Covenant Logistics Group Announces Second Quarter Financial and Operating Results
Covenant Logistics Group (NASDAQ: CVLG) reported Q2 2024 earnings of $0.88 per diluted share and adjusted earnings of $1.04 per diluted share. Total revenue reached $287.5M, a 4.9% increase YoY, while freight revenue grew 5.3% to $256.5M. Operating income was $15.6M, up from $11.8M YoY. Adjusted operating income rose by 15.0% to $18.7M. Covenant's investment with Transport Enterprise Leasing contributed $4.1M pre-tax net income, down from $5.4M YoY.
Despite market headwinds, Covenant saw a 8.7% increase in truckload operations revenue. However, the truckload segment faced rising operating costs per mile. Managed Freight's revenue declined 4.6%, but operating income improved 71.2%. Warehousing revenue grew 0.7%, with operating income increasing significantly. The company's net indebtedness rose by $25.0M to $273.3M. The outlook remains cautious but optimistic, focusing on structural improvements and strategic execution.
- Q2 2024 earnings per diluted share of $0.88
- Adjusted earnings per diluted share of $1.04
- Total revenue increased by 4.9% YoY to $287.5M
- Freight revenue grew 5.3% to $256.5M
- Operating income increased to $15.6M from $11.8M YoY
- Adjusted operating income rose by 15.0% to $18.7M
- Truckload operations revenue increased by 8.7%
- Managed Freight's operating income improved by 71.2%
- Warehousing segment's operating income increased significantly
- Pre-tax net income from Transport Enterprise Leasing decreased to $4.1M from $5.4M YoY
- Net income decreased to $12.2M from $12.3M YoY
- Adjusted net income slightly down to $14.5M from $14.4M YoY
- Truckload operating costs per mile increased by 1.1%
- Insurance and claims expenses increased by 56% per total mile
- Loss on sale of equipment was $0.9M compared to a gain of $2.0M in the prior year quarter
- Net indebtedness increased by $25.0M to $273.3M
Insights
Covenant Logistics Group's Q2 2024 results demonstrate resilience in a challenging freight environment. The company reported earnings of
- Year-over-year freight revenue growth of
5.3% - Adjusted operating income growth of
15.0% - Total revenue increased to
$287.5 million , up from$274.0 million in Q2 2023 - Operating ratio improved to
94.6% from95.7% in the prior year quarter
The company's diversified logistics services have proven valuable in navigating market headwinds. However, the 49% equity investment in Transport Enterprise Leasing (TEL) saw a decrease in contribution, primarily due to deterioration in the equipment market and increased interest expenses.
The Truckload segment showed mixed results, with revenue growth offset by increased operating costs. The Managed Freight segment saw a slight decline in revenue but significant improvement in operating income. The Warehousing segment demonstrated modest revenue growth with substantial improvements in operating income.
Covenant's net indebtedness increased to
Looking ahead, management expects a gradual improvement in freight market fundamentals but anticipates a slow recovery. The company remains focused on executing its strategic plan to enhance profitability and predictability in its business model.
Covenant Logistics Group's Q2 2024 results offer insights into the broader trucking and logistics industry trends:
- The 5.3% year-over-year freight revenue growth suggests a gradual recovery in shipping demand, despite ongoing market challenges.
- The company's ability to grow its fleet by
9.1% (191 more average tractors) indicates confidence in future demand and potential market share gains. - Improved freight revenue per total mile in most segments points to some pricing power, though rate pressures persist in certain areas.
- The deterioration in the used equipment market, as evidenced by TEL's performance and Covenant's own losses on equipment sales, signals ongoing challenges in fleet management across the industry.
The divergent performance across segments highlights the importance of a diversified business model in the current market:
- Expedited segment saw pressure on rates and utilization.
- Dedicated segment demonstrated strong growth and improved pricing.
- Managed Freight showed resilience with improved profitability despite lower revenue.
- Warehousing benefited from cost control measures and rate increases.
The company's outlook suggests a cautious optimism about the freight market's recovery. This aligns with broader industry expectations of a gradual improvement in market conditions, though the pace remains uncertain.
Investors should note the company's strategic focus on deepening supply chain involvement and enhancing operational efficiencies. This approach could position Covenant well for future growth as market conditions improve, potentially outperforming peers who lack such strategic initiatives.
CHATTANOOGA, Tenn., July 24, 2024 (GLOBE NEWSWIRE) -- Covenant Logistics Group, Inc. (NASDAQ/GS: CVLG) (“Covenant” or the “Company”) announced today financial and operating results for the second quarter ended June 30, 2024. The Company’s conference call to discuss the quarter will be held at 10:00 A.M. Eastern Time on Thursday, July 25, 2024.
