Central Freight Lines, Inc. Announces Continued Sequential
Improvement; Reports Second Quarter Financial Results WACO, Texas,
July 28 /PRNewswire-FirstCall/ -- Central Freight Lines, Inc.
(NASDAQ:CENF) announced today its financial and operating results
for the quarter and six months ended July 2, 2005. Sequential
Improvement Continues Central's President and Chief Executive
Officer, Bob Fasso stated: "In the second quarter, we achieved
meaningful sequential improvement in our operating ratio (operating
expenses as a percentage of operating revenue) and significantly
improved our liquidity. On May 12, we announced that our goal for
the second quarter of 2005 was to lower our operating ratio by 200
to 350 basis points compared to the first quarter. We successfully
achieved that goal by improving our operating ratio by 330 basis
points in the second quarter. Also, the operating ratio for the
second quarter of 2005 improved 130 basis points over the same
quarter last year. After taking into account the second quarter
results, the total improvement in our operating ratio since the
third quarter of 2004 stands at 740 basis points, which we believe
is a substantial accomplishment for the Company. "We are encouraged
by a 13.2% increase in revenue per day in the second quarter of
2005 over the first quarter. LTL tons per day increased 10.9% over
the same time period. LTL revenue per hundredweight, without fuel
surcharge, also improved slightly from $10.56 in the first quarter
of 2005 to $10.61 in the second quarter of 2005, despite a 2.1%
increase in weight per LTL shipment. "Further, we announced on July
14, 2005 that we have significantly improved our liquidity position
by closing real estate transactions that generated approximately
$15.2 million in net proceeds. The proceeds from the real estate
transactions were used to repay amounts drawn on the Company's
revolving line of credit led by Bank of America. Subject to certain
requirements under the credit agreement, the Company estimates that
it currently has approximately $35.0 million of borrowing
availability under its credit facility. In addition, Central
currently has approximately $4.5 million of idle assets held for
sale that are planned to be disposed of in 2005. "In the second
quarter of 2005 and for the first time in the last five quarters,
the Company generated positive EBITDA (earnings before interest,
income taxes, depreciation and amortization) and we expect EBITDA
to be positive in the third and fourth quarters of 2005. Our goal
for the 2005 third quarter is to lower our operating ratio from the
third quarter of 2004 by 750 to 950 basis points." Second Quarter
and Year to Date Financial Results For the second quarter of 2005,
Central's operating revenue was $99.5 million on 64 working days,
compared to operating revenue of $105.5 million on the same number
of working days for the second quarter of 2004. Revenue decreased
5.7% and total tons hauled decreased 10.8% for the second quarter
of 2005 compared to the same period in 2004. LTL revenue per
hundredweight increased 3.9% from $11.31 in the 2004 quarter to
$11.75 in the 2005 quarter, due to an increase in fuel surcharge
revenue. Excluding fuel surcharge revenue, LTL revenue per
hundredweight was down 1.5% in the 2005 second quarter compared to
the 2004 quarter, partially due to a 4.2% increase in average
weight per LTL shipment. A pre-tax loss of $6.1 million or $0.34
cents per diluted share was realized in the 2005 second quarter
compared to a pre-tax loss of $6.9 million, or $0.39 per diluted
share in the 2004 second quarter. A net loss of $6.1 million, or
$0.34 per diluted share, was realized in the second quarter of
2005. The $6.1 million pre-tax loss in the second quarter of 2005
generated a tax benefit of approximately $2.3 million, equivalent
to $0.13 per diluted share, which was offset by the increase in the
valuation allowance for deferred tax assets. This resulted in no
tax benefit being recorded in the second quarter of 2005. The net
loss in the second quarter of 2004 was $2.5 million, or $0.14 per
diluted share. For the six months ended July 2, 2005, operating
revenue amounted to $188.8 million a 6.8% decrease compared with
operating revenue of $202.6 million for the first half of 2004. A
pre-tax loss of $14.4 million or $0.79 cents per diluted share was
realized in the 2005 first half compared to a pre- tax loss of $8.7
million, or $0.49 per diluted share in the 2004 first half. A net
loss of $14.4 million, or $0.79 per diluted share, was reported for
the six months ended July 2, 2005. An income tax benefit of
approximately $5.5 million, equivalent to $0.30 benefit per diluted
share, was recorded in 2005, but was offset by an increase in the
valuation for deferred tax assets. This resulted in no tax benefit
being recorded in the first half of 2005. The net loss in the first
half of 2004 was $3.7 million, or $0.21 per diluted share. Balance
Sheet and Liquidity At July 2, 2005, the Company had $73.3 million
in stockholders' equity and $68.4 million of total debt and capital
leases, including current maturities. The debt and capital leases
include $15.9 million of borrowing under the Bank of America led
credit facility that matures in the first quarter of 2009.
