Covenant Transportation Group, Inc. (NASDAQ/GS: CVTI) (“CTG”)
announced today financial and operating results for the third
quarter ended September 30, 2019.
Highlights for the quarter included the
following(1):
- Total revenue of $222.9 million, a
decrease of 8.4% compared with the third quarter of 2018.
- Freight revenue of $199.8 million
(excludes revenue from fuel surcharges), a decrease of 6.9%
compared with the third quarter of 2018.
- Operating loss of $1.9 million and
an operating ratio of 100.9%. Adjusted operating
loss(2) of $1.2 million and an adjusted operating
ratio(2) of 100.6%. This compares with operating
income of $16.2 million and an operating ratio of 93.3% and
adjusted operating income(2) of $16.9 million and
an adjusted operating ratio(2) of 92.1% in the
third quarter of 2018.
- Net loss of $3.2 million, or
earnings (loss) per diluted share of ($0.17). This compares with
net income of $11.6 million, or earnings per diluted share of $0.63
in the third quarter of 2018. Adjusted net loss(2)
of $1.5 million, or adjusted earnings (loss) per diluted
share(2) of ($0.08). This compares with adjusted
net income(2) of $12.1 million, or adjusted
earnings per diluted share(2) of $0.66 per diluted
share in the third quarter of 2018.
Chairman and Chief Executive Officer, David R.
Parker, commented: “The third quarter marked the first
year-over-year period in which our July 2018 acquisition of Landair
was included in both results. The freight environment was
much weaker compared with the 2018 quarter, as excess industry-wide
trucking capacity and weak shipping demand combined to pressure
both freight rates and volumes. In addition, new and
incumbent freight brokers placed additional pressure on the
irregular route truckload market by competing for market share
based on what we view as unsustainable pricing. In general,
our dedicated Truckload and Managed Freight operations
(approximately 59% of our consolidated freight revenue, a
significant portion of which is attributable to the Landair
acquisition) were profitable and exhibited moderate year-over-year
market volatility. Our irregular route expedited and
refrigerated truckload operations exhibited significant volatility
and swung to being unprofitable for the quarter, with the largest
factors being lower rate per mile and combined insurance and
capital cost increases versus the prior year quarter.
“In terms of sequential progression, we believe
the freight environment touched a low point during the third
quarter and remains muted but not worsening. Our average
freight revenue per tractor per week, which excludes revenue from
fuel surcharges, was approximately the same in the second and third
quarters of 2019. However, previously announced cost items,
primarily in health, workers’ compensation, and casualty insurance
accruals, and incentive compensation, negatively impacted our
financial results on a sequential basis. We expect sequential
improvement in financial results for the fourth quarter.
Based on falling new truck orders, reports of competitors exiting
the industry, and a rapidly building inventory of used trucks on
dealers’ lots, we believe the path toward supply and demand
equilibrium has begun, assuming economic factors remain
constant.”
Management Discussion—Truckload
OperationsMr. Parker continued: “For the quarter, total
revenue in our truckload operations decreased to $175.0 million, a
decrease of $22.1 million compared with the third quarter of
2018. This decrease consisted of $16.4 million lower freight
revenue and $5.7 million lower fuel surcharge revenue. The $16.4
million decrease in freight revenue primarily related to 9.5%
decrease in average freight revenue per truck.
“Average freight revenue per tractor per week
decreased to $3,766 during the 2019 quarter from $4,159 during the
2018 quarter. Average freight revenue per total mile decreased by
10.9 cents per mile, or 5.5%, compared to the 2018 quarter and
average miles per tractor decreased by 4.2%. The main factors
impacting the decreased utilization was an approximate 160 basis
point decrease in the percentage of our total fleet comprised of
team-driven trucks and a lower freight demand in relation to
industry-wide trucking capacity. Team-driven trucks decreased
to an average of 829 teams (or 27.0% of the total fleet) in the
third quarter of 2019 versus an average of 880 teams (or 28.6% of
the total fleet) in the third quarter of 2018.
