Covenant Expects 4Q Earnings to Rise
Separately, the truckload carrier also recently announced a public stock offering and new investments in active safety technology.
In the update to its quarterly outlook, Covenant said freight demand is trending “solidly above” the fourth quarter of 2013, but did not provide an estimated earnings range for the current period. In last year’s quarter, the company posted net income of $3.3 million, or 22 cents per share.
Covenant said its revenue increased 10.9% in October compared with the same month last year.
Meanwhile, average freight revenue per tractor grew 10.6% in October from a year ago and climbed about 16% in the first 12 days of November, the company said.
Covenant also said its average seated truck count in October jumped by about 35% compared with the third quarter.
Although fuel prices had been declining during the quarter, Covenant said it expects that trend to have only a limited effect on the company because about 27% of its expected fuel usage is hedged at prices higher than those actually paid by the company in the quarter thus far.
Covenant also announced Nov. 13 that it had commenced a public offering of 2.2 million shares of its common stock.
The company, which had about 15.1 million shares outstanding last quarter, said it expects to use the proceeds from the offering to repay debt.
The underwriters will have an option to buy up to 330,000 additional shares, the company said.
A day earlier, Covenant said it is expanding its fleet’s active safety technology by including collision-avoidance equipment on all of its new trucks.
The company said it will include Meritor Wabco’s OnGuard collision-mitigation system and OnLane lane-departure warning system on every new truck it orders, beginning in November.
“Safety is paramount to providing excellent customer service, and we are committed to providing our professional driving force and the motoring public with the safest equipment available in the marketplace,” Joey Hogan, Covenant’s chief operating officer, said in the announcement.
The carrier said it began installing SmartTrac roll stability technology on most new tractor deliveries in early 2013.
Covenant, based in Chattanooga, Tennessee, ranks No. 43 on Transport Topics’ TT100 list of the largest for-hire carriers in North America.
