Covenant Transportation Group, Inc. (NASDAQ/GS: CVTI) (“CTG”)
announced today financial and operating results for the fourth
quarter ended December 31, 2019.
Highlights for the quarter included the
following(1):
- Total revenue of $233.1 million, a
decrease of 14.4% compared with the fourth quarter of 2018.
- Freight revenue of $209.9 million
(excludes revenue from fuel surcharges), a decrease of 14.0%
compared with the fourth quarter of 2018.
- Operating income of $3.7 million
and an operating ratio of 98.4%. Adjusted operating
income(2) of $4.4 million and an adjusted
operating ratio(2) of 97.9%. This compares with
operating income of $22.3 million and an operating ratio of 91.8%
and adjusted operating income(2) of $23.0 million
and an adjusted operating ratio(2) of 90.6% in the
fourth quarter of 2018.
- Net income of $1.2 million, or
earnings per diluted share of $0.06. This compares with net income
of $16.5 million, or earnings per diluted share of $0.89 in the
fourth quarter of 2018. Adjusted net income(2) of
$1.9 million, or adjusted earnings per diluted
share(2) of $0.10. This compares with adjusted net
income(2) of $17.0 million, or adjusted earnings
per diluted share(2) of $0.92 per diluted share in
the fourth quarter of 2018.
- The fourth quarter consolidated net
income and adjusted net income included a $0.4 million, or $0.02
per diluted share pass-through loss from the Company’s 49% equity
investment in Transport Enterprise Leasing (“TEL”), primarily due
to a TEL customer bankruptcy. This compares to a $1.7 million, or
$0.09 per diluted share pass-through gain from the Company’s
investment in TEL included in consolidated net income and adjusted
net income in the fourth quarter of 2018.
Chairman and Chief Executive Officer, David R.
Parker, commented: “We are relatively pleased to return to
profitability for the fourth quarter based on higher revenue per
tractor and lower costs per mile sequentially versus the third
quarter of 2019. However, by no means are we satisfied with
the result. For the fourth quarter and all of 2019, we
battled a difficult operating environment, marked by excess
industry capacity, lackluster freight volumes, intense competition
from freight brokerage competitors, and higher operating
costs. In this environment, we continued to execute our
enterprise-wide efforts to become more deeply embedded in our
customers’ supply chains, capture more consistent and profitable
year-round freight, and allocate capital to operations with better
returns.
“Our Managed Freight and dedicated Truckload
operations (together approximately 60% of our consolidated freight
revenue) were solidly profitable overall and exhibited moderate
year-over-year market volatility, with the exception of our
automotive dedicated operations, which were negatively impacted by
a customer strike that ended October 25, 2019. In addition,
our irregular route expedited business generated a mid-single digit
operating margin, which is below our normal expectations, but an
improvement sequentially. However, our solo-driven
refrigerated Truckload operations deteriorated materially, and as
part of our strategic plan, we are reducing our exposure to the
solo-driven refrigerated business, in particular unprofitable
irregular route contracts.”
Management Discussion—Truckload
OperationsMr. Parker continued: “For the quarter, total
revenue in our Truckload operations decreased to $176.0 million, a
decrease of $28.8 million compared with the fourth quarter of
2018. This decrease consisted of $23.6 million lower freight
revenue and $5.2 million lower fuel surcharge revenue. The $23.6
million decrease in freight revenue primarily related to 10.4%
decrease in average freight revenue per truck and a 3.4% decrease
in the average size of the operational truck fleet.
“Average freight revenue per tractor per week
decreased to $3,857 during the 2019 quarter from $4,304 during the
2018 quarter. Average freight revenue per total mile decreased by
24.2 cents per mile, or 11.3%, compared to the 2018 quarter, while
average miles per tractor increased by 1.1%. A portion of the
reduction in freight revenue per total mile was planned, as we have
steadily increased the percentage of our assets allocated to
dedicated truckload or other year-round service offerings, leaving
a smaller percentage to participate in the more volatile peak
season, which secures significantly higher rates for a few
weeks. The other primary factors were continued capacity and
demand imbalance and a reduction in certain of our customers’ peak
season team capacity needs this year. The main factor
impacting the increased utilization was an improved average seated
truck percentage, as only 1.5% of our operational truck fleet
lacked drivers during the 2019 quarter compared with 3.0% during
the 2018 quarter.
“Salaries, wages, and related expenses decreased
9.3 cents per total mile compared to the 2018 quarter. On a per
mile basis, reduced group health insurance, peak-season
professional driver wages, and variable incentive compensation for
non-drivers more than offset increased year-over-year workers’
compensation expense.
