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.