Chairman and Chief Executive Officer, David R. Parker, commented: “We are pleased to report second quarter earnings of
“Highlights of our second quarter’s results include year over year freight revenue growth of
“Our
A summary of our second quarter financial performance:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| ( | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Total Revenue | $ | 287,497 | $ | 274,016 | $ | 566,260 | $ | 540,867 | ||||||||
| Freight Revenue, Excludes Fuel Surcharge | $ | 256,512 | $ | 243,704 | $ | 504,197 | $ | 477,126 | ||||||||
| Operating Income | $ | 15,577 | $ | 11,783 | $ | 19,912 | $ | 29,415 | ||||||||
| Adjusted Operating Income (1) | $ | 18,670 | $ | 16,235 | $ | 33,470 | $ | 28,860 | ||||||||
| Operating Ratio | 94.6 | % | 95.7 | % | 96.5 | % | 94.6 | % | ||||||||
| Adjusted Operating Ratio (1) | 92.7 | % | 93.3 | % | 93.4 | % | 94.0 | % | ||||||||
| Net Income | $ | 12,194 | $ | 12,293 | $ | 16,168 | $ | 28,928 | ||||||||
| Adjusted Net Income (1) | $ | 14,452 | $ | 14,443 | $ | 25,969 | $ | 27,208 | ||||||||
| Earnings per Diluted Share | $ | 0.88 | $ | 0.91 | $ | 1.17 | $ | 2.10 | ||||||||
| Adjusted Earnings per Diluted Share (1) | $ | 1.04 | $ | 1.07 | $ | 1.88 | $ | 2.00 | ||||||||
| (1) | Represents non-GAAP measures. | |
Truckload Operating Data and Statistics
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| ( | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Combined Truckload | ||||||||||||||||
| Total Revenue | $ | 201,475 | $ | 185,267 | $ | 391,428 | $ | 366,407 | ||||||||
| Freight Revenue, excludes Fuel Surcharge | $ | 170,771 | $ | 155,234 | $ | 329,966 | $ | 303,252 | ||||||||
| Operating Income | $ | 10,218 | $ | 9,058 | $ | 10,305 | $ | 25,481 | ||||||||
| Adj. Operating Income (1) | $ | 12,788 | $ | 13,047 | $ | 22,817 | $ | 24,169 | ||||||||
| Operating Ratio | 94.9 | % | 95.1 | % | 97.4 | % | 93.0 | % | ||||||||
| Adj. Operating Ratio (1) | 92.5 | % | 91.6 | % | 93.1 | % | 92.0 | % | ||||||||
| Average Freight Revenue per Tractor per Week | $ | 5,726 | $ | 5,678 | $ | 5,688 | $ | 5,589 | ||||||||
| Average Freight Revenue per Total Mile | $ | 2.38 | $ | 2.32 | $ | 2.37 | $ | 2.35 | ||||||||
| Average Miles per Tractor per Period | 31,270 | 31,775 | 62,459 | 61,407 | ||||||||||||
| Weighted Average Tractors for Period | 2,294 | 2,103 | 2,231 | 2,099 | ||||||||||||
| Expedited | ||||||||||||||||
| Total Revenue | $ | 108,010 | $ | 104,073 | $ | 213,481 | $ | 204,969 | ||||||||
| Freight Revenue, excludes Fuel Surcharge | $ | 88,918 | $ | 85,969 | $ | 175,518 | $ | 167,627 | ||||||||
| Operating Income | $ | 4,768 | $ | 5,815 | $ | 9,552 | $ | 15,091 | ||||||||
| Adj. Operating Income (1) | $ | 5,302 | $ | 7,953 | $ | 10,619 | $ | 15,334 | ||||||||
| Operating Ratio | 95.6 | % | 94.4 | % | 95.5 | % | 92.6 | % | ||||||||
| Adj. Operating Ratio (1) | 94.0 | % | 90.7 | % | 93.9 | % | 90.9 | % | ||||||||
| Average Freight Revenue per Tractor per Week | $ | 7,516 | $ | 7,734 | $ | 7,459 | $ | 7,587 | ||||||||
| Average Freight Revenue per Total Mile | $ | 2.06 | $ | 2.10 | $ | 2.08 | $ | 2.15 | ||||||||
| Average Miles per Tractor per Period | 47,396 | 47,840 | 93,448 | 91,122 | ||||||||||||
| Weighted Average Tractors for Period | 910 | 855 | 905 | 855 | ||||||||||||
| Dedicated | ||||||||||||||||
| Total Revenue | $ | 93,465 | $ | 81,194 | $ | 177,947 | $ | 161,438 | ||||||||
| Freight Revenue, excludes Fuel Surcharge | $ | 81,853 | $ | 69,265 | $ | 154,448 | $ | 135,625 | ||||||||
| Operating Income (Loss) | $ | 5,450 | $ | 3,243 | $ | 753 | $ | 10,390 | ||||||||
| Adj. Operating Income (1) | $ | 7,486 | $ | 5,094 | $ | 12,198 | $ | 8,835 | ||||||||
| Operating Ratio | 94.2 | % | 96.0 | % | 99.6 | % | 93.6 | % | ||||||||
| Adj. Operating Ratio (1) | 90.9 | % | 92.6 | % | 92.1 | % | 93.5 | % | ||||||||
| Average Freight Revenue per Tractor per Week | $ | 4,549 | $ | 4,269 | $ | 4,480 | $ | 4,216 | ||||||||
| Average Freight Revenue per Total Mile | $ | 2.86 | $ | 2.67 | $ | 2.82 | $ | 2.66 | ||||||||
| Average Miles per Tractor per Period | 20,667 | 20,770 | 41,309 | 40,996 | ||||||||||||
| Weighted Average Tractors for Period | 1,384 | 1,248 | 1,326 | 1,244 | ||||||||||||
| (1) | Represents non-GAAP measures. | |
Combined Truckload Revenue
Paul Bunn, the Company’s President commented on truckload operations, “For the quarter, total revenue in our truckload operations increased
Expedited Truckload Revenue
Mr. Bunn added, “Freight revenue in our Expedited segment increased
Dedicated Truckload Revenue
“For the quarter, freight revenue in our Dedicated segment increased
Combined Truckload Operating Expenses
Mr. Bunn continued, “Our truckload operating cost per total mile increased 3 cents, or
“Salaries, wages and related expenses increased year-over-year by 3 cents, or approximately
“Insurance and claims expense increased by 8 cents, or approximately
“Fixed expenses related to revenue producing equipment, including purchases of new equipment, depreciation, and loss on sale increased by 3 cents, or approximately
Managed Freight Segment
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| ( | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Freight Revenue | $ | 60,366 | $ | 63,281 | $ | 123,283 | $ | 124,155 | ||||||||
| Operating Income | $ | 3,330 | $ | 1,945 | $ | 5,599 | $ | 3,163 | ||||||||
| Adj. Operating Income (1) | $ | 3,594 | $ | 2,070 | $ | 6,127 | $ | 3,323 | ||||||||
