continues Downsizing Moves

Posted: Updated:
Svindland says Celadon cut its truck count by 200 between April and August, and another 200 in September. Svindland says Celadon cut its truck count by 200 between April and August, and another 200 in September.
INDIANAPOLIS -

Indianapolis-based Celadon Group Inc. (NYSE: CGI) says it is has refinanced its revolving credit facility and decreased its truck count by hundreds of tractors. The moves come weeks after the company sold its flatbed trucking division and exited its three Celadon Driving Academy locations.

Celadon Chief Executive Officer Paul Svindland says the company is "moving rapidly toward implementation" of a new strategic plan by refinancing, increasing liquidity and extending the term of equipment leases set to mature next fiscal year. He says the company is also reducing its tractor count after "the fleet size grew too rapidly" over the past several years. Svindland says Celadon cut its truck count by 200 between April and August, and another 200 in September.

In a release, Celadon also revealed it is being investigated by the Securities and Exchange Commission. The company did not give details of the investigation, but says shareholder class action and derivative lawsuits are seeking damages "related to certain accounting-related matters."

Svindland's statement is below:

Chief Executive Officer, Paul Svindland, commented: "Over the past two months, Celadon has adopted a new strategic plan and is moving rapidly toward implementation.  The primary components of our plan include strengthening our capital structure, exiting or downsizing unprofitable or non-core business, restoring the historical operating practices and profitability of our irregular route truckload business, and augmenting our senior management team and board of directors with world-class talent.  We are making significant progress toward our goals, while acknowledging our financial results will be uneven during this time.  

"Strengthening our capital structure involves refinancing our revolving credit facility, increasing our liquidity, and extending the term of equipment leases maturing during fiscal 2018.  The refinancing effort is underway and has received significant initial interest, while our major equipment lessors have been supportive as well.   We expect to identify lead investors and a proposed capital structure in November, with a closing targeted for the second half of December.  We appreciate the support of our revolving lenders and our existing tractor and trailer lessors during this process.

"Our business evaluation identified core businesses for investment as well as non-core assets and business units for disposition.  The core truckload business, Celadon Logistics, A&S/Kinard, Taylor, Buckler, International, and others are key components of our ongoing strategy.   In terms of non-core assets, we exited the flatbed business and our driver-training academy in September, and we plan to exit three additional small businesses, including our Quality Companies lease servicing business, in coming quarters.  In addition, excess trailers and real estate have been identified for sale.

"The turnaround plan in our irregular route truckload business is centered around allocating our significant asset capacity toward profitable, driver friendly, and enduring customer needs within defined operating territories.  Over the past several years, the fleet size grew too rapidly and our traffic lanes became too diffuse in our Celadon Truckload Services subsidiary ("CTSI"), the largest irregular route component of our business. Our plan includes rationalizing the fleet size and improving our asset productivity.  We expect the strong freight market and growing shipper demand for capacity to assist us in increasing yield, driving out unproductive miles, and improving the efficiency of CTSI's operations. Since Jon Russell and Doug Schmidt took over CTSI's truckload operations, average revenue per seated tractor per week (excluding fuel surcharge revenue) improved from $2,652 in April to $3,069 in August.  At the same time, total truck count decreased by approximately 200 tractors, or 7%, between April and August, and by approximately another 200 tractors in September including the previously announced disposition of the flatbed operation.  

"Finally, we are taking steps to augment our team.  We have searches underway for both senior management and independent director candidates.  We expect to add both in the relatively near term."

  • Perspectives

    • How to Build an Effective Team

      Many leaders who are looking to increase overall productivity at their company are implementing collaborative team environments. This growing trend is backed up by a recent study that states collaborative work environments lead to an increase in overall profitability. However, teams are only effective if built correctly. Don’t expect a group of employees to work well together if you throw them in a room without cultivating any sort of trust or team building.

    More

Subscribe

Name:
Company Name:
Email:
Confirm Email:
HTML
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections
INPower
Subscribe
Unsubscribe

Events



  • Most Popular Stories

    • UPDATE: Nestl√© Details Fort Wayne Layoffs

      Virginia-based Nestlé USA says only 40 employees will be laid off at the company's Fort Wayne distribution center. A spokesperson for Nestlé tells Inside INdiana Business a WARN Notice filed with the state incorrectly stated the facility would close at the end of the year, affecting nearly 70 workers.

    • Eleven Fifty to Move Headquarters

      Eleven Fifty Academy has announced plans to relocate. The nonprofit coding academy says it will invest $5 million to move its national headquarters to a 25,000-square-foot space in downtown Indianapolis near the Indiana Statehouse. Eleven Fifty says it will maintain its existing space in Fishers and has additional plans to add more locations statewide in the future. The organization says it aims to bring its staff to more than 150 over the next six years. Founder Scott Jones...

    • Purdue Startup Targets Airline Food Carts

      A Purdue University-affiliated student startup thinks its innovation will help airlines become more efficient. Operating out of the Purdue Railyard, FlykeART has developed what it calls a lighter and smarter galley cart for airlines, which co-founder Yuhan Roh says could save airlines millions of dollars in fuel costs. The slimmer cart design, according to Purdue, would also help make the carts less of an injury threat for travelers. On The INnovators with Dr. K, Roh said...

    • Gateway Park will lead into the downtown district.

      Plans For New Muncie Facility Halted

      Plans for a $75 million project at the former BorgWarner site in Muncie have come to a halt.  Nigel Morrison, director of Waelz Sustainable Products LLP says “a campaign of misinformation tainted the process and ultimately made it impossible for the city council to continue supporting the project.” The project was first announced in January and was slated to create up to 90 new jobs. The announcement follows the opposition of Muncie residents who...

    • Northern Indiana Telemarketer Sentenced in Scheme

      A Merrillville telemarketer has been sentenced to over five years in prison for his role in a $10 million scheme to defraud mostly elderly victims in the United States. Carlin Woods, 35, pleaded guilty in 2017 to a count of conspiracy to commit wire fraud, one count of wire fraud and another conspiracy count to commit money laundering.