Notwithstanding the maturity date, borrowings under the facility
are categorized as short-term debt to be consistent with the
evolving interpretations of Emerging Issues Task Force 95-22
Balance Sheet Classifications, Borrowings Outstanding Under
Revolving Credit Agreements that include both a Subjective
Acceleration Clause and a Lock-Box Arrangement ("EITF 95-22"). At
July 2, 2005, the Company had approximately $17.5 million of
borrowing availability under the Bank of America facility, reduced
by a $5.0 million minimum availability restriction. Based on an
amendment in May 2005 to the Company's credit facility, the Company
has no financial covenants through August 15, 2005. In lieu of
financial covenants, the $5.0 million availability restriction
remains in place. After August 15, 2005, the $5.0 million
restriction is eliminated and no financial covenants exist as long
as excess availability on the line remains above $15.0 million. If
excess availability drops below $15.0 million, the Company is
required to maintain minimum EBITDA (earnings before interest,
income taxes, depreciation and amortization) levels. Please see the
Company's Quarterly Report on Form 10-Q for a more detailed
description of the amended credit facility and EITF 95-22. In May
2005, the Company contracted to sell approximately 14 excess acres
in Phoenix for $1.2 million. This transaction closed in June and
the Company recognized a gain on the sale. In addition, the Company
closed on agreements in July 2005 covering an estimated $14.0
million in sale-leaseback and mortgage financing transactions on
four terminal properties. The Company closed on an agreement
concerning a sale-leaseback on one of its terminals. The
transaction generated approximately $6.2 million in net proceeds
and the Company signed a ten-year lease with a ten-year option. The
Company also closed on mortgage financing on three other terminal
properties that generated approximately $7.8 million in net
proceeds. All of the proceeds from these transactions were used to
repay existing debt under the Company's credit facility with Bank
of America. In addition to the liquidity from the above financing,
at July 2, 2005, Central had approximately $4.5 million in assets
held for sale that are planned to be disposed of in 2005. In the
quarter and six months ended July 2, 2005, the Company had net
capital proceeds of $2.1 million and $1.5 million, respectively,
mainly as a result of proceeds realized from the sale of excess
land in Phoenix. Gross capital expenditures for the remainder of
2005 are expected to be $1.5 million to $7.5 million. Included in
this range is roughly $6.0 million for the possible replacement of
revenue equipment, which if made will be financed independently
from the Bank of America led credit facility. Central Freight
Lines, Inc. is a non-union less-than-truckload carrier specializing
in regional overnight and second day markets. One of the 10 largest
regional LTL carriers in the nation, Central provides regional,
interregional, and expedited services, as well as value-added
supply chain management, throughout the Midwest, Southwest, West
Coast and Pacific Northwest. Utilizing marketing alliances, Central
provides service solutions to the Great Lakes, Northeast,
Southeast, Mexico and Canada. This press release contains
forward-looking statements that involve risk, assumptions, and
uncertainties that are difficult to predict. Statements that
constitute forward-looking statements are usually identified by
words such as "anticipates," "believes," "estimates," "projects,"
"expects," "plans," "intends," or similar expressions. These
statements are made pursuant to the safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended. Such
statements are based upon the current beliefs and expectations of
our management and are subject to significant risks and
uncertainties. Actual results may differ from those set forth in
the forward-looking statements. With respect to statements
regarding the Company's goals for the third and fourth quarters of
2005, those goals are based upon the Company's expectation of a
freight environment similar to the current environment; the
Company's continuing ability to add quality customers and freight
without any significant losses; and the Company's ability to raise
its revenue yields by market increase levels. The Company's goals
also are based upon expectations that it will continue to execute
its operating plan (including but not limited to improvements in
insurance and claims expense) and will not suffer any material
management, employee relations, customer or other disruptions; that
the Company is able to maintain adequate liquidity and successfully
dispose of assets held for sale; and that the Company does not
suffer any material uninsured losses. These expectations are
subject to risks, including but not limited to the risk that
customers will resist rate increases; the risk of loss of customer
freight based on rate increases, contract non-renewal, or other
factors; the risk that uninsured losses will exceed expectations;
the risk that dispositions of assets held for sale will not be
possible on favorable terms or at all; and the risk that the
Company fails to continue to obtain efficiencies to allow margin
improvements in excess of revenue growth. With respect to the
Company's business generally, the following factors, among others,
could cause actual results to differ materially from those in
forward- looking statements: the risk that revenue growth may be
delayed or not occur at all; the risk that improvements in revenue
