Covenant Transportation Group Announces First Quarter Financial and Operating Results

Covenant Transportation Group Announces First Quarter Financial and Operating
Results

CHATTANOOGA, Tenn., April 24, 2013 (GLOBE NEWSWIRE) -- Covenant Transportation
Group, Inc. (Nasdaq:CVTI) announced today financial and operating results for
the first quarter ended March 31, 2013.

Highlights for the quarter included the following:

  oTotal revenue of $164.7 million, an increase of 4.9% compared with the
    first quarter of 2012;
  oFreight revenue of $129.1 million (excludes revenue from fuel surcharges),
    an increase of 5.9% compared with the first quarter of 2012;
  oOperating loss of $0.7 million and an operating ratio of 100.6%, compared
    with operating income of $2.4 million and an operating ratio of 98.1% in
    the first quarter of 2012;
  oNet loss of $2.0 million, or ($0.13) per share, compared with net loss of
    $0.6 million, or ($0.04) per share in the first quarter of 2012; and
  oGains on sale included $0.7 million from revenue equipment in the 2013
    quarter compared with $2.4 million from the sale of a terminal real estate
    property and $0.6 million from revenue equipment in the 2012 quarter.
    Gains on sale are reflected as a reduction of depreciation and
    amortization on our statement of operations.

Management Discussion—Asset-Based Operations

Chairman, President, and Chief Executive Officer, David R. Parker, made the
following comments: "We experienced an uneven operating environment in the
first quarter as January freight was strong, followed by average demand but
difficult weather conditions in February, and a March that started off well,
but finished weaker than expected. In addition, the first quarter of 2013
basically had two fewer business days than the prior period, due to leap year
in 2012 and an early Easter in 2013.Despite the business, weather, and
calendar headwinds, operating results were comparable to last year's first
quarter, excluding the $2.4 million gain on sale of a terminal in the 2012
quarter. During the quarter, we continued to improve asset productivity by
allocating assets to our refrigerated and team operations, reducing exposure
to solo dry van operations, and improving our drivers' employment experience.
These factors contributed to a 7.6% increase in average freight revenue per
tractor compared with the first quarter of 2012, which nearly covered our
year-over-year operating cost increases. Our asset-based operating ratio was
100.4% compared with 100.1%, excluding the $2.4 million gain on sale of a
terminal, in the 2012 quarter.

For the quarter, total revenue in our asset‑based operations increased to
$157.5 million, an increase of $5.1 million compared with the first quarter of
2012.This increase consisted of higher freight revenues of $4.7 million and
higher fuel surcharge revenue of $0.4 million. The $4.7 million increase in
freight revenues related to an 8.8% increase in average freight revenue per
tractor per week, partially offset by a 3.9% decrease in our average tractor
fleet.

"Average freight revenue per tractor per week increased to $3,311 during the
2013 quarter from $3,044 during the 2012 quarter.Average freight revenue per
total mile increased by 5.9 cents per mile (or 4.2%) compared to the 2012
quarter and average miles per unit increased by 3.3%. The main factors
impacting the improved utilization were a 200 basis point increase in the
percentage of our fleet comprised of team-driven tractors, improved seated
truck percentage and improved use of technology.These improvements were
partially offset by more difficult weather and fewer business days compared to
the 2012 quarter. Our non-revenue miles percentage decreased by approximately
10 basis points compared with the 2012 quarter. As of March 31, 2013,
approximately 4.1% of our fleet lacked drivers, compared with approximately
5.4% at March 31, 2012.

"We experienced cost pressure in several areas. Salaries, wages and related
expenses increased approximately 3.4 cents per mile due to employee pay
adjustments since the first quarter of 2012 and higher workers' compensation
expense.These increases more than offset a decrease in the percentage of our
miles generated by driver employees due to an increase in owner-operators.