“Net fuel expense increased by 4.0 cents per
total mile in the 2019 quarter, primarily as a result of a reduced
fuel surcharge recovery percentage due to customer mix adjustments,
partially offset by lower average diesel fuel prices in the current
year quarter. Ultra-low sulfur diesel prices as measured by the
Department of Energy averaged $0.20/gallon lower in the fourth
quarter of 2019 compared with the 2018 quarter.
“General supplies and expenses increased $2.1
million compared with the prior year quarter related to increased
professional advisory fees for real estate, income tax, strategic
planning, legal, and procurement activities.
“Capital costs (combined depreciation and
amortization, leased revenue equipment expense, building rent and
interest expense) were relatively consistent year-over-year on a
quarterly basis, however with a $0.9 million increase to leased
revenue equipment and a $0.5 million increase to interest expense
partially offset by a $1.1 million decrease in depreciation
expense, including gains and losses on disposition of property and
equipment.”
Management Discussion—Non-Asset Based
Managed FreightMr. 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 decreased 15.5%, to
$57.0 million from $67.5 million in the same quarter of 2018. The
primary factor to the reduced revenue was a reduction in certain of
our brokerage customers’ peak season capacity needs this year.
Operating income was $4.6 million for an operating ratio of 91.9%,
compared with operating income of $6.0 million and an operating
ratio of 91.1% in the fourth 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 December 31, 2019, our total lease-adjusted
indebtedness net of cash (“net lease-adjusted indebtedness”), was
approximately $304.6 million, and our stockholders’ equity was
$350.1 million, for a ratio of net lease-adjusted indebtedness to
capitalization of 46.5% compared to 42.6% as of December 31, 2018.
In addition, our leverage ratio (defined as: net lease-adjusted
indebtedness divided by trailing four quarters’ earnings before
interest, taxes, depreciation, amortization, and rental expense)
has increased to 2.4x from 1.5x for the period ended December 31,
2018. At December 31, 2019, the Company's total balance sheet
indebtedness, net of cash, plus the present value of operating
leases that were not recorded on the balance sheet prior to the
adoption of ASC Topic 842, Leases, increased by approximately $50.0
million compared with the 2018 year-end. The impact of the adoption
of ASC Topic 842 on leverage ratio 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 December 31, 2019, provided net proceeds of $6.5
million as compared to net capital expenditures of $18.2 million
for the prior year period. In fiscal 2019, we took delivery of
approximately 1,258 new company tractors, disposed of approximately
742 used tractors, and at December 31 had approximately 625
tractors (“excess tractors”) removed from our operating fleet that
are either in the process of being prepared or have already been
prepared and are held for sale. Our current tractor fleet plan for
fiscal 2020 includes the delivery of 525 new company replacement
tractors, the disposal of 550 used tractors from our current
operating fleet throughout the course of the year, and the disposal
of the 625 excess tractors in the first half of 2020. By the end of
2020, the size of our operating tractor fleet is expected to be
flat to down 2.0% compared to the 3,021 tractors we operated at the
end of 2019.”
OutlookMr. Cribbs commented on
the Company’s outlook: “From a financial perspective, we expect
operating cash flows, and our leverage ratio to improve for fiscal
2020 compared with fiscal 2019. We expect financial
improvements to be weighted toward the second half of the year, as
year-over-year comparisons in consolidated average freight revenue
per total mile and margin performance in certain irregular route
Truckload operations are expected to be negative for at least the
next several months. Our expectations for improving
performance throughout 2020 are based on assumptions of (i)
declining truckload industry capacity (due to, among other factors,
a continuation of falling new truck production, competitors exiting
the industry, and tighter federal drug testing regulations), (ii)
continued U.S. economic expansion, (iii) the successful disposal of
excess real estate and revenue equipment, and (iv) the reallocation
of assets to more profitable operations. The timing and
magnitude of these factors will impact our results.
“For 2020, we are intensely focused on
accelerating our plans to become increasingly embedded in our
customers’ supply chains, reduce the cyclicality and seasonality of
our financial results through growth in our higher margin, yet less
volatile services, and to enhance sustainable long-term earnings
power and return on invested capital for our shareholders through
disciplined strategic planning and execution. Our operational
focus areas are as follows:
- In our Truckload operations, we are
seeking to tighten our one-way irregular route Truckload freight
network, to re-allocate capacity from solo-driven refrigerated to
more profitable dedicated and dry-van opportunities, to decrease
real estate and revenue equipment capital costs per mile, and to
reduce other controllable costs. Regarding the dedicated Truckload
service offering, we have recently been awarded significant new
long-term business that is scheduled to be operational beginning
within the second quarter of 2020.
