|
[X]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Nevada
|
88-0320154
|
(State or other jurisdiction of incorporation
|
(I.R.S. Employer Identification No.)
|
or organization)
|
|
|
|
400 Birmingham Hwy.
|
|
Chattanooga, TN
|
37419
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
$0.01 Par Value Class A common stock
|
CVTI
|
The NASDAQ Global Select Market
|
Yes [X]
|
No [ ]
|
Yes [X]
|
No [ ]
|
Large accelerated filer [ ]
|
|
Accelerated filer [X]
|
Non-accelerated filer [ ]
|
Smaller reporting company [X]
|
|
|
Emerging growth company [ ]
|
Yes [ ]
|
No [X]
|
PART I
FINANCIAL INFORMATION
|
||
|
|
Page
Number
|
Item 1.
|
Financial Statements
|
|
|
|
|
|
3
|
|
|
|
|
|
4
|
|
|
|
|
|
5
|
|
|
|
|
|
6
|
|
|
|
|
|
7
|
|
|
|
|
|
8
|
|
|
|
|
Item 2.
|
18
|
|
|
|
|
Item 3.
|
31
|
|
|
|
|
Item 4.
|
32
|
|
|
||
PART II
OTHER INFORMATION
|
||
|
|
Page
Number
|
|
|
|
Item 1.
|
33
|
|
|
|
|
Item 1A.
|
33
|
|
|
|
|
Item 2.
|
34
|
|
|
|
|
Item 3.
|
34
|
|
|
|
|
Item 4.
|
34
|
|
|
|
|
Item 5.
|
34
|
|
|
|
|
Item 6.
|
35
|
PART I
|
FINANCIAL INFORMATION
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands, except share data)
|
|
March 31, 2020
|
December 31,
|
||||||
|
(unaudited)
|
2019
|
||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
39,655
|
$
|
43,591
|
||||
Accounts receivable, net of allowance of $2,213 in 2020 and $1,944 in 2019
|
192,628
|
167,825
|
||||||
Drivers' advances and other receivables, net of allowance of $719 in 2020 and $692 in 2019
|
9,799
|
8,507
|
||||||
Inventory and supplies
|
3,812
|
4,210
|
||||||
Prepaid expenses
|
7,948
|
11,707
|
||||||
Assets held for sale
|
22,691
|
12,010
|
||||||
Income taxes receivable
|
4,785
|
5,403
|
||||||
Other short-term assets
|
1,226
|
1,132
|
||||||
Total current assets
|
282,544
|
254,385
|
||||||
|
||||||||
Property and equipment, at cost
|
687,668
|
725,383
|
||||||
Less: accumulated depreciation and amortization
|
(188,150
|
)
|
(208,180
|
)
|
||||
Net property and equipment
|
499,518
|
517,203
|
||||||
|
||||||||
Goodwill
|
42,518
|
42,518
|
||||||
Other intangibles, net
|
28,884
|
29,615
|
||||||
Other assets, net
|
59,220
|
37,919
|
||||||
|
||||||||
Total assets
|
$
|
912,684
|
$
|
881,640
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Checks outstanding in excess of bank balances
|
$
|
481
|
$
|
592
|
||||
Accounts payable
|
23,742
|
25,745
|
||||||
Accrued expenses
|
34,180
|
31,840
|
||||||
Current maturities of long-term debt
|
61,403
|
54,377
|
||||||
Current portion of finance lease obligations
|
7,062
|
7,258
|
||||||
Current portion of operating lease obligations
|
18,452
|
19,460
|
||||||
Current portion of insurance and claims accrual
|
21,998
|
21,800
|
||||||
Other short-term liabilities
|
1,086
|
185
|
||||||
Total current liabilities
|
168,404
|
161,257
|
||||||
|
||||||||
Long-term debt
|
228,203
|
200,177
|
||||||
Long-term portion of finance lease obligations
|
24,901
|
26,010
|
||||||
Long-term portion of operating lease obligations
|
36,357
|
40,882
|
||||||
Insurance and claims accrual
|
42,902
|
20,295
|
||||||
Deferred income taxes
|
78,670
|
80,330
|
||||||
Other long-term liabilities
|
4,754
|
2,578
|
||||||
Total liabilities
|
584,191
|
531,529
|
||||||
Commitments and contingent liabilities
|
-
|
-
|
||||||
Stockholders' equity:
|
||||||||
Class A common stock, $.01 par value; 40,000,000 shares authorized; 16,166,828 shares issued and 14,737,624 shares outstanding as of March 31, 2020; and 16,165,145 shares issued and
outstanding as of December 31, 2019
|
173
|
173
|
||||||
Class B common stock, $.01 par value; 5,000,000 shares authorized; 2,350,000 shares issued and outstanding
|
24
|
24
|
||||||
Additional paid-in-capital
|
142,345
|