| Operating Ratio | 94.5 | % | 96.9 | % | 95.5 | % | 97.5 | % | ||||||||
| Adj. Operating Ratio (1) | 94.0 | % | 96.7 | % | 95.0 | % | 97.3 | % | ||||||||
| (1) | Represents non-GAAP measures. | |
“For the quarter, Managed Freight’s freight revenue decreased
Warehousing Segment
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| ( | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Freight Revenue | $ | 25,375 | $ | 25,189 | $ | 50,948 | $ | 49,719 | ||||||||
| Operating Income | $ | 2,029 | $ | 780 | $ | 4,008 | $ | 771 | ||||||||
| Adj. Operating Income (1) | $ | 2,288 | $ | 1,118 | $ | 4,526 | $ | 1,368 | ||||||||
| Operating Ratio | 92.1 | % | 96.9 | % | 92.2 | % | 98.5 | % | ||||||||
| Adj. Operating Ratio (1) | 91.0 | % | 95.6 | % | 91.1 | % | 97.2 | % | ||||||||
| (1) | Represents non-GAAP measures. | |
“For the quarter, Warehousing’s freight revenue increased
Capitalization, Liquidity and Capital Expenditures
Tripp Grant, the Company’s Chief Financial Officer, added the following comments: “At June 30, 2024, our total indebtedness, composed of total debt and finance lease obligations, net of cash (“net indebtedness”), increased by
“The increase in net indebtedness in the first half of the current year is primarily attributable to approximately
“At June 30, 2024, we had cash and cash equivalents totaling
“At the end of the quarter, we had
“For the balance of 2024, our baseline expectation for net capital equipment expenditures is
Outlook
Mr. Parker concluded, “Our consistently strong financial performance over the duration of a very weak general freight market is encouraging and reflects the benefits of the significant structural changes made to our business model over the last four years as part of our strategic plan. We remain committed to continued improvement to our business model and are actively working to take Covenant to the next level of performance. While we believe freight market fundamentals have continued to slowly improve and macroeconomic indicators are beginning to positively reveal themselves, absent an outside catalyst, we believe a material improvement in the freight market will take time. Regardless of the operating environment, our focus and commitment remains unchanged as we execute our strategic plan through tactical step by step execution that will continue to allow us to capitalize on opportunities that drive us deeper into the supply chain, add value for our customers, and create efficiencies across our enterprise, which we believe will allow us to become a stronger, more profitable, and more predictable business.”
Conference Call Information
The Company will host a live conference call tomorrow, July 25, 2024, at 10:00 a.m. Eastern time to discuss the quarter. Individuals may access the call by dialing 877-550-1505 (U.S./Canada) and 0800-524-4760 (International). An audio replay will be available for one week following the call at 800-645-7964, access code 3895#. 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.covenantlogistics.com/investors under the icon “Earnings Info.”
Covenant Logistics Group, Inc., through its subsidiaries, offers a portfolio of transportation and logistics services to customers throughout the United States. Primary services include asset- based expedited and dedicated truckload capacity, as well as asset-light warehousing, transportation management, and freight brokerage capability. In addition, Transport Enterprise Leasing is an affiliated company providing revenue equipment sales and leasing services to the trucking industry. Covenant's Class A common stock is traded on the NASDAQ Global Select market under the symbol, “CVLG.”
(1) See GAAP to Non-GAAP Reconciliation in the schedules included with this release. In addition to operating income (loss), operating ratio, net income, and earnings per diluted share, we use adjusted operating income (loss), adjusted operating ratio, adjusted net income, and adjusted earnings per diluted share, non-GAAP measures, as key measures of profitability. Adjusted operating income (loss), adjusted operating ratio, adjusted net income, and adjusted diluted earnings per share are not substitutes for operating income (loss), operating ratio, net income, and earnings per diluted share measured in accordance with GAAP. There are limitations to using non-GAAP financial measures. We believe our presentation of these non-GAAP financial measures are useful because it provides investors and securities analysts with supplemental information that we use internally for purposes of assessing profitability. Further, our Board and management use non-GAAP operating income (loss), operating ratio, net income, and earnings per diluted share measures on a supplemental basis to remove items that may not be an indicator of performance from period-to-period. Although we believe that adjusted operating income (loss), adjusted operating ratio, adjusted net income, and adjusted diluted earnings per share improves comparability in analyzing our period-to-period performance, they could limit comparability to other companies in our industry, if those companies define such measures differently. Because of these limitations, adjusted operating income (loss), adjusted operating ratio, adjusted net income, and adjusted earnings per diluted share should not be considered measures of income generated by our business or discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.
