published Friday, October 7th, 2011

Covenant Transportation Group to report third quarter loss

Covenant Transport, is seen in this aerial file photo.
Covenant Transport, is seen in this aerial file photo.
Photo by John Rawlston /Chattanooga Times Free Press.
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    David Parker is the president of Covenant Transport.

Covenant Transportation Group, Inc. announced today that it will report a loss for the third quarter, helping to drive down the company’s stock nearly 30 percent in midday trading on the Nasdaq Exchange.

Covenant President David Parker said the Chattanooga trucking company expects to report a net loss somewhere between $500,000 and $1.7 million for the third quarter of 2011. That compares to a reported net income of $1.9 million for the third quarter of 2010.

“The main differences compared with the third quarter of 2010 include an approximately 9 percent to 10 percent decrease in revenue miles per truck, combined with increased costs per mile in the areas of salaries, wages and related expenses, net fuel expense, operations and maintenance, and insurance and claims,” Parker said in a prepared statement issued today. “These factors are expected to more than offset an approximately 5 percent to 6 percent increase in freight revenue per total mile (excluding fuel surcharge revenue)."

Parker also announced that Covenant has revised the terms of its revolving credit facility with Bank of America and J.P. Morgan to avoid a default of the credit terms due to the third quarter loss.

"We are presently working with our lenders on a longer term amendment to the financial covenant calculation that would address our operating and fixed asset expectations as well as the forecast of many economists of a U.S. economy with little or no growth for an extended period,” Parker said.

As of 12:45 p.m. Covenant’ stock was down 95 cents per share, or 28.3 percent, to $2.40 per share.

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about Dave Flessner...

Dave Flessner is the business editor for the Times Free Press. A journalist for 35 years, Dave has been business editor and projects editor for the Chattanooga Times Free Press, city editor for The Chattanooga Times, business and county reporter for the Chattanooga Times, correspondent for the Lansing State Journal and Ingham County News in Michigan, staff writer for the Hastings Daily Tribune in Nebraska, and news director for WCBN-FM in Michigan. Dave, a native ...

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