Covenant Transportation Group, Inc. (NASDAQ:CVTI) Q4 2019 Earnings Conference Call - Final Transcript

Jan 24, 2020 • 11:00 am ET

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Covenant Transportation Group, Inc. (NASDAQ:CVTI) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Excuse me, everyone. We now have all of our speakers in conference. [Operator Instructions]

It is now my pleasure to turn the conference over to Mr. Richard Cribbs.

Executive
Richard B. Cribbs

Hey. Thanks, Brett.

Good morning. Welcome to our fourth quarter conference call. Joining me on the call this morning are David Parker and Joey Hogan.

This conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Please review our disclosures and filings with the SEC, including without limitation the Risk Factors section in our most recent Form 10-K and our current year [Phonetic] Form 10-Q. We undertake no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.

As a reminder, a copy of our prepared comments and additional financial information is available on our website at covenanttransport.com under the Investors tab. Our prepared comments will be brief and then we will open up the call for questions.

In summary, the key highlights of the quarter were: our Truckload segment's revenue excluding fuel decreased 13.4% to $152.8 million due primarily to a 10.4% decrease in average freight revenue per truck along with a 105 or 3.4% average truck decrease in the 2019 period as compared to the 2018 period.

Versus the year ago period, average freight revenue per total mile was down $24.02 or 11.3%, while average miles per tractor was up 1.1%. A portion of the reduction in freight revenue per total mile was planned as we have steadily increased the percentage of our assets allocated to dedicated truckload or other year-round service offerings, leaving a smaller percentage to participate in the more volatile peak season which secures significantly higher rate for a few weeks.

The other primary factors impacting the decreased average freight revenue per total mile were continued capacity and demand imbalance and a reduction in certain of our customers' peak season team capacity needs this year. The main factor impacting the increased utilization was an improved average seated truck percentage as only 1.5% of our operational truck fleet lacked drivers compared with 3% during the prior-year quarter.

The Truckload segment's operating cost per mile net of surcharge revenue was down approximately $0.033 compared to the year-ago period. This was mainly attributable to lower employee wages and group health claims costs, partially offset by higher net fuel expense, workers' comp claims costs and outside professional advisory fees.

Our Managed Freight segment's revenue excluding fuel decreased 15.5% versus the year ago quarter to $57 million from $67.5 million. The primary factor to this reduced revenue was a reduction in certain of our brokerage customers' peak season capacity needs this year.

Due primarily to the bankruptcy of one of Transport Enterprise Leasing's that we call TEL -- TEL's customers -- our consolidated net income included a $400,000 pass-through loss or $0.02 per diluted share from our minority