“Salaries, wages and related expenses were
relatively consistent year-over-year on a cost per total mile
basis. However, driver wages, workers compensation insurance and
group health insurance increases were mostly offset by reduced
non-driver wages related to lower variable incentive compensation
in the current year quarter. On a sequential basis from the second
quarter of 2019 to the third quarter of 2019, salaries, wages and
related expenses increased 9.9 cents per total mile due primarily
to the following items; a) a 4.5 cent per total mile increase in
non-driver wages related to the second quarter of 2019 reversal of
previously accrued variable incentive compensation expense as
reduced earnings had made certain restricted stock and cash
incentive programs not probable to be attained, b) a 2.7 cent per
total mile increase in workers compensation expense due to
increased claims accruals associated with the estimated cost of
accidents during the quarter and, c) a 2.6 cent per mile increase
in group health insurance costs.
“Net fuel expense increased by 1.7 cents per
total mile in the 2019 quarter, primarily as a result of the lack
of the favorable fuel hedging activity we experienced in the 2018
quarter totaling $0.6 million of fuel hedge gains. We have not had
any fuel hedges in place since December 2018.
“Capital costs (combined depreciation and
amortization, leased revenue equipment expense, building rent and
interest expense) increased by approximately $2.2 million versus
the third quarter of 2018. The main factors were a $1.8 million
year-over-year increase in combined depreciation and leased revenue
equipment expense, primarily as a result of excessive tractors and
trailers that were pulled out of operations but were not yet
prepared for sale, and a $0.4 million increase in year-over-year
interest expense due to an increase in our total indebtedness, net
of cash. These factors related primarily to a large portion
of our annual tractor capital deliveries occurring in the third
quarter and difficulty processing all of the disposals.
“Insurance and claims expense increased to 16.7
cents per total mile in the third quarter of 2019 versus 14.5 cents
per total mile in the third quarter of 2018 due to an increase in
frequency of incidents and inflation in overall expected cost per
claim.”
Management Discussion—Non-Asset Based
Managed Freight and Other OperationsMr. Parker offered the
following comments concerning the Company’s non-asset based managed
freight segment, which consists of freight brokerage,
transportation management services (“TMS”), shuttle and switching
services, warehousing, and accounts receivable factoring offerings
(“Managed Freight”): “For the quarter, Managed Freight’s freight
revenue increased 3.4% to $47.8 million from $46.3 million in the
same quarter of 2018. Operating income was $3.7 million for an
operating ratio of 92.3%, compared with operating income of $4.2
million and an operating ratio of 90.9% in the third quarter of
2018. In addition, our 49% equity investment in Transport
Enterprise Leasing contributed $2.1 million of pre-tax income in
the quarter compared with $2.1 million in the third quarter of
2018.”
Capitalization, Liquidity and Capital
ExpendituresRichard B. Cribbs, the Company's Executive
Vice President and Chief Financial Officer, added the following
comments: “At September 30, 2019, our total indebtedness, net of
cash, was approximately $328.8 million and our stockholders’ equity
was $348.4 million, for a ratio of net indebtedness to
capitalization of 48.5% compared to a 42.6% ratio as of December
31, 2018. In addition, our leverage ratio (defined as: net
indebtedness divided by trailing four quarters’ earnings before
interest, taxes, depreciation, amortization, and rental expense)
has increased to 2.3x from 1.5x for the period ended December 31,
2018.
“Between December 31, 2018 and September 30, 2019, the Company's
total indebtedness, net of cash, increased by approximately $74.2
million when including the present value of operating leases that
were not recorded on the balance sheet prior to the adoption of ASC
Topic 842, Leases. The impact of the adoption of ASC Topic 842 on
leverage ratio as used above was modest because rental expense
associated with the right to use assets was included in the
denominator of the calculation.
