Transcript Document

NYSE: CGI
www.CeladonGroup.com
Forward-Looking Statement Disclaimer
This
presentation, including documents
incorporated
herein by
reference, will contain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended. Forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated by the forwardlooking statements. Please review our disclosures in filings with the
Securities Exchange Commission.
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About Celadon
Overview
Awards & Accomplishments
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Established: 1985
NYSE Ticker: CGI
Shares Outstanding: 23.68M
Market Capitalization: $525.7M
Recent Price: $24.09 (3/12/14)
Initiated Quarterly Dividend in 2011
52-week Range: $16.29 - $24.67
$200M unsecured line of credit
Strong acquisition history
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Wal-Mart – Platinum Carrier of the
Year
Healthy Trucking Fleet of the Year
Ryder – National Truckload Carrier of
the Year
Phillips -Van Heusen – Truckload
Carrier of the year
First Carrier certified C-TPAT and ACE
for border crossings
‘Highway 2 Health’ Wellness Program
(American Heart Association award)
Voted ‘Best Fleets to Drive For’ and
‘Best Places to Work in Indiana’
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Celadon Operations
• Truckload Operations
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3,500 tractors (including 500 Canada and 200 Mexico)
9,150 trailers
Young Fleet
Tractor: 1.7 years at 12/31/13
Trailer: 2.4 years at 12/31/13
Long Haul Focus
• International Footprint
– 30% Mexico / 21.5% Canada
• Intermodal
• Dedicated, Brokerage and Logistics Services
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Past Acquisitions
Continental
Express Inc
Burlington
Motor Carriers
Indiana
March 2002
2002
2003
2004
CX Roberson
Warrior Xpress
Illinois
March 2005
Virginia
March 2007
2005
2006
2007
Highway Express
Digby
Virginia
September 2003
Tennessee
October 2006
2008
Arkansas
December 2008
2009
Air Road Express
Indiana
June 2007
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Recent Acquisitions and Terminal Locations
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Revenue Mix
% OF REVENUE
40%
30%
29%
Logistics/Brokers
23%
20%
13% 16%
22%
17%
Manufacturing & Industrial
20%
17%
Retail
12%
Automotive
Homegoods/Food & Beverage
0%
2012
2013
% OF REVENUE
100%
79%
80%
79%
TOP 5
60%
TOP 10
45%
44%
40%
20%
TOP 25
TOP 50
16% 23%
13%
15% 21%
TOP 100
12%
0%
2012
2013
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Revenue by Service Type
Calendar Year 2012
$38,908
5%
Calendar Year 2013
$46,956
6%
$15,652
2%
$25,897
3%
$37,961
5%
$23,144
3%
Truckload
$128,018
18%
$531,969
72%
Fuel
Intermodal
Asset Light
$131,614
16%
$570,122
70%
Other
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Recent Quarter Comparison
Previous 2nd (Dec) Quarter Results
Q2 14 Expense Breakdown
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Fuel
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$1M Acquisition
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$1M Weather
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Maintenance
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$1M Acquisition
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$2M Increased Miles
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$1M Newer Emissions
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Salaries
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Higher seated count
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Recruiting Expense
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$600k Medical Benefits
$0.35
$0.32
$0.30
$0.25
$0.24
$0.22
$0.20
$0.15
$0.10
$0.05
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Q2 12
Q2 13
Q2 14
RPLM
$1.528
$1.564
$1.632
Operating Ratio
91.5%
89.2%
94.3%
Avg. Seated Tractors
2,633
2,698
3,418
63,554
62,883
78,448
Loaded Miles
(thousands)
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Previous Year Comparison
Annual EPS
$1.40
$1.12
$1.15
FY11
FY12
FY13
Avg. RPLM
$1.481
$1.529
$1.571
Avg. Operating Ratio
93.4%
90.2%
90.1%
Avg. Seated Tractors
2,662
2,705
2,707
263,892
263,705
258,378
$1.20
$1.00
$0.80
$0.67
$0.60
$0.40
$0.20
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Total Loaded Miles
(thousands)
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Fiscal Year Results
Net Income
$30.0
$25.5
$27.3
$25.0
$20.0
$15.3
$15.0
$11.7
$10.0
$120.0
$5.0
$100.0
$87.7
$94.4
$100.4
$80.0
$FY11
FY12
FY13
FY14 Q1-Q2
EPS
$51.7
$60.0