141,885
|
||||||
Treasury stock at cost; 1,429,204 and no shares as of March 31, 2020 and December 31, 2019, respectively
|
(17,515
|
)
|
-
|
|||||
Accumulated other comprehensive loss
|
(3,364
|
)
|
(1,014
|
)
|
||||
Retained earnings
|
206,830
|
209,043
|
||||||
Total stockholders' equity
|
328,493
|
350,111
|
||||||
Total liabilities and stockholders' equity
|
$
|
912,684
|
$
|
881,640
|
|
Three Months Ended March 31,
|
|||||||
|
(unaudited)
|
|||||||
|
2020
|
2019
|
||||||
Revenues
|
||||||||
Freight revenue
|
$
|
192,321
|
$
|
195,761
|
||||
Fuel surcharge revenue
|
21,232
|
23,420
|
||||||
Total revenue
|
$
|
213,553
|
$
|
219,181
|
||||
|
||||||||
Operating expenses:
|
||||||||
Salaries, wages, and related expenses
|
82,825
|
79,503
|
||||||
Fuel expense
|
25,265
|
27,832
|
||||||
Operations and maintenance
|
12,825
|
15,174
|
||||||
Revenue equipment rentals and purchased transportation
|
46,062
|
48,670
|
||||||
Operating taxes and licenses
|
3,454
|
3,183
|
||||||
Insurance and claims
|
15,614
|
11,235
|
||||||
Communications and utilities
|
1,569
|
1,718
|
||||||
General supplies and expenses
|
8,568
|
6,731
|
||||||
Depreciation and amortization, including gains and losses on disposition of property and equipment
|
16,663
|
19,709
|
||||||
Total operating expenses
|
212,845
|
213,755
|
||||||
Operating income
|
708
|
5,426
|
||||||
Interest expense, net
|
2,892
|
2,446
|
||||||
Loss (income) from equity method investment
|
735
|
(3,035
|
)
|
|||||
(Loss) income before income taxes
|
(2,919
|
)
|
6,015
|
|||||
Income tax (benefit) expense
|
(706
|
)
|
1,582
|
|||||
Net (loss) income
|
$
|
(2,213
|
)
|
$
|
4,433
|
|||
|
||||||||
Income per share:
|
||||||||
Basic and diluted (loss) income per share
|
$
|
(0.12
|
)
|
$
|
0.24
|
|||
Basic weighted average shares outstanding
|
18,088
|
18,381
|
||||||
Diluted weighted average shares outstanding
|
18,088
|
18,533
|
|
Three Months Ended March 31,
|
|||||||
|
2020
|
2019
|
||||||
|
||||||||
Net (loss) income
|
$
|
(2,213
|
)
|
$
|
4,433
|
|||
|
||||||||
Other comprehensive loss:
|
||||||||
|
||||||||
Unrealized loss on effective portion of cash flow hedges, net of tax of $820 in 2020 and $164 in 2019
|
(2,391
|
)
|
(431
|
)
|
||||
|
||||||||
Reclassification of cash flow hedge (gain) loss into statement of operations, net of tax of ($14) in 2020 and $4 in 2019
|
41
|
(11
|
)
|
|||||
|
||||||||
Unrealized holding gain (loss) on investments classified as available-for-sale
|
-
|
10
|
||||||
Total other comprehensive (loss) income
|
(2,350
|
)
|
(432
|
)
|
||||
|
||||||||
Comprehensive (loss) income
|
$
|
(4,563
|
)
|
$
|
4,001
|
|
For the Three Months Ended March 31, 2020
|
|||||||||||||||||||||||||||
|
Accumulated
|
|||||||||||||||||||||||||||
|
Additional
|
Other
|
Total
|
|||||||||||||||||||||||||
|
Common Stock
|
Paid-In
|
Treasury
|
Comprehensive
|
Retained
|
Stockholders'
|
||||||||||||||||||||||
|
Class A
|
Class B
|
Capital
|
Stock
|
(Loss)
|
Earnings
|
Equity
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balances at December 31, 2019
|
$
|
173
|
$
|
24
|
$
|
141,885
|
$
|
-
|
$
|
(1,014
|
)
|
$
|
209,043
|
$
|
350,111
|
|||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
(2,213
|
)
|
(2,213
|
)
|
|||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
(2,350
|
)
|
-
|
(2,350
|
)
|
|||||||||||||||||||
Share repurchase
|
-
|
-
|
-
|
(17,515
|
)
|
-
|
-
|
(17,515
|
)
|
|||||||||||||||||||
Stock-based employee compensation expense
|
-
|
-
|
466
|
-
|
-
|
-
|
466
|
|||||||||||||||||||||
Issuance of restricted shares, net
|
-
|
-
|
(6
|
)
|
-
|
-
|
-
|
(6
|
)
|
|||||||||||||||||||
Balances at March 31, 2020
|
$
|
173
|
$
|
24
|
$
|
142,345
|
$
|
(17,515
|
)
|
$
|
(3,364
|
)
|
$
|
