Covenant expresses ‘regret’ over $11.3M net loss in 2Q

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Covenant Transportation Group today, July 25, announced its financial and operating results for the quarter ended June 30.

For the quarter, total revenue increased 4.8 percent to $177.4 million from $169.4 million in the same quarter of 2006. Freight revenue, which excludes fuel surcharges, increased 8.4 percent to $151.0 million in the 2007 quarter from $139.3 million in the 2006 quarter. The company experienced a net loss of $11.3 million in the 2007 quarter compared with a net loss of $398,000 for the second quarter of 2006.

For the six months ended June 30, total revenue increased 7.2 percent to $343.8 million in 2007 from $320.9 million during 2006. Freight revenue increased 9.6 percent to $294.6 million in 2007 from $268.8 million in 2006. The company generated a net loss of $13.3 million compared with a net loss of $1.3 million for 2006.

“To my fellow stockholders, I want to express my sincere regret and disappointment with our financial results for the second quarter of 2007,” said David R. Parker, chairman, president and chief executive officer of Chattanooga, Tenn.-based Covenant. “Although a majority of the loss is attributable to three items of an infrequent nature, and we knew our ongoing business realignment would involve fluctuations in results, the results are nonetheless disappointing.”

Parker said Covenant considers the increase in insurance accrual related to settlement of two large claims during the quarter, the change in estimated effective tax rate, and the impairment charge associated with the sale of the corporate airplane, to be infrequent in nature.

“There were a few operational improvements during the quarter, particularly in the asset productivity of the regional service offering, but these improvements were overshadowed by the overall numbers,” he said. “We are committed to a full evaluation of the company’s strategy and are leaving no stone unturned in our effort to improve the company’s results,” Parker said. “Fortunately, we have a strong balance sheet, many fine customers, a loyal employee base and stable relationships with our lenders that provide a solid foundation for the company as we continue the turnaround process.”