Covenant Transportation Group, Inc. (NASDAQ/GS: CVTI) (“CTG”)
announced today financial and operating results for the fourth
quarter ended December 31, 2018.
Highlights for the quarter included the
following(1):
- Total revenue of $272.3 million, an
increase of 33.9% compared with the fourth quarter of 2017.
- Freight revenue of $244.0 million
(excludes revenue from fuel surcharges), an increase of 34.4%
compared with the fourth quarter of 2017.
- Operating income of $22.3 million
and an operating ratio of 91.8%. Adjusted operating
income(2) of $23.0 million and an adjusted
operating ratio(2) of 90.6%. This compares with
adjusted operating income(2) of $14.8 million and
an adjusted operating ratio(2) of 91.8% in the
fourth quarter of 2017.
- Net income of $16.5 million, or
earnings per diluted share of $0.89. Adjusted net
income(2) of $17.0 million, or adjusted earnings
per diluted share(2) of $0.92. This compares with
net income of $49.3 million, or $2.68 per diluted share and
adjusted net income(2) of $9.2 million, or
adjusted earnings per diluted share(2) of $0.50
per diluted share in the fourth quarter of 2017.
- In the fourth quarter of 2017, net
income included $40.1 million, or $2.18 per diluted share, of
income tax benefit resulting primarily from our reasonable estimate
of the revaluation of our net deferred tax balances at December 31,
2017 as a result of the enactment of the Tax Cuts and Jobs Act,
signed into law on December 22, 2017.
(1) For information regarding
comparability of the reported results due to the acquisition of
Landair Holdings and its subsidiaries (“Landair”), refer to
footnote (2) of the Non-GAAP Reconciliation (Unaudited) schedules
included with this release.(2) See GAAP to
Non-GAAP Reconciliation in the schedules included with this
release.
Chairman and Chief Executive Officer, David R.
Parker, made the following comments: “We are pleased to announce
record fourth quarter revenue and adjusted net income. Higher
freight revenue per tractor at each of our 3 historical truckload
businesses, strong growth and improved margins at our brokerage
unit, the addition of Landair, and favorable impacts from our
minority investment in Transport Enterprise Leasing all contributed
to our record results. Equally important, through our strategy of
becoming “closer to the customer”, we believe we have improved our
revenue mix and reduced our exposure to seasonal and cyclical
volatility by growing around our most capital-intensive service
offerings with longer-term contractual business in the dedicated,
logistics and warehousing markets. We intend to continue executing
this plan in 2019.”
Management Discussion—Truckload
OperationsMr. Parker continued: “For the quarter, total
revenue in our truckload operations increased to $204.7 million, an
increase of $38.2 million compared with the fourth quarter of
2017. This increase consisted of $31.7 million higher freight
revenue and $6.5 million higher fuel surcharge revenue. The $31.7
million increase in freight revenue related to a 562 (or 22.0%)
average truck increase and a 1.7% increase in average freight
revenue per truck in the 2018 period as compared to the 2017
period, partially offset by a $1.7 million year-over-year reduction
in intermodal revenues as we effectively discontinued this
consistently unprofitable service offering within our solo-driver
refrigerated truckload unit during December 2017. Of the 562
increased average trucks, 430 average trucks were contributed by
the Landair acquisition as Landair contributed $19.2 million of
freight revenue to consolidated truckload operations in the fourth
quarter of 2018.
“Average freight revenue per tractor per week
increased to $4,304 during the 2018 quarter from $4,234 during the
2017 quarter. Average freight revenue per total mile increased by
25.2 cents per mile, or 13.4%, compared to the 2017 quarter and
average miles per tractor decreased by 10.4%. The primary
factor impacting our productivity was the impact of the Landair
operations on the combined truckload division. Landair's shorter
average length of haul and dedicated contract, solo-driven truck
operations generally produce higher revenue per total mile and
fewer miles per tractor than our other truckload business
units. Our excellent package of service offerings and a
supportive freight environment during all of 2018 also contributed
to higher revenue per mile across all business units, while a
decrease in the percentage of our fleet comprised of team-driven
trucks affected mileage utilization. Team-driven trucks decreased
to an average of 866 teams (or 27.8% of the total fleet) in the
fourth quarter of 2018 versus an average of 912 teams (or 35.7% of
the total fleet) in the fourth quarter of 2017. Our average seated
truck percentage improved as 3.0% of our fleet lacked drivers
during the 2018 quarter compared with 5.2% during the 2017
quarter.
