Covenant posts 2Q net loss on tax settlement, flat freight revenue

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Covenant Transport announced Monday, July 24, that total revenue for the second quarter of 2006 ended June 30 increased 8 percent to $169.4 million from $156.8 million in the same quarter of 2005. Freight revenue, which excludes fuel surcharges, was essentially flat at $139.3 million in the 2006 quarter and $138.7 million in the 2005 quarter.

The company reported a net loss of $398,000, compared to net income of $652,000 for the second quarter of 2005. The second quarter of 2006 included a $650,000 after-tax increase to income taxes related to a previously disclosed settlement with the Internal Revenue Service and a contingency reserve concerning an uncertain tax position.

For the six months ended June 30, total revenue increased 8.9 percent to $320.9 million from $294.7 million during 2005. Freight revenue increased 2.5 percent to $268.8 million in 2006 from $262.3 million in 2005. The company generated a net loss of $1.3 million, compared with a $3,000 profit for the same period of 2005.

“From a freight standpoint, the second quarter started slow and gained momentum,” said David R. Parker, chairman, president and chief executive officer of Chattanooga, Tenn.-based Covenant. “April was soft, May was good, and June was really strong. Equipment utilization, driver turnover and safety are three key areas we had targeted, and we are pleased to report progress on these fronts. … I want to emphasize, however, that we still have a long way to go to reach our financial and operating goals.”