Celadon Group, Inc. (NYSE:CGI) reported its financial and operating results for the three months ended September 30, 2015, the first fiscal quarter of the company’s fiscal year, ending June 30, 2016.
Revenue for the quarter increased 37.6% to $266.1 million in the 2016 quarter from $193.4 million in the 2015 quarter. Freight revenue, which excludes fuel surcharges, increased 50.8% to $237.8 million in the 2016 quarter from $157.7 million in the 2015 quarter. Net income increased 42.5% to $11.4 million in the 2016 quarter from $8.0 million for the same quarter last year. Earnings per diluted share increased 20.6% to $0.41 in the 2016 quarter from $0.34 for the same quarter last year, on a 16.8% increase in weighted average diluted shares resulting primarily from the company’s public offering of 3,500,000 common shares, completed in May 2015.
Paul Will, Chief Executive Officer, made the following comments: “We are pleased overall with our operating results in a less-than-robust freight environment. We saw improvement in some of our key operating statistics that we believe 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 (ELDs) and mandatory truck speed limiters. The increase in average seated tractor count of 1,730, or 53.1%, to 4,985 in the September 2015 quarter compared with 3,255 in the September 2014 quarter was a significant operating metric improvement that resulted in increased revenue for the quarter. Our average revenue per tractor per week decreased $88, or 3.0%, to $2,889 in the September 2015 quarter, from $2,977 in the September 2014 quarter. This decrease is a result of a lackluster freight environment coupled with the significant growth in our seated tractor count. We continue to increase our customer freight to better align with our increased fleet size. In addition, our average revenue per loaded mile increased to $1.872 per mile in the September 2015 quarter from $1.633 in the September 2014 quarter, which is a 14.6% increase.
“We continue to work on driver recruitment and retention as the market remains challenging for qualified drivers. As a result, our costs related to driver training, advertising for experienced drivers and other recruitment and retention efforts have continued to increase. This, along with economic and safety regulatory issues, has resulted in more constrained truckload capacity for shippers. Their understanding and willingness to adjust rates upward reflects the collective capacity and service challenges currently facing the industry. In addition to initiating and implementing sustainable rate increases, we continue to work on cost reduction initiatives as we strive to improve our operating results.
“The average age of the company’s tractor fleet was 1.2 years as of September 2015. Gains on sales of assets were $13.2 million in the September 2015 quarter compared with $4.6 million in the September 2014 quarter. The gain on sale of equipment in the quarter, which is net of any trade expenses, resulted primarily from the sale of third-party equipment by our sales and leasing division. With the growth of this division over the last 18 months, the current net operating expenses associated with running this division were approximately $4.5 million for the quarter. The division generated operating income of $8.7 million for the quarter. As Celadon has completed its tractor refresh cycle, we expect all gains going forward to be related to third-party sales and leasing.
“Our balance sheet remains solid, and we retain significant liquidity to support the growth of our business. At September 30, 2015, we had $368.0 million of stockholders’ equity, and our earnings before interest, taxes, depreciation and amortization were $42.7 million in the current September 2015 quarter. Our increased cash flow generated from operations will allow us to effectively continue to execute on our growth strategy.”
On October 27, 2015, the Board of Directors approved a regular cash dividend to shareholders for the quarter ending December 31, 2015. The quarterly cash dividend of two cents ($0.02) per share of common stock will be payable on January 22, 2016 to shareholders of record at the close of business on January 8, 2016. (Original Source)
Shares of Celadon closed today at $14.15, down $0.03 or 0.21%. CGI has a 1-year high of $29.15 and a 1-year low of $13.78. The stock’s 50-day moving average is $16.81 and its 200-day moving average is $21.09.
On the ratings front, Celadon has been the subject of a number of recent research reports. In a report issued on July 31, Cowen analyst Jason Seidl reiterated a Buy rating on CGI, with a price target of $30, which represents a potential upside of 112.0% from where the stock is currently trading. Separately, on July 30, Stifel Nicolaus’ John Larkin reiterated a Buy rating on the stock and has a price target of $28.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jason Seidl and John Larkin have a total average return of -0.5% and 9.4% respectively. Seidl has a success rate of 42.6% and is ranked #2706 out of 3804 analysts, while Larkin has a success rate of 61.4% and is ranked #587.
Celadon Group Inc, through its subsidiaries, provides truckload transportation services between United States, Canada and Mexico. It offers services such as long-haul, regional, dedicated, less-than-truckload, intermodal and logistics services.