$40.0
$1.40
$20.0
$1.12
$1.20
$1.15
$FY11
$1.00
$0.80
EBITDA
FY12
FY13
FY14 Q1-Q2
$0.67
$0.60
$0.50
$0.40
$0.20
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$FY11
FY12
FY13
FY 14 Q1-Q2
State of the Truckload Industry
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Truckload industry is very fragmented
Many small companies under stress
Increased tractor and trailer costs
Aging equipment
Increased government regulations
– CSA
– Hours of Service
– ELDs
• Driver Shortage
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Many Small Companies Under Stress
• During the December Qtr 2013, 335 companies were
pulled from the road
– 7,775 total trucks
• During September Qtr 2013, 235 companies were pulled
from the road
– 4,985 total trucks
• Reasons:
– Cost inflation outpacing rate increases
– Soft Demand
– Intermodal Competition
Source: Avondale Partners Q4 13 Trucking Capacity Report
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Increased Equipment Costs
New Class 8 Truck Builds
$140,000
$125,000
$125,000
$120,000
$100,000
$80,000
$95,000
$75,000
$45,000
$105,000
$60,000
$40,000
$20,000
3-Year Old Truck
$50,000
3-Year Old Truck
$50,000
2006
2012
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7-Year Old Truck
$20,000
2012
• Equipment and operating financing is more costly and less
available
• Average OTR truck age is approx. 7 years
• Higher maintenance costs for older equipment
• Many companies do not have the capital to buy
new trucks or maintain old trucks
• Insurance is more costly and difficult to obtain
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Aging Equipment
Avg Active Class 8 Tractor Age
Active Class 8 Tractor Units
6.8
6.6
2.30M
6.6
6.4
2.20M
6.2
6
2.10M
Increased costs of new
tractors & limited
financing options
5.8
5.6
13% decrease
2006-2012
2.00M
5.4
1.98
1.90M
5.2
2006
2007
2008
2009
2010
2011
1.80M
2012
2006
Maintenance Cost per Mile
2007
2008
2009
2010
2011
2012
*Approximately 650,000 truckload units
Equipment Mileage
>550K
Celadon Statistics
500K
•Average Tractor Age: 1.7 years
•Average Trailer Age: 2.4 years
350K
1 year old tractor =
approximately 120,000 miles
250K
<=175K
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$0.02
$0.04
$0.06 $0.08 $0.10
Cost per Mile
$0.12
$0.14
$0.16
Source: Ward’s and A.C.T. Research
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Increased Government Regulation
• CSA Scores (as of Dec. 2013)
CSA Basic
Unsafe Driving
Fatigued Driving
Driver Fitness
Controlled Substance and Alcohol
Vehicle Maintenance
CGI
62
20
66
2
30
• Hours of Service
Alert Threshold
65
65
80
80
80
• CSA Impact
– Driver pool will decrease
– Costs related to compliance and
insurance will increase
– Costs related to accident litigation
will increase
– Implemented July 1, 2013
• Requires 34 hour restarts, must
include two consecutive periods
between 1:00am and 5:00am, and
1 week between 34 hour restarts
• Requires a 30 minute break after
8 hours of driving
• HOS Impact
– 2-3% decrease in mileage
productivity
• Decreases capacity
• Decreases potential earnings
for drivers
• Decreases utilization
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Driver Shortage
Celadon Seated Trucks
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Driver vs Employment Alternatives
• Home Time
• Lifestyle
• More Pay
Celadon Actions
• Acquisitions
• Driving School
3,500
3,300
3,100
2,900
2,700
2,500
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CY 13 Rate & Revenue Growth
$225
$1.640
$200
$1.620
$175
$36.4M
$125
$1.600
$33.1M
$150
$31.2M
$30.9M
$1.580
$100
$1.560
$75
$50
$131.4M
$118.7M
$142.0M
$157.2M
$1.540
$1.520
$25
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$1.500
Mar-13
Jun-13
Revenue
Fuel Revenue
Each 1¢ has an approximate annual impact
of $2.6 million in pre-tax profit or $.08 EPS
Sep-13
Dec-13
Rate Per Loaded Mile
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Strategy
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Gain truckload market share by leveraging our
service offerings and customer relationships
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Improve asset productivity through enhanced
technology and investments in human capital
Continue to drive out costs and recognize synergies
from previous acquisitions as we complete
integrations
Maintain our long haul and international focus, while
leveraging our expanded service offerings to our
customers
Pursue strategic acquisition opportunities
on an opportunistic basis
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