Covenant Transportation Group Inc. on Tuesday reported record profits and revenues during the third quarter as the Chattanooga-based trucking firm benefited from the improving economy and its recent acquisition of Landair Holdings.
Net income in the quarter totaled $11.6 million, or 63 cents per diluted share. That's compared to net income of $4.6 million, or 25 cents per diluted share, in the quarter a year ago.
Third quarter earnings beat the consensus analyst estimate of 61 cents per share.
Covenant posted total revenue of $243.3 million in the latest quarter, an increase of 36.2 percent over the same period last year.
David R. Parker, Covenant's chairman and chief executive officer, said officials are happy with its first three months of ownership of Landair Holdings. This summer, Covenant purchased the dedicated truckload carrier with a fleet of 430 trucks and 900 trailers. The company also had 12 distribution facilities and 1.8 million square feet of warehousing space.
"A unified team from both organizations has done an excellent job of prioritizing and executing on the most impactful transition items, while customer sentiment towards our combined capabilities has been very positive," Parker said in a statement. "From the collaboration between the sales and operations teams to the scope and speed of attaining cost synergies, the transition efforts have exceeded our expectations."
Covenant's stock price closed Tuesday at $24.19 per share, down 45 cents, or 1.83 percent.
For the third quarter, total revenue in Covenant's truckload operations was $197.1 million, an increase of $44 million compared to last year. The increase consisted of $34.4 million in higher freight revenue and $9.6 million in higher fuel surcharge revenue.
Also, salaries, wages and related expenses increased 14.3 cents per total mile due primarily to the impact of the Landair acquisition and employee pay adjustments since the third quarter of 2017, partially offset by fewer miles from team-driven trucks, which carry the cost of two drivers, the company reported.
For the rest of the year, Covenant officials said they expect the overall balance of business conditions to remain favorable through the fourth quarter of 2018 and into 2019.