“Salaries, wages and related expenses increased
18.8 cents per total mile due primarily to the impact of the
Landair acquisition and employee pay adjustments since the fourth
quarter of 2017, higher group health insurance, as well as $0.8
million of stock compensation expense recognized in the fourth
quarter of 2018 for meeting the performance-based vesting target
for a group of 2016 restricted share grants that was not previously
expected to vest. These unfavorable impacts were partially offset
by fewer miles from team-driven trucks, which carry the cost of two
drivers.
“Insurance and claims expense increased to 14.2
cents per total mile in the fourth quarter of 2018 versus 11.6
cents per total mile in the fourth quarter of 2017 due to increased
frequency and severity of accidents.
“In addition to the items mentioned above,
primarily in connection with our July acquisition of Landair, we
experienced increases to operations and maintenance, revenue
equipment rentals and purchased transportation, as well as general
supplies and expenses.
“Net fuel expense decreased by 3.2 cents per
total mile in the 2018 quarter, primarily as a result of
improvement in fuel hedging activity, with $0.3 million of fuel
hedge gains in the 2018 quarter compared with $0.4 million of fuel
hedge losses in the 2017 quarter. In addition, our fuel surcharge
recovery was more effective during the 2018 quarter and we expect
to continue to experience improved fuel economy as we upgrade our
tractor fleet. These favorable items were partially offset by
increased fuel pricing. Ultra-low sulfur diesel prices as measured
by the Department of Energy averaged $0.39/gallon higher in the
fourth quarter of 2018 compared with the 2017 quarter.”
Management Discussion—Non-Asset Based
Managed Freight and Other OperationsMr. Parker offered the
following comments concerning the Company’s non-asset based managed
freight segment, which consists of freight brokerage, warehousing,
and other transportation logistics services (“Managed Freight”):
“For the quarter, Managed Freight’s total revenue increased 83.6%,
to $67.5 million from $36.8 million in the same quarter of 2017.
Operating income was $6.0 million for an operating ratio of 91.1%,
compared with operating income of $3.1 million and an operating
ratio of 91.6% in the fourth quarter of 2017. Of the $30.7 million
of increased total revenue, Landair contributed $21.4 million of
revenue to combined Managed Freight operations in the fourth
quarter of 2018. In addition, our 49% equity investment in
Transport Enterprise Leasing contributed $2.3 million of pre-tax
income in the quarter compared with $0.8 million in the fourth
quarter of 2017.”
Capitalization, Liquidity and Capital
ExpendituresRichard B. Cribbs, the Company's Executive
Vice President and Chief Financial Officer, added the following
comments: “In connection with the July 3rd, 2018 acquisition of
Landair, we invested approximately $106.5 million, including an
$8.2 million tax gross up payment in connection with a post-closing
Internal Revenue Code Section 338(h)(10) election for which we
expect to receive a future net cash benefit in excess of the tax
gross up payment. At December 31, 2018, our total balance sheet
debt and capital lease obligations, net of cash, were $212.7
million, and our stockholders’ equity was $343.1 million, for a
ratio of net debt to total balance sheet capitalization of 38.3%,
which compares favorably to the 40.2% ratio as of December 31,
2017, even after the Landair investment. In addition, our leverage
ratio (defined as: net balance sheet debt divided by trailing four
quarters earnings before interest, taxes, depreciation, and
amortization, as adjusted and pro forma for the Landair
acquisition) has improved to 1.4x from 1.9x for the fiscal 2017
period. At December 31, 2018, the discounted value of future
obligations under off-balance sheet operating lease obligations was
$41.8 million. Between December 31, 2017 and December 31, 2018, the
Company's balance sheet debt and capital lease obligations, net of
cash, increased by $14.3 million, while the present value of
financing provided by operating leases increased $20.2 million. At
December 31, 2018, we had $57.7 million of borrowing availability
under our revolving line of credit.
