INDIANAPOLIS, Ind. — Celadon Group Inc. reports an 8.3% increases in its revenues for the three months ended Sept. 30, 2006, the first fiscal quarter of the Companys 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 that higher freight rates and continued focus on cost controls allowed the company to improve its 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 Celadon posted for the June 2006 quarter.
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, Russell reported. He added that 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.
Celadon has been aggressively diversifying its freight mix in recent years. And Russell said the company has continued to reduce business related to new automobile production, and now does 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, he added. 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.
Celadon expects to hire up to 150 drivers. An important part of the Digby customer base was in the food business, which is consistent with Celadons focus on consumer-non-durable freight.
As of September 30, 2006, Celadons 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 its first fiscal quarter, it invested approximately $20 million in cash to purchase new tractors. In connection with its acquisition of the assets of Digby, Celadon added approximately $21 million of borrowing on October 6, 2006.
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).
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