Covenant Transport turned a financial corner of sorts as it posted 327% higher profits in the third quarter compared to the same period last year. The TL carrier had lost nearly $2 million this year to cover the declining value of its tractor fleet.
Chattanooga, TN-based Covenant said its freight revenues decreased 2% to $135.3 million compared to the same quarter in 2001. Net income, however, increased 327% to $3.6 million, up from $845,000 in the same period last year.
For the year, Covenant said its freight revenue dropped 2% to $403.1 million, down from $411.1 million during the same period in 2001. Yet the carrier's net earnings stayed in the black at $4.9 million, after taking a $2 million after-tax charge in the first quarter to reflect the plummeting residual value of its trucks.
CEO David Parker added that freight demand was wildly unpredictable for much of the third quarter, much like "a roller coaster," he said.
"A very strong July was followed by a weak August and a modest rebound in mid-September, with the shutdown at the West Coast ports at the end the quarter," he said.
Despite the fluctuations, Covenant increased revenue per loaded mile 1% and miles per tractor 0.5% versus the same quarter a year ago. Revenue per tractor per week improved almost 2% to $2,819, helping the carrier pay down some $18 million of funded debt in the third quarter, resulting in a ratio of debt to total capitalization of less than 30%, said Parker.