Covenant Transportation Group, Inc., announced financial and operating results for the fourth quarter ended December 31, 2018.
Highlights for the quarter included the following:
Total revenue of $272.3 million, an increase of 33.9% compared with the fourth quarter of 2017. Freight revenue of $244.0 million (excludes revenue from fuel surcharges), an increase of 34.4% compared with the fourth quarter of 2017.
Operating income of $22.3 million and an operating ratio of 91.8%. Adjusted operating income of $23.0 million and an adjusted operating ratio of 90.6%. This compares with adjusted operating income of $14.8 million and an adjusted operating ratio of 91.8% in the fourth quarter of 2017.
Net income of $16.5 million, or earnings per diluted share of $0.89. Adjusted net income of $17.0 million, or adjusted earnings per diluted share of $0.92. This compares with net income of $49.3 million, or $2.68 per diluted share and adjusted net income of $9.2 million, or adjusted earnings per diluted share of $0.50 per diluted share in the fourth quarter of 2017.
Chairman and Chief Executive Officer, David R. Parker, made the following comments: “We are pleased to announce record fourth quarter revenue and adjusted net income. Higher freight revenue per tractor at each of our 3 historical truckload businesses, strong growth and improved margins at our brokerage unit, the addition of Landair, and favorable impacts from our minority investment in Transport Enterprise Leasing all contributed to our record results. Equally important, through our strategy of becoming “closer to the customer”, we believe we have improved our revenue mix and reduced our exposure to seasonal and cyclical volatility by growing around our most capital-intensive service offerings with longer-term contractual business in the dedicated, logistics and warehousing markets. We intend to continue executing this plan in 2019.”
Management Discussion—Truckload Operations
Mr. Parker continued: “For the quarter, total revenue in our truckload operations increased to $204.7 million, an increase of $38.2 million compared with the fourth quarter of 2017. This increase consisted of $31.7 million higher freight revenue and $6.5 million higher fuel surcharge revenue. The $31.7 million increase in freight revenue related to a 562 (or 22.0%) average truck increase and a 1.7% increase in average freight revenue per truck in the 2018 period as compared to the 2017 period, partially offset by a $1.7 million year-over-year reduction in intermodal revenues as we effectively discontinued this consistently unprofitable service offering within our solo-driver refrigerated truckload unit during December 2017. Of the 562 increased average trucks, 430 average trucks were contributed by the Landair acquisition as Landair contributed $19.2 million of freight revenue to consolidated truckload operations in the fourth quarter of 2018.
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