“Our net capital expenditures for the three
months ended December 31, 2018 totaled $18.2 million compared to
$4.9 million for the prior year period. Excluding the assets
acquired with the Landair transaction, in fiscal 2018, we took
delivery of approximately 775 new company tractors and disposed of
approximately 831 used tractors. Our current tractor fleet plan for
full-year 2019 includes the delivery of approximately 1,150 new
company tractors, and the disposal of approximately 1,050 used
tractors. Over the course of 2019, the size of our tractor fleet is
expected to grow between 1.0% to 4.0% above the 3,154 tractors we
operated as of December 31, 2018, depending on our ability to
secure additional long-term dedicated contracts from shippers and
our ability to hire and retain professional drivers to seat the
additional tractors.”
OutlookMr. Cribbs commented on
the Company’s outlook: “Our earnings outlook for 2019 is positive.
We expect to deliver earnings improvement for the first quarter of
2019 as compared to the first quarter of 2018. For the full year,
we expect adjusted earnings per diluted share to increase modestly
over 2018, based on the favorable impact of a full year of earnings
contribution from Landair’s service offerings, partially offset by
investment in growing the Managed Freight segment. From a
balance sheet perspective, with net capital expenditures scheduled
at normal replacement cycle, along with positive operating cash
flows, we expect to reduce combined balance sheet and off-balance
sheet debt over the course of fiscal 2019.
“Our outlook is based on our expectation of a
relatively balanced freight environment measured over the entire
2019 year, with the potential for intra-period volatility in
response to national and global events. We believe these conditions
are consistent with U.S. economic growth of 2.0% to 2.5%, modestly
growing industrial production, balanced inventories, and mid-single
digit percentage increases in revenue per total mile across our
truckload business. The freight market in January has thus far been
consistent with our expectations, but not as strong as January
2018, nor the majority of 2018. Beyond the general freight
environment, we believe company-specific improvement opportunities
exist as we continue to execute on our strategic direction to grow
our contract logistics service offerings including dedicated
contract truckload, warehousing and transportation management
services (“TMS”). We expect that the growth of our dedicated
contract truckload service offering will come somewhat from a
re-allocation of capital from our transactional over-the-road
(“OTR”) truckload service offering, most specifically from the less
profitable solo-driven refrigerated OTR service. In addition, we
expect to continue to invest in the organic growth of our freight
brokerage services, which could pressure Managed Freight profit
margins until revenue growth catches up with the investments. Even
with these changes, attracting and retaining highly qualified,
professional truck drivers will remain a significant challenge, and
we will continue to work actively with our customers to improve
driver compensation, efficiency, and working conditions while
providing a high level of service. In the aggregate, the goals of
our capital allocation strategy are to become increasingly embedded
in our customers’ supply chains, to reduce the cyclicality and
seasonality of our business and financial results, and to enhance
our long-term earnings power and return on invested capital.”
Conference Call InformationThe
Company will host a live conference call tomorrow, January 24,
2019, at 10:00 a.m. Eastern time to discuss the quarter.
Individuals may access the call by dialing 800-351-4894
(U.S./Canada) and 800-756-3333 (International), access code
CTG4. An audio replay will be available for one week
following the call at 877-919-4059, access code 12169050. For
additional financial and statistical information regarding the
Company that is expected to be discussed during the conference
call, please visit our website at
www.covenanttransport.com/investors under the icon “Earnings
Info.”
Covenant Transportation Group, Inc. is the
holding company for several transportation providers that offer
premium transportation services for customers throughout the United
States. The consolidated group includes operations from Covenant
Transport and Covenant Transport Solutions of Chattanooga,
Tennessee; Southern Refrigerated Transport of Texarkana, Arkansas;
Landair Transport and Landair Logistics of Greeneville, Tennessee;
and Star Transportation of Nashville, Tennessee. In addition,
Transport Enterprise Leasing, of Chattanooga, Tennessee is an
integral affiliated company providing revenue equipment sales and
leasing services to the trucking industry. The Company's Class A
common stock is traded on the NASDAQ Global Select market under the
symbol, “CVTI”.