“Our net capital expenditures for the three
months ended September 30, 2019 totaled $34.6 million compared to
$1.6 million for the prior year period. In the first nine months of
2019, we took delivery of approximately 1,211 new company tractors
and disposed of approximately 486 used tractors. Our current
tractor fleet plan for full-year 2019 includes the delivery of
approximately 1,340 new company tractors and the disposal of
approximately 1,200 used tractors. Therefore, we expect to acquire
only 129 new tractors, while disposing of 714 used tractors, during
the fourth quarter of 2019. This should result in net
proceeds from revenue equipment transactions to reduce our net
indebtedness during the fourth quarter of 2019. By the end of 2019,
the size of our tractor fleet is expected to be down 4.0% to 5.0%
compared to the 3,154 tractors we operated as of December 31, 2018,
depending on our ability to hire and retain professional drivers to
seat our tractors.”
OutlookMr. Cribbs commented on
the Company’s outlook: “For the fourth quarter of 2019, we expect
to remain an important provider in our customers’ peak season
supply chains. However, given the current imbalance of
capacity and demand, we expect pricing and volume levels to remain
subdued compared with the last several holiday peak seasons. Our
focus will be on identifying opportunities to improve the
performance of our one-way truckload service offerings and adding
more predictable long-term contracts in our dedicated truckload,
transportation management and warehousing service offerings.
Barring unforeseen circumstances, we expect our combined insurance
and capital costs to decrease sequentially as compared to the third
quarter of 2019 and anticipate our consolidated adjusted net income
to improve sequentially to a profitable level in the fourth quarter
of 2019.”
Conference Call InformationThe
Company will host a live conference call tomorrow, October 23,
2019, at 11:00 a.m. Eastern time to discuss the quarter.
Individuals may access the call by dialing 800-351-4894
(U.S./Canada) and 800-756-3333 (International), access code
CTG3. An audio replay will be available for one week
following the call at 877-919-4059, access code 41015891. For
additional financial and statistical information regarding the
Company that is expected to be discussed during the conference
call, please visit our website at
www.covenanttransport.com/investors under the icon “Earnings
Info.”
Covenant Transportation Group, Inc. is the
holding company for several transportation providers that offer
premium transportation services for customers throughout the United
States. The consolidated group includes operations from Covenant
Transport and Covenant Transport Solutions of Chattanooga,
Tennessee; Southern Refrigerated Transport of Texarkana, Arkansas;
Landair Transport and Landair Logistics of Greeneville, Tennessee;
and Star Transportation of Nashville, Tennessee. In addition,
Transport Enterprise Leasing, of Chattanooga, Tennessee is an
integral affiliated company providing revenue equipment sales and
leasing services to the trucking industry. The Company's Class A
common stock is traded on the NASDAQ Global Select market under the
symbol, “CVTI”.
(1) For information regarding
comparability of the reported results due to the acquisition of
Landair Holdings and its subsidiaries (“Landair”), refer to
footnote (2) of the Non-GAAP Reconciliation (Unaudited) schedules
included with this release.(2) See GAAP to
Non-GAAP Reconciliation in the schedules included with this
release. In addition to operating income (loss), operating ratio,
net income (loss) and earnings (loss) per diluted share, we use
adjusted operating income (loss), adjusted operating ratio,
adjusted net income (loss) and adjusted earnings (loss) per diluted
share, non-GAAP measures, as key measures of profitability.
Adjusted operating income (loss), adjusted operating ratio,
adjusted net income (loss) and adjusted diluted earnings (loss) per
share are not substitutes for operating income (loss), operating
ratio, net income (loss) and earnings (loss) per diluted share
measured in accordance with GAAP. There are limitations to using
non-GAAP financial measures. We believe our presentation of these
non-GAAP financial measures are useful because it provides
investors and securities analysts supplemental information that we
use internally for purposes of assessing profitability. Further,
our Board and management use non-GAAP operating income (loss),
operating ratio, net income (loss) and earnings (loss) per diluted
share measures on a supplemental basis to remove items that may not
be an indicator of performance from period-to-period. Although we
believe that adjusted operating income (loss), adjusted operating
ratio, adjusted net income (loss) and adjusted diluted earnings
(loss) per share improves comparability in analyzing our
period-to-period performance, they could limit comparability to
other companies in our industry, if those companies define such
measures differently. Because of these limitations, adjusted
operating income (loss), adjusted operating ratio, adjusted net
income (loss) and adjusted earnings (loss) per diluted share should
not be considered measures of income (loss) generated by our
business or discretionary cash available to us to invest in the
growth of our business. Management compensates for these
limitations by primarily relying on GAAP results and using non-GAAP
financial measures on a supplemental basis.