206,830
|
$
|
328,493
|
|
For the Three Months Ended March 31, 2019
|
|||||||||||||||||||||||||||
|
Accumulated
|
|||||||||||||||||||||||||||
|
Additional
|
Other
|
Total
|
|||||||||||||||||||||||||
|
Common Stock
|
Paid-In
|
Treasury
|
Comprehensive
|
Retained
|
Stockholders'
|
||||||||||||||||||||||
|
Class A
|
Class B
|
Capital
|
Stock
|
(Loss)
|
Earnings
|
Equity
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||||
Balances at December 31, 2018
|
$
|
171
|
$
|
24
|
$
|
142,177
|
$
|
-
|
$
|
204
|
$
|
200,566
|
$
|
343,142
|
||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
4,433
|
4,433
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
(432
|
)
|
-
|
(432
|
)
|
|||||||||||||||||||
Stock-based employee compensation expense
|
-
|
-
|
1,262
|
-
|
-
|
-
|
1,262
|
|||||||||||||||||||||
Issuance of restricted shares, net
|
1
|
-
|
(669
|
)
|
-
|
-
|
-
|
(668
|
)
|
|||||||||||||||||||
Balances at March 31, 2019
|
$
|
172
|
$
|
24
|
$
|
142,770
|
$
|
-
|
$
|
(228
|
)
|
$
|
204,999
|
$
|
347,737
|
|
Three Months Ended March 31,
|
|||||||
|
2020
|
2019
|
||||||
Cash flows from operating activities:
|
||||||||
Net (loss) income
|
$
|
(2,213
|
)
|
$
|
4,433
|
|||
Adjustments to reconcile net (loss) income to net cash (used) provided by operating activities:
|
||||||||
Provision for (reversal of losses on) accounts receivable
|
320
|
(32
|
)
|
|||||
Reversal of gain on sales to equity method investee
|
(2
|
)
|
(1
|
)
|
||||
Depreciation and amortization
|
18,187
|
19,851
|
||||||
Amortization of deferred financing fees
|
37
|
37
|
||||||
Deferred income tax (benefit) expense
|
(904
|
)
|
442
|
|||||
Income tax benefit arising from restricted share vesting and stock options exercised
|
9
|
668
|
||||||
Stock-based compensation expense
|
466
|
1,262
|
||||||
Equity in loss (income) of affiliate
|
735
|
(3,035
|
)
|
|||||
Gain on disposition of property and equipment
|
(1,524
|
)
|
(143
|
)
|
||||
Return on investment in available-for-sale securities
|
-
|
203
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Receivables and advances
|
(48,218
|
)
|
(2,482
|
)
|
||||
Prepaid expenses and other assets
|
3,802
|
2,759
|
||||||
Inventory and supplies
|
398
|
(58
|
)
|
|||||
Insurance and claims accrual
|
22,805
|
(4,537
|
)
|
|||||
Accounts payable and accrued expenses
|
2,586
|
(10,197
|
)
|
|||||
Net cash flows (used) provided by operating activities
|
(3,516
|
)
|
9,170
|
|||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Purchase of available-for-sale securities
|
245
|
-
|
||||||
Acquisition of property and equipment
|
(35,240
|
)
|
(37,926
|
)
|
||||
Proceeds from disposition of property and equipment
|
18,497
|
4,431
|
||||||
Net cash flows used by investing activities
|
(16,498
|
)
|
(33,495
|
)
|
||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Change in checks outstanding in excess of bank balances
|
(111
|
)
|
(223
|
)
|
||||
Proceeds from issuance of notes payable
|
29,746
|
19,217
|
||||||
Repayments of notes payable
|
(18,993
|
)
|
(10,469
|
)
|
||||
Repayments of finance lease obligations
|
(1,305
|
)
|
(1,373
|
)
|
||||
Proceeds under revolving credit facility
|
411,981
|
435,995
|
||||||
Repayments under revolving credit facility
|
(387,719
|
)
|
(410,280
|
)
|
||||
Payment of minimum tax withholdings on stock compensation
|
(6
|
)
|
(668
|
)
|
||||
Common stock repurchased
|
(17,515
|
)
|
-
|
|||||
Net cash flows provided by financing activities
|
16,078
|
32,199
|
||||||
|
||||||||
Net change in cash and cash equivalents
|
(3,936
|
)
|
7,874
|
|||||
|
||||||||
Cash and cash equivalents at beginning of period
|
43,591
|
23,127
|
||||||
Cash and cash equivalents at end of period
|
$
|
39,655
|
$
|
31,001
|
Note 1.
