EX-99 3 pressrelease.txt EX 99.1 PRESS RELEASE 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 ---------------------- --------------------- 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 ---------------------- --------------------- Total operating expenses 137,997 132,443 410,851 400,559 ---------------------- --------------------- 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 ---------------------- --------------------- Other (income) expenses, net 244 1,588 1,474 5,133 ---------------------- --------------------- 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 ---------------------- --------------------- Net income $4,050 $3,611 12.1% $8,052 $4,924 63.5% ====================== ===================== (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 ---------- --------- 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%