This press release contains certain statements
that may be considered forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and such statements are subject to the safe harbor created by those
sections and the Private Securities Litigation Reform Act of 1995,
as amended. Such statements may be identified by their use of
terms or phrases such as "expects," "estimates," "projects,"
"believes," "anticipates," "plans," "intends," “outlook,” “focus,”
and similar terms and phrases. Forward-looking statements are
based upon the current beliefs and expectations of our management
and are inherently subject to risks and uncertainties, some of
which cannot be predicted or quantified, which could cause future
events and actual results to differ materially from those set forth
in, contemplated by, or underlying the forward-looking
statements. In this press release, the statements relating to
our business model, expected business, industry-wide capacity and
supply and demand, the freight environment, expected financial
results for the fourth quarter, and our tractor fleet plan,
including acquisitions, dispositions, use of proceeds therefrom,
and fleet size, as well as the statements under “Outlook” are
forward-looking statements. The following factors, among
others, could cause actual results to differ materially from those
in the forward-looking statements: the rates and volumes realized
during the remainder of 2019, elevated experience in the frequency
and severity of claims relating to accident, cargo, workers'
compensation, health, and other claims, increased insurance
premiums, fluctuations in claims expenses that result from our
self-insured retention amounts, including in our excess layers and
in respect of claims for which we commute policy coverage, and the
requirement that we pay additional premiums if there are claims in
certain of those layers, differences between estimates used in
establishing and adjusting claims reserves and actual results over
time, adverse changes in claims experience and loss development
factors, or additional changes in management's estimates of
liability based upon such experience and development factors that
cause our expectations of insurance and claims expense to be
inaccurate or otherwise impacts our results; government regulations
imposed on our captive insurance companies; changes in the market
condition for used revenue equipment and real estate that impact
our capital expenditures and our ability to dispose of revenue
equipment and real estate on the schedule and for the prices we
expect; increases in the prices paid for new revenue equipment that
impact our capital expenditures and our results generally; changes
in management’s estimates of the need for new tractors and
trailers; the effect of any reduction in tractor purchases on the
number of tractors that will be accepted by manufacturers under
tradeback arrangements; our inability to generate sufficient cash
from operations and obtain financing on favorable terms to meet our
significant ongoing capital requirements; our ability to respond to
changes in our industry or business in light of our substantial
indebtedness and lease obligations; our ability to sustain or
increase profitability in the future; the risks related to our
receivables factoring arrangements; our ability to maintain
compliance with the provisions of our credit agreements,
