Celadon Group Reports Second Quarter Financial Results.

INDIANAPOLIS -- Celadon Group Inc. (NASDAQ:CLDN) today reported its financial and operating results for the three and six months ended Dec. 31, 2006, the second fiscal quarter of the company's fiscal year ending June 30, 2007.

For the quarter, revenue increased 2.2% to $122.9 million in the 2006 quarter from $120.3 million in the 2005 quarter. Freight revenue, which excludes fuel surcharges, was up 4.5% to $107.5 million in the 2006 quarter from $102.9 million in the 2005 quarter. Net income increased 27.1% to $6.1 million in the 2006 quarter from $4.8 million for the same quarter last year. Earnings per diluted share improved by 23.8% to $0.26 in the 2006 quarter from $0.21 for the same quarter last year.

For the six months ended Dec. 31, 2006, revenue increased 5.2% to $250.6 million in 2006 from $238.2 million for the same period last year. Freight revenue was up 4.3% to $215.1 million in 2006 from $206.2 million for the same period last year. Net income increased 38.9% to $13.2 million in 2006 from $9.5 million for the same period last year. Earnings per diluted share increased 36.6% to $0.56 from $0.41 the same period last year.

Chairman and CEO Steve Russell commented on the quarter: "We are pleased with the results of the December quarter, during what turned out to be a more challenging freight environment than the industry has seen in the past several years. Our average revenue per loaded mile, excluding fuel surcharge, increased by 4.0%, to $1.55 from $1.49, while average revenue per total mile, excluding fuel surcharge, improved 2.2%, to $1.40 from $1.37. Reduced miles per week per truck and increased deadhead, were both a result of the decline in freight levels during the latter part of the quarter. As a result of excellent drivers, disciplined management and strong cost control, our operating ratio (defined as operating expenses, net of fuel surcharge, as a percentage of freight revenue) improved 260 basis points to 89.8% from 92.4%.

"On Oct. 6, 2006, the company acquired certain assets of Digby Truck Lines. The on-boarding of Digby's former customers and drivers was successfully accomplished during the quarter. We are in the process of disposing of the older tractors and trailers that we are not intending to retain.

"We believe capacity in our industry continues to be constrained by a shortage of qualified drivers. We address the driver shortage by recruiting safe and experienced drivers, providing newer equipment, and offering competitive compensation and lifestyle programs. We believe our continued commitment to the quality of life of our drivers helps keep our trucks seated, reduces our costs, improves customer service and contributes to improved safety for the driving public.

"We believe carefully managing the average age of our fleet allows us greater flexibility in addressing the cost and reliability issues involving tractor engines designed to comply with stricter emissions requirements in 2007 and generally lowers our operating expenses."

Conference Call Information

An investor conference call is scheduled for Thursday, Jan. 25, at 10:00 a.m. ET. Steve Russell and other members of management will discuss the results of the quarter. To listen and participate in a questions-and-answers exchange, simply dial 866-831-6247 (international calls 617-213-8856) pin number 59501791 a few minutes prior to the start time. A replay will be available through March 25 by dialing 888-286-8010 (international calls 617-801-6888) and entering call back code 96962889.

This call is being webcast by Thomson/CCBN and can be accessed on Celadon's web site at www.celadongroup.com. Any statistical and financial information that is expected to be discussed during the conference call also will be available at www.celadongroup.com.

Celadon Group Inc. (www.celadongroup.com), through its subsidiaries, primarily provides long-haul, full-truckload freight service across the United States, Canada and Mexico. The company also owns TruckersB2B Inc. (www.truckersb2b.com) which provides cost savings to member fleets.

This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements may be identified by their use of terms or phrases such as "expects," "estimates," "projects," "believes," "anticipates," "plans," "intends," and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Actual results may differ from those set forth in the forward-looking statements. In this press release, these statements include, without limitation, statements relating to anticipated capacity constraints in the industry due to a shortage of drivers and our response thereto, our commitment to the quality of life of our drivers and perceived related benefits, the average age of our tractor fleet and perceived related benefits, and our expected future results. The following factors, among others, could cause actual results to differ materially from those in forward-looking statements: the risk that our perception of capacity constraints due to a shortage of drivers and perceived benefits of our approach to addressing such shortage are inaccurate; the risk that managing our tractor fleet age does not result in greater flexibility and lower operating expenses; excess tractor and trailer capacity in the trucking industry; decreased demand for our services or loss of one or more of our major customers; surplus inventories; recessionary economic cycles and downturns in customers' business cycles; strikes, work slow downs, or work stoppages at our facilities, or at customer, port, border crossing, or other shipping related facilities; increases in compensation for and difficulty in attracting and retaining qualified drivers and independent contractors; increases in insurance premiums and deductible amounts; elevated experience in the frequency or severity of claims relating to accident, cargo, workers' compensation, health, and other matters; fluctuations in claims expenses that result from high self-insured retention amounts and differences between estimates used in establishing and adjusting claims reserves and actual results over time; increases or rapid fluctuations in fuel prices, as well as fluctuations in hedging activities and surcharge collection, the volume and terms of diesel purchase commitment, interest rates, fuel taxes, tolls, and license and registration fees; fluctuations in foreign currency exchange rates; increases in the prices paid for new revenue equipment and changes in the resale value of our used equipment; increases in interest rates or decreased availability of capital or other sources of financing for revenue equipment; seasonal factors such as harsh weather conditions that increase operating costs; competition from trucking, rail, and intermodal competitors; regulatory requirements that increase costs or decrease efficiency, including revised hours-of-service requirements for drivers and new emissions control regulations; our ability to identify acceptable acquisition candidates, consummate acquisitions, and integrate acquired operations; the timing of, and any rules relating to, the opening of the border to Mexican drivers; challenges associated with doing business internationally; our ability to retain key employees; and the effects of actual or threatened military action or terrorist attacks or responses, including security measures that may impede shipping efficiency, especially at border crossings.

Readers should review and consider these factors along with the various disclosures by the company in its press releases, stockholder reports, and filings with the Securities Exchange Commission. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

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