|
Significant Accounting Policies
|
Note 2.
|
(Loss) Income Per Share
|
(in thousands except per share data)
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Numerator:
|
||||||||
Net (loss) income
|
$
|
(2,213
|
)
|
$
|
4,433
|
|||
Denominator:
|
||||||||
Denominator for basic (loss) income per share – weighted-average shares
|
18,088
|
18,381
|
||||||
Effect of dilutive securities:
|
||||||||
Equivalent shares issuable upon conversion of unvested restricted shares
|
-
|
152
|
||||||
Denominator for diluted (loss) income per share adjusted weighted-average shares and assumed conversions
|
18,088
|
18,533
|
||||||
|
||||||||
Net (loss) income per share:
|
||||||||
Basic and diluted net (loss) income per share
|
$
|
(0.12
|
)
|
$
|
0.24
|
Note 3.
|
Segment Information
|
●
|
Highway Services: Includes the Company’s Expedited and OTR services, which are typically ad-hoc and do not include long-term contracts.
|
|
o
|
Expedited services primarily involves high service freight with delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows. Expedited services generally require
two-person driver teams on equipment either owned or leased by the Company.
|
|
o
|
OTR services provide customers with one-way load capacity over irregular routes for loads that are typically shorter in nature.
|
|
●
|
Dedicated: Specializes in providing customers with committed capacity over extended contract periods using equipment either owned or leased by the Company.
|
|
●
|
Managed Freight: Includes the Company’s Brokerage, TMS and Warehousing services.
|
|
o
|
Brokerage services provide logistics capacity by outsourcing the carriage of customers’ freight to contractual third parties.
|
|
o
|
TMS provides comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.
|
|
o
|
Warehousing services provides day-to-day warehouse management services to customers who have chosen to outsource this function.
|
|
●
|
Factoring services assist freight capacity providers with improving cash flows by purchasing accounts receivables at a discount and collecting them directly from the end consumer.
|
(in thousands)
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Revenues:
|
||||||||
Highway Services:
|
||||||||
Expedited
|
$
|
67,597
|
$
|
61,623
|
||||
OTR
|
18,564
|
26,705
|
||||||
Total Highway Services
|
86,161
|
88,328
|
||||||
|
||||||||
Dedicated
|
81,788
|
84,332
|
||||||
|
||||||||
Managed Freight:
|
||||||||
Brokerage
|
21,779
|
24,307
|
||||||
TMS
|
8,958
|
8,370
|
||||||
Warehousing
|
12,128
|
11,996
|
||||||
Total Managed Freight
|
42,865
|
44,673
|
||||||
|
||||||||
Factoring
|
2,739
|
1,848
|
||||||
|
||||||||
Total revenues
|
$
|
213,553
|
$
|
219,181
|
Note 4.
|
Income Taxes
|
Note 5.
|
Debt and Lease Obligations
|
(in thousands)
|
March 31, 2020
|
December 31, 2019
|
||||||||||||||
|
Current
|
Long-Term
|
Current
|
Long-Term
|
||||||||||||
Borrowings under Credit Facility
|
$
|
-
|
$
|
24,262
|
$
|
-
|
$
|
-
|
||||||||
Revenue equipment installment notes; weighted average interest rate of 3.7% at March 31, 2020 and December 31, 2019, due in monthly installments with final maturities at various dates ranging
from July 2020 to September 2024, secured by related revenue equipment
|
60,415
|
181,552
|
53,431
|
177,514
|
||||||||||||
|
||||||||||||||||
Real estate note; interest rate of 3.3% at March 31, 2020 and December 31, 2019, due in monthly installments with a fixed maturity at August 2035, secured by related real estate
|
1,105
|
22,389
|
1,093
|
22,670
|
||||||||||||
Deferred loan costs
|
(117
|
)
|
-
|
(147
|
)
|
(7
|
)
|
|||||||||
Total debt
|
61,403
|
228,203
|
54,377
|
200,177
|
||||||||||||
Principal portion of finance lease obligations, secured by related revenue equipment
|
7,062
|
24,901
|
7,258
|
26,010
|
||||||||||||
Principal portion of operating lease obligations, secured by related revenue equipment
|
18,452
|
36,357
|
19,460
|
40,882
|
||||||||||||
Total debt and lease obligations
|
$
|
86,917
|
$
|
289,461
|
$
|
81,095
|
$
|
267,069
|
Note 6.