particularly financial covenants in our revolving credit facility;
excess tractor or trailer capacity in the trucking industry;
decreased demand for our services or loss of one or more of
our major customers; our ability to renew dedicated service
offering contracts on the terms and schedule we expect; surplus
inventories, recessionary economic cycles, and downturns in
customers' business cycles; strikes, work slowdowns, or work
stoppages at the Company, customers, ports, or other shipping
related facilities; increases or rapid fluctuations in fuel prices,
as well as fluctuations in hedging activities and surcharge
collection, including, but not limited to, changes in customer fuel
surcharge policies and increases in fuel surcharge bases by
customers; the volume and terms of diesel purchase commitments and
hedging contracts; interest rates, fuel taxes, tolls, and
license and registration fees; increases in compensation for and
difficulty in attracting and retaining qualified drivers and
independent contractors; our ability to retain our key employees;
the risks associated with engaging independent contractors to
provide a portion of our capacity; seasonal factors such as harsh
weather conditions that increase operating costs; competition from
trucking, rail, and intermodal competitors; our dependence on
third-party providers, particularly in our Managed Freight segment;
regulatory requirements that increase costs, decrease efficiency,
or impact the availability or effective driving time of our drivers
and other drivers in the industry, including the terms and
exemptions from hours-of-service and electronic log requirements
for drivers and the Federal Motor Carrier Safety Administration’s
Compliance, Safety, Accountability program applicable to driver
standards and the methodology for determining a carrier’s
Department of Transportation safety rating; the proper functioning
and availability of our management information and communication
systems and other information technology assets; volatility of our
stock price; remediation of a material weakness in our internal
controls, including our ability to remediate the material weakness
by December 31, 2019; our ability to implement internal controls at
Landair, including our ability to implement internal controls at
Landair by December 31, 2019; impairment of goodwill and other
intangible assets; our ability to effectively manage the challenges
associated with doing business internationally; future outcomes of
litigation; uncertainties in the interpretation of the 2017 Tax
Cuts and Jobs Act and other tax laws; the ability to reduce, or
control increases in, operating costs; changes in the Company’s
business strategy that require the acquisition of new businesses,
and the ability to identify acceptable acquisition candidates,
consummate acquisitions, and integrate acquired operations
(including our acquisition of Landair); our ability to achieve our
strategic plan; fluctuations in the results of Transport Enterprise
Leasing, which are included as equity in income (loss) of affiliate
in our financial statements; our Chairman of the Board and Chief
Executive Officer and his wife control a large portion of our stock
and have substantial control over us, which could limit other
stockholders' ability to influence the outcome of key transactions,
including changes of control; and future share repurchases, if