- In our Managed Freight operations,
we have attained excellent customer retention rates in our more
profitable warehousing, transportation management and factoring
service offerings. We expect continued growth with these customers,
as well as with new customer opportunities. We have a strong sales
pipeline in these offerings for which we have targeted growth and
have already secured some long-term awards for our warehousing
services that are scheduled to begin late in the first quarter or
during the second quarter of 2020.”
“From a balance sheet perspective, with net
capital expenditures scheduled well below normal replacement cycle,
along with positive operating cash flows, we expect to reduce net
lease-adjusted indebtedness over the course of fiscal 2020.”
Conference Call InformationThe
Company will host a live conference call tomorrow, January 24,
2020, 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
CTG4. An audio replay will be available for one week
following the call at 877-919-4059, access code 61166604. 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, operating ratio, net
income and earnings per diluted share, we use adjusted operating
income, adjusted operating ratio, adjusted net income and adjusted
earnings per diluted share, non-GAAP measures, as key measures of
profitability. Adjusted operating income, adjusted operating ratio,
adjusted net income and adjusted diluted earnings per share are not
substitutes for operating income, operating ratio, net income and
earnings 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, operating ratio, net income and earnings 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, adjusted
operating ratio, adjusted net income and adjusted diluted earnings
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, adjusted
operating ratio, adjusted net income and adjusted earnings per
diluted share should not be considered measures of income 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 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: 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 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
Assistant
TIves@covenanttransport.com
|
Covenant
Transportation Group, Inc. |
Key
Financial and Operating Statistics |
|
|
|
|
|
|
|
|
|
|
|
INCOME
STATEMENT DATA |
|
INCOME
STATEMENT DATA |
|
|
Three Months Ended Dec 31, |
|
Year Ended Dec 31, |
($000s, except per share data) |
|
2019 |
|
|
2018 |
|
%
Change |
|
2019 |
|
|
2018 |
|
%
Change |
Freight revenue |
$ |
209,890 |
|
$ |
244,008 |
|
-14.0 |
% |
|
$ |
800,401 |
|
$ |
779,729 |
|
2.7 |
% |
Fuel surcharge revenue |
|
23,245 |
|
|
28,260 |
|
|
|
|
94,127 |
|
|
105,726 |
|
|
|
Total revenue |
$ |
233,135 |
|
$ |
272,268 |
|
-14.4 |
% |
|
$ |
894,528 |
|
$ |
885,455 |
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Salaries,
wages, and related expenses |
|
82,621 |
|
|
92,825 |
|
|
|
|
321,997 |
|
|
304,447 |
|
|
|
Fuel
expense |
|
29,449 |
|
|
31,446 |
|
|
|
|
115,307 |
|
|
121,264 |
|
|
|
Operations
and maintenance |
|
14,691 |
|
|
14,723 |
|
|
|
|
59,505 |
|
|
55,505 |
|
|
|
Revenue
equipment rentals and |
|
|
|
|
|
|
|
|
purchased transportation |
|
58,387 |
|
|
68,121 |
|
|
|
|
204,655 |
|
|
183,645 |
|
|
|
Operating
taxes and licenses |
|
3,305 |
|
|
3,182 |
|
|
|
|
13,024 |
|
|
11,831 |
|
|
|
Insurance
and claims |
|
11,966 |
|
|
12,064 |
|
|
|
|
