Covenant Transportation Group, Inc. today boosted its second quarter profits nearly seven-fold from a year ago and beat analysts forecasts for the spring period as freight volumes, rates and utilization all improved for the Chattanooga-based trucking firm.
Covenant said it earned $10 million, or 54 cents per share, on revenues of $196.3 million. In the same period a year earlier, Covenant earned $1.5 million, or 8 cents per share, on revenues of $145.6 million. The results were 2 cents per share better than the average estimate among analysts who follow Covenant.
In today's earnings announcement, Covenant Transport CEO David Parker said he expects the improvement in trucking volumes and utilization to continue in the second half of 2018 and the company's $83 million purchase of the Greeneville, Tenn.-based Landair Transport Inc. - the biggest acquisition in Covenant's 32-year history - should add to earnings in the balance of the year.
"From an earnings perspective, we expect our consolidated operating ratio for the third quarter to be similar to our consolidated operating ratio for the second quarter, but with the addition of revenue from Landair's operations," Parker said. "For the fourth quarter, we expect to remain a major participant in the holiday peak shipping season and anticipate our consolidated operating ratio and consolidated earnings per diluted share to improve compared with the fourth quarter of 2017."
Parker did not offer specific earnings guidance, however.
In the second quarter, Covenant said boosted its truckload operations ratio by 620 basis point to 91.9 percent and average freight revenue per tractor per week increased to $4,287 from $3,754 a year earlier.
Parker said the average wages for drivers increased by 7.3 cents per mile due to employee pay adjustments since the second quarter of 2017, partially offset by the reduced percentage of team-driven trucks and improved workers' compensation expense.