Owner-operator expense (reflected as purchased transportation) increased
approximately 2.3 cents per mile on a total mile basis compared with the 2012
quarter.This reflects a combination of higher rates, including fuel surcharge
compensation and an increase in owner-operator miles as a percentage of our
total miles to 8.8% in the 2013 quarter from 7.6% in the 2012 quarter. We are
continuing our objective of growing our owner-operator fleet as a percentage
of our total fleet. Increasing owner-operator capacity has shifted (and
assuming all other factors remain equal is expected to continue to shift)
expenses to the purchased transportation line item with offsetting reductions
in employee driver wages and related expenses, net fuel, maintenance, and
capital costs.

"The increase in owner-operator miles as a percentage of total miles, together
with our accounting for owner-operator settlements and fuel surcharges, affect
our purchased transportation and net fuel expense.We generally compensate
owner-operators on a per mile basis that includes a base rate plus additional
amounts associated with activities and fuel surcharges.The total amount paid
to our owner-operators is recorded in purchased transportation.We do not net
the fuel surcharges we collect from customers against purchased transportation
(even though a similar amount is passed through to owner-operators); instead
these amounts are netted against fuel expense and reduce that line item when
we calculate net fuel costs.Fuel surcharge recovery from miles operated by
owner-operators was approximately $3.1 million in the 2013 quarter compared
with approximately $2.6 million in the 2012 quarter. Overall net fuel expense
was approximately 17.3 cents per company mile in the 2013 quarter compared
with 17.1 cents per company mile in the 2012 quarter due to increased idling
due to severe weather and increased usage of fuel for refrigeration units
associated with the growth of our SRT subsidiary.

"Capital costs (combined depreciation and amortization, revenue equipment
rentals and interest expense) increased by approximately $1.5 million.
Excluding the $2.4 million gain on sale of our Long Beach terminal recognized
in the prior year quarter as a reduction of depreciation and amortization,
capital costs decreased by approximately $0.9 million.The change was
primarily attributable to greater use of owner-operators, offset partially by
a $0.9 million increase to revenue equipment rentals in the 2013 quarter.
Gains on sale of equipment were approximately equal for the first quarter of
2013 and 2012.

"Insurance and claims per mile cost decreased to 10.2 cents per mile in the
first quarter of 2013 from 11.8 cents per mile in the first quarter of 2012.
We experienced a reduction in the number of claims for accidents, as well as
in unfavorable claims reserve adjustment on past claims."

Management Discussion—Non-Asset Based Brokerage and Other Operations

Mr. Parker offered the following comments concerning Covenant Transport
Solutions, Inc. ("Solutions"), the Company's non-asset based subsidiary:"For
the quarter, Solutions' total revenue increased 54.9%, to $7.2 million from
$4.7 million in the same quarter of 2012. Operating loss was approximately
$267,000 for an operating ratio of 103.7%, compared with operating income of
$1,000 and an operating ratio of 100.0% in the first quarter of 2012.
Solutions' gross margins contracted, as purchased transportation was 79.2% of
total revenue in the current quarter, compared with 76.9% of total revenue in
the prior year quarter. Solutions' other operating expenses as a percentage of
revenue increased to 24.5% of total revenue in the first quarter of 2013 from
23.1% of total revenue in the first quarter of 2012. In addition, our 49%
equity investment in Transport Enterprise Leasing ("TEL") contributed
approximately $0.5 million of pre-tax income in the first quarter."

Cash Flow and Liquidity

Richard B. Cribbs, the Company's Senior Vice President and Chief Financial
Officer, added the following comments: "At March 31, 2013, our total balance
sheet debt and capital lease obligations, net of cash, were $166.6 million,
our stockholders' equity was $92.7 million, and our tangible book value was
$92.2 million, or $6.25 per basic share.At March 31, 2013, our ratio of net
debt to total balance sheet capitalization was 64.2%.Also at March 31, 2013,
the discounted value of future obligations under off-balance sheet operating
lease obligations was approximately $86.1 million, including the residual
value guarantees under those leases, and we believe the value of the leased
equipment was approximately equal to the present value of such lease
obligations.Since the end of 2012, the Company's balance sheet debt and
capital lease obligations, net of cash, has decreased by $1.5 million, while
the present value of financing provided by operating leases increased by
approximately $11.8 million.