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, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “plans,” “could,” “would,” “may,” “will,” "intends," “outlook,” “focus,” “seek,” “potential,” “mission,” “continue,” “goal,” “target,” “objective,” derivations thereof, 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, statements relating to future availability and covenant testing under our ABL credit facility, equipment age, net capital expenditures and related priorities, benefits, and returns, capital allocation alternatives, progress toward our strategic goals and the expected impact of achieving such goals, and the statements under “Outlook” are forward-looking statements. The following factors, among others could cause actual results to differ materially from those in the forward-looking statements: Our business is subject to economic, credit, business, and regulatory factors affecting the truckload industry that are largely beyond our control; We may not be successful in achieving our strategic plan; We operate in a highly competitive and fragmented industry; We may not grow substantially in the future and we may not be successful in improving our profitability; We may not make acquisitions in the future, or if we do, we may not be successful in our acquisition strategy; The conflicts in Ukraine and the Middle East, expansion of such conflicts to other areas or countries or similar conflicts could adversely impact our business and financial results; Increases in driver compensation or difficulties attracting and retaining qualified drivers could have a materially adverse effect on our profitability and the ability to maintain or grow our fleet; Our engagement of independent contractors to provide a portion of our capacity exposes us to different risks than we face with our tractors driven by company drivers; We derive a significant portion of our revenues from our major customers; Fluctuations in the price or availability of fuel, the volume and terms of diesel fuel purchase commitments, surcharge collection, and hedging activities may increase our costs of operation; We depend on third-party providers, particularly in our Managed Freight segment; We depend on the proper functioning and availability of our management information and communication systems and other information technology assets (including the data contained therein) and a system failure or unavailability, including those caused by cybersecurity breaches internally or with third-parties, or an inability to effectively upgrade such systems and assets could cause a significant disruption to our business; If we are unable to retain our key employees, our business, financial condition, and results of operations could be harmed; Seasonality and the impact of weather and climate change and other catastrophic events affect our operations and profitability; We self-insure for a significant portion of our claims exposure, which could significantly increase the volatility of, and decrease the amount of, our earnings; Our self-insurance for auto liability claims and our use of captive insurance companies could adversely impact our operations; We have experienced, and may experience additional, erosion of available limits in our aggregate insurance policies; We may experience additional expense to reinstate insurance policies due to liability claims; We operate in a highly regulated industry; If our independent contractor drivers are deemed by regulators or judicial process to be employees, our business, financial condition, and results of operations could be adversely affected; Developments in labor and employment law and any unionizing efforts by employees could have a materially adverse effect on our results of operations; The Compliance Safety Accountability program adopted by the Federal Motor Carrier Safety Administration could adversely affect our profitability and operations, our ability to maintain or grow our fleet, and our customer relationships; An unfavorable development in the Department of Transportation safety rating at any of our motor carriers could have a materially adverse effect on our operations and profitability; Compliance with various environmental laws and regulations; Changes to trade regulation, quotas, duties, or tariffs; Litigation may adversely affect our business, financial condition, and results of operations; Increasing attention on environmental, social and governance matters may have a negative impact on our business, impose additional costs on us, and expose us to additional risks; Our ABL credit facility and other financing arrangements contain certain