This press release contains certain statements
that may be considered forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended,
and such statements are subject to the safe harbor created by those
sections and the Private Securities Litigation Reform Act of 1995,
as amended. Such statements may be identified by their use of terms
or phrases such as "expects," "estimates," "projects," "believes,"
"anticipates," "plans," "intends," “outlook,” and similar terms and
phrases. Forward-looking statements are based upon the current
beliefs and expectations of our management and are inherently
subject to risks and uncertainties, some of which cannot be
predicted or quantified, which could cause future events and actual
results to differ materially from those set forth in, contemplated
by, or underlying the forward-looking statements. In this
press release, the statements relating to benefits of our revenue
mix, seasonality and cyclicality exposure, execution of our
strategies, expected fuel economy of new tractors, our current
tractor fleet plan, net cash benefits from the IRC Section
338(h)(10) election, and the statements under “Outlook” are
forward-looking statements. The following factors, among others,
could cause actual results to differ materially from those in the
forward-looking statements: the rates and volumes realized during
2019, elevated experience in the frequency and severity of claims
relating to accident, cargo, workers' compensation, health, and
other claims, increased insurance premiums, fluctuations in
claims expenses that result from our self-insured retention
amounts, including in our excess layers and in respect of claims
for which we commute policy coverage, and the requirement that we
pay additional premiums if there are claims in certain of those
layers, differences between estimates used in establishing and
adjusting claims reserves and actual results over time, adverse
changes in claims experience and loss development factors, or
additional changes in management's estimates of liability based
upon such experience and development factors that cause our
expectations of insurance and claims expense to be inaccurate or
otherwise impacts our results; changes in the market condition for
used revenue equipment and real estate that impact our capital
expenditures and our ability to dispose of revenue equipment and
real estate on the schedule and for the prices we expect; increases
in the prices paid for new revenue equipment that impact our
capital expenditures and our results generally; changes in
management’s estimates of the need for new tractors and trailers;
the effect of any reduction in tractor purchases on the number of
tractors that will be accepted by manufacturers under tradeback
arrangements; our inability to generate sufficient cash from
operations and obtain financing on favorable terms to meet our
significant ongoing capital requirements; our ability to maintain
compliance with the provisions of our credit agreements,
particularly financial covenants in our revolving credit facility;
excess tractor or trailer capacity in the trucking industry;
decreased demand for our services or loss of one or more of our
major customers; our ability to renew dedicated service offering
contracts on the terms and schedule we expect; surplus inventories,
recessionary economic cycles, and downturns in customers' business
cycles; strikes, work slowdowns, or work stoppages at the Company,
customers, ports, or other shipping related facilities; increases
or rapid fluctuations in fuel prices, as well as fluctuations in
hedging activities and surcharge collection, including, but not
limited to, changes in customer fuel surcharge policies and
increases in fuel surcharge bases by customers; the volume and
terms of diesel purchase commitments and hedging contracts;
interest rates, fuel taxes, tolls, and license and registration
fees; increases in compensation for and difficulty in attracting
and retaining qualified drivers and independent contractors;
seasonal factors such as harsh weather conditions that increase
operating costs; competition from trucking, rail, and intermodal
competitors; regulatory requirements that increase costs, decrease
efficiency, or impact the availability or effective driving time of
our drivers and other drivers in the industry, including the terms
and exemptions from hours-of-service and electronic log
requirements for drivers and the Federal Motor Carrier Safety
Administration’s Compliance, Safety, Accountability program
applicable to driver standards and the methodology for determining
a carrier’s DOT safety rating; the ability to reduce, or control
increases in, operating costs; changes in the Company’s business
strategy that require the acquisition of new businesses, and the
ability to identify acceptable acquisition candidates, consummate
acquisitions, and integrate acquired operations (including our
recent acquisition of Landair); fluctuations in the results of
Transport Enterprise Leasing, which are included as equity in
income (loss) of affiliate in our financial statements; the number
of shares repurchased, if any; the effects of repurchasing the
shares on debt, equity, and liquidity; the effects of repurchasing
no or a nominal number of shares; and the ultimate uses of
repurchased shares, if any. 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 and Exchange Commission. We disclaim any
obligation to update or revise any forward-looking statements to
reflect actual results or changes in the factors affecting the
forward-looking information.
For further information contact:Richard B.
