Covenant Transport announced Monday, April 23, financial and operating results for the quarter ended March 31, including a rise in revenue but a net loss. Additionally, the company announced a proposed name change for the Nevada-based holding company from Covenant Transport Inc. to Covenant Transportation Group Inc.
For the quarter, total revenue increased 9.8 percent to $166.4 million from $151.5 million in the same quarter of 2006. Freight revenue, which excludes fuel surcharges, increased 10.9 percent to $143.5 million in the 2007 quarter from $129.4 million in the 2006 quarter. The company experienced a net loss of $2.1 million in the 2007 quarter compared with a net loss of $884,000 for the first quarter of 2006.
“During the first quarter, we continued to implement major actions in pursuit of our business realignment,” said David R. Parker, chairman, president and chief executive officer of Covenant. “Some of these actions had negative effects on the quarter and, when combined with a weak freight market and unusually severe winter weather, produced disappointing results. Nevertheless, we are seeing signs of operational improvement and remain committed to building the right foundation for the longer term.”
From a revenue perspective, the first-quarter freight market featured a decline in truck tonnage and numerous requests for bid packages from customers, Parker said. “In addition, harsh weather throughout the month of February and early March resulted in lost revenue opportunities and increased expenses, as large portions of our fleet were idled at certain times,” he said. “Despite those challenges, Covenant was able to increase average freight revenue per tractor per week by 1.8 percent.”
In January, Covenant announced a primary goal for the full year of 2007 of improving its operating ratio by 100 to 200 basis points versus the full year of 2006. “Due to slower-than-anticipated freight volumes and the resulting concern regarding capacity supply and demand in the marketplace, our goal for 2007 may be difficult to achieve, although we have not formally changed that goal,” Parker said. “We intend to continue to evaluate the allocation of our assets across service offerings and to aggressively reduce costs where possible to improve margins.”
Regarding the proposed name change of the holding company, “After much thought about the evolution of the company over the past few years, we felt the current name of the public entity created some confusion and did not appropriately reflect the broadening corporate structure of the company,” Parker said. “I believe this name change will clarify roles, responsibilities and corporate entity names as we move the company forward.”
Covenant Transport is the holding company for several transportation providers that offer services for customers throughout the United States. The consolidated group includes operations from Covenant Transport and Covenant Transport Solutions of Chattanooga, Tenn.; Southern Refrigerated Transport of Texarkana, Ark.; and Star Transportation of Nashville, Tenn.