Let's face it: Trucking isn't a glamour business.
Be that as it may, Celadon
The Indianapolis-based outfit indicated that compared to the year-ago period, sales for the fiscal second quarter were up 12.5% to $120.3 million, while net income climbed 71.4% to $4.8 million, which worked out to be $0.46 per share. The quarter was a record breaker, since both net income and EPS were the highest the company had ever achieved in a quarter. It's also important to note that growth in this latest quarter was hardly a flash in the pan. In the past nine quarters, Celadon has chalked up year-over-year earnings growth of at least 42%.
The keys to Celadon's success are relatively simple. First, the company works hard to keep its workers happy. The population of truck drivers is aging, and few younger people are signing up for the work. As a result, drivers are currently in short supply in the industry, so losing these employees can seriously disrupt operations. Celadon boasts driver turnover of about 70%, which seems high, but is actually quite favorable compared to the industry average of 135%.
In addition, the small trucking firm concentrates on keeping its equipment relatively new. This no doubt pleases drivers, but also lowers maintenance costs. Furthermore, Celadon believes keeping a new fleet will give it an edge in complying with the stricter diesel emissions requirements that will come into effect in 2007.
Finally, Celadon's customer base is relatively diversified, in part as a result of acquisitions made in recent years. The company customers have included, among others, General Motors
Admittedly, Celadon is a relatively small fish in the trucking business, surrounded by large competitors like JB Hunt Transport Services
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.
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