any. Readers should review and consider these factors along
with the various disclosures by the Company in its press releases,
stockholder reports, and filings with the Securities and Exchange
Commission. We disclaim any obligation to update or revise any
forward-looking statements to reflect actual results or changes in
the factors affecting the forward-looking information.
For further information contact:Richard B.
Cribbs, Executive Vice President and Chief Financial
Officer
RCribbs@covenanttransport.com
For copies of Company information
contact:Theresa Ives, Executive Administrative
AssistantTIves@covenanttransport.com
Covenant
Transportation Group, Inc. |
Key
Financial and Operating Statistics |
|
|
|
|
|
|
|
|
|
INCOME
STATEMENT DATA |
|
INCOME
STATEMENT DATA |
|
Three Months Ended Sep 30, |
|
Nine Months Ended Sep 30, |
($000s, except per share data) |
2019 |
2018 |
%
Change |
|
2019 |
2018 |
%
Change |
Freight revenue |
$199,832 |
|
$214,623 |
|
-6.9% |
|
$590,511 |
|
$535,721 |
|
10.2% |
Fuel surcharge revenue |
|
23,082 |
|
|
28,680 |
|
|
|
|
70,882 |
|
|
77,466 |
|
|
Total revenue |
$222,914 |
|
$243,303 |
|
-8.4% |
|
$661,393 |
|
$613,187 |
|
7.9% |
Operating expenses: |
|
|
|
|
|
|
|
Salaries, wages, and related expenses |
|
84,093 |
|
|
86,249 |
|
|
|
|
239,376 |
|
|
211,621 |
|
|
Fuel expense |
|
28,812 |
|
|
33,428 |
|
|
|
|
85,859 |
|
|
89,817 |
|
|
Operations and maintenance |
|
14,742 |
|
|
16,457 |
|
|
|
|
44,814 |
|
|
40,783 |
|
|
Revenue equipment rentals and |
|
|
|
|
|
|
|
purchased transportation |
|
50,428 |
|
|
47,445 |
|
|
|
|
146,267 |
|
|
115,525 |
|
|
Operating taxes and licenses |
|
3,170 |
|
|
3,377 |
|
|
|
|
9,719 |
|
|
8,649 |
|
|
Insurance and claims |
|
14,051 |
|
|
12,675 |
|
|
|
|
35,758 |
|
|
31,269 |
|
|
Communications and utilities |
|
1,791 |
|
|
1,810 |
|
|
|
|
5,269 |
|
|
5,216 |
|
|
General supplies and expenses |
|
7,685 |
|
|
6,391 |
|
|
|
|
21,701 |
|
|
16,833 |
|
|
Depreciation and amortization, including gains and |
|
|
|
|
|
|
|
losses on disposition of property and equipment |
|
20,073 |
|
|
19,290 |
|
|
|
|
60,291 |
|
|
56,803 |
|
|
Total operating expenses |
|
224,845 |
|
|
227,122 |
|
|
|
|
649,054 |
|
|
576,516 |
|
|
Operating income (loss) |
|
(1,931 |
) |
|
16,181 |
|
|
|
|
12,339 |
|
|
36,671 |
|
|
Interest expense, net |
|
2,992 |
|
|
2,460 |
|
|
|
|
8,121 |
|
|
6,360 |
|
|
Income from equity method investment |
|
(2,138 |
) |
|
(2,142 |
) |
|
|
|
(7,548 |
) |
|
(5,407 |
) |
|
Income (loss) before income taxes |
|
(2,785 |
) |
|
15,863 |
|
|
|
|
11,766 |
|
|
35,718 |
|
|
Income tax expense |
|
404 |
|
|
4,249 |
|
|
|
|
4,451 |
|
|
9,716 |
|
|
Net income (loss) |
($3,189 |
) |
$11,614 |
|
|
|
$7,315 |
|
$26,002 |
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share |
($0.17 |
) |
$0.63 |
|
|
|
$0.40 |
|
$1.42 |
|
|
Diluted earnings (loss) per share |
($0.17 |
) |
$0.63 |
|
|
|
$0.39 |
|
$1.41 |
|
|
Basic weighted average shares outstanding (000s) |
|
18,458 |
|
|
18,343 |
|
|
|
|
18,426 |
|
|
18,337 |
|
|
Diluted weighted average shares outstanding (000s) |
|
18,719 |
|
|
18,497 |
|
|
|
|
18,620 |
|
|
18,448 |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Sep 30, |
|
Nine Months Ended Sep 30, |
|
2019 |
2018 |
%
Change |
|
2019 |
2018 |
%
Change |
($000s) |
SEGMENT
REVENUES |
|
SEGMENT
REVENUES |
Asset-based truckload revenues |
$152,007 |
|
$168,373 |
