Celadon Group Inc. conducted a conference call Wednesday morning to address a host of recently disclosed financial and accounting issues, but the call lasted 18 minutes and executives took no live questions from investors.
The Indianapolis-based trucking company this week disclosed that it was facing a raft of challenges and said its financial reports for the past 18 months could no longer be relied upon. The company also disclosed some top leadership changes and said it expects to post a $10 million loss for its most recent fiscal quarter.
The news sent company shares into a freefall on Tuesday, with the stock falling as much as 67 percent. At least 16 law firms have filed lawsuits against the company over its financial statements or are investigating doing so.
On Wednesday’s informational call, three Celadon executives delivered what was described as a prepared narrative based on questions that investors had previously emailed to the company.
One major focus of the call: How Celadon intends to improve its troubled financial situation.
Bobby Peavler, Celadon’s chief financial officer, said Celadon is looking at selling off parts of its business, though he did not provide specifics.
“We are in discussions with multiple parties on multiple transactions at this time,” Peavler said.
The company is also looking at ways to improve performance of its irregular route business, where its trucks are being underused and where driver turnover has increased. Poor performance in this part of Celadon’s business was a major reason for last quarter’s loss, the company said.
Irregular routes, also known as over-the-road routes, involve moving freight to any place and any time as needed. These routes differ from dedicated routes, where drivers travel regular routes on set schedules.
“We have failed to meet our expectations as to the percentage of our fleet dispatched daily,” said Jon Russell, who recently moved into the role of president and chief operating officer. Russell is the son of Celadon’s late founder and CEO, Steve Russell.
Russell said Celadon plans to use more of its own drivers. This represents a shift for Celadon, which had previously worked to increase its fleet of independent drivers. In its most recent annual report, issued in September, Celadon said independent contractors provided 27 percent of the company’s trailer capacity, and the company intended to increase its use of independent drivers in 2017.
Company executives said Celadon is committed to a back-to-basics approach following several years of rapid expansion through acquisition. Those acquisitions were strategically important and helped diversify the company, but now the company needs to get “back to the basics,” said Chairman and CEO Paul Will.
“I am optimistic in the future of Celadon,” Will said.
Executives did not go into much detail about Celadon’s audit and financial reporting issues.
Auditing firm BKD LLC notified Celadon last week that it was withdrawing its reports on the company’s annual report for the fiscal year that ended June 30, 2016, and for the subsequent quarters ending Sept. 30 and Dec. 31.
In a letter to the chairman of Celadon’s audit committee, BKD said it had been “unable to obtain sufficient appropriate audit evidence” to support those financial reports, even after asking company management for explanations and supporting documents.
Celadon said the items questioned by BKD involve equipment that Celadon either sold to third parties or contributed to 19th Capital Group, a truck-leasing joint venture formed last year between Celadon and Element Transportation LLC.
Peavler said the board’s audit committee is using independent counsel to review the matter. He said management would not make additional comments on the situation.
“Celadon continues to be committed to proper accounting,” Peavler said.
Celadon’s share price fell further following Wednesday’s call.
Shares of the company closed at $1.80 Tuesday, down 55 percent from Monday’s close of $4. Shares were trading at $1.58 on Wednesday, down another 12.5 percent.