Celadon says 2Q08 net income unchanged; revenue down 13.7%

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Celadon Group Inc. on Wednesday, Jan. 21, reported its financial and operating results for the three and six months ended Dec. 31, the second fiscal quarter of the company’s fiscal year ending June 30, 2009.

Revenue for the quarter decreased 13.7 percent to $119.6 million in the 2008 quarter from $138.6 million in the 2007 quarter. Freight revenue, which excludes fuel surcharges, was down 14.0 percent to $98.5 million from $114.5 million. Net income was unchanged at $1.7 million in both the 2008 and 2007 quarters.

For the six months ended Dec. 31, revenue decreased 2.2 percent to $266.5 million in 2008 from $272.4 million for the same period last year. Freight revenue, which excludes fuel surcharges, was down 9.0 percent to $207.8 million from $228.4 million. Net income increased 7.1 percent to $4.5 million from $4.2 million.

“As a consequence of the falloff in the U.S. economy, we experienced a significant decline in loaded miles run, as well as an increase in empty miles,” said Steve Russell, chairman and chief executive officer of Indianapolis-based Celadon. “We were able to offset the adverse impact of these changes through effective cost management.”

Russell said a major improvement in miles per gallon has been achieved through lowering tractor speeds, improved tractor aerodynamics, added auxiliary heaters, implementation of a strict tractor idling policy, renegotiation of bulk fuel purchasing arrangements, and counseling of Celadon’s drivers in more efficient driving patterns. “Further, we have benefited by a decline in diesel prices,” he said. “We have also been effective at cost controls in virtually all areas of our business. Although we have seen a significant reduction in capacity in the truckload industry, through fleet failures and the lack of new Class 8 tractors being built, demand has declined at a greater rate.”

Russell said that following last quarter’s acquisition of the tractors and trailers of Continental Express Inc. of Little Rock, Ark., for $24.1 million, Celadon has been successful at retaining many Continental customers while adding less than half of its drivers; Continental had about 130 nondriver employees, and about 30 of these employees were hired as Celadon employees. “At the same time, we were engaged in a comprehensive efficiency effort at Celadon that reduced approximately 35 nondriver employees across the company,” he said. “As a result, we added a substantial customer base and the Continental terminal facility in Little Rock without a net increase in our consolidated nondriver employee base.”

Russell said Celadon’s balance sheet debt and capital lease obligations have been reduced by more than $18 million during the six months ended Dec. 31, when the company’s balance sheet reflected $84.3 million in borrowings and capitalized leases and $143.8 million of total stockholders’ equity. “With $32.3 million available on our bank revolving credit line at December 31, 2008, coupled with our current cash flow from operations, we believe we have adequate liquidity for the foreseeable future,” he said.