|
-9.7% |
|
$452,596 |
|
$444,846 |
|
1.7% |
Managed freight revenues |
|
47,825 |
|
|
46,250 |
|
3.4% |
|
|
137,915 |
|
|
90,875 |
|
51.8% |
Freight revenue |
$199,832 |
|
$214,623 |
|
-6.9% |
|
$590,511 |
|
$535,721 |
|
10.2% |
|
|
|
|
|
|
|
|
|
OPERATING
STATISTICS |
|
OPERATING
STATISTICS |
Average freight revenue per loaded mile |
$2.054 |
|
$2.160 |
|
-4.9% |
|
$2.063 |
|
$2.051 |
|
0.6% |
Average freight revenue per total mile |
$1.858 |
|
$1.967 |
|
-5.5% |
|
$1.862 |
|
$1.870 |
|
-0.5% |
Average freight revenue per tractor per week |
$3,766 |
|
$4,159 |
|
-9.5% |
|
$3,752 |
|
$4,149 |
|
-9.6% |
Average miles per tractor per period |
|
26,638 |
|
|
27,797 |
|
-4.2% |
|
|
78,609 |
|
|
86,523 |
|
-9.1% |
Weighted avg. tractors for period |
|
3,071 |
|
|
3,080 |
|
-0.3% |
|
|
3,093 |
|
|
2,749 |
|
12.5% |
Tractors at end of period |
|
3,008 |
|
|
3,077 |
|
-2.2% |
|
|
3,008 |
|
|
3,077 |
|
-2.2% |
Trailers at end of period |
|
6,822 |
|
|
7,260 |
|
-6.0% |
|
|
6,822 |
|
|
7,260 |
|
-6.0% |
|
SELECTED
BALANCE SHEET DATA |
|
|
|
|
($000s, except per share data) |
9/30/19 |
12/31/18 |
|
|
|
|
|
Total assets |
$901,607 |
|
$773,524 |
|
|
|
|
|
|
Total stockholders' equity |
$348,433 |
|
$343,142 |
|
|
|
|
|
|
Total indebtedness, net of cash |
$328,784 |
|
$254,544 |
|
|
|
|
|
|
Net Indebtedness to Capitalization Ratio |
|
48.5% |
|
|
42.6% |
|
|
|
|
|
|
Tangible book value per basic share |
$14.94 |
|
$14.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Covenant
Transportation Group, Inc. |
Non-GAAP
Reconciliation (Unaudited) |
Adjusted
Operating Income and Adjusted Operating Ratio (1) (2) |
|
|
|
|
|
|
|
|
(Dollars in thousands) |
Three Months Ended Sep 30, |
|
Nine Months Ended Sep 30, |
GAAP Presentation |
2019 |
2018 |
bps
Change |
|
2019 |
2018 |
bps
Change |
Total revenue |
$222,914 |
|
$243,303 |
|
|
|
$661,393 |
|
$613,187 |
|
|
Total operating expenses |
|
224,845 |
|
|
227,122 |
|
|
|
|
649,054 |
|
|
576,516 |
|
|
Operating income (loss) |
($1,931 |
) |
$16,181 |
|
|
|
$12,339 |
|
$36,671 |
|
|
Operating ratio |
|
100.9% |
|
|
93.3% |
|
760 |
|
|
98.1% |
|
|
94.0% |
|
410 |
|
|
|
|
|
|
|
|
Non-GAAP Presentation |
2019 |
2018 |
bps
Change |
|
2019 |
2018 |
bps
Change |
Total revenue |
$222,914 |
|
$243,303 |
|
|
|
$661,393 |
|
$613,187 |
|
|
Fuel surcharge revenue |
|
(23,082 |
) |
|
(28,680 |
) |
|
|
|
(70,882 |
) |
|
(77,466 |
) |
|
Freight revenue (total revenue, excluding fuel surcharge) |
|
199,832 |
|
|
214,623 |
|
|
|
|
590,511 |
|
|
535,721 |
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
224,845 |
|
|
227,122 |
|
|
|
|
649,054 |
|
|
576,516 |
|
|
Adjusted for: |
|
|
|
|
|
|
|
Fuel surcharge revenue |
|
(23,082 |
) |
|
(28,680 |
) |
|
|
|
(70,882 |
) |
|
(77,466 |
) |
|
Amortization of intangibles (3) |
|
(731 |
) |
|
(731 |
) |
|
|
|
(2,192 |
) |
|
(731 |
) |
|
Adjusted operating expenses |
|
201,032 |
|
|
197,711 |
|
|
|
|
575,980 |
|
|
498,319 |
|
|
Adjusted operating income (loss) |
|
(1,200 |
) |
|
16,912 |
|
|
|
|
14,531 |
|
|
37,402 |
|
|
Adjusted operating ratio |
|
100.6% |
|
|
92.1% |
|
850 |
|
|
97.5% |
|
|
93.0% |
|
450 |
|
|
|
|
|
|
|
|
(1)
Pursuant to the requirements of Regulation G, this table reconciles
consolidated GAAP operating income and operating ratio to
consolidated non-GAAP Adjusted operating income and Adjusted
operating ratio. |
(2)
The reported results do not include the results of operations of
