Nevada
|
000-24960
|
88-0320154
|
(State or other jurisdiction
of incorporation)
|
(Commission
File Number)
|
(IRS Employer
Identification No.)
|
400 Birmingham Hwy., Chattanooga, TN
|
37419
|
(Address of principal executive offices)
|
(Zip Code)
|
[ ]
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
|
[ ]
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
|
[ ]
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
|
[ ]
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
|
|
[ ]
|
Emerging growth company
|
[ ]
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
|
Item 2.02
|
Results of Operations and Financial Condition.
|
|
On January 23, 2019, Covenant Transportation Group, Inc., a Nevada corporation (the "Company"), issued a press release announcing its financial and operating results for the quarter and year ended December 31, 2018. A copy of the press release is attached to this report as Exhibit 99.
|
||
Item 9.01
|
Financial Statements and Exhibits.
|
|
(d)
|
Exhibits.
|
|
EXHIBIT
NUMBER
|
EXHIBIT DESCRIPTION
|
|
Covenant Transportation Group, Inc. press release announcing financial and operating results for the quarter and year ended December 31, 2018
|
||
The information contained in Items 2.02 and 9.01 of this report and the exhibit hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
|
||
The information in Items 2.02 and 9.01 of this report and the exhibit hereto may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act 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 are made based on the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results or events may differ from those anticipated by forward-looking statements. Please refer to the italicized paragraph at the end of the attached press release and various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission for information concerning risks, uncertainties, and other factors that may affect future results.
|
COVENANT TRANSPORTATION GROUP, INC.
|
||
Date: January 23, 2019
|
By:
|
/s/ Richard B. Cribbs |
Richard B. Cribbs
|
||
Executive Vice President and Chief Financial Officer
|
EXHIBIT
NUMBER
|
EXHIBIT DESCRIPTION
|
Covenant Transportation Group, Inc. press release announcing financial and operating results for the quarter and year ended December 31, 2018
|
·
|
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.
|
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.
|