Celadon spokesmen Wednesday in a conference call for shareholders discussed the “significant” management changes it announced Monday, and the company’s efforts to “refocus” on its core trucking operations.
Jon Russell, son of late Celadon founder Steve Russell, was appointed president and chief operating officer and Doug Schmidt was appointed president of the Celadon Trucking subsidiary. Former COO Eric Meek is in pursuit of other interests.
Noting that the management changes are “substantive and symbolic” of refocusing efforts on truckload, “We took these actions because the trucking business is a main driver of cash-generating opportunity and it was underperforming [according] to our standards,” said Paul Will, CEO and Chairman of the Board at Celadon.
The call came amidst Celadon stock shares falling to $1.30 Tuesday morning, and rebounding to $1.48 that afternoon, The Wall Street Journal reported. The company has announced it expects to turn in an operating loss of $10 million for the quarter ended March 31. The share price a year ago this time was in the $12 range.
Will said the company should release earnings for the quarter on or before May 15 and that they would provide additional comments regarding the financial statement “at that time.”
Russell noted that since October 2014 the company had acquired four carriers specializing in hauling dedicated freight: A&S Kinard, Taylor Express, Buckler Transport and FTL Inc., and that those four have contributed operating profits since that time.
However, he said Celadon’s irregular route truckload business had been “the key factor in our consolidated operating ratio deterioration,” with increased driver turnover and a reduction of seated trucks along with increased deadhead miles and longer dwell times in some markets exacerbated by its heavy dependence on independent contractors and lease purchase drivers.
Russell said the carrier expects to move to smaller recruiting regions and emphasize company drivers in the future as well as improve the percentage of its fleet’s daily dispatches. The company also plans on raising pay "within markets where we have freight density," he said.
Bobby Peavler, chief financial officer, said to gain liquidity, the company recently finalized an amendment to its current agreement with its bank group and a term sheet for a new ABL credit facility, adding that “we are appreciative of our bank group’s support of the company’s plan to return to profitability.”
To sum up the company’s efforts, Will said it was important to remember that No. 1, Celadon is one of the largest carriers in the industry; No. 2, it’s establishing an asset base to support the company’s liquidity needs; No. 3 it’s reducing its debt and No. 4, it’s improving its truckload business.
“We’re turning back to the basics of trucking,” he said.