|
Leases
|
(dollars in thousands)
|
Three Months Ended
|
Three Months Ended
|
||||||
|
March 31, 2020
|
March 31, 2019
|
||||||
|
||||||||
Finance lease cost:
|
||||||||
Amortization of right-of-use assets
|
$
|
1,037
|
$
|
1,411
|
||||
Interest on lease liabilities
|
247
|
227
|
||||||
Operating lease cost
|
6,602
|
6,182
|
||||||
Variable lease cost
|
158
|
-
|
||||||
|
||||||||
Total lease cost
|
$
|
8,044
|
$
|
7,820
|
||||
|
||||||||
Other information
|
||||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||||||
Operating cash flows from finance leases
|
1,037
|
1,146
|
||||||
Operating cash flows from operating leases
|
6,760
|
6,182
|
||||||
Financing cash flows from finance leases
|
247
|
227
|
||||||
Right-of-use assets obtained in exchange for new operating lease liabilities
|
461
|
4,146
|
||||||
Weighted-average remaining lease term—finance leases
|
2.7 years
|
|||||||
Weighted-average remaining lease term—operating leases
|
3.5 years
|
|||||||
Weighted-average discount rate—finance leases
|
3.0
|
%
|
||||||
Weighted-average discount rate—operating leases
|
5.2
|
%
|
(in thousands)
|
Operating
|
Finance
|
||||||
2020 (1)
|
$
|
16,152
|
$
|
7,931
|
||||
2021
|
18,087
|
8,179
|
||||||
2022
|
15,941
|
9,902
|
||||||
2023
|
7,214
|
6,775
|
||||||
2024
|
408
|
1,300
|
||||||
Thereafter
|
1,992
|
-
|
||||||
Total minimum lease payments
|
59,794
|
34,087
|
||||||
Less: amount representing interest
|
(4,985
|
)
|
(2,124
|
)
|
||||
Present value of minimum lease payments
|
54,809
|
31,963
|
||||||
Less: current portion
|
(18,452
|
)
|
(7,062
|
)
|
||||
Lease obligations, long-term
|
$
|
36,357
|
$
|
24,901
|
Note 7.
|
Stock-Based Compensation
|
Note 8.
|
Commitments and Contingencies
|
Note 9.
|
Equity Method Investment
|
(in thousands)
|
As of March 31,
|
As of December 31,
|
||||||
|
2020
|
2019
|
||||||
Total Assets
|
$
|
360,538
|
$
|
374,591
|
||||
Total Liabilities
|
306,132
|
318,743
|
||||||
Total Equity
|
$
|
54,406
|
$
|
55,848
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Revenue
|
$
|
25,221
|
$
|
27,525
|
||||
Cost of Sales
|
4,769
|
7,516
|
||||||
Operating Expenses
|
18,875
|
12,526
|
||||||
Operating Income
|
1,577
|
7,483
|
||||||
Net (Loss) Income
|
$
|
(1,442
|
)
|
$
|
5,088
|
Note 10.
|
Goodwill and Other Intangible Assets
|
(in thousands)
|
March 31, 2020
|
|||||||||||||||
|
Gross intangible assets
|
Accumulated amortization
|
Net intangible assets
|
Remaining life (months)
|
||||||||||||
Trade name:
|
||||||||||||||||
Dedicated
|
$
|
2,402
|
$
|
(280
|
)
|
$
|
2,122
|
|||||||||
Managed Freight
|
1,998
|
(233
|
)
|
1,765
|
||||||||||||
Total trade name
|
4,400
|
(513
|
)
|
3,887
|
159
|
|||||||||||
Non-compete agreement:
|
||||||||||||||||
Dedicated
|
914
|
(321
|
)
|
593
|
||||||||||||
Managed Freight
|
486
|
(170
|
)
|
316
|
||||||||||||
Total non-compete agreement
|
1,400
|
(491
|
)
|
909
|
39
|
|||||||||||
Customer relationships:
|
||||||||||||||||
Dedicated
|
14,072
|
(2,052
|
)
|
12,020
|
||||||||||||
Managed Freight
|
14,128
|
(2,060
|
)
|
12,068
|
||||||||||||
Total customer relationships:
|
28,200
|
(4,112
|
)
|
24,088
|
123
|
|||||||||||
Total other intangible assets
|
$
|
34,000
|
$
|
(5,116
|
)
|
$
|
28,884
|
(in thousands)
|
December 31, 2019
|
|||||||||||||||
|
Gross intangible assets
|
Accumulated amortization
|
Net intangible assets
|
Remaining life (months)
|
||||||||||||
Trade name:
|
||||||||||||||||
Dedicated
|
$
|
2,402
|
$
|
(240
|
)
|
$
|
2,162
