Exhibit 99.1
COVENANT TRANSPORT, INC. ANNOUNCES THIRD QUARTER
FINANCIAL AND OPERATING RESULTS
CHATTANOOGA, TENNESSEE - October 23, 2003 - Covenant Transport, Inc.
(Nasdaq/NMS:CVTI) announced today financial and operating results for the third
quarter ended September 30, 2003.
For the quarter, total revenue increased 3.7%, to $146.5 million from $141.2
million for the same quarter of 2002. Total revenue included fuel surcharges and
other accessorial revenue of $8.2 million for the quarter, compared with $5.9
million for the same quarter of 2002. Excluding fuel surcharge and other
accessorial revenue, the increase in freight revenue was 2.2%, or $3.0 million,
for the quarter. The Company measures revenue, before fuel surcharge and other
accessorial revenue, or "freight revenue," in addition to total revenue, because
management believes removing this sometimes volatile source of revenue affords a
more consistent basis for comparing results of operations from period to period.
Net income increased 12.1%, to $4.1 million from $3.6 million for the same
quarter of 2002. Net income per diluted share increased 12.0%, to $0.28 from
$0.25 for the same quarter of 2002.
For the nine months ended September 30, 2003, total revenue increased 3.0%, to
$430.3 million from $417.8 million for the same period of 2002. Total revenue
included fuel surcharges and other accessorial revenue of $26.6 million for the
nine months ended September 30, 2003, compared with $14.6 million for the nine
months ended September 30, 2002. Excluding fuel surcharge and other accessorial
revenue, the increase in freight revenue was 0.1%, or $0.6 million, for the nine
months. Net income increased 63.5%, to $8.1 million from $4.9 million for the
same period of 2002. During the first quarter of 2002, the Company recognized
pre-tax charges of $3.3 million to reflect an impairment in tractor values and
$1.4 million to reflect the early extinguishment of debt.
Chairman, President, and Chief Executive Officer David R. Parker stated, "Strong
freight demand that continued to build throughout the quarter helped us raise
revenue per tractor by 3.8% compared with the same quarter of 2002. We believe
that the shipping market continues to be impacted by a more favorable
relationship between demand and truck capacity, which contributed to an increase
of our average revenue per loaded mile by just over two cents for the quarter
while improving miles per tractor as well. As a result, we were able to grow
freight revenue by 2.2% while operating approximately 1.5% fewer weighted
average tractors. On the expense side, our after-tax cost per mile increased
$.008 per mile. As previously announced, the higher costs of new tractors and
trailers, which resulted from updating our fleet, increased our ownership/lease
costs by $.015 per mile. Savings in other areas partially offset this increase.
Ownership/lease costs include both leased and owned equipment and are reflected
in the combined cost of equipment rentals, depreciation, and interest. Our
results for the quarter included approximately $723,000 in workers' compensation
expense relating to a natural gas explosion at our Indiana terminal and an
approximately $250,000 non-cash benefit from interest rate changes under SFAS
No. 133.
Our balance sheet remains strong. At September 30, 2003, our total debt was
approximately $44.7 million and stockholders' equity was $186.8 million for a
total debt-to-capitalization ratio of 19.3%. Since the beginning of the year, we
have reduced our balance sheet debt by approximately $39.0 million while
improving the average age of our tractors and trailers. The present value of our
operating leases increased $18.0 million during that time due to the number of
leased tractors and trailers and two sale-leaseback transactions. As previously
discussed, we expect to significantly reduce the average age of our revenue
equipment during 2003. During the year, we expect to purchase or lease
approximately 1600 tractors and 2900 trailers and trade or sell approximately
1400 tractors and 1800 trailers. By year end, we expect the average age of our
tractors to be approximately 18 months and our trailers to be approximately 42
months."
The Company will be hosting a conference call on Friday, October 24, 2003, at
11:00 a.m. EST. The public will be able to listen and participate in the call
telephonically by dialing 1-800-603-1780 access code 3141331. For more
information on how to access the conference call and for statistical and
financial information regarding the Company that is expected to be discussed
during the conference call, please visit our website at
www.covenanttransport.com.
Covenant Transport, Inc. is a public truckload carrier that offers just-in-time
service and other premium transportation services for customers throughout the
United States. Covenant operates one of the ten largest fleets in North America
and is committed to growing revenue and earnings per share both internally and
through acquisitions. The Company's common stock is traded on the Nasdaq
National Market under symbol, "CVTI."
