Covenant Transportation Group Inc. warned today that first quarter earnings are expected to come in well below analysts expectations.
The Chattanooga-based trucking company said it expects to report net income for the first three months of 2019 of between $3.4 million and $4.9 million, or between 18 and 26 cents per share. Among five analysts who follow Covenant Transport surveyed by Yahoo finance, the average consensus for first quarter earning had been for 36 cents per share.
"The truckload freight environment has been weaker this year from late January through mid March," Covenant CEO David Parker said in a statement today announcing the company's revised outlook. "We attribute the softer demand to factors such as late 2018 inventory growth in advance of the perceived impact of tariffs, the effects of the partial government shutdown on spending, and extended periods of inclement weather that impacted the timing of shipping seasonal goods as well as our ability to safely dispatch our equipment."
Although below expectations, Parker said Covenant earnings should be better than a year ago when Covenant earned $4.4 million, or 24 cents per share, in the first quarter of 2018.
For the two months ended February 28, 2019, consolidated freight revenue has increased 34.9 percent compared with the two months ended February 28, 2018, primarily due to extra freight acquired through the purchase last July of Landair Logistics in Greeneville, Tennessee. Excluding Landair, Covenant's consolidated freight revenue has increased 5.5 percent from a year ago during the current quarter.
Managed freight has more than doubled with the Landair acquisition, but truckload operations were down in the first part of 2019, Parker said.
So far this year, Covenant's fleet size has dropped by 47 trucks and in the first two months of the year average freight revenue per tractor decreased 4.8% percent.
"While we expect our first quarter financial results to reflect less impact from lower demand than in historical periods, we still have meaningful work ahead to achieve our full potential," Parker said.
Shares of Covenant fell Monday by more than 2 percent, or 49 cents per share, to $21.40 per share - the lowest in two months. The company's stock price is still up by nearly 11.5 percent so far this year. But shares of Covenant are still priced 33 percent below the price of a year ago.
Contact Dave Flessner at dflessner@timesfreepress.com or 757-6340.