Covenant reports 3Q net loss of $3.6M

user-gravatar Headshot

Covenant Transportation Group announced Thursday, Oct. 18, financial and operating results for the quarter ended Sept. 30. For the quarter, total revenue decreased 0.5 percent to $175.8 million from $176.7 million in the same quarter of 2006. Freight revenue, which excludes fuel surcharges, increased 3.0 percent to $148.5 million in the 2007 quarter from $144.1 million in the 2006 quarter.

The company measures freight revenue because management believes that fuel surcharges tend to be a volatile source of revenue and the removal of such surcharges affords a more consistent basis for comparing results of operations from period to period. The company experienced a net loss of $3.6 million in the 2007 quarter compared with net income of $795,000 for the third quarter of 2006.

“Regarding the freight market, similar to last year, we did not see the typical peak shipping period that usually begins in August,” said David R. Parker, chairman, president and chief executive officer of Chattanooga, Tenn.-based Covenant. “The third-quarter freight market reflected a sustained decline in truck tonnage and numerous requests for bid packages.”

For the nine months ended Sept. 30, total revenue increased 4.4 percent to $519.6 million in 2007 from $497.5 million during 2006. Freight revenue increased 7.3 percent to $443.1 million in 2007 from $412.9 million in 2006. The company generated a net loss of $16.9 million, compared with a net loss of $487,000 for the 2006 period.

“Looking ahead to the fourth quarter, our previous goal to post a small profit does not appear to be achievable as the economy, rates and fuel surcharge collection are not expected to improve substantially,” said Joey Hogan, senior executive vice president and chief operating officer. “We continue to caution our stockholders, employees and customers that we are anticipating slow and modest improvements given the current freight environment.”