"Our current tractor fleet plan for 2013 includes the disposal of
approximately 975 used tractors, the delivery of approximately 900 new company
tractors. The pace at which we are able to on-board additional owner-operators
will determine whether or not we are able to average the same fleet size for
2013 as the 2012 year. With a relatively young average company tractor fleet
age of 25 months at March 31, 2013, we believe there is significant
flexibility to manage our fleet, and we plan to regularly evaluate our tractor
replacement cycle and new tractor purchase requirements. In addition, we
believe we have sufficient financing available from the captive finance
subsidiaries of our main tractor suppliers, our revolving credit facility, and
other sources to fund our expected revenue equipment purchases in 2013."

Conference Call Information

The Company will host a live conference call tomorrow, April 25, 2013, at
11:00 a.m. Eastern time to discuss the quarter.Individuals may access the
call by dialing 800-351-4894 (U.S./Canada) and 334-323-7224 (International),
access code CTG1.An audio replay will be available for one week following the
call at 877-919-4059, access code 24223847. For additional financial and
statistical information regarding the Company that is expected to be discussed
during the conference call, please visit our website at
www.ctgcompanies.com/investor-relations under the icon "Earnings Info."

Covenant Transportation Group, Inc. is the holding company for several
transportation providers that offer premium transportation services for
customers throughout the United States. The consolidated group includes
operations from Covenant Transport and Covenant Transport Solutions of
Chattanooga, Tennessee; Southern Refrigerated Transport of Texarkana,
Arkansas; and Star Transportation of Nashville, Tennessee.In addition,
Transport Enterprise Leasing, of Chattanooga, Tennessee is an integral
affiliated company. The Company's Class A common stock is traded on the NASDAQ
Global Select under the symbol, "CVTI".

This press release contains certain statements that may be considered
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Such statements may be identified by their use of terms or
phrases such as "expects," "estimates," "projects," "believes," "anticipates,"
"plans," "intends," and similar terms and phrases. Forward-looking statements
are based upon the current beliefs and expectations of our management and are
inherently subject to risks and uncertainties, some of which cannot be
predicted or quantified, which could cause future events and actual results to
differ materially from those set forth in, contemplated by, or underlying the
forward-looking statements. In this press release, the statements relating to
equipment purchases and disposals, the on-boarding of owner-operators, and the
availability of sufficient financing for equipment purchases are
forward-looking statements. The following factors, among others, could cause
actual results to differ materially from those in the forward-looking
statements: elevated experience in the frequency and severity of claims
relating to accident, cargo, workers' compensation, health, and other claims,
increasedinsurance premiums, fluctuations in claims expenses that result from
our self-insured retention amounts, including in our excess layers and in
respect of claims for which we commute policy coverage, and the requirement
that we pay additional premiums if there are claims in certain of those
layers, differences between estimates used in establishing and adjusting
claims reserves and actual results over time, adverse changes in claims
experience and loss development factors, or additional changes in management's
estimates of liability based upon such experience and development factors that
cause our expectations of insurance and claims expense to be inaccurate or
otherwise impacts our results; changes in the market condition for used
revenue equipment and real estate that impact our capital expenditures and our
ability to dispose of revenue equipment and real estate on the schedule and
for the prices we expect; increases in the prices paid for new revenue
equipment that impact our capital expenditures and our results generally;
changes in management's estimates of the need for new tractors and trailers;
the effect of any reduction in tractor purchases on the number of tractors
that will be accepted by manufacturers under tradeback arrangements; our
inability to generate sufficient cash from operations and obtain financing on
favorable terms to meet our significant ongoing capital requirements; our
ability to maintain compliance with the provisions of our credit agreements,
particularly financial covenants in our revolving credit facility; excess
tractor or trailer capacity in the trucking industry; decreased demand for our
services or loss of one or more of our major customers; our ability to renew
dedicated service offering contracts on the terms and schedule we expect;
surplus inventories, recessionary economic cycles, and downturns in customers'
business cycles; strikes, work slowdowns, or work stoppages at the Company,
customers, ports, or other shipping related facilities; increases or rapid
fluctuations in fuel prices, as well as fluctuations in hedging activities and
surcharge collection, including, but not limited to, changes in customer fuel
surcharge policies and increases in fuel surcharge bases by customers; the
volume and terms of diesel purchase commitments; interest rates, fuel taxes,
tolls, and license and registration fees; increases in compensation for and
difficulty in attracting and retaining qualified drivers and independent
contractors; seasonal factors such as harsh weather conditions that increase
operating costs; competition from trucking, rail, and intermodal competitors;
regulatory requirements that increase costs, decrease efficiency, or reduce
the availability of drivers, including revised hours-of-service requirements
for drivers and the Comprehensive Safety Analysis 2010 that implemented new
driver standards and modified the methodology for determining a carrier's DOT
safety rating; the ability to reduce, or control increases in, operating
costs; changes in the Company's business strategy that require the acquisition
of new businesses, 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 and Exchange Commission. We disclaim any
obligation to update or revise any forward-looking statements to reflect
actual results or changes in the factors affecting the forward-looking
information.

