Steve Russell, Chairman,
Paul Will, CFO
Celadon Group, Inc.
One Celadon Drive
Indianapolis, IN 46235-4207
317-972-7000
CELADON GROUP REPORTS FIRST FISCAL QUARTER FINANCIAL RESULTS
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INDIANAPOLIS, IN - October 25, 2004 Celadon Group, Inc. (NASDAQ-CLDN) today
reported its financial and operating results for the three months ended
September 30, 2004, the first fiscal quarter of the Company's fiscal year ending
June 30, 2005.
For the quarter, operating revenue increased 9.1% to $104.4 million, compared
with $95.7 million for the same quarter last year. Net income increased to $2.8
million from a loss of $5.5 million and diluted earnings per share improved to
$0.27 from a loss of $0.72. During the prior year, the Company recognized a $6.9
million, or $0.86 per diluted share, non-cash, after-tax impairment charge
related to trailers. Excluding the impairment charge, net income increased 115%
to $2.8 million from $1.3 million in the same quarter last year. Diluted
earnings per share increased 59% to $0.27 from $0.17 in the same quarter last
year, despite a 33% increase in weighted average shares outstanding primarily as
a result of our May 2004 stock offering.
Chairman and CEO Steve Russell commented on the quarter: "We were pleased with
the results of the quarter. Our results reflect a strong freight environment and
the efforts of a team that is demonstrating significant pricing discipline,
successful execution of yield management strategies and continued focus on
servicing our customers. By continuing to emphasize discipline in all aspects of
our operations, we have generated improvements compared with the same quarter
last fiscal year including:
o Average revenue per tractor per week, excluding fuel surcharge, our
main measure of asset productivity, improved 8.8%, to $2,864 from
$2,633, as a result of higher rates per mile and miles per tractor.
o Average revenue per loaded mile, excluding fuel surcharge, increased
6.5%, to $1.376 from $1.292, and average revenue per total mile
improved 7.3%, to $1.28 from $1.193, as a result of higher freight
rates and a lower percentage of non-revenue miles.
o Average miles per tractor per week improved 1.4%, to 2,238 from 2,207,
as a result of improved operational discipline, increased freight
demand and increased length of haul.
These improvements, excluding the trailer charge from the prior year,
contributed to an approximately 190 basis point improvement in our pre-tax
margin versus the same quarter last year. We were particularly pleased with our
8.7 cent per mile increase in revenue per total mile, excluding fuel surcharge,
which we achieved while increasing our average length of haul. Our performance
overcame record high fuel prices and an increase in the exchange rate of the
Canadian dollar. Our average fuel prices were approximately 30% higher than the
comparable period in the prior year. These higher fuel costs, net of the impact
of fuel surcharges, negatively
impacted the quarter's diluted earnings per share by approximately $0.06,
compared with the same period in the prior year. Further, in January 2004 we
significantly increased our driver pay. Compared with the prior year, there was
an increase in the exchange rate of the Canadian dollar, which affects us
because we pay approximately 450 employees and owner-operators in that currency.
We estimate that the difference in exchange rates negatively impacted our
earnings by $.03 per share compared with the same quarter last year.
TruckersB2B continued to contribute nicely to our results. For the quarter,
Truckers B2B generated revenue of $2.0 million and operating income of $0.4
million, compared with revenue of $2.5 million and operating income of $0.4
million for the same quarter last year. Revenue reflects fees and rebates only,
not the value of the goods and services related to these transactions. Gains in
most products were offset by lower tire margins. In the September 2004 quarter,
TruckersB2B purchased approximately 10% of its outstanding shares into treasury
bringing Celadon's ownership to approximately 90%.
Our balance sheet remains strong as we continued to reduce balance sheet debt
through a combination of cash flow and financing new tractors and trailers under
operating leases. At September 30, 2004, we had $84.6 million of total
stockholders' equity and only $11.6 million in total borrowings and capital
lease obligations, net of cash on hand, for a debt-to-capitalization ratio of
approximately 12%.
Looking forward, we expect to continue with our plan of using operational
discipline to drive improved financial results. Based on the freight environment
during the first half of October, tight truck capacity, available economic data,
and the efforts of our sales force, we expect freight rates to continue to
increase and freight demand to remain strong for the foreseeable future. High
fuel prices and driver availability are the two main areas of risk we foresee
that could affect profitability. We expect competition for quality drivers to
remain intense and that driver numbers will be the most substantial limiting
factor on capacity growth. Although the driver pay increase we implemented and
our new tractor program have actually improved our percentage of company trucks
with drivers at September 30 compared with the same time last year, we are
cautious about our continued ability to recruit and retain quality drivers in
this tight driver market. We do not anticipate further compensation increases
for our drivers during the second fiscal quarter, but we believe additional
increases by all carriers will be needed in the future as rates allow.
For the past three years, we have worked to transform Celadon into a premium
service long-haul truckload carrier that has a more sustainable and profitable
mix of business. With our highest quarterly earnings per share performance in
the Company's history, significantly better margins, and an enhanced capital
structure, we believe Celadon is well positioned to achieve continued revenue
growth and profitability."
Conference Call Information
An investor conference call is scheduled for Tuesday, October 26, 2004, at 10:00
a.m. (Eastern). Steve Russell and other members of management will discuss the
results of the quarter. To listen and participate in a questions-
and-answers exchange, simply dial (800) 798-2801 at least five minutes prior to
the start time. Otherwise, you may listen to the call via website:
www.celadontrucking.com (double click on the investor tab).