|
|||||||||
Managed Freight
|
1,998
|
(200
|
)
|
1,798
|
||||||||||||
Total trade name
|
4,400
|
(440
|
)
|
3,960
|
162
|
|||||||||||
Non-compete agreement:
|
||||||||||||||||
Dedicated
|
914
|
(274
|
)
|
640
|
||||||||||||
Managed Freight
|
486
|
(146
|
)
|
340
|
||||||||||||
Total non-compete agreement
|
1,400
|
(420
|
)
|
980
|
42
|
|||||||||||
Customer relationships:
|
||||||||||||||||
Dedicated
|
14,072
|
(1,759
|
)
|
12,313
|
||||||||||||
Managed Freight
|
14,128
|
(1,766
|
)
|
12,362
|
||||||||||||
Total customer relationships:
|
28,200
|
(3,525
|
)
|
24,675
|
126
|
|||||||||||
Total other intangible assets
|
$
|
34,000
|
$
|
(4,385
|
)
|
$
|
29,615
|
|
(in thousands)
|
|||
2020 (1)
|
$
|
2,192
|
||
2021
|
2,923
|
|||
2022
|
2,923
|
|||
2023
|
2,783
|
|||
2024
|
2,643
|
|||
Thereafter
|
15,420
|
(1)
|
Excludes the three months ended March 31, 2020.
|
Note 11.
|
Equity
|
Note 12.
|
Liquidity
|
Note 13.
|
Subsequent Events
|
|
●
|
Total revenue of $213.6 million, a decrease of 2.6% compared with the first quarter of 2019, and freight revenue of $192.3 million (which excludes revenue from fuel surcharges), a decrease of 1.8% compared
with the first quarter of 2019;
|
|
|
|
|
●
|
Operating income of $0.7 million, compared with $5.4 million in the first quarter of 2019;
|
|
|
|
|
●
|
Net loss of $2.2 million, or $0.12 per basic and diluted share, compared with net income of $4.4 million, or $0.24 per basic and diluted share, in the first quarter of 2019;
|
|
|
|
|
●
|
With available borrowing capacity of $35.6 million under our Credit Facility at March 31, 2020, we do not expect to be required to test our fixed charge covenant in the foreseeable future;
|
|
|
|
|
●
|
Our Managed Freight segment’s total revenue decreased to $42.9 million in the 2020 quarter from $44.7 million in the 2019 quarter and operating income decreased to $1.6 million in the 2020 quarter from $2.7
million in the 2019 quarter;
|
|
|
|
|
●
|
Our equity investment in TEL used $0.7 million of pre-tax earnings in the first quarter of 2020 and provided $3.0 million in the first quarter of 2019;
|
|
|
|
|
●
|
Since December 31, 2019, total indebtedness, net of cash, increased by $32.1 million to $336.7 million; and
|
|
|
|
|
●
|
Stockholders' equity and tangible book value at March 31, 2020, were $328.5 million and $257.1 million, respectively.
|
Three months ended
March 31,
|
||||||||||||||||
GAAP Operating Ratio:
|
2020
|
OR %
|
2019
|
OR %
|
||||||||||||
Total revenue
|
$
|
213,553
|
$
|
219,181
|
||||||||||||
Total operating expenses
|
212,845
|
99.7
|
%
|
213,755
|
97.5
|
%
|
||||||||||
Operating income
|
$
|
708
|
$
|
5,426
|
||||||||||||
Adjusted Operating Ratio:
|
2020
|
Adj.
OR %
|
2019
|
Adj.
OR %
|
||||||||||||
Total revenue
|
$
|
213,553
|
$
|
219,181
|
||||||||||||
Fuel surcharge revenue
|
(21,232
|
) |
(23,420
|
) | ||||||||||||
Freight revenue (total revenue, excluding fuel surcharge)
|
192,321
|
195,761
|
||||||||||||||
Total operating expenses
|
212,845
|
213,755
|
||||||||||||||
Adjusted for:
|
||||||||||||||||
Fuel surcharge revenue
|
(21,232
|
) |
(23,420
|
) | ||||||||||||
Amortization of intangibles
|
(731
|
) |
|
|
(731
|
)
|
|
|
||||||||
Adjusted operating expenses | 190,882 | 99.3 | % | 189,604 | 96.9 | % | ||||||||||
Adjusted operating income
|
$
|
1,439
|
$
|
6,157
|
● |
Highway Services: Includes the Company’s Expedited and OTR services, which are typically ad-hoc and do not include long-term contracts.
