CELADON GROUP REPORTS FIRST FISCAL QUARTER FINANCIAL RESULTS, 50% INCREASE IN EARNINGS PER SHARE
INDIANAPOLIS – Celadon Group Inc. (Nasdaq:CLDN) today reported its financial and operating results for the three months ended Sept. 30, 2006, the first fiscal quarter of the Company’s fiscal year ending June 30, 2007.
Revenue for the quarter increased 8.3% to $127.7 million in the 2006 quarter from $117.9 million in the 2005 quarter. Freight revenue, which excludes fuel surcharges, was up 4.3% to $107.7 million in the 2006 quarter from $103.3 million in the 2005 quarter. Net income increased 51.1% to $7.1 million in the 2006 quarter from $4.7 million for the same quarter last year. Earnings per diluted share improved by 50% to $0.30 in the 2006 quarter from $0.20 for the same quarter last year. The September quarter marked the highest operating income and net income in the history of the Company.
Chairman and CEO Steve Russell commented on the quarter: “We are pleased with the Company's results for the September 2006 quarter. Higher freight rates and continued focus on cost controls allowed us to improve our operating ratio by 300 basis points to 89.2% in the September 2006 quarter from 92.2% in the September 2005 quarter. The operating ratio for the September 2006 quarter also represented a sequential improvement over the 90.3% operating ratio we posted for the June 2006 quarter. We define operating ratio as total operating expenses, net of fuel surcharges, as a percentage of freight revenue.
“Average rate per loaded mile increased by 4.2% to $1.539, from $1.477 in the prior year's September quarter, average length of haul increased by about twenty miles per load, and generally costs were in line with expectations. Seated count increased by approximately 150 trucks year over year, driver turnover continues to be about half of the industry average and the number of qualified drivers joining us is up significantly. We continue our policy of hiring only experienced drivers with records that meet our safety standards. As part of our ongoing efforts to improve our freight mix, we continued to reduce business related to new automobile production, and now do no business with the “Big Three” U.S. automakers.
“Improvement in our freight rates was offset by a decrease in average miles per tractor, resulting in a 3.6% decrease in average freight revenue per tractor per week, from $2,976 to $2,870. Our success in recruiting drivers and growing our fleet resulted in a decrease in miles per truck per week. We believe our October 6, 2006, purchase of the assets of Digby Trucking, of Nashville TN, which operated 250 trucks, will offer an opportunity to increase miles and revenue for our entire fleet. Digby generated approximately $48 million in revenue in the twelve months prior to the acquisition. We have met with their top ten customers, and believe that our reputation for safety, service and technology provides an opportunity to establish a relationship with those customers. We expect to hire up to 150 drivers, which should provide an opportunity for additional miles for our existing fleet. An important part of the Digby customer base was in the food business, which is consistent with our focus on consumer-non-durable freight.
“At September 30, 2006, our balance sheet reflected $1.1 million in cash, $11.7 million in borrowings and capitalized leases, and $129.9 million of total stockholders’ equity. In our first fiscal quarter, we invested approximately $20 million in cash to purchase new tractors. In connection with our acquisition of the assets of Digby, we added approximately $21 million of borrowing on October 6, 2006.
“In summary, we believe we will be able to continue to execute on our strategic plan and produce positive results going forward."
Conference Call Information
An investor conference call is scheduled for Friday, Oct. 20, at 10:00 a.m. Eastern time. Steve Russell and other members of management will discuss the results of the quarter. To listen and participate in the question-and-answer exchange, dial 800-510-0178 (international calls 617-614-3450) pin number 22842534 a few minutes prior to the starting time. A replay will be available through Dec. 20 by dialing 888-286-8010 (international calls 617-801-6888) and entering call back code 24185881.
This call is being webcast by Thomson/CCBN and can be accessed via Celadon's web site at www. CeladonGroup .com. Any statistical and financial information that is discussed during the conference call also will be available at www. CeladonGroup .com.
Founded in 1985, Celadon Group Inc. (www. CeladonGroup .com) is a truckload carrier headquartered in Indianapolis that operates in the U.S., Canada and Mexico. Celadon also owns TruckersB2B Inc. (www. TruckersB2B .com) which provides cost savings to about 20,000 member fleets.