Landair Holdings and its subsidiaries ("Landair") prior to its
acquisition by Covenant Transportation Group on July 3, 2018 in
accordance with the accounting treatment applicable to the
transaction. |
(3)
"Amortization of intangibles" reflects the non-cash amortization
expense relating to intangible assets identified in the July 3,
2018 acquisition of Landair. |
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliation (Unaudited) |
Adjusted Net
Income and Adjusted EPS (1) (2) |
|
|
|
|
|
|
|
|
(Dollars in thousands) |
Three Months Ended Sep 30, |
|
Nine Months Ended Sep 30, |
|
2019 |
2018 |
|
|
2019 |
2018 |
|
GAAP Presentation - Net income (loss) |
($3,189 |
) |
$11,614 |
|
|
|
$7,315 |
|
$26,002 |
|
|
Adjusted for: |
|
|
|
|
|
|
|
Income tax expense |
|
404 |
|
|
4,249 |
|
|
|
|
4,451 |
|
|
9,716 |
|
|
Income (loss) before income taxes |
|
(2,785 |
) |
|
15,863 |
|
|
|
|
11,766 |
|
|
35,718 |
|
|
Amortization of intangibles (3) |
|
731 |
|
|
731 |
|
|
|
|
2,192 |
|
|
731 |
|
|
Adjusted income (loss) before income taxes |
|
(2,054 |
) |
|
16,594 |
|
|
|
|
13,958 |
|
|
36,449 |
|
|
Provision for income tax expense at effective rate |
|
(298 |
) |
|
(4,445 |
) |
|
|
|
(5,280 |
) |
|
(9,915 |
) |
|
Impact of federal income tax adjustments (4) |
|
849 |
|
|
- |
|
|
|
|
849 |
|
|
- |
|
|
Non-GAAP Presentation - Adjusted net income
(loss) |
($1,504 |
) |
$12,149 |
|
|
|
$9,526 |
|
$26,534 |
|
|
|
|
|
|
|
|
|
|
GAAP Presentation - Diluted earnings (loss) per
share ("EPS") |
($0.17 |
) |
$0.63 |
|
|
|
$0.39 |
|
$1.41 |
|
|
Adjusted for: |
|
|
|
|
|
|
|
Income tax expense |
|
0.02 |
|
|
0.23 |
|
|
|
|
0.24 |
|
|
0.53 |
|
|
Income (loss) before income taxes |
|
(0.15 |
) |
|
0.86 |
|
|
|
|
0.63 |
|
|
1.94 |
|
|
Amortization of intangibles (3) |
|
0.04 |
|
|
0.04 |
|
|
|
|
0.12 |
|
|
0.04 |
|
|
Adjusted income (loss) before income taxes |
|
(0.11 |
) |
|
0.90 |
|
|
|
|
0.75 |
|
|
1.98 |
|
|
Provision for income tax expense at effective rate |
|
(0.02 |
) |
|
(0.24 |
) |
|
|
|
(0.28 |
) |
|
(0.54 |
) |
|
Impact of federal income tax adjustments (4) |
|
0.05 |
|
|
- 0 |
|
|
|
|
0.05 |
|
|
- 0 |
|
|
Non-GAAP Presentation - Adjusted EPS |
($0.08 |
) |
$0.66 |
|
|
|
$0.51 |
|
$1.44 |
|
|
|
|
|
|
|
|
|
|
(1)
Pursuant to the requirements of Regulation G, this table reconciles
consolidated GAAP net income to consolidated non-GAAP adjusted net
income and consolidated GAAP diluted earnings per share to non-GAAP
consolidated Adjusted EPS. |
(2)
The reported results do not include the results of operations of
Landair Holdings and its subsidiaries ("Landair") on and prior to
its acquisition by Covenant Transportation Group on July 3, 2018 in
accordance with the accounting treatment applicable to the
transaction. |
(3)
"Amortization of intangibles" reflects the non-cash amortization
expense relating to intangible assets identified in the July 3,
2018 acquisition of Landair. |
(4)
"Impact of federal income tax adjustments" represents the non-cash
reversal of a portion of a previously recorded federal income tax
credit that was settled with the IRS during the third quarter of
2019 totaling $455 and the recording of a reserve for an uncertain
tax position that was previously recorded as a tax benefit in a
prior year totaling $394, where new information effected the tax
position. |
|
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