Cribbs, Executive Vice President and Chief Financial
Officer
RCribbs@covenanttransport.com
For copies of Company information
contact:Theresa Ives, Executive Administrative
Assistant
TIves@covenanttransport.com
Covenant Transportation Group,
Inc. |
Key Financial and Operating
Statistics |
|
|
|
|
|
|
|
|
|
|
|
INCOME STATEMENT DATA |
|
INCOME STATEMENT DATA |
|
|
Three Months Ended Dec 31, |
|
Year Ended Dec 31, |
($000s, except per share data) |
2018 |
|
2017 |
|
% Change |
|
2018 |
|
2017 |
|
% Change |
Freight
revenue |
$244,008 |
|
$181,597 |
|
34.4 |
% |
|
$779,729 |
|
$626,809 |
|
24.4 |
% |
Fuel
surcharge revenue |
28,260 |
|
21,709 |
|
30.2 |
% |
|
105,726 |
|
78,198 |
|
35.2 |
% |
|
Total revenue |
$272,268 |
|
$203,306 |
|
33.9 |
% |
|
$885,455 |
|
$705,007 |
|
25.6 |
% |
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Salaries, wages, and
related expenses |
92,825 |
|
63,145 |
|
|
|
304,447 |
|
241,784 |
|
|
|
Fuel expense |
31,446 |
|
26,829 |
|
|
|
121,264 |
|
103,139 |
|
|
|
Operations and
maintenance |
14,723 |
|
11,270 |
|
|
|
55,505 |
|
48,774 |
|
|
|
Revenue equipment
rentals and |
|
|
|
|
|
|
|
|
purchased
transportation |
68,121 |
|
51,235 |
|
|
|
183,645 |
|
141,954 |
|
|
|
Operating taxes and
licenses |
3,182 |
|
2,681 |
|
|
|
11,831 |
|
9,878 |
|
|
|
Insurance and
claims |
12,064 |
|
8,843 |
|
|
|
43,333 |
|
33,155 |
|
|
|
Communications and
utilities |
1,844 |
|
1,857 |
|
|
|
7,061 |
|
6,938 |
|
|
|
General supplies and
expenses |
6,395 |
|
3,864 |
|
|
|
23,227 |
|
14,783 |
|
|
|
Depreciation and
amortization, including gains and |
|
|
|
|
|
|
|
|
losses on
disposition of property and equipment |
19,353 |
|
18,740 |
|
|
|
76,156 |
|
76,447 |
|
|
Total
operating expenses |
249,953 |
|
188,464 |
|
|
|
826,469 |
|
676,852 |
|
|
Operating
income |
22,315 |
|
14,842 |
|
|
|
58,986 |
|
28,155 |
|
|
Interest
expense, net |
2,348 |
|
2,042 |
|
|
|
8,708 |
|
8,258 |
|
|
Income from
equity method investment |
(2,325 |
) |
(825 |
) |
|
|
(7,732 |
) |
(3,400 |
) |
|
Income
before income taxes |
22,292 |
|
13,625 |
|
|
|
58,010 |
|
23,297 |
|
|
Income tax
expense (benefit) |
5,791 |
|
(35,673 |
) |
|
|
15,507 |
|
(32,142 |
) |
|
Net
income |
$16,501 |
|
$49,298 |
|
|
|
$42,503 |
|
$55,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$0.90 |
|
$2.70 |
|
|
|
$2.32 |
|
$3.03 |
|
|
Diluted earnings per share |
$0.89 |
|
$2.68 |
|
|
|
$2.30 |
|
$3.02 |
|
|
Basic
weighted average shares outstanding (000s) |
18,347 |
|
18,291 |
|
|
|
18,340 |
|
18,279 |
|
|
Diluted
weighted average shares outstanding (000s) |
18,533 |
|
18,368 |
|
|
|
18,469 |
|
18,372 |
|
|
|
|
Three Months Ended Dec 31, |
|
Year Ended Dec 31, |
|
|
2018 |
2017 |
% Change |
|
2018 |
2017 |
% Change |
($000s) |
SEGMENT
REVENUES |
|
SEGMENT REVENUES |
Asset-based
truckload revenues |
$176,474 |
$144,804 |
21.9% |
|
$621,320 |
$534,636 |
16.2 |
% |
Managed
freight revenues |
67,534 |
36,793 |
83.6% |
|
158,409 |
92,173 |
71.9 |
% |
|
Freight
revenue |
$244,008 |
$181,597 |
34.4% |
|
$779,729 |
$626,809 |
24.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
OPERATING STATISTICS |
|
OPERATING STATISTICS |
Average
freight revenue per loaded mile |
$2.360 |
$2.081 |
13.4% |
|
$2.130 |
$1.890 |
12.7 |
% |
Average
freight revenue per total mile |
