Covenant Transportation (CVTI) Guides Q3 Profit Ahead of Expectations

Covenant Transportation (NASDAQ: CVTI) its expectations regarding financial results for the third quarter of 2014.

Financial and Operating Results

Chairman, President and Chief Executive Officer, David R. Parker, offered the following comments: "Strong operating metrics for the first two months of the quarter have caused us to increase our financial expectations for the quarter. For the third quarter of 2014, we expect to report consolidated net income in a range of $0.05 to $0.11 per diluted share. These expected results include the additional reserve for a cargo claim of $0.29 to $0.33 per diluted share related to an adverse judgment regarding a 2008 cargo claim that we announced on September 2, 2014. On a non-GAAP basis, without the additional reserve for this cargo claim, we expect to report consolidated net income in a range of $0.35 to $0.40 per diluted share. These expected results compare to reported consolidated net income of $0.13 per diluted share for the third quarter of 2013.

*** The Street consensus calls for Q3 EPS of $0.22 and revs of $172.8 million.

"The expected significant improvement in earnings per diluted share, excluding the additional cargo claim reserve, should relate primarily to higher freight revenue per tractor (excluding fuel surcharge revenue) in our asset-based business, lower costs of fuel (net of fuel surcharge recovery), partially offset by higher salaries, wages and related expenses from increased employee pay adjustments since the third quarter of 2013. During July and August, we experienced a significant increase in demand, particularly in our expedited team-driver operations, which supported higher than expected freight revenue per mile (excluding fuel surcharge revenue) and miles per tractor. Although not at the levels of August, we have continued to experience strong freight demand thus far in September for our service offerings. In addition, our fleet had grown to 2,614 trucks at the end of August, a 50 truck increase from our reported fleet size of 2,564 trucks at the end of June. We will remain focused on our professional drivers and the needs of our customers going forward."

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