covenants, restrictions, and requirements, and we may be unable to comply with such covenants, restrictions, and requirements; In the future, we may need to obtain additional financing that may not be available or, if it is available, may result in a reduction in the percentage ownership of our stockholders; Our indebtedness and finance and operating lease obligations could adversely affect our ability to respond to changes in our industry or business; Our profitability may be materially adversely impacted if our capital investments do not match customer demand or if there is a decline in the availability of funding sources for these investments; Increased prices for new revenue equipment, design changes of new engines, future uses of autonomous tractors, volatility in the used equipment market, decreased availability of new revenue equipment, and the failure of manufacturers to meet their sale or trade-back obligations to us could have a materially adverse effect on our business, financial condition, results of operations, and profitability; Our
For further information contact:
M. Paul Bunn, President
PBunn@covenantlogistics.com
Tripp Grant, Chief Financial Officer
TGrant@covenantlogistics.com
For copies of Company information contact:
Brooke McKenzie, Executive Administrative Assistant
BMcKenzie@covenantlogistics.com
| Covenant Logistics Group, Inc. | ||||||||||||||||||||||||
| Key Financial and Operating Statistics | ||||||||||||||||||||||||
| Income Statement Data | ||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| ($s in 000s, except per share data) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||
| Revenues | ||||||||||||||||||||||||
| Freight revenue | $ | 256,512 | $ | 243,704 | 5.3 | % | $ | 504,197 | $ | 477,126 | 5.7 | % | ||||||||||||
| Fuel surcharge revenue | 30,985 | 30,312 | 2.2 | % | 62,063 | 63,741 | (2.6 | %) | ||||||||||||||||
| Total revenue | $ | 287,497 | $ | 274,016 | 4.9 | % | $ | 566,260 | $ | 540,867 | 4.7 | % | ||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Salaries, wages, and related expenses | 106,373 | 101,280 | 206,708 | 200,439 | ||||||||||||||||||||
| Fuel expense | 29,093 | 31,428 | 60,045 | 65,519 | ||||||||||||||||||||
| Operations and maintenance | 15,552 | 16,235 | 29,148 | 33,344 | ||||||||||||||||||||
| Revenue equipment rentals and purchased transportation | 62,755 | 67,983 | 129,506 | 130,999 | ||||||||||||||||||||
| Operating taxes and licenses | 2,283 | 3,317 | 5,644 | 6,780 | ||||||||||||||||||||
| Insurance and claims | 17,148 | 11,043 | 32,538 | 23,736 | ||||||||||||||||||||
| Communications and utilities | 1,272 | 1,215 | 2,675 | 2,499 | ||||||||||||||||||||
| General supplies and expenses | 14,477 | 12,775 | 35,307 | 26,395 | ||||||||||||||||||||
| Depreciation and amortization | 22,130 | 18,944 | 43,238 | 33,519 | ||||||||||||||||||||
| Loss (gain) on disposition of property and equipment, net | 837 | (1,987 | ) | 1,539 | (11,778 | ) | ||||||||||||||||||
| Total operating expenses | 271,920 | 262,233 | 546,348 | 511,452 | ||||||||||||||||||||
| Operating income | 15,577 | 11,783 | 19,912 | 29,415 | ||||||||||||||||||||
| Interest expense, net | 3,799 | 2,124 | 7,137 | 2,893 | ||||||||||||||||||||
| Income from equity method investment | (4,094 | ) | (5,381 | ) | (7,770 | ) | (11,324 | ) | ||||||||||||||||
| Income from continuing operations before income taxes | 15,872 | 15,040 | 20,545 | 37,846 | ||||||||||||||||||||
| Income tax expense | 3,828 | 2,897 | 4,677 | 9,218 | ||||||||||||||||||||
| Income from continuing operations | 12,044 | 12,143 | 15,868 | 28,628 | ||||||||||||||||||||
| Income from discontinued operations, net of tax | 150 | 150 | 300 | 300 | ||||||||||||||||||||
| Net income | $ | 12,194 | $ | 12,293 | $ | 16,168 | $ | 28,928 | ||||||||||||||||
| Basic earnings per share (1) | ||||||||||||||||||||||||
| Income from continuing operations | $ | 0.92 | $ | 0.94 | $ | 1.21 | $ | 2.18 | ||||||||||||||||
| Income from discontinued operations | $ | 0.01 | $ | 0.01 | $ | 0.02 | $ | 0.02 | ||||||||||||||||
| Net income per basic share | $ | 0.93 | $ | 0.95 | $ | 1.23 | $ | 2.20 | ||||||||||||||||
| Diluted earnings per share (1) | ||||||||||||||||||||||||
| Income from continuing operations | $ | 0.87 | $ | 0.90 | $ | 1.15 | $ | 2.08 | ||||||||||||||||
| Income from discontinued operations | $ | 0.01 | $ | 0.01 | $ | 0.02 | $ | 0.02 | ||||||||||||||||
| Net income per diluted share | $ | 0.88 | $ | 0.91 | $ | 1.17 | $ | 2.10 | ||||||||||||||||
| Basic weighted average shares outstanding (000s) | 13,146 | 12,939 | 13,117 | 13,150 | ||||||||||||||||||||
