Covenant Transportation Group Inc. boosted its third quarter profits by more than 56 percent from a year ago during the third quarter as Covenant's trucking shipments and revenues rose nearly 9 percent.
The Chattanooga- based trucking company said Thursday it earned $4.6 million, or 25 cents per share, on revenues of $178.6 million in the three-month period ended Sept. 30. In the same period a year earlier, Covenant earned $2.9 milion, or 16 cents per share, on rvenues of $164.5 million.
The gain in net income was much bigger than what analysts had forecast. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 17 cents per share.
"Overall, freight demand was strong and trucking capacity was tight during the third quarter," Covenant CEO David Parker said. "The market improved each month and has continued at a strong level in October."
Freight miles and revenue per tractor both increased in the summer quarter, Parker said, even though salaries, wages and related expenses were up 5.2 cents per mile in the past year due to recent pay increases for truckers.
Richard B. Cribbs, the company's chief financial officer, said the outlook for the traditionally busy final three months of the calendar year also is up from a year ago.
Covenant also should benefit by the implementation of the electronic logging device rules, which go into effect in December and will require commercial truckers to have electronic logs to ensure compliance with operating and safety rules on the road. The new ELD rules may idle some independent or small trucking operations that have not implemented the new equipment or standards yet. Covenant already has such electronic logging devices on all of its trucks.
"We expect strong customer demand to continue throughout the fourth quarter in all of our service offerings, as well as tightening of truckload supply as the mandatory ELD implementation date approaches," Cribbs said.
Covenant shares have climbed 44 percent since the beginning of the year. Ahead of the announcement of the third quarter results after the market closed Thursday, Covenant shares rose nearly 4.4 percent to close Thursday to $27.76 per share.