This press release contains forward-looking statements that involve risk,
assumptions, and uncertainties that are difficult to predict. Statements that
constitute forward-looking statements are usually identified by words such as
"anticipates," "believes," "estimates," "projects," "expects," "plans,"
"intends," or similar expressions. These statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such statements are based upon the current beliefs and expectations of our
management and are subject to significant risks and uncertainties. Actual
results may differ from those set forth in the forward-looking statements. The
following factors, among others, could cause actual results to differ materially
from those in forward-looking statements: excess tractor or trailer capacity in
the trucking industry; decreased demand for our services or loss of one or more
of our major customers; surplus inventories; recessionary economic cycles and
downturns in customers' business cycles; strikes, work slow downs, or work
stoppages at the Company, customers, parts, or other shipping related
facilities; increases or rapid fluctuations in fuel prices as well as
fluctuations in hedging activities and surcharge collection, the volume and
terms of diesel purchase commitments, interest rates, fuel taxes, tolls, and
license and registration fees; increases in the prices paid for new revenue
equipment; the resale value of our used equipment and the price of new
equipment; increases in compensation for and difficulty in attracting and
retaining qualified drivers and independent contractors; elevated experience in
the frequency and severity of claims relating to accident, cargo, workers'
compensation, health, and other claims; high insurance premiums and deductible
amounts; seasonal factors such as harsh weather conditions that increase
operating costs; competition from trucking, rail, and intermodal competitors;
regulatory requirements that increase costs or decrease efficiency, including
revised hours-of-service requirements for drivers; the ability to successfully
execute the Company's initiative of improving the profitability of medium length
of haul movements; and the ability to identify acceptable acquisition
candidates, consummate acquisitions, and integrate acquired
operations. Readers should review and consider these factors along with the
various disclosures by the Company in its press releases, stockholder reports,
and filings with the Securities Exchange Commission.
For further information contact:
Joey B. Hogan, Executive VP and Chief Financial Officer (423) 825-3336
hogjoe@covenanttransport.com
For copies of Company information contact:
Kim Perry (423) 825-3357
perkim@covenanttransport.com
Covenant Transport, Inc.
Key Financial and Operating Statistics
Three Months Ended Sept. 30 Nine Months Ended Sept. 30
---------------------------------- -----------------------------------
($000s) 2003 2002 % Change 2003 2002 % Change
---- ---- -------- ---- ---- --------
Freight revenue $138,245 $135,275 2.2% $403,708 $403,135 0.1%
Fuel surcharge and other accessorial revenue 8,238 5,948 26,592 14,619
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Total revenue $146,483 $141,223 3.7% $430,300 $417,754 3.0%
Operating expenses
Salaries, wages and related expenses 55,863 55,315 165,335 169,647
Fuel expense 26,370 24,077 81,660 70,223
Operations and maintenance 10,161 10,697 30,446 29,824
Revenue equipment rentals and
purchased transportation 18,634 14,711 50,014 44,368
Operating taxes and licenses 3,343 3,165 10,519 10,357
Insurance and claims 8,240 7,840 25,836 22,844
Communications and utilities 1,868 1,567 5,307 5,103
General supplies and expenses 3,527 3,579 10,526 10,727
Depreciation and amortization(1) 9,991 11,492 31,208 37,466
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Total operating expenses 137,997 132,443 410,851 400,559
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Operating income 8,486 8,780 -3.3% 19,449 17,195 13.1%
Other (income) expenses:
Interest expense 538 868 1,786 2,802
Interest income (43) (18) (106) (52)
Other (251) 738 (206) 949
Early extinguishment of debt(2) - - - 1,434
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Other (income) expenses, net 244 1,588 1,474 5,133
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Income before income taxes 8,242 7,192 14.6% 17,975 12,062 49.0%
Income tax expense 4,192 3,581 9,923 7,138
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Net income $4,050 $3,611 12.1% $8,052 $4,924 63.5%
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(1) Includes a $3.3 million pre-tax impairment charge which was incurred in the first quarter of 2002.
(2) Reflects the reclassification of early extinguishment of debt due to the adoption of SFAS 145.
Basic earnings per share $0.28 $0.25 12.0% $0.56 $0.35 60.0%
Diluted earnings per share $0.28 $0.25 12.0% $0.55 $0.34 61.8%
Weighted avg. common shares outstanding 14,461 14,317 14,413 14,171
Weighted avg. common shares outstanding 14,692 14,704 14,652 14,465
adjusted for assumed conversions
Operating statistics exclude fuel and accessorial surcharges.
Net margin as a percentage of freight revenue 2.9% 2.7% 2.0% 1.2%
Average revenue per loaded mile $1.241 $1.218 1.9% $1.236 $1.208 2.3%
Average revenue per total mile $1.146 $1.134 1.1% $1.138 $1.123 1.3%
Average revenue per tractor per week $2,927 $2,819 3.8% $2,818 $2,796 0.8%
Average miles per tractor per period 33,568 32,664 2.8% 96,444 97,106 -0.7%
Weighted avg. tractors for period 3,584 3,639 -1.5% 3,665 3,679 -0.4%
Tractors at end of period 3,586 3,629 -1.2% 3,586 3,629 -1.2%
Trailers at end of period 8,294 7,557 9.8% 8,294 7,557 9.8%
Sept 2003 Dec 2002
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Total assets $339,590 $361,541
Total equity 186,805 175,588
Total debt, including current maturities 44,653 83,530
Debt to Capitalization Ratio 19.3% 32.2%