| Diluted weighted average shares outstanding (000s) | 13,831 | 13,574 | 13,802 | 13,766 | ||||||||||||||||||||
| (1 | ) | Total may not sum due to rounding. |
| Segment Freight Revenues | ||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| ($s in 000's) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||
| Expedited - Truckload | $ | 88,918 | $ | 85,969 | 3.4 | % | $ | 175,518 | $ | 167,627 | 4.7 | % | ||||||||||||
| Dedicated - Truckload | 81,853 | 69,265 | 18.2 | % | 154,448 | 135,625 | 13.9 | % | ||||||||||||||||
| Combined Truckload | 170,771 | 155,234 | 10.0 | % | 329,966 | 303,252 | 8.8 | % | ||||||||||||||||
| Managed Freight | 60,366 | 63,281 | (4.6 | %) | 123,283 | 124,155 | (0.7 | %) | ||||||||||||||||
| Warehousing | 25,375 | 25,189 | 0.7 | % | 50,948 | 49,719 | 2.5 | % | ||||||||||||||||
| Consolidated Freight Revenue | $ | 256,512 | $ | 243,704 | 5.3 | % | $ | 504,197 | $ | 477,126 | 5.7 | % | ||||||||||||
| Truckload Operating Statistics | ||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||
| Average freight revenue per loaded mile | $ | 2.73 | $ | 2.64 | 3.4 | % | $ | 2.70 | $ | 2.67 | 1.1 | % | ||||||||||||
| Average freight revenue per total mile | $ | 2.38 | $ | 2.32 | 2.6 | % | $ | 2.37 | $ | 2.35 | 0.9 | % | ||||||||||||
| Average freight revenue per tractor per week | $ | 5,726 | $ | 5,678 | 0.8 | % | $ | 5,688 | $ | 5,589 | 1.8 | % | ||||||||||||
| Average miles per tractor per period | 31,270 | 31,775 | (1.6 | %) | 62,459 | 61,407 | 1.7 | % | ||||||||||||||||
| Weighted avg. tractors for period | 2,294 | 2,103 | 9.1 | % | 2,231 | 2,099 | 6.3 | % | ||||||||||||||||
| Tractors at end of period | 2,314 | 2,132 | 8.5 | % | 2,314 | 2,132 | 8.5 | % | ||||||||||||||||
| Trailers at end of period | 6,314 | 5,855 | 7.8 | % | 6,314 | 5,855 | 7.8 | % | ||||||||||||||||
| Selected Balance Sheet Data | ||||||||
| ($s in '000's, except per share data) | 6/30/2024 | 12/31/2023 | ||||||
| Total assets | $ | 994,987 | $ | 954,438 | ||||
| Total stockholders' equity | $ | 419,373 | $ | 403,420 | ||||
| Total indebtedness, comprised of total debt and finance leases, net of cash | $ | 273,332 | $ | 248,329 | ||||
| Net Indebtedness to Capitalization Ratio | 39.5 | % | 38.1 | % | ||||
| Leverage Ratio(1) | 2.11 | 2.14 | ||||||
| Tangible book value per end-of-quarter basic share | $ | 18.64 | $ | 17.45 | ||||
| (1 | ) | Leverage Ratio is calculated as average total indebtedness, comprised of total debt and finance leases, net of cash, divided by the trailing twelve months sum of operating income (loss), depreciation and amortization, and gain on disposition of property and equipment, net. |
| Covenant Logistics Group, Inc. | ||||||||||||||||||||||||
| Non-GAAP Reconciliation (Unaudited) | ||||||||||||||||||||||||
| Adjusted Operating Income and Adjusted Operating Ratio(1) | ||||||||||||||||||||||||
| (Dollars in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| GAAP Presentation | 2024 | 2023 | bps Change | 2024 | 2023 | bps Change | ||||||||||||||||||
| Total revenue | $ | 287,497 | $ | 274,016 | $ | 566,260 | $ | 540,867 | ||||||||||||||||
| Total operating expenses | 271,920 | 262,233 | 546,348 | 511,452 | ||||||||||||||||||||
| Operating income | $ | 15,577 | $ | 11,783 | $ | 19,912 | $ | 29,415 | ||||||||||||||||
| Operating ratio | 94.6 | % | 95.7 | % | (110 | ) | 96.5 | % | 94.6 | % | 190 | |||||||||||||
| Non-GAAP Presentation | 2024 | 2023 | bps Change | 2024 | 2023 | bps Change | ||||||||||||||||||
| Total revenue | $ | 287,497 | $ | 274,016 | $ | 566,260 | $ | 540,867 | ||||||||||||||||
| Fuel surcharge revenue | (30,985 | ) | (30,312 | ) | (62,063 | ) | (63,741 | ) | ||||||||||||||||
| Freight revenue (total revenue, excluding fuel surcharge) | 256,512 | 243,704 | 504,197 | 477,126 | ||||||||||||||||||||
| Total operating expenses | 271,920 | 262,233 | 546,348 | 511,452 | ||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||
| Fuel surcharge revenue | (30,985 | ) | (30,312 | ) | (62,063 | ) | (63,741 | ) | ||||||||||||||||
| Amortization of intangibles (2) | (2,373 | ) | (1,802 | ) | (4,744 | ) | (2,922 | ) | ||||||||||||||||
| Gain on disposal of terminals, net | - | - | - | 7,627 | ||||||||||||||||||||
| Contingent consideration liability adjustment | (720 | ) | (492 | ) | (8,814 | ) | (1,992 | ) | ||||||||||||||||
| Acquisition transaction costs and executive retirement | - | (2,158 | ) | - | (2,158 | ) | ||||||||||||||||||
| Adjusted operating expenses | 237,842 | 227,469 | 470,727 | 448,266 | ||||||||||||||||||||
| Adjusted operating income | 18,670 | 16,235 | 33,470 | 28,860 | ||||||||||||||||||||
| Adjusted operating ratio | 92.7 | % | 93.3 | % | (60 | ) | 93.4 | % | 94.0 | % | (60 | ) | ||||||||||||
