Covenant Issues 2Q Earnings Guidance Below '04 Level

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ruckload carrier Covenant Transport said Thursday its second-quarter earnings per share would be 2 cents to 8 cents a share, compared with earning 30 cents a share in the same quarter last year.

Chairman and Chief Executive Officer David Parker said the “main factor affecting the quarter is a continuation of softer than expected freight demand.”

Covenant had cited the same reason in taking a first-quarter loss of $650,000 or 4 cents a share, compared with net income of $721,000 or 5 cents a year earlier. (Click here for previous coverage.)

“Other than a brief period of increased demand in late April and early May, our customer demand has not improved to the seasonal level we expected or needed . . . contributing to lower-than-planned tractor productivity,” Parker said in a statement.

Freight revenue per total mile, excluding fuel surcharges, will increase 8%, about 1% per mile less than the company had planned, he said. Covenant projected its miles per tractor would fall about 8% to 9% compared with the same quarter last year.

The primary contributors to higher pre-mile costs are higher driver pay, increased fuel costs and a decrease in total miles, Parker said.

Fuel-price increases, net of surcharge collections, will reduce the company’s earnings by about 6 cents a share compared with 2004, and 10 cents versus the company’s prior outlook, he said.

Covenant is ranked No. 29 on the Transport Topics 100 listing of U.S. and Canadian for-hire carriers.