Celadon Group, Inc. is a truckload carrier headquartered in Indianapolis that
operates in the U.S., Canada and Mexico. Celadon is also the majority owner of
TruckersB2B, Inc., which is a provider of cost benefits to more than 16,000
member fleets. Please visit the company's websites at: www.celadontrucking.com
and www.truckersb2b.com.
The discussion set forth above as well as oral statements made by officers of
the company relating thereto, may contain forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such comments
are based upon information currently available to management and management's
perception thereof as of the date of this press release. Actual results of the
company's operations could materially differ from those forward-looking
statements. Such differences could be caused by a number of factors including,
but not limited to, 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, or other shipping related facilities; our
ability to execute our strategic plan; 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 commitments, 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; increases in interest
rates or decreased availability of capital or other sources of financing for
revenue equipment; decreases in the resale value of our used 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; 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.
For a more detailed discussion of these factors, please refer to the various
disclosures made by the Company in its press releases, stockholder reports, and
filings with the Securities and Exchange Commission.
- tables follow -
Consolidated Balance Sheets
(Dollars in thousands, except par value and share numbers)
September 30, June 30,
2004 2004
---- ----
A S S E T S (unaudited)
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Current assets:
Cash and cash equivalents........................................... $1,876 $356
Trade receivables, net of allowance for doubtful accounts of
$2,043 and $1,946 in 2004 and 2003, respectively................ 50,362 52,248
Drivers advances and other receivables.............................. 5,552 4,476
Prepaid expenses and other current assets........................... 6,523 5,427
Tires in service.................................................... 4,801 4,368
Deferred income taxes............................................... 2,025 1,974
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Total current assets............................................ 71,139 68,849
Property and equipment, at cost......................................... 101,968 102,084
Less accumulated depreciation and amortization 40,080 40,283
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Net property and equipment...................................... 61,888 61,801
Tires in service........................................................ 2,162 1,875
Goodwill ............................................................... 16,702 16,702
Other assets............................................................ 2,074 2,083
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Total assets.................................................... $153,965 $151,310
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L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
Current liabilities:
Accounts payable.................................................... $7,609 $7,464
Accrued salaries and benefits....................................... 8,801 9,229
Accrued insurance and claims........................................ 7,755 7,563
Accrued independent contractor expense.............................. 2,347 2,269
Accrued fuel expense................................................ 3,070 2,466
Other accrued expenses.............................................. 13,601 11,499
Current maturities of long-term debt................................ 6,205 2,270
Current maturities of capital lease obligations..................... 2,634 3,040
Income tax payable.................................................. 2,008 2,941
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Total current liabilities....................................... 54,030 48,741
Long-term debt, net of current maturities............................... 2,844 6,907
Capital lease obligations, net of current maturities.................... 1,851 2,277
Deferred income taxes................................................... 10,586 10,530
Minority interest....................................................... 25 25
Stockholders' equity:
Preferred stock, $1.00 par value, authorized 179,985 shares; no
shares issued and outstanding................................... --- ---
Common stock, $0.033 par value, authorized 12,000,000 shares
issued 7,789,764 shares in 2004 and 2003........................ 323 322
Additional paid-in capital.......................................... 85,467 86,588
Retained earnings (deficit)......................................... 1,715 (1,036)
Accumulated other comprehensive loss................................ (2,239) (2,355)
Unearned compensation on restricted stock........................... (637) (689)
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Total stockholders' equity...................................... 84,629 82,830
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Total liabilities and stockholders' equity...................... $153,965 $151,310
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Key Operating Statistics
For the three months ended For the three months ended
September 30, September 30,
2004 2003
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Operating Statistics (U.S./Canada Truckload)
Average revenue per loaded mile(*).................... $1.376 $1.292
Average revenue per total mile(*)..................... $1.280 $1.193
Avg. revenue per tractor per week (*)................. $2,864 $2,633
Average miles per tractor per week ................... 2,238 2,207
Average tractors...................................... 2,251 2,228
Tractors at end of period (**)........................ 2,493 2,558
Trailers at end of period (**)........................ 6,848 7,624
* Excluding fuel surcharges
** Total fleet, including equipment operated by independent contractors and our Mexican subsidiary, Jaguar.
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share amounts)
For the three months ended
September 30,
2004 2003
---- ----
Operating revenue.................................................... $104,393 $95,651
Operating expenses:
Salaries, wages and employee benefits........................... 33,174 29,831
Fuel............................................................ 17,860 12,414
Operations and maintenance...................................... 8,908 8,183
Insurance and claims............................................ 3,004 3,922
Depreciation, amortization and impairment charge (1)............ 3,368 13,611
Revenue equipment rentals....................................... 7,878 6,811
Purchased transportation........................................ 18,540 19,694
Cost of products and services sold.............................. 1,203 1,655
Professional and consulting fees................................ 501 528
Communications and utilities.................................... 1,032 1,035
Operating taxes and licenses.................................... 2,085 2,101
General and other operating..................................... 1,521 1,776
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Total operating expenses.................................... 99,074 101,561
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Operating income (loss).............................................. 5,319 (5,910)
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Other (income) expense:
Interest income................................................. (18) (16)
Interest expense................................................ 350 1,135
Other (income) expense, net..................................... (9) 37
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Income (loss) before income taxes.................................... 4,996 (7,066)
Income tax expense (benefit)......................................... 2,245 (1,526)
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Net income (loss)............................................... $2,751 $(5,540)
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Earnings (loss) per common share:
Diluted earnings (loss) per share............................... $0.27 $(0.72)
Basic earnings (loss) per share................................. $0.28 $(0.72)
Average shares outstanding:
Diluted ........................................................ 10,253 7,705
Basic........................................................... 9,761 7,705
1) Includes a $9.8 million pre-tax impairment charge on trailers in the three months ended September 30, 2003.