EX-99.1 2 exhibit991.htm EXHIBIT 99.1 (EARNINGS RELEASE) Exhibit 99.1 (Earnings Release)
 
 
At the Company 
Steve Russell, Chairman, or Paul Will, CFO 
317-972-7000 


CELADON GROUP REPORTS RECORD JUNE QUARTER AND FULL FISCAL YEAR RESULTS


INDIANAPOLIS, IN - July 27, 2005 (BUSINESS WIRE) - Celadon Group, Inc. (NASDAQ-CLDN) today reported its financial and operating results for the three months and fiscal year ended June 30, 2005.

Revenue for the quarter increased approximately 10% to $117.0 million in the 2005 quarter from $106.3 million in the 2004 quarter. Freight revenue, excluding fuel surcharges, was up 4.1% to $105.0 million in the 2005 quarter from $100.9 million in the 2004 quarter. Net income increased over 80% to $4.3 million in the 2005 quarter from $2.4 million for the same quarter last year. Diluted earnings per share improved over 60% to $0.42 in the 2005 quarter from $0.26 for the same quarter last year, despite a 13.1% increase in weighted average diluted shares outstanding resulting primarily from the Company’s May 2004 stock offering. The June quarter marked the best earnings per share in the history of the Company.

For the full year, revenue increased 9.8%, to $436.8 million from $397.9 million for the prior year. During fiscal year 2004, the Company recognized a $6.9 million or $0.86 per diluted share non-cash, after-tax impairment charge related to used trailers. Net income for the 2005 fiscal year was $12.6 million, or $1.23 per diluted share, compared with a net loss, including the impairment charge, of $0.3 million, or $0.03 per diluted share, for the prior year.

Chairman and CEO Steve Russell commented on the quarter: “The June quarter reflected accelerating success of our programs initiated over four years ago to execute on our strategic plan. The plan was designed to enhance profitability through improving our freight mix and revenue yield, diversifying our customer base, upgrading our revenue equipment fleet, and emphasizing discipline in all aspects of our operations. Continued strengthening of our customer base, enhanced driver satisfaction levels, steadily increasing average rates per mile, improved equipment age and further strengthening of cost controls resulted in an increase of over 80% in our quarterly net income. Pre-tax earnings as a percent of freight revenue increased to 6.8% from 4.3%.

The CX Roberson acquisition, completed in January 2005, has been fully integrated. This was our third successful and accretive acquisition in as many years. Operations and maintenance costs has demonstrated sequential improvements, and was $7.7 million in the June 2005 quarter, or down 13.5% from $8.9 million in the June 2004 quarter. The reduced age of our fleet coupled with management improvements in the Maintenance area has contributed to this continued reduction in this expense category. Although the average length of haul has remained constant at approximately the 1,000 mile level, miles per week per truck declined from 2,274 in the June 2004 quarter to 2,179 in the June 2005, a decrease of 95 miles per week per truck. About half of this decline related to fewer teams, and the balance was due to the effect of the continued change in our freight mix. We have taken steps to remedy both of these factors.

In the June 2004 quarter, a $3.1 million fuel tax refund relating to prior years and a $3.1 million increase in our insurance and claims expense, primarily relating to a significant accident during the June 2004 quarter, largely offset each other.”


During the quarter, we continued to strengthen our balance sheet through improving cash flow. The continued improved cash flow from operations has allowed us to report over $11 million of cash, zero bank debt and to begin paying cash for equipment during the June 2005 quarter.

In summary, we are pleased with our performance in the June 2005 quarter, and, based on demand levels we've experienced so far in July, we believe we will be able to continue to execute on our strategic plan and produce positive results going forward."

Celadon has been included in the newly launched Russell Microcap Index, which debuted on July 1, 2005.

Conference Call Information

An investor conference call is scheduled for Thursday, July 28, at 11:00 a.m. (Eastern). 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 866-825-3354 (international calls 617-213-8063) pin number 84508177 a few minutes prior to the starting time. A replay will be available through September 28, 2005 by dialing 888-286-8010 (international calls 617-801-6888) and entering call back code 98413263.

This call is being webcast by CCBN and can be accessed on 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.

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 19,000 member fleets. Please visit the company’s websites at: www.celadontrucking.com and www.truckersb2b.com.

This press release and statements made by Celadon in its stockholder reports and public filings, as well as oral public statements by Celadon representatives, contain certain forward-looking information, usually identified by words such as "anticipates," "believes," "estimates," "projects," “intends,” expects," “plans,” or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations of Celadon's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in forward-looking statements. With respect to general business operations, the following factors, among others, could cause actual results to differ materially from those in forward-looking statements: 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, border crossing, 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. Readers should review and consider the various disclosures made by Celadon in this press release, stockholder reports, and in its Forms 10-K, 10-Q, and other public filings. Celadon disclaims any such obligation to update or alter its forward-looking statements whether as a result of new information, future events, or otherwise.
 
