Buoyed by a better-than-expected 20.9 percent jump in freight revenue this spring, Covenant Transportation Group, Inc. said today it expects its second quarter results to jump more than five fold from a year ago.
The Chattanooga-based trucking company said today it expects to earn from 45 to 53 cents per share in the second quarter of 2018, up from 8 cents a share a year ago. Analysts surveyed by Yahoo Finance had predicted second quarter profits for Covenant between 38 cents and 47 cents per share.
"The truckload freight environment has been favorable during the second quarter to date, leading to operating results that are exceeding our expectations," Covenant CEO David Parker said in an announcement after the market closed today.
Parker said in the past year Covenant's fleet size increased by 21 trucks and average freight revenue per tractor increased 14.8 percent as average freight revenue per total mile increased 14.8 percent while average miles per tractor were basically flat. Freight revenue is defined as total revenue excluding fuel surcharge revenue.
"On a year-over-year basis, salaries, wages and related expenses have increased significantly primarily due to employee pay adjustments since the second quarter of 2017, as well as increased incentive pay resulting from improved profitability," Park said. "Partially offsetting the increased compensation expense, year-over-year net fuel expense has decreased, primarily as a result of current year period gains as opposed to prior year period losses on our fuel hedging activity."
Covenant's managed freight revenue jumped 61.1 percent over a year ago in the past two months.
Ahead of today's announcement, Covenant's stock closed at $30.58 per share, up 27 cents Tuesday in trading on the Nasdaq exchange.
In the past 12 months, shares of Covenant have jumped nearly 73 percent due to the improving transit market.