Higher Rates Help Knight, Covenant Improve Profits
Knight Transportation Inc. raised second-quarter net income 7% to $27.6 million, or 33 cents per share, powered by stronger results in both the trucking and logistics businesses, including 6.7% higher revenue per mile. Covenant Transportation Group Inc. nearly tripled net income to $11 million, or 60 cents, and achieved a 5% increase in revenue per mile.
Revenue rose 14% to $301.8 million at Knight, whose second-quarter 2014 earnings were $25.8 million, or 31 cents.
Revenue excluding fuel surcharge collections was 23% higher, Knight reported as revenue from fuel surcharges fell by $13 million. Knight, which is based in Phoenix, reported earnings of $32 million, or 39 cents, on an adjusted basis that reflected $4.4 million in costs to settle two class action suits.
“We continued to successfully execute our internal initiatives to grow our business, improve margins and drive operational efficiency,” CEO Dave Jackson said in a statement.
The truckload operating ratio at Knight, which ranks No. 31 on the Transport Topics list of the Top 100 largest for-hire carriers in the United States and Canada, was 78.8, excluding fuel surcharge.
Knight reported 17% higher logistics revenue and 21% higher income excluding interest and taxes in that unit. Results improved because brokerage loads increased 64%. Intermodal revenue fell 16%, but profitability for truck-rail shipments rose.
At No. 46 Covenant, revenue rose 11%, excluding fuel surcharge collections. Including them, revenue climbed 1% to $175.5 million. In last year’s second quarter, Covenant earned $3.78 million, or 25 cents.
“Freight demand and capacity remain closely in balance as the driver market remains tight,” Covenant CEO David Parker said in a statement that noted the pace of U.S. economic growth remains uncertain.
Covenant Transportation GroupOn a more positive note, he said “discussions thus far with major peak season shippers make us optimistic regarding the demand for our service offerings for the remainder of this fiscal year.”
Covenant’s statement said earnings increased 12 cents per share because of a one-time gain related to insurance premiums.
The truckload operating ratio of 87 was lowered by 3.7 percentage points due to the insurance gain.
Revenue at Covenant’s brokerage unit fell 5% to $12.7 million, but profit excluding interest and taxes rose 3%.
