The Covenant Transport facility is located southwest of downtown Chattanooga, adjacent to Interstate 24.With its stock price up and the economy fueling double-digit revenue gains this fall, Covenant Transportation Group, Inc. is issuing another 2.2 million shares of stock.
The Chattanooga-based trucking company, which currently has nearly 15 million shares outstandng, could fetch more than $48 million from the additional stock, which the company said it would use to reduce its debt.
The stock issue comes as the company said Thursday it expects fourth quarter profits to be "materially greater" than a year ago due to the strong shipping demand this fall.
Covenant said in a statement that it has "experienced improvements in its operating results for the month of October 2014, which are expected to continue during the fourth quarter of 2014."
Covenant earned 20 cents per share a year ago and analysts are forcasting earnings this quarter to double last year's results.
Covenant said its revenue grew by 10.4 percent in October. In the first 12 days of November, average freight revenue per tractor per week grew by 16 percent.
The number of operating trucks on the road for Covenant has increased by 35 trucks from a year ago to 2,743.
Fuel prices are also down, but since the company hedges its fuel usage the drop won't have much impact on Covenant profits, the company said.
The announcement of the stock issue and improved fourth quarter results came after the market closed Thursday. Prior to the announcements, Covenant shares fell by 62 cents per share, or 2.7 percent, to close at $22.17.
Despite Thursday's price drop, however, Covenant's stock price has more than doubled from the start of the year when Covenent was priced at $8.21 per share.
Those gains will help the yield from the new stock issue, which is being jointly managed by Stephens Inc. and BB&T Capital Markets. Avondale Partners, Cowen and Company, and Wolfe Research Securities will serve as co-managing underwriters for the offering.
Covenant said it will grant the underwriters of the stock offering a 30-day option to purchase up to 330,000 additional shares at the same price per share. The offering is subject to market conditions, and the company said "there can be no assurance as to whether or when the offering may be completed."
Contact Dave Flessner at dflessner@timesfreepress.com