Celadon says 3Q revenue up, profit down

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Celadon Group on Thursday, April 26, reported its financial and operating results for the three and nine months ended March 31, the third fiscal quarter of the company’s fiscal year ending June 30.

For the quarter, revenue increased 4.4 percent to $120.4 million in the 2007 quarter from $115.3 million in the 2006 quarter. Freight revenue, which excludes fuel surcharges, was up 4.4 percent to $105.2 million in the 2007 quarter from $100.8 million in the 2006 quarter. Net income decreased 17.0 percent to $3.9 million in the 2007 quarter from $4.7 million for the same quarter last year.

For the nine months ended March 31, 2007, revenue increased 5.0 percent to $371.0 million in 2007 from $353.5 million for the same period last year. Freight revenue was up 4.3 percent to $320.3 million in 2007 from $307.1 million for the same period last year. Net income increased 20.4 percent to $17.1 million in 2007 from $14.2 million for the same period last year.

“Our team responded favorably to a difficult freight market and the adverse impact of harsh winter weather by continuing to manage costs effectively, and by building our customer and driver base by completing our second tuck-in acquisition in five months,” said Steve Russell, chairman and chief executive officer of Indianapolis-based Celadon. “Although we are not pleased by the bottom-line number, we are encouraged by continued success in our seated truck count, customer diversity and, critically, our safe and experienced corps of professional drivers. These advances were more than offset by decreased miles per tractor and an increase in the percentage of nonrevenue miles.”

Celadon completed the purchase of certain assets of Warrior Express on Feb. 28. “The purchase for $8.3 million enabled us to add about 85 well-qualified drivers, and a good customer base,” Russell said. “As in the four previous acquisitions, there was no goodwill associated with the transaction. We’ve sold off about $3 million of the assets so far. Including this acquisition, we have added approximately 250 seated linehaul trucks to the operating tractor count from the prior year’s quarter. In addition to adding drivers from the two acquisitions, we benefited from strong recruiting classes, our reputation on the road, and continued low driver turnover. We believe our growing fleet puts us in a position to capitalize on this added capacity when freight demand improves.”

From a revenue perspective, the company’s average revenue per loaded mile, excluding fuel surcharge, increased by 2.0 percent, to $1.52 in the 2007 quarter, from $1.49 in the prior-year March quarter. This pickup was offset by higher nonrevenue miles, which increased from 8.7 percent to 10.3 percent of total miles. “Lower general freight demand, as well as empty miles run to on-board the Warrior drivers and position equipment for sale, contributed to this increase,” Russell said. “Overall, our rate per total mile was marginally up from a year ago.”

Russell said that from an expense perspective, the main negatives resulted from lower productivity and higher nonrevenue miles, as the company’s fixed costs, driver pay per mile and fuel expense were not covered as efficiently by lower freight revenue per tractor. “We also experienced costs associated with severe winter weather and selling the former Digby and Warrior equipment, which increased operations and maintenance costs and sale preparation costs,” he said.

“In summary, we continue to execute on our long-term strategy of growth through diversification of our customer base from the two acquisitions in the past six months, which further strengthens our future opportunities,” Russell said. “We believe we are well positioned to benefit significantly when demand returns to prior levels.”