47,724 |
|
|
43,333 |
|
|
|
Communications and utilities |
|
1,700 |
|
|
1,844 |
|
|
|
|
6,969 |
|
|
7,061 |
|
|
|
General
supplies and expenses |
|
8,733 |
|
|
6,395 |
|
|
|
|
30,434 |
|
|
23,227 |
|
|
|
Depreciation
and amortization, including gains and |
|
|
|
|
|
|
|
|
losses on disposition of property and equipment |
|
18,588 |
|
|
19,353 |
|
|
|
|
78,879 |
|
|
76,156 |
|
|
Total operating expenses |
|
229,440 |
|
|
249,953 |
|
|
|
|
878,494 |
|
|
826,469 |
|
|
Operating income |
|
3,695 |
|
|
22,315 |
|
|
|
|
16,034 |
|
|
58,986 |
|
|
Interest expense, net |
|
2,990 |
|
|
2,348 |
|
|
|
|
11,110 |
|
|
8,708 |
|
|
(Income) loss from equity method investment |
|
531 |
|
|
(2,325 |
) |
|
|
|
(7,017 |
) |
|
(7,732 |
) |
|
Income before income taxes |
|
174 |
|
|
22,292 |
|
|
|
|
11,941 |
|
|
58,010 |
|
|
Income tax expense (benefit) |
|
(988 |
) |
|
5,791 |
|
|
|
|
3,464 |
|
|
15,507 |
|
|
Net income |
$ |
1,162 |
|
$ |
16,501 |
|
|
|
$ |
8,477 |
|
$ |
42,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.06 |
|
$ |
0.90 |
|
|
|
$ |
0.46 |
|
$ |
2.32 |
|
|
Diluted earnings per share |
$ |
0.06 |
|
$ |
0.89 |
|
|
|
$ |
0.45 |
|
$ |
2.30 |
|
|
Basic weighted average shares outstanding (000s) |
|
18,462 |
|
|
18,347 |
|
|
|
|
18,435 |
|
|
18,340 |
|
|
Diluted weighted average shares outstanding (000s) |
|
18,681 |
|
|
18,533 |
|
|
|
|
18,635 |
|
|
18,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended Dec 31, |
|
Year Ended Dec 31, |
|
|
|
2019 |
|
|
2018 |
|
%
Change |
|
2019 |
|
|
2018 |
|
%
Change |
($000s) |
SEGMENT
REVENUES |
|
SEGMENT
REVENUES |
Asset-based truckload revenues |
$ |
152,845 |
|
$ |
176,474 |
|
-13.4 |
% |
|
$ |
605,441 |
|
$ |
621,320 |
|
-2.6 |
% |
Managed freight revenues |
|
57,045 |
|
|
67,534 |
|
-15.5 |
% |
|
|
194,960 |
|
|
158,409 |
|
23.1 |
% |
|
Freight revenue |
$ |
209,890 |
|
$ |
244,008 |
|
-14.0 |
% |
|
$ |
800,401 |
|
$ |
779,729 |
|
2.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
OPERATING
STATISTICS |
|
OPERATING
STATISTICS |
Average freight revenue per loaded mile |
$ |
2.094 |
|
$ |
2.360 |
|
-11.3 |
% |
|
$ |
2.071 |
|
$ |
2.130 |
|
-2.8 |
% |
Average freight revenue per total mile |
$ |
1.893 |
|
$ |
2.135 |
|
-11.3 |
% |
|
$ |
1.869 |
|
$ |
1.938 |
|
-3.6 |
% |
Average freight revenue per tractor per week |
$ |
3,857 |
|
$ |
4,304 |
|
-10.4 |
% |
|
$ |
3,778 |
|
$ |
4,191 |
|
-9.9 |
% |
Average miles per tractor per period |
|
26,774 |
|
|
26,493 |
|
1.1 |
% |
|
|
105,379 |
|
|
112,736 |
|
-6.5 |
% |
Weighted avg. tractors for period |
|
3,015 |
|
|
3,120 |
|
-3.4 |
% |
|
|
3,073 |
|
|
2,843 |
|
8.1 |
% |
Tractors at end of period |
|
3,021 |
|
|
3,154 |
|
-4.2 |
% |
|
|
3,021 |
|
|
3,154 |
|
-4.2 |
% |
Trailers at end of period |
|
6,739 |
|
|
6,950 |
|
-3.0 |
% |
|
|
6,739 |
|
|
6,950 |
|
-3.0 |
% |
|
|
SELECTED
BALANCE SHEET DATA |
|
|
|
|
($000s, except per share data) |
12/31/19 |
12/31/18 |
|
|
|
|
|
Total assets |
$ |
881,850 |
|
$ |
773,524 |
|
|
|
|
|
|
Total stockholders' equity |
$ |
350,110 |
|
$ |
343,142 |
|
|
|
|
|
|
Total indebtedness, net of cash |
$ |
304,573 |
|
$ |
254,544 |
|
|
|
|
|
|
Net Indebtedness to Capitalization Ratio |
|
46.5 |
% |
|
42.6 |
% |
|
|
|
|
|
Tangible book value per basic share |
$ |
15.07 |
|
$ |
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 Dec 31, |
|
Year Ended Dec 31, |
GAAP Presentation |
|
2019 |
|
|
2018 |