|
|
o
|
Expedited services primarily involves high service freight with delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows. Expedited services generally require
two-person driver teams on equipment either owned or leased by the Company.
|
|
o
|
OTR services provide customers with one-way load capacity over irregular routes for loads that are typically shorter in nature.
|
|
● |
Dedicated: Specializes in providing customers with committed capacity over extended contract periods using equipment either owned or leased by the Company.
|
|
● |
Managed Freight: Includes the Company’s Brokerage, TMS and Warehousing services.
|
|
o
|
Brokerage services provide logistics capacity by outsourcing the carriage of customers’ freight to contractual third parties.
|
|
o
|
TMS provides comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.
|
|
o
|
Warehousing services provides day-to-day warehouse management services to customers who have chosen to outsource this function.
|
|
● |
Factoring services assist freight capacity providers with improving cash flows by purchasing accounts receivables at a discount and collecting them directly from the end consumer.
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Revenue:
|
||||||||
Freight revenue
|
$
|
192,321
|
$
|
195,761
|
||||
Fuel surcharge revenue
|
21,232
|
23,420
|
||||||
Total revenue
|
$
|
213,553
|
$
|
219,181
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Salaries, wages, and related expenses
|
$
|
82,824
|
$
|
79,503
|
||||
% of total revenue
|
38.8
|
%
|
36.3
|
%
|
||||
% of freight revenue
|
43.1
|
%
|
40.6
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Fuel expense
|
$
|
25,265
|
$
|
27,832
|
||||
% of total revenue
|
11.8
|
%
|
12.7
|
%
|
||||
% of freight revenue
|
13.1
|
%
|
14.2
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Total fuel surcharge
|
$
|
21,232
|
$
|
23,420
|
||||
Less: Fuel surcharge revenue reimbursed to independent contractors and other third parties
|
2,781
|
2,942
|
||||||
Company fuel surcharge revenue
|
$
|
18,451
|
$
|
20,478
|
||||
Total fuel expense
|
$
|
25,265
|
$
|
27,832
|
||||
Less: Company fuel surcharge revenue
|
18,451
|
20,478
|
||||||
Net fuel expense
|
$
|
6,814
|
$
|
7,354
|
||||
% of freight revenue
|
3.5
|
%
|
3.8
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Operations and maintenance
|
$
|
12,825
|
$
|
15,174
|
||||
% of total revenue
|
6.0
|
%
|
6.9
|
%
|
||||
% of freight revenue
|
6.7
|
%
|
7.8
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Revenue equipment rentals and purchased transportation
|
$
|
46,062
|
$
|
48,670
|
||||
% of total revenue
|
21.6
|
%
|
22.2
|
%
|
||||
% of freight revenue
|
24.0
|
%
|
24.9
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Operating taxes and licenses
|
$
|
3,454
|
$
|
3,183
|
||||
% of total revenue
|
1.6
|
%
|
1.5
|
%
|
||||
% of freight revenue
|
1.8
|
%
|
1.6
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Insurance and claims
|
$
|
15,614
|
$
|
11,235
|
||||
% of total revenue
|
7.3
|
%
|
5.1
|
%
|
||||
% of freight revenue
|
8.1
|
%
|
5.7
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Communications and utilities
|
$
|
1,569
|
$
|
1,718
|
||||
% of total revenue
|
0.7
|
%
|
0.8
|
%
|
||||
% of freight revenue
|
0.8
|
%
|
0.9
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
General supplies and expenses
|
$
|
8,568
|
$
|
6,731
|
||||
% of total revenue
|
4.0
|
%
|
3.1
|
%
|
||||
% of freight revenue
|
4.5
|
%
|
3.4
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Depreciation and amortization, including gains and losses on disposition of property and equipment
|
$
|
16,663
|
$
|
19,709
|
||||
% of total revenue
|
7.8
|
%
|
9.0
|
%
|
||||
% of freight revenue
|
8.7
|
%
|
10.1
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Interest expense, net
|
$
|
2,892
|
$
|
2,446
|
||||
% of total revenue
|
1.4
|
%
|
1.1
|
%
|
||||
% of freight revenue
|
1.5
|
%
|
1.2
|
%
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
(Loss) income from equity method investment
|
$
|
(735
