Trucking giant Covenant Transportation Group hit a bumpier road this spring, cutting net income by two thirds on freight revenues that fell by 9.5 percent from a year ago.
The Chattanooga-based trucking firm said today its second quarter net income was $3.6 million, or 20 cents per share, on revenues of $158.8 million. In the same period a year ago, Covenant reported net income of $11 million, or 60 cents per share, on revenues of $144.4 million.
But this year's results still topped Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 19 cents per share in the second quarter of 2016.
Covenant CEO David Parker said freight demand "was lackluster" this spring and there was plenty of trucks available so prices and margins were squeezed.
"A segment of the shipping community became more rate conscious, which pressured our average freight revenue per mile as well as our volumes where we were not willing to match some of the rates quoted by competitors," Parker said.
One of Covenant's subsidiaries, Southern Refrigerated Transport, also suffered an operating loss in the quarter.
"Turning around SRT's performance continues to be one of our most important objectives," Parker said.
Covenent has deployed one of its directors, former Conway Truckload CEO Herb Schmidt as a consultant to work with SRT's leadership over the second half of 2016.
Covenant Transportation shares have risen roughly 8 percent since the beginning of the year. In the final minutes of trading on today, shares hit $20.35, a fall of almost 9 percent in the last 12 months.