Covenant Transportation lowers Q2 adjusted EPS view to 34c-35c, consensus 46c
Covenant Transportation updated its Q2 expectations, with CEO David Parker stating: "After reviewing preliminary operating and financial information through the end of June, we expect to report earnings per diluted share in the range of 32c-33c and adjusted earnings per diluted share in the range of 34c-35c. This is an update from our previous statement that we expected second quarter 2019 Adjusted EPS to be fairly consistent with the prior year quarter - we reported EPS and Adjusted EPS of $0.54 for the second quarter of 2018 - based on an expectation of the freight market staying consistent and an occurrence of normal seasonal patterns. Contrary to normal seasonal patterns, the truckload freight environment remained sluggish through most of the second quarter. We attribute the softer freight environment to factors such as continued excess inventory levels, a soft produce season, and the extra capacity of Class 8 tractors that entered the U.S. market over the last 9-12 months. For the second quarter of 2019, consolidated freight revenue is expected to increase approximately 14% compared with the second quarter of 2018, primarily reflecting the acquisition of Landair in July 2018. We are starting to see the early favorable impact on freight availability of the marginal correction of overcapacity and expect capacity reduction to continue throughout the remainder of 2019. Our contract logistics' customers have maintained steady freight for the first half of the year and we expect their business to remain steady through the end of the year."