yield and tonnage growth may be delayed or not occur at all; the
risk that service, safety, and productivity measures will be
further delayed or will not be successfully implemented throughout
our operations; the risk that our cost-cutting measures may have
unintended and unforeseen consequences that adversely affect our
business; the risk that geographic expansion has produced or may
produce freight imbalances, customer service issues, operational
issues, or other consequences that we cannot manage successfully on
a timely basis or at all; the risk that our insurance and claims
costs will continue to exceed our expectations and will not return
to acceptable levels on a timely basis or at all; the risk that we
will be unable to obtain the financing we are seeking or that it
will not be available on acceptable terms; the risk that operating
losses and negative cash flows will continue and will have a
material and adverse result including but no limited to the
termination of our line of credit; and the risks detailed from time
to time in reports filed by the Company with the Securities and
Exchange Commission, including forms 8-K, 10-Q, 10-K, and our
registration statement on Form S-1. Corporate Contact: Jeff Hale,
Chief Financial Officer (480) 361-5295 CENTRAL FREIGHT LINES, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited,
in thousands, except per share data) Three months ended Six months
ended ------------------ ---------------- July 2, July 3, July 2,
July 3, ------- ------- ------- ------- 2005 2004 2005 2004 ----
---- ---- ---- Working Days 64 64 129 130 --------- ---------
--------- --------- Operating revenues $ 99,518 $ 105,513 $ 188,840
$ 202,551 --------- --------- --------- --------- Operating
expenses: Salaries, wages and benefits 53,982 60,084 104,946
115,740 Purchased transportation 9,129 11,387 17,947 22,692
Purchased transportation - related parties 4,482 5,965 7,953 8,242
Operating and general supplies and expenses 23,099 20,821 43,704
39,152 Operating and general supplies and expenses - related
parties 35 39 197 134 Insurance and claims 6,736 6,881 11,761
10,874 Building and equipment rentals 1,007 1,044 2,026 1,973
Building and equipment rentals - related parties 449 376 898 896
Depreciation and amortization 4,127 3,951 9,004 7,870 ---------
--------- --------- --------- Total operating expenses 103,046
110,548 198,436 207,573 --------- --------- --------- ---------
Loss from operations (3,528) (5,035) (9,596) (5,022) Other expense:
Interest expense (1,038) (368) (1,653) (573) Interest expense -
related parties (1,545) (1,537) (3,126) (3,142) --------- ---------
--------- --------- Loss before income taxes (6,111) (6,940)
(14,375) (8,737) Income tax: Income tax benefit --- 4,397 --- 5,065
--------- --------- --------- --------- Net loss $ (6,111) $
(2,543) $ (14,375) $ (3,672) ========= ========= =========
========= Net loss per share: Basic $ (0.34) $ (0.14) $ (0.79) $
(0.21) Diluted (0.34) (0.14) (0.79) (0.21) Weighted average
outstanding shares: Basic 18,215 17,842 18,203 17,777 Diluted
18,215 17,842 18,203 17,777 CENTRAL FREIGHT LINES, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS July 2, 2005 and December
31, 2004 (in thousands) Assets 2005 (Unaudited) 2004 ---------
--------- Cash and cash equivalents $ 312 $ 2,144 Restricted cash
--- 20,825 Accounts receivable, net 52,743 51,582 Other current
assets 9,299 8,655 Deferred income taxes 9,901 6,689 ---------
--------- Total current assets 72,255 89,895 Property and
equipment, net 126,464 135,274 Goodwill 4,324 4,324 Other assets
7,617 7,761 --------- --------- Total assets $ 210,660 $ 237,254
========= ========= Liabilities and stockholders' equity Current
maturities of long-term debt $ 9,171 $ 10,958 Short-term notes
payable 16,769 28,108 Trade accounts payable 16,697 23,835 Payables
for related party transportation services 2,006 988 Accrued
expenses 28,269 23,050 --------- --------- Total current
liabilities 72,912 86,939 Long-term debt, excluding current
maturities 19,738 21,884 Related party financing 22,716 22,852
Deferred income taxes 11,587 8,375 Claims and insurance accruals
10,362 9,646 --------- --------- Total liabilities 137,315 149,696
--------- --------- Stockholders' equity 73,345 87,558 ---------
--------- Total liabilities and stockholders' equity $ 210,660 $
237,254 ========= ========= CENTRAL FREIGHT LINES, INC. AND
SUBSIDIARIES OPERATING STATISTICS (Amounts in thousands except
where indicated by *) Three months ended Six months ended
------------------ ---------------- July 2, July 3, July 2, July 3,
------ ------ ------ ------ 2005 2004 % Change 2005 2004 % Change
---- ---- -------- ---- ---- -------- Operating Ratio 103.5% 104.8%
105.1% 102.5% Working days 64 64 0.0% 129 130 -0.8% LTL bills
848.43 971.93 -12.7% 1,641.52 1,884.18 -12.9% Total bills 858.47
982.78 -12.6% 1,660.67 1,903.76 -12.8% LTL tons 398.56 438.45 -9.1%
763.59 840.42 -9.1% Total tons 478.04 536.18 -10.8% 917.98 1,018.42
-9.9% LTL revenue per hundredweight* $ 11.75 $ 11.31 3.9% $ 11.64 $
11.37 2.4% LTL weight per bill (in pounds)* 940 902 4.2% 930 892
4.3% Average length of haul (in miles)* 488 479 1.9% 488 473 3.2%
Fuel surcharge as a % of total revenue* 9.7% 4.7% 9.1% 3.9%
http://www.newscom.com/cgi-bin/prnh/20040205/DACENTRALLOGO
http://photoarchive.ap.org/ DATASOURCE: Central Freight Lines, Inc.
CONTACT: Jeff Hale, Chief Financial Officer of Central Freight
Lines, Inc., +1-480-361-5295, or Web site:
http://www.centralfreight.com/
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