Covenant Transportation sees Q3 EPS 12c-17c, consensus 23c
Covenant CEO David R. Parker stated, "The main differences with 3Q15 EPS of 42c were higher depreciation, higher claims expense, and lower average freight revenue per tractor, partially offset by improved brokerage gross margin and a favorable effective tax rate. Compared with 3Q15, depreciation increased $4.6M, or 15c per diluted share, to $19.3M, primarily as a result of lowering the salvage values effectively increasing the rate of depreciation on a significant percentage of our tractors due to the expectation that the soft used truck market could continue for an extended period. A year-over-year increase in depreciation expense for these tractors will continue to affect our results for at least the next three quarters. We also experienced a $1.7M, or 6c per diluted share, year-over-year increase in casualty insurance and claims expense, primarily as a result of increased frequency and severity of accidents. Average freight revenue per tractor declined 1.2%, due to a weaker truckload freight environment. These factors more than offset improved performance from our Solutions non-asset based brokerage business and a favorable effective income tax rate."