The holding company for trucking companies Covenant Transport and others moved to a profit from a loss in the first quarter of the year.
Covenant Transportation Group Inc. reported net income of $10.2 million, or 56 cents per diluted share, compared with net loss of $1.4 million, or a loss of 9 cents per diluted share in the first quarter of 2014.
Total revenue was $167.2 million, an increase of 3.9% compared with the first quarter of 2014 for the Tennessee-based operation.
For the quarter, total revenue in Covenant's asset-based operations increased to $157.2 million, an increase of $7 million compared with the first quarter of 2014. This increase consisted of higher freight revenue of $17.7 million, partially offset by lower fuel surcharge revenue of $10.7 million, according to the company.
“The $17.7 million increase in freight revenue related to a 12.1% increase in average freight revenue per tractor per week, a 55-truck increase in our average tractor fleet, and a $1.3 million increase of freight revenue contributed from our refrigerated intermodal service offering," explained Chairman, President, and CEO David R. Parker.
He said the company’s average freight revenue per tractor, per week increased to $3,743 during the 2015 quarter from $3,339 during the 2014 quarter. Average freight revenue per total mile increased by 8.8 cents per mile compared to the 2014 quarter on an approximately 7.4% increase in average length of haul. Average miles per unit increased by 5.9%.
“The main factors impacting the improved utilization were a 450 basis point increase in the percentage of our fleet comprised of team-driven trucks, a tighter overall freight network for our service offerings, less harsh weather and a higher seated truck percentage,” Parker said. “On average, approximately 4.9% of our fleet lacked drivers during the 2015 quarter compared with approximately 5.6% during the 2014 quarter.”
In the company’s non-asset based subsidiary, Covenant Transport Solutions, total revenue decreased 6.9%, to $10 million from $10.7 million in the same quarter of 2014. Operating income was approximately $337,000 for an operating ratio of 96.6%, compared with operating income of approximately $541,000 and an operating ratio of 94.9% a year earlier.
Covenant expects to report earnings in the second quarter in a range of 38 cents to 48 cents per diluted share.
“We remain cautious of our ability to achieve meaningful year-over-year improvements in earnings per share in the second half of the year, taking into consideration expected weighted average diluted shares year-over-year increases of approximately 21% for the third quarter and 11% for the fourth quarter,” said Richard Cribbs, the company's senior vice president and chief financial officer. “Second half performance will depend to a significant extent on the level of involvement of our asset-based and Solutions subsidiaries in the supply chains of our less-than-truckload, parcel, and omni-channel shipping customers during the 2015 peak freight season and the associated pricing for our services.”
In addition to Covenant Transport, CTG operations include Southern Refrigerated, Star Transportation and Transport Enterprise Leasing.