$2.135 |
$1.883 |
13.4% |
|
$1.938 |
$1.702 |
13.9 |
% |
Average
freight revenue per tractor per week |
$4,304 |
$4,234 |
1.7% |
|
$4,191 |
$3,917 |
7.0 |
% |
Average
miles per tractor per period |
26,493 |
29,555 |
-10.4% |
|
112,736 |
120,043 |
-6.1 |
% |
Weighted
avg. tractors for period |
3,120 |
2,558 |
22.0% |
|
2,843 |
2,557 |
11.2 |
% |
Tractors at
end of period |
3,154 |
2,559 |
23.3% |
|
3,154 |
2,559 |
23.3 |
% |
Trailers at
end of period |
6,950 |
7,134 |
-2.6% |
|
6,950 |
7,134 |
-2.6 |
% |
|
|
SELECTED BALANCE SHEET DATA |
|
|
|
|
($000s, except per share data) |
12/31/2018 |
12/31/2017 |
|
|
|
|
|
Total
assets |
$773,524 |
$649,668 |
|
|
|
|
|
Total
stockholders' equity |
$343,142 |
$295,201 |
|
|
|
|
|
Total
balance sheet debt, net of cash |
$212,711 |
$198,443 |
|
|
|
|
|
Net Debt to
Capitalization Ratio |
38.3% |
40.2% |
|
|
|
|
|
Tangible
book value per basic share |
$14.65 |
$16.11 |
|
|
|
|
|
Covenant Transportation Group,
Inc. |
Non-GAAP Reconciliation
(Unaudited) |
Adjusted Operating Income and Adjusted
Operating Ratio (1) (2) |
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
Three Months Ended Dec 31, |
|
Year Ended Dec 31, |
GAAP Presentation |
2018 |
|
2017 |
|
bps Change |
|
2018 |
|
2017 |
|
bps Change |
Total
revenue |
$272,268 |
|
$203,306 |
|
|
|
$885,455 |
|
$705,007 |
|
|
Total
operating expenses |
249,953 |
|
188,464 |
|
|
|
826,469 |
|
676,852 |
|
|
|
Operating income |
$22,315 |
|
$14,842 |
|
|
|
$58,986 |
|
$28,155 |
|
|
|
Operating ratio |
91.8% |
|
92.7% |
|
-90 |
|
93.3% |
|
96.0% |
|
-270 |
|
|
|
|
|
|
|
|
|
Non-GAAP Presentation |
2018 |
|
2017 |
|
bps Change |
|
2018 |
|
2017 |
|
bps Change |
Total
revenue |
$272,268 |
|
$203,306 |
|
|
|
$885,455 |
|
$705,007 |
|
|
Fuel
surcharge revenue |
(28,260 |
) |
(21,709 |
) |
|
|
(105,726 |
) |
(78,198 |
) |
|
|
Freight revenue (total
revenue, excluding fuel surcharge) |
244,008 |
|
181,597 |
|
|
|
779,729 |
|
626,809 |
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses |
249,953 |
|
188,464 |
|
|
|
826,469 |
|
676,852 |
|
|
Adjusted
for: |
|
|
|
|
|
|
|
Fuel
surcharge revenue |
(28,260 |
) |
(21,709 |
) |
|
|
(105,726 |
) |
(78,198 |
) |
|
Amortization of intangibles (3) |
(731 |
) |
- |
|
|
|
(1,462 |
) |
- |
|
|
|
Adjusted operating
expenses |
220,962 |
|
166,755 |
|
|
|
719,281 |
|
598,654 |
|
|
|
Adjusted operating
income |
23,046 |
|
14,842 |
|
|
|
60,448 |
|
28,155 |
|
|
|
Adjusted operating
ratio |
90.6% |
|
91.8% |
|
-130 |
|
92.2% |
|
95.5% |
|
-330 |
|
|
|
|
|
|
|
|
|
(1) Pursuant to the requirements of Regulation G,
this table reconciles consolidated GAAP operating ratio to
consolidated non-GAAP Adjusted operating ratio. |
(2) The reported results do not include the
results of operations of Landair Holdings and its subsidiaries
("Landair") prior to its acquisition by Covenant Transportation
Group on July 3, 2018 in accordance with the accounting treatment
applicable to the transaction. |
(3) "Amortization of intangibles" reflects the
non-cash amortization expense relating to intangible assets
identified in the July 3, 2018 acquisition of Landair. Certain data
necessary to complete the purchase price allocation for the Landair
acquisition is open for adjustments during the measurement period.