|
)
|
$
|
3,035
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Income tax (benefit) expense
|
$
|
(706
|
)
|
$
|
1,582
|
|||
% of total revenue
|
(0.3
|
%)
|
0.7
|
%
|
||||
% of freight revenue
|
(0.4
|
%)
|
0.8
|
%
|
(in thousands)
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2020
|
2019
|
||||||
Revenues:
|
||||||||
Highway Services:
|
||||||||
Expedited
|
$
|
67,597
|
$
|
61,623
|
||||
OTR
|
18,564
|
26,705
|
||||||
Total Highway Services
|
86,161
|
88,328
|
||||||
|
||||||||
Dedicated
|
81,788
|
84,332
|
||||||
|
||||||||
Managed Freight:
|
||||||||
Brokerage
|
21,779
|
24,307
|
||||||
TMS
|
8,958
|
8,370
|
||||||
Warehousing
|
12,128
|
11,996
|
||||||
Total Managed Freight
|
42,865
|
44,673
|
||||||
|
||||||||
Factoring
|
2,739
|
1,848
|
||||||
|
||||||||
Total revenues
|
$
|
213,553
|
$
|
219,181
|
||||
|
||||||||
Operating Income (Loss):
|
||||||||
Highway Services
|
||||||||
Expedited
|
$
|
1,237
|
$
|
2,197
|
||||
OTR
|
(2,994
|
)
|
(3,031
|
)
|
||||
Total Highway Services
|
(1,757
|
)
|
(834
|
)
|
||||
|
||||||||
Dedicated
|
(1,325
|
)
|
2,110
|
|||||
|
||||||||
Managed Freight:
|
||||||||
Brokerage
|
(11
|
)
|
556
|
|||||
TMS
|
664
|
587
|
||||||
Warehousing
|
975
|
1,527
|
||||||
Total Managed Freight
|
1,628
|
2,670
|
||||||
|
||||||||
Factoring
|
2,162
|
1,480
|
||||||
|
||||||||
Total operating income
|
$
|
708
|
$
|
5,426
|
|
●
|
$24.3 million and no outstanding borrowings under the Credit Facility, respectively;
|
|
|
|
|
●
|
$242.0 million and $230.9 million in revenue equipment installment notes, respectively;
|
|
|
|
|
●
|
$23.5 million and $23.8 million in real estate notes, respectively;
|
|
|
|
|
●
|
$0.1 million and $0.2 million in deferred loan costs (which reduce long-term debt), respectively;
|
|
|
|
|
●
|
$32.0 million and $33.3 million of the principal portion of financing lease obligations, respectively, and;
|
|
|
|
|
●
|
$54.8 million and $60.3 million of the operating lease obligations, respectively.
|
ITEM 3.
|
PART II
|
OTHER INFORMATION
|
ITEM 1.
|
ITEM 1A.
|
ITEM 2.
|
Period
|
(a)
Total Number of Shares Purchased
|
(b)
Average Price Paid per Share
|
(c)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
|
(d)
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(1)
|
||||||||||||
January 1-31, 2020
|
—
|
—
|
—
|
—
|
||||||||||||
February 1-29, 2020
|
546,647
|
$
|
13.99
|
546,647
|
$
|
12,328,598
|
||||||||||
March 1-31, 2020
|
882,557
|
$
|
11.19
|
882,557
|
$
|
2,485,495
|
||||||||||
Total
|
1,429,204
|
1,429,204
|
$
|
2,485,495
|
(1)
|
On February 10, 2020, our Board of Directors approved a stock repurchase program authorizing the purchase of up to $20.0 million of our Class A common stock from time-to-time based upon market conditions and
other factors. On March 26, 2020, our Board of Directors temporarily suspended the stock repurchase program for added flexibility in response to the uncertain impact of the COVID-19 pandemic. The Company has the ability to reinstate the
stock repurchase program as circumstances warrant based on market conditions, cash flow requirements, securities law limitations, and other factors.
|
ITEM 3.
|
ITEM 4.
|
ITEM 5.
|
ITEM 6.
|
EXHIBITS
|
|
COVENANT TRANSPORTATION GROUP, INC.
|
|
|
|
|
|
|
|
Date: May 27, 2020
|
By:
|
/s/ M. Paul Bunn
|
|
|
M. Paul Bunn
|
|
|
Executive Vice President, Chief Financial Officer, and Secretary in his capacity as such and as a duly authorized officer on behalf of the issuer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Covenant Transportation Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
Date: May 27, 2020
|
/s/ David R. Parker
|
|
David R. Parker
|
|
Principal Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Covenant Transportation Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
Date: May 27, 2020
|
/s/ M. Paul Bunn
|
|
M. Paul Bunn
Principal Financial Officer
|
Date: May 27, 2020
|
/s/ David R. Parker
|
|
David R. Parker
|
|
Chief Executive Officer
|
Date: May 27, 2020
|
/s/ M. Paul Bunn
|
|
M. Paul Bunn
|
|
Chief Financial Officer
|