| (1 | ) | Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating income and operating ratio to consolidated non-GAAP Adjusted operating income and Adjusted operating ratio. |
| (2 | ) | "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets. |
| Non-GAAP Reconciliation (Unaudited) | ||||||||||||||||
| Adjusted Net Income and Adjusted EPS(1) | ||||||||||||||||
| (Dollars in thousands) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| GAAP Presentation - Net income | $ | 12,194 | $ | 12,293 | $ | 16,168 | $ | 28,928 | ||||||||
| Adjusted for: | ||||||||||||||||
| Amortization of intangibles (2) | 2,373 | 1,802 | 4,744 | 2,922 | ||||||||||||
| Discontinued operations reversal of loss contingency (3) | (200 | ) | (200 | ) | (400 | ) | (400 | ) | ||||||||
| Gain on disposal of terminals, net | - | - | - | (7,627 | ) | |||||||||||
| Contingent consideration liability adjustment | 720 | 492 | 8,814 | 1,992 | ||||||||||||
| Acquisition transaction costs and executive retirement bonus | - | 2,158 | - | 2,158 | ||||||||||||
| Total adjustments before taxes | 2,893 | 4,252 | 13,158 | (955 | ) | |||||||||||
| Provision for income tax expense at effective rate | (635 | ) | (1,102 | ) | (3,357 | ) | 235 | |||||||||
| Tax effected adjustments | $ | 2,258 | $ | 3,150 | $ | 9,801 | $ | (720 | ) | |||||||
| Tennessee works tax act | - | (1,000 | ) | - | (1,000 | ) | ||||||||||
| Non-GAAP Presentation - Adjusted net income | $ | 14,452 | $ | 14,443 | $ | 25,969 | $ | 27,208 | ||||||||
| GAAP Presentation - Diluted earnings per share ("EPS") (4) | $ | 0.88 | $ | 0.91 | $ | 1.17 | $ | 2.10 | ||||||||
| Adjusted for: | ||||||||||||||||
| Amortization of intangibles (2) | 0.17 | 0.13 | 0.34 | 0.21 | ||||||||||||
| Discontinued operations reversal of loss contingency(3) | (0.01 | ) | (0.02 | ) | (0.03 | ) | (0.03 | ) | ||||||||
| Gain on sale of terminal, net | - | - | - | (0.54 | ) | |||||||||||
| Contingent consideration liability adjustment | 0.05 | 0.04 | 0.64 | 0.15 | ||||||||||||
| Acquisition transaction costs and executive retirement bonus | - | 0.16 | - | 0.16 | ||||||||||||
| Total adjustments before taxes | 0.21 | 0.31 | 0.95 | (0.05 | ) | |||||||||||
| Provision for income tax expense at effective rate | (0.05 | ) | (0.08 | ) | (0.24 | ) | 0.02 | |||||||||
| Tax effected adjustments | $ | 0.16 | $ | 0.23 | $ | 0.71 | $ | (0.03 | ) | |||||||
| Tennessee works tax act | - | (0.07 | ) | - | (0.07 | ) | ||||||||||
| Non-GAAP Presentation - Adjusted EPS | $ | 1.04 | $ | 1.07 | $ | 1.88 | $ | 2.00 | ||||||||
| (1 | ) | Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP net income to consolidated non-GAAP adjusted net income and consolidated GAAP diluted earnings per share to non-GAAP consolidated Adjusted EPS. |
| (2 | ) | "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets. |
| (3 | ) | "Discontinued Operations reversal of loss contingency" reflects the non-cash reversal of a previously recorded loss contingency that is no longer considered probable. The original loss contingency was recorded in Q4 2020 as a result of our disposal of our former accounts receivable factoring segment, TFS. |
| (4 | ) | Total may not sum due to rounding. |
| Covenant Logistics Group, Inc | ||||||||||||||||||||||||||||||||||||||||
| Non-GAAP Reconciliation (Unaudited) | ||||||||||||||||||||||||||||||||||||||||
| Adjusted Operating Income and Adjusted Operating Ratio (1) | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Three Months Ended June 30, | |||||||||||||||||||||||||||||||||||||||
| GAAP Presentation | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||
| Expedited | Dedicated | Combined Truckload | Managed Freight | Warehousing | Expedited | Dedicated | Combined Truckload | Managed Freight | Warehousing | |||||||||||||||||||||||||||||||
| Total revenue | $ | 108,010 | $ | 93,465 | $ | 201,475 | $ | 60,366 | $ | 25,656 | $ | 104,073 | $ | 81,194 | $ | 185,267 | $ | 63,281 | $ | 25,468 | ||||||||||||||||||||
| Total operating expenses | 103,242 | 88,015 | 191,257 | 57,036 | 23,627 | 98,258 | 77,951 | 176,209 | 61,336 | 24,688 | ||||||||||||||||||||||||||||||
| Operating income | $ | 4,768 | $ | 5,450 | $ | 10,218 | $ | 3,330 | $ | 2,029 | $ | 5,815 | $ | 3,243 | $ | 9,058 | $ | 1,945 | $ | 780 | ||||||||||||||||||||
| Operating ratio | 95.6 | % | 94.2 | % | 94.9 | % | 94.5 | % | 92.1 | % | 94.4 | % | 96.0 | % | 95.1 | % | 96.9 | % | 96.9 | % | ||||||||||||||||||||
| Non-GAAP Presentation | ||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 108,010 | $ | 93,465 | $ | 201,475 | $ | 60,366 | $ | 25,656 | $ | 104,073 | $ | 81,194 | $ | 185,267 | $ | 63,281 | $ | 25,468 | ||||||||||||||||||||