We believe the estimates used are reasonable, but are subject to
change as additional information becomes available. |
Non-GAAP Reconciliation
(Unaudited) |
Adjusted Net Income and Adjusted EPS (1)
(2) |
|
|
|
|
|
|
|
(Dollars in thousands) |
Three Months Ended Dec 31, |
|
Year Ended Dec 31, |
|
|
2018 |
|
2017 |
|
|
|
2018 |
|
2017 |
|
|
GAAP Presentation - Net income |
$16,501 |
|
$49,298 |
|
|
|
$42,503 |
|
$55,439 |
|
|
Adjusted
for: |
|
|
|
|
|
Income tax
expense (benefit) |
5,791 |
|
(35,673 |
) |
|
|
15,507 |
|
(32,142 |
) |
|
|
Income before income
taxes |
22,292 |
|
13,625 |
|
|
|
58,010 |
|
23,297 |
|
|
Amortization of intangibles (3) |
731 |
|
- |
|
|
|
1,462 |
|
- |
|
|
|
Adjusted income before
income taxes |
23,023 |
|
13,625 |
|
|
|
59,472 |
|
23,297 |
|
|
Provision
for income tax expense (benefit) at effective rate |
(5,981 |
) |
35,673 |
|
|
|
(15,898 |
) |
32,142 |
|
|
Tax benefit
from revaluation of net deferred tax balances
(4) |
- |
|
(40,123 |
) |
|
|
- |
|
(40,123 |
) |
|
|
Adjusted income tax
expense |
(5,981 |
) |
(4,450 |
) |
|
|
(15,898 |
) |
(7,981 |
) |
|
|
Non-GAAP
Presentation - Adjusted net income |
$17,042 |
|
$9,175 |
|
|
|
$43,574 |
|
$15,316 |
|
|
|
|
|
|
|
|
|
GAAP Presentation - Diluted earnings per share
("EPS") |
$0.89 |
|
$2.68 |
|
|
|
$2.30 |
|
$3.02 |
|
|
Adjusted
for: |
|
|
|
|
|
Income tax
expense (benefit) |
0.31 |
|
(1.94 |
) |
|
|
0.84 |
|
(1.75 |
) |
|
|
Income before income
taxes |
1.20 |
|
0.74 |
|
|
|
3.14 |
|
1.27 |
|
|
Amortization of intangibles (3) |
0.04 |
|
- |
|
|
|
0.08 |
|
- |
|
|
|
Adjusted income before
income taxes |
1.24 |
|
0.74 |
|
|
|
3.22 |
|
1.27 |
|
|
Provision
for income tax expense (benefit) at effective rate |
(0.32 |
) |
1.94 |
|
|
|
(0.86 |
) |
1.75 |
|
|
Tax benefit
from revaluation of net deferred tax balances
(4) |
- |
|
(2.18 |
) |
|
|
- |
|
(2.18 |
) |
|
|
Adjusted income tax
expense |
(0.32 |
) |
(0.24 |
) |
|
|
(0.86 |
) |
(0.43 |
) |
|
|
Non-GAAP
Presentation - Adjusted EPS |
$0.92 |
|
$0.50 |
|
|
|
$2.36 |
|
$0.83 |
|
|
|
|
|
|
|
|
|
(1) Pursuant to the requirements of Regulation G,
this table reconciles consolidated GAAP net income to consolidated
non-GAAP Adjusted net income and consolidated GAAP diluted earnings
per share to non-GAAP consolidated Adjusted EPS. |
(2) The reported results do not include the
results of operations of Landair Holdings and its subsidiaries
("Landair") on and prior to its acquisition by Covenant
Transportation Group on July 3, 2018 in accordance with the
accounting treatment applicable to the transaction. |
(3) "Amortization of intangibles" reflects the
non-cash amortization expense relating to intangible assets
identified in the July 3, 2018 acquisition of Landair. Certain data
necessary to complete the purchase price allocation for the Landair
acquisition is open for adjustments during the measurement period.
We believe the estimates used are reasonable, but are subject to
change as additional information becomes available. |
(4) "Tax benefit from revaluation of net deferred
tax balances" reflects income tax benefit resulting primarily from
our reasonable estimate of the revaluation of our net deferred tax
balances at December 31, 2017 as a result of the enactment of the
Tax Cuts and Jobs Act, signed into law on December 22, 2017. |
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