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)
 
   
June 30,
  
June 30,
  
   
2005
  
2004
  
ASSETS
  
(unaudited)
      
           
Current assets:
          
Cash and cash equivalents 
  
$
11,115
  
$
356
  
Trade receivables, net of allowance for doubtful accounts of $1,496 and $1,945 in 2005 and 2004, respectively
    
55,760
    
52,248
  
Accounts receivable - other 
    
2,727
    
4,476
  
Prepaid expenses and other current assets 
    
3,599
    
5,427
  
Tires in service 
    
3,308
    
4,368
  
Deferred income taxes 
    
2,424
    
1,974
  
Total current assets
    
78,933
    
68,849
  
Property and equipment, at cost 
    
88,230
    
102,084
  
Less accumulated depreciation and amortization
    
30,685
    
40,283
 
Net property and equipment
    
57,545
    
61,801
  
Tires in service 
    
1,739
    
1,875
  
Goodwill  
    
19,137
    
16,702
  
Other assets 
    
2,089
    
2,083
 
Total assets
  
$
159,443
  
$
151,310
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
               
Current liabilities:
              
Accounts payable 
    $
4,465
  
$
6,018
  
Accrued salaries and benefits 
    
11,141
    
9,229
  
Accrued insurance and claims 
    
10,021
    
7,563
  
Accrued owner-operator expense 
    
1,265
    
2,269
  
Accrued fuel expense 
    
6,104
    
2,466
  
Other accrued expenses 
    
10,222
    
12,945
  
Current maturities of long-term debt 
    
1,057
    
2,270
  
Current maturities of capital lease obligations 
    
788
    
3,040
  
Income tax payable 
    
265
    
2,941
 
Total current liabilities
    
45,328
    
48,741
  
Long-term debt, net of current maturities 
    
4,239
    
6,907
  
Capital lease obligations, net of current maturities 
    
1,260
    
2,277
  
Deferred income taxes 
    
10,100
    
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  and outstanding 10,050,449 and 9,748,970 shares 
               at June 30,2005 and June 30, 2004
   
332
    
322
  
Additional paid-in capital
    
89,359
    
86,588
  
Retained earnings (deficit) 
    
11,544
    
(1,036
)
Unearned compensation on restricted stock 
    
(711
)
  
(689
)
Accumulated other comprehensive loss 
    
(2,033
)
  
(2,355
)
Total stockholders’ equity
    
98,491
    
82,830
  
Total liabilities and stockholders’ equity
  
$
159,443
  
$
151,310
  





Key Operating Statistics
 
   
For the three months ended
  
For the fiscal year ended
  
   
June 30,
  
June 30,
  
   
2005
  
2004
  
2005
  
2004
  
   
Operating Statistics (U.S./Canada)
          
                           
Average revenue per loaded mile(*)
  
$
1.469
  
$
1.356
  
$
1.424
  
$
1.322
  
Average revenue per total mile (*)
 
$
1.346
  
$
1.261
  
$
1.316
  
$
1.225
  
Avg. revenue per tractor per week (*)
  
$
2,934
  
$
2,868
  
$
2,841
  
$
2,723
  
Average miles per tractor per week
    
2,179
    
2,274
    
2,158
    
2,223
  
Average line-haul tractors
    
2,380
    
2,286
    
2,322
    
2,262
  
Tractors at end of period (**)
    
2,570
    
2,531
    
2,570
    
2,531
  
Trailers at end of period (**)
    
7,468
    
6,966
    
7,468
    
6,966
  

* 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
  
For the fiscal year ended
 
   
June 30,
  
June 30,
  
   
2005
  
2004
  
2005
  
2004
  
                   
Freight revenue 
  
$
104,976
  
$
100,895
  
$
399,656
  
$
382,918
  
Fuel surcharge revenue 
  
$
11,991
  
$
5,418
  
$
37,107
  
$
15,005
  
Total revenue 
  
$
116,967
  
$
106,313
  
$
436,763
  
$
397,923
  
                           
Operating expenses:
                          
Salaries, wages and employee benefits
    
34,981
    
33,327
    
133,565
    
124,532
  
Fuel (1)
    
23,674
    
13,005
    
81,517
    
54,019
  
Operations and maintenance
    
7,656
    
8,870
    
33,742
    
33,081
  
Insurance and claims (2) 
    
4,448
    
7,042
    
14,375
    
18,919
  
Depreciation, amortization and impairment charge (3) 
    
3,929
    
4,545
    
14,870
    
25,779
  
Revenue equipment rentals
    
10,296
    
8,620
    
35,848
    
30,244
  
Purchased transportation
    
17,650
    
19,466
    
73,012
    
77,617
  
Costs of products and services sold
    
1,299
    
913
    
4,807
    
5,022
  
Professional and consulting fees
    
815
    
588
    
2,624
    
2,366
  
Communications and utilities
    
1,048
    
1,067
    
4,218
    
4,226
  
Operating taxes and licenses
    
2,117
    
2,177
    
8,507
    
8,182
  
General and other operating
  
1,559
    
1,674
    
6,270
    
6,865
  
Total operating expenses
    $
109,472
    $
101,294
    $
413,355
    $
390,852
  
                           
Operating income  
    
7,495
    
5,019
    
23,408
    
7,071
  
                           
Other (income) expense:
                          
Interest income
    
(4
)
  
(8
)
  
(12
)
  
(40
)
Interest expense
   
330
    
716
    
1,430
    
3,763
  
Other (income) expense, net
    
3
    
(55
)
  
13
    
180
  
Income before income taxes 
    
7,166
    
4,366
    
21,977
    
3,168
  
Income tax expense  
    
2,853
    
1,998
    
9,397
    
3,443
  
Net income (loss)  
  
$
4,313
  
$
2,368
  
$
12,580
  
$
(275
)
Earnings (loss) per common share:
                          
Diluted earnings (loss) per share
  
$
0.42
  
$
0.26
  
$
1.23
  
$
(0.03
)
Basic earnings (loss) per share
  
$
0.43
  
$
0.28
  
$
1.27
  
$
(0.03
)
                           
Weighted average number of common shares outstanding:
                          
Diluted
    
10,280
    
9,093
    
10,228
    
7,986
  
Basic
    
10,031
    
8,610
    
9,905
    
7,986
  


1)  
Includes a $3.1 million pre-tax refund of fuel taxes in fiscal year 2004.
2)  
Includes a $3.1 million pre-tax expense related to increased contingent liability reserves for insurance claims in fiscal year 2004.
3)  
Includes a $9.8 million pre-tax impairment charge on trailers in fiscal year 2004.