Covenant Transportation Group, Inc.
Key Financial and Operating Statistics
                                                                   
                                                INCOME STATEMENT DATA
                                                Three Months Ended Mar 31,
($000s, except per share data)                   2013      2012       % Change
Freight revenue                                  $129,141  $121,900   5.9%
Fuel surcharge revenue                           35,590   35,131    
Total revenue                                    $164,731  $157,031   4.9%
                                                                   
Operating expenses:                                                 
Salaries, wages, and related expenses            55,074   52,162    
Fuel expense                                     48,635   48,355    
Operations and maintenance                       11,678   10,411    
Revenue equipment rentals and purchased          22,685   17,178    
transportation
Operating taxes and licenses                     2,773    2,398     
Insurance and claims                             8,494    9,856     
Communications and utilities                     1,284    1,198     
General supplies and expenses                    3,907    3,752     
Depreciation and amortization, including gains
and losses on disposition of property and        10,916   9,364     
equipment
Total operating expenses                         165,446  154,674   
Operating income (loss)                          (715)    2,357     
Other (income) expenses:                                            
Interest expense                                 2,633    3,518     
Interest income                                  --       --        
Other                                            --       (11)      
Other expenses, net                              2,633    3,507     
Equity in income of affiliate                    480      245       
Loss before income taxes                         (2,868)  (905)     
Income tax expense (benefit)                     (909)    (265)     
Net loss                                         ($1,959)  ($640)     
                                                                   
                                                                   
Basic and diluted earnings (loss) per share      ($0.13)   ($0.04)    
Basic and diluted weighted average shares        14,762   14,722    
outstanding (000s)
                                                                   
                                                Three Months Ended Mar 31,
                                                2013      2012       % Change
($000s)                                          SEGMENT REVENUES
Asset-based trucking revenues                    $121,932  $117,246   4.0%
Covenant Transport Solutions non-asset based     7,209    4,654     54.9%
revenues
Freight revenue                                  $129,141  $121,900   5.9%
                                                                   
                                                OPERATING STATISTICS
Average freight revenue per loaded mile         $1.623    $1.561     4.0%
Average freight revenue per total mile          $1.464    $1.405     4.2%
Average freight revenue per tractor per week     $3,311    $3,044     8.8%
Average miles per tractor per period             29,079   28,155    3.3%
Weighted avg. tractors for period                2,846    2,963     -3.9%
Tractors at end of period                        2,802    2,938     -4.6%
Trailers at end of period                        6,766    7,143     -5.3%
                                                SELECTED BALANCE SHEET DATA
($000s, except per share data)                   3/31/2013 12/31/2012 
Total assets                                     $397,648  $400,232   
Total equity                                     $92,713   $94,673    
Total balance sheet debt, net of cash            $166,565  $168,098   
Net Debt to Capitalization Ratio                 64.2%     64.0%      
Tangible book value per basic share              $6.25     $6.38      

CONTACT: For further information contact:
         Richard B. Cribbs, Senior Vice President and
         Chief Financial Officer
         (423) 463-3331
         criric@covenanttransport.com
        
         For copies of Company information contact:
         Kim Perry, Administrative Assistant
         (423) 463-3357
         perkim@covenanttransport.com

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