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Celadon Group Reports March Quarter Results And Declares Dividend

INDIANAPOLIS, April 27, 2016 /PRNewswire/ -- Celadon Group Inc. CGI, -2.80% today reported its financial and operating results for the three months and nine months ended March 31, 2016, the third fiscal quarter of the Company's fiscal year ending June 30, 2016.

Revenue for the quarter increased 12.0% to $259.6 million in the March 2016 quarter from $231.7 million in the March 2015 quarter. Freight revenue, which excludes fuel surcharges, increased 18.9% to $239.9 million in the March 2016 quarter from $201.7 million in the March 2015 quarter. Net income decreased 39.5% to $5.2 million in the 2016 quarter from $8.6 million for the same quarter last year. Earnings per diluted share decreased 47.2% to $0.19 in the March 2016 quarter from $0.36 for the same quarter last year, on a 16.6% increase in weighted average diluted shares resulting primarily from the company's public offering of 3,500,000 common shares, completed in May 2015.

Revenue for the nine months ended March 31, 2016 increased 23.7% to $801.1 million from $647.5 million for the same period last year. Freight revenue, which excludes fuel surcharges, increased 33.0% to $727.0 million in the March 2016 period from $546.6 million in the March 2015 period. Net income decreased 7.9% to $23.2 million in the March 2016 period from $25.2 million for the same period last year. Earnings per diluted share decreased 21.0% to $0.83 in the March 2016 period from $1.05 for the same period last year.

Operating expenses as a percentage of operating revenue, with both amounts net of fuel surcharges, was 95.6% for the March 2016 quarter and 94.2% for the nine months ended March 31, 2016.

Paul Will, Chief Executive Officer, made the following comments: "Despite weaker freight volumes and pricing pressure experienced in the March 2016 quarter, we have continued to focus on our four key business initiatives which include moving the business model to more dedicated and committed customer freight, increasing our asset light model which broadens our value-added customer service offering at good margins, creating more lane density in our core operating lanes, and increasing our brokerage portion of our business in lanes that do not create lane density. We have seen improvement in several of our key operating statistics sequentially as a result of this increased focus. Although we have been able to grow our top line revenues year over year as a result of a larger fleet size, we have reduced the average seated line haul tractors sequentially by 232 tractors to 5,082 in the March 2016 quarter from 5,314 in the December 2015 quarter as we continue to focus on utilization improvements and revenue enhancements to our operating assets. We believe these efforts will position us well to continue to focus on improving our key operating metrics in future quarters and will be beneficial long term as capacity is challenged by a very competitive driver recruiting market, in addition to the numerous pending and proposed federal safety initiatives such as electronic logging devices (ELD's) and mandatory truck speed limiters. Our average revenue per tractor per week decreased $230, or 7.6%, to $2,804 in the March 2016 quarter, from $3,034 in the March 2015 quarter. This decrease is a result of a lackluster freight environment coupled with the significant growth in our seated tractor count year over year. However, our average revenue per tractor per week increased sequentially by $29, or 1.0%, from $2,775 in the December 2015 quarter. We have continued to increase our customer freight to better align with our increased fleet size. This has already resulted in an increase in our average miles per seated tractor per week by 45 miles, or 2.6%, increase to 1,749 in the March 2016 quarter from 1,704 in the December 2015 quarter.

"We successfully increased our number of dedicated trucks and trucks committed to specific customers during the quarter to 1,792 at the end of March 2016, from 1,330 at the end of March 2015. We believe this will allow us to continue to generate more consistent earnings levels in future quarters with this movement of our equipment into this portion of our service offering.

"We are transitioning our Quality business from a model heavily weighted in equipment sales and related gains to one focused on an annuity based income model related to multiple service offerings to better serve our customers. These service offerings include sales, leasing, business services, maintenance, and insurance. As a result, we recorded a lower gain on disposition of equipment of $2.0 million in the March 2016 quarter compared with $5.6 million in the March 2015 quarter, while making significant progress in the model transformation to generate ongoing revenue and a more consistent income stream that we believe will continue to grow in future periods. We will continue to sell and lease the remaining equipment included in our equipment held for sale over the next couple of quarters, which will result in a corresponding reduction in our debt.

"We continue to work on driver recruitment and retention as the market remains challenging for qualified drivers. A shrinking supply of qualified drivers along with economic and safety regulatory issues, should result in a more constrained truckload capacity for shippers in the future. In this environment of soft freight and pricing pressure, we are continuing to focus on our customer relationships that can provide us with freight opportunities that will drive better equipment utilization through lane density and lower deadhead, while being more driver friendly that will drive better overall margins. We are continuing to work on cost reduction initiatives as we strive to improve our operating results."

"At March 31, 2016, we had $380.0 million of stockholders' equity and our earnings before interest, taxes, depreciation and amortization were $31.1 million in the current March 2016 quarter and $149.7 for the year ending March 31, 2016. At March 31, 2016, we had $151.9 million outstanding borrowings on...


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