Covenant Reports Positive 2012 and Fourth Quarter, Compared to Year-Ago Losses
February 01, 2013
Covenant Transportation Group, Chattanooga, Tenn., saw its revenue rise nearly 10% over last year's fourth quarter and its net income turn positive compared to a loss.<!stop> Similarly, for the year, total revenue increased 3.3% and the company reported net income of $6.1 million compared to a net loss of $14.3 million in 2011.
For the fourth quarter, Covenant reported total revenue of $177.5 million, an increase of 9.6% compared with the fourth quarter of 2011. Freight revenue of $140 million (excludes revenue from fuel surcharges), was up 9.8% compared with the fourth quarter of 2011.
Quarterly operating income was $5.1 million and the operating ratio was 96.3%, compared with operating income of $1.2 million and an operating ratio of 99.1% in the fourth quarter of 2011; and net income of $1.5 million, or $0.10 per share, compared with a net loss of $2.2 million, or ($0.15) per share in the fourth quarter of 2011.
For the year , total revenue increased 3.3%, to $674.3 million from $652.6 million for 2011. Freight revenue, which excludes revenue from fuel surcharges, increased 3.3%, to $529.1 million in 2012 from $512.0 million in 2011.
The company reported net income of $6.1 million, or $0.41 per share, for 2012 compared to a net loss, including impairment charges, of $14.3 million, or ($0.97) per share in 2011. On a non-GAAP basis, without impairment charges, the company's net loss would have been $4.9 million, or ($0.33) per share for 2011.
"Our fourth quarter results marked continued year-over-year improvement in our financial and operating performance," said Chairman, President, and CEO David R. Parker. "Consistent with our strategic plan, we allocated assets toward refrigerated and high-value team operations, reduced exposure to solo dry van operations, and increased our use of owner-operators.
"In addition, substantial focus on yield management, equipment control, and our drivers' employment experience contributed to a significant increase in asset productivity."
As a result, Covenant's asset-based operating ratio improved approximately 350 basis points versus the 2011 quarter, while its balance sheet leverage improved.
Average freight revenue per tractor per week increased to $3,509 during the 2012 quarter from $3,079 during the 2011 quarter. Average freight revenue per total mile increased by 11.2 cents per mile (or 7.9%) compared to the 2011 quarter and average miles per unit increased by 5.6%.
The main factors impacting the improved utilization were a 175 basis point increase in the percentage of the fleet made up of team-driven tractors and improved use of technology.
Net fuel cost provided a significant benefit during the 2012 quarter, improving by approximately 3.4 cents per company mile compared with the fourth quarter of 2011. Higher fuel prices were offset by improved fuel economy, benefits from fuel hedging, and improved fuel surcharge recovery.
"We expect to continue managing our idle time and truck speeds, investing in more fuel-efficient tractors, and partnering with customers to adjust fuel surcharge programs which are inadequate to recover a fair portion of rising fuel costs," Parker said.
Capital costs fell by approximately $1.1 million. This was primarily attributable to a decrease in company-owned tractors and trailers due to fleet downsizing and greater use of owner-operators.