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Covenant Transport Parent Earnings Jump

The parent to Covenant Transport and other trucking companies, Covenant Transportation Group Inc., has reported big jumps in both its fourth quarter and 2014 profits.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
January 22, 2015
Covenant Transport Parent Earnings Jump

 

3 min to read


The parent to Covenant Transport and other trucking companies, Covenant Transportation Group Inc., has reported big jumps in both its fourth quarter and 2014 profits.

Net income was $13.5 million in the most recent quarter, or 82 cents per diluted share, compared with $3.3 million, or $0.22 per diluted share a year earlier. 2014 net income totaled $17.8 million, or $1.15 per diluted share, compared to $5.2 million, or 35 cents per diluted share in 2013

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Total fourth quarter revenue was $206.8 million, an increase of 17.2% compared with the fourth quarter of 2013, while for all of last year it increased 5% to $719 million from the previous year.

“The substantial improvement in earnings for the fourth quarter relates primarily to higher freight revenue per tractor in our asset-based business, significant improvement in revenue and margins in our non–asset based Covenant Transport Solutions business relating to peak holiday shipping projects, and reduced fuel and capital costs,” said CTG Chairman, President, and CEO, David R. Parker. “These improvements were partially offset by higher employee wage and benefit expense, as well as higher casualty insurance expense. Our results during the quarter benefitted significantly from the growth in holiday shopping over the Internet, and the resulting volumes carried for our less-than-truckload parcel delivery, and omni-channel shipping customers.”

For the quarter, total revenue in the company’s asset based operations increased to $185.6 million, a gain of $20.7 million compared with the fourth quarter of 2013. This included higher freight revenue of $22.6 million, partially offset by lower fuel surcharge revenue of $1.9 million. Average freight revenue per tractor per week increased to $4,300 during the 2014 quarter from $3,568 during the 2013 quarter.

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“This improvement primarily resulted from an increase in the percentage of our fleet comprised of team-driven trucks and the participation of both asset-based and non-asset based subsidiaries in holiday shipping business, which contributed to increases in miles per unit, average length of haul and average freight revenue per total mile,” the company said in a statement. “Our average seated truck percentage also increased, as approximately 4.4% of our fleet lacked drivers during the 2014 quarter compared with approximately 5% during the 2013 quarter.”

In CTG’s non-asset based brokerage business, Covenant Transport Solutions, total revenue increased 83%, to $21.2 million from $11.6 million in the same quarter of 2013. Operating income was approximately $2.3 million compared with operating income of approximately $697,000 in the fourth quarter of 2013. The sequential and year-over-year growth in revenue and profitability was primarily the result of additional peak-season freight opportunities, according to the company, and is not continuing into the first quarter of 2015.

CTG said it expects to report earnings in the first quarter in a range of 10 cents to 18 cents per diluted share, generating its positive first quarter earnings for the first time since 2004.

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