Revenue for the quarter decreased 13.7% to $119.6 million in the 2008 quarter from $138.6 million in the 2007 quarter. Freight revenue, which excludes fuel surcharges, was down 14% to $98.5 million in the 2008 quarter from $114.5 million in the 2007 quarter. Net income was unchanged at $1.7 million in both the 2008 and 2007 quarters. Earnings per diluted share was unchanged at $0.08 in both the 2008 and 2007 quarters.
For the first six month's of Celadon's fiscal year, revenue decreased 2.2% to $266.5 million in 2008 from $272.4 million for the same period last year. Freight revenue, which excludes fuel surcharges, was down 9.0% to $207.8 million in 2008 from $228.4 million for the same period last year. Net income increased 7.1% to $4.5 million in 2008 from $4.2 million for the same period last year. Earnings per diluted share increased by 11.1% to $0.20 in 2008 from $0.18 for the same period last year.
"Since September, we've seen a significant fall off in demand, particularly import volumes out of Mexico, as the weakening U.S. economy has dramatically reduced Mexican exports to the U.S.," said Chairman and CEO Steve Russell. "Although the devaluation of the Mexican peso and increased costs associated with imported goods from China should make Mexico far more competitive, this change has not yet translated to an increase in Mexican production. As a consequence of the fall-off in the U.S. economy, we experienced a significant decline in loaded miles run, as well as an increase in empty miles."
Russell said the company was able to offset the impact of these changes through cost management, such as improved fuel mileage through lowering tractor speeds, improved tractor aerodynamics, added auxiliary heaters, implementation of a strict tractor idling policy, renegotiation of bulk fuel purchasing arrangements, and counseling of our drivers in more efficient driving patterns.
"Further, we have benefited by a decline in diesel prices," Russell said. "We have also been effective at cost controls in virtually all areas of our business. Although we have seen a significant reduction in capacity in the truckload industry, through fleet failures and the lack of new class 8 tractors being built, demand has declined at a greater rate."
Late in the quarter, Celadon acquired the tractors and trailers of Continental Express Inc. of Little Rock, Ark., for $24.1 million. Celadon says it has been successful at retaining many of Continental's customers, and added less than half of their drivers. Continental had about 130 non-driver employees and about 30 of these employees were hired as Celadon employees. At the same time we were engaged in a comprehensive efficiency effort at Celadon that reduced approximately 35 non-driver employees across the company. As a result, we added a substantial customer base and the Continental terminal facility in Little Rock without a net increase in our consolidated non-driver employee base.
Stifel Nicolaus transportation analyst John Larkin noted that Celadon is in the midst of disposing of 250 of the tractors acquired as a result of the Continental acquisition.
Larkin also noted that Celadon reported an improved operating ratio of 95.6% from the same quarter a year ago. "To post a modest improvement in operating ratio during F2Q09 reflects the excellent cost control program the company has put into place."