|
bps
Change |
|
2019 |
|
|
2018 |
|
bps
Change |
Total revenue |
$ |
233,135 |
|
$ |
272,268 |
|
|
|
$ |
894,528 |
|
$ |
885,455 |
|
|
Total operating expenses |
|
229,440 |
|
|
249,953 |
|
|
|
|
878,494 |
|
|
826,469 |
|
|
|
Operating
income |
$ |
3,695 |
|
$ |
22,315 |
|
|
|
$ |
16,034 |
|
$ |
58,986 |
|
|
|
Operating
ratio |
|
98.4 |
% |
|
91.8 |
% |
660 |
|
|
|
98.2 |
% |
|
93.3 |
% |
490 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP Presentation |
|
2019 |
|
|
2018 |
|
bps
Change |
|
2019 |
|
|
2018 |
|
bps
Change |
Total revenue |
$ |
233,135 |
|
$ |
272,268 |
|
|
|
$ |
894,528 |
|
$ |
885,455 |
|
|
Fuel surcharge revenue |
|
(23,245 |
) |
|
(28,260 |
) |
|
|
|
(94,127 |
) |
|
(105,726 |
) |
|
|
Freight
revenue (total revenue, excluding fuel surcharge) |
|
209,890 |
|
|
244,008 |
|
|
|
|
800,401 |
|
|
779,729 |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
229,440 |
|
|
249,953 |
|
|
|
|
878,494 |
|
|
826,469 |
|
|
Adjusted for: |
|
|
|
|
|
|
|
Fuel surcharge revenue |
|
(23,245 |
) |
|
(28,260 |
) |
|
|
|
(94,127 |
) |
|
(105,726 |
) |
|
Amortization of intangibles (3) |
|
(731 |
) |
|
(731 |
) |
|
|
|
(2,923 |
) |
|
(1,462 |
) |
|
|
Adjusted
operating expenses |
|
205,464 |
|
|
220,962 |
|
|
|
|
781,444 |
|
|
719,281 |
|
|
|
Adjusted
operating income |
|
4,426 |
|
|
23,046 |
|
|
|
|
18,957 |
|
|
60,448 |
|
|
|
Adjusted
operating ratio |
|
97.9 |
% |
|
90.6 |
% |
730 |
|
|
|
97.6 |
% |
|
92.2 |
% |
540 |
|
|
|
|
|
|
|
|
|
|
(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 Dec 31, |
|
Year Ended Dec 31, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
2019 |
|
|
2018 |
|
|
GAAP Presentation - Net income |
$ |
1,162 |
|
$ |
16,501 |
|
|
|
$ |
8,477 |
|
$ |
42,503 |
|
|
Adjusted for: |
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
(988 |
) |
|
5,791 |
|
|
|
|
3,464 |
|
|
15,507 |
|
|
|
Income
before income taxes |
|
174 |
|
|
22,292 |
|
|
|
|
11,941 |
|
|
58,010 |
|
|
Amortization of intangibles (3) |
|
731 |
|
|
731 |
|
|
|
|
2,923 |
|
|
1,462 |
|
|
|
Adjusted
income before income taxes |
|
905 |
|
|
23,023 |
|
|
|
|
14,864 |
|
|
59,472 |
|
|
Benefit from (provision for) income tax expense at effective
rate |
|
968 |
|
|
(5,981 |
) |
|
|
|
(4,312 |
) |
|
(15,898 |
) |
|
Impact of federal income tax adjustments (4) |
|
- |
|
|
- |
|
|
|
|
849 |
|
|
- |
|
|
|
Non-GAAP Presentation - Adjusted net income |
$ |
1,873 |
|
$ |
17,042 |
|
|
|
$ |
11,401 |
|
$ |
43,574 |
|
|
|
|
|
|
|
|
|
|
|
GAAP Presentation - Diluted earnings per share
("EPS") |
$ |
0.06 |
|
$ |
0.89 |
|
|
|
$ |
0.45 |
|
$ |
2.30 |
|
|
Adjusted for: |
|
|
|
|
|
|
|
Income tax expense |
|
(0.05 |
) |
|
0.31 |
|
|
|
|
0.19 |
|
|
0.84 |
|
|
|
Income
before income taxes |
|
0.01 |
|
|
1.20 |
|
|
|
|
0.64 |
|
|
3.14 |
|
|
Amortization of intangibles (3) |
|
0.04 |
|
|
0.04 |
|
|
|
|
0.16 |
|
|
0.08 |
|
|
|
Adjusted
income before income taxes |
|
0.05 |
|
|
1.24 |
|
|
|
|
0.80 |
|
|
3.22 |
|
|
Benefit from (provision for) income tax expense at effective
rate |
|
0.05 |
|
|
(0.32 |
) |
|
|
|
(0.23 |
) |
|
(0.86 |
) |
|
Impact of federal income tax adjustments (4) |
|
- |
|
|
- |
|
|
|
|
0.05 |
|
|
- |
|
|
|
Non-GAAP Presentation - Adjusted EPS |
$ |
0.10 |
|
$ |
0.92 |
|
|
|
$ |
0.61 |
|
$ |
2.36 |
|
|
|
|
|
|
|
|
|
|
|
(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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