| Fuel surcharge revenue | (19,092 | ) | (11,612 | ) | (30,704 | ) | - | (281 | ) | (18,104 | ) | (11,929 | ) | (30,033 | ) | - | (279 | ) | ||||||||||||||||||||||
| Freight revenue (total revenue, excluding fuel surcharge) | 88,918 | 81,853 | 170,771 | 60,366 | 25,375 | 85,969 | 69,265 | 155,234 | 63,281 | 25,189 | ||||||||||||||||||||||||||||||
| Total operating expenses | 103,242 | 88,015 | 191,257 | 57,036 | 23,627 | 98,258 | 77,951 | 176,209 | 61,336 | 24,688 | ||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||
| Fuel surcharge revenue | (19,092 | ) | (11,612 | ) | (30,704 | ) | - | (281 | ) | (18,104 | ) | (11,929 | ) | (30,033 | ) | - | (279 | ) | ||||||||||||||||||||||
| Amortization of intangibles (2) | (534 | ) | (1,316 | ) | (1,850 | ) | (264 | ) | (259 | ) | (533 | ) | (975 | ) | (1,508 | ) | (35 | ) | (259 | ) | ||||||||||||||||||||
| Gain on disposal of terminals, net | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Contingent consideration liability adjustment | - | (720 | ) | (720 | ) | - | - | (492 | ) | - | (492 | ) | - | - | ||||||||||||||||||||||||||
| Transaction and executive retirement | - | - | - | - | - | (1,113 | ) | (876 | ) | (1,989 | ) | (90 | ) | (79 | ) | |||||||||||||||||||||||||
| Adjusted operating expenses | 83,616 | 74,367 | 157,983 | 56,772 | 23,087 | 78,016 | 64,171 | 142,187 | 61,211 | 24,071 | ||||||||||||||||||||||||||||||
| Adjusted operating income | 5,302 | 7,486 | 12,788 | 3,594 | 2,288 | 7,953 | 5,094 | 13,047 | 2,070 | 1,118 | ||||||||||||||||||||||||||||||
| Adjusted operating ratio | 94.0 | % | 90.9 | % | 92.5 | % | 94.0 | % | 91.0 | % | 90.7 | % | 92.6 | % | 91.6 | % | 96.7 | % | 95.6 | % | ||||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||
| GAAP Presentation | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||
| Expedited | Dedicated | Combined Truckload | Managed Freight | Warehousing | Expedited | Dedicated | Combined Truckload | Managed Freight | Warehousing | |||||||||||||||||||||||||||||||
| Total revenue | $ | 213,481 | $ | 177,947 | $ | 391,428 | $ | 123,283 | $ | 51,549 | $ | 204,969 | $ | 161,438 | $ | 366,407 | $ | 124,155 | $ | 50,305 | ||||||||||||||||||||
| Total operating expenses | 203,929 | 177,194 | 381,123 | 117,684 | 47,541 | 189,878 | 151,048 | 340,926 | 120,992 | 49,534 | ||||||||||||||||||||||||||||||
| Operating income | $ | 9,552 | $ | 753 | $ | 10,305 | $ | 5,599 | $ | 4,008 | $ | 15,091 | $ | 10,390 | $ | 25,481 | $ | 3,163 | $ | 771 | ||||||||||||||||||||
| Operating ratio | 95.5 | % | 99.6 | % | 97.4 | % | 95.5 | % | 92.2 | % | 92.6 | % | 93.6 | % | 93.0 | % | 97.5 | % | 98.5 | % | ||||||||||||||||||||
| Non-GAAP Presentation | ||||||||||||||||||||||||||||||||||||||||
| Total revenue | $ | 213,481 | $ | 177,947 | $ | 391,428 | $ | 123,283 | $ | 51,549 | $ | 204,969 | $ | 161,438 | $ | 366,407 | $ | 124,155 | $ | 50,305 | ||||||||||||||||||||
| Fuel surcharge revenue | (37,963 | ) | (23,499 | ) | (61,462 | ) | - | (601 | ) | (37,342 | ) | (25,813 | ) | (63,155 | ) | - | (586 | ) | ||||||||||||||||||||||
| Freight revenue (total revenue, excluding fuel surcharge) | 175,518 | 154,448 | 329,966 | 123,283 | 50,948 | 167,627 | 135,625 | 303,252 | 124,155 | 49,719 | ||||||||||||||||||||||||||||||
| Total operating expenses | 203,929 | 177,194 | 381,123 | 117,684 | 47,541 | 189,878 | 151,048 | 340,926 | 120,992 | 49,534 | ||||||||||||||||||||||||||||||
| Adjusted for: | ||||||||||||||||||||||||||||||||||||||||
| Fuel surcharge revenue | (37,963 | ) | (23,499 | ) | (61,462 | ) | - | (601 | ) | (37,342 | ) | (25,813 | ) | (63,155 | ) | - | (586 | ) | ||||||||||||||||||||||
| Amortization of intangibles (2) | (1,067 | ) | (2,631 | ) | (3,698 | ) | (528 | ) | (518 | ) | (1,066 | ) | (1,268 | ) | (2,334 | ) | (70 | ) | (518 | ) | ||||||||||||||||||||
| Gain on disposal of terminals, net | - | - | - | - | - | 3,928 | 3,699 | 7,627 | - | - | ||||||||||||||||||||||||||||||
| Contingent consideration liability adjustment | - | (8,814 | ) | (8,814 | ) | - | - | (1,992 | ) | - | (1,992 | ) | - | - | ||||||||||||||||||||||||||
| Transaction and executive retirement | - | - | - | - | - | (1,113 | ) | (876 | ) | (1,989 | ) | (90 | ) | (79 | ) | |||||||||||||||||||||||||
| Adjusted operating expenses | 164,899 | 142,250 | 307,149 | 117,156 | 46,422 | 152,293 | 126,790 | 279,083 | 120,832 | 48,351 | ||||||||||||||||||||||||||||||
| Adjusted operating income | 10,619 | 12,198 | 22,817 | 6,127 | 4,526 | 15,334 | 8,835 | 24,169 | 3,323 | 1,368 | ||||||||||||||||||||||||||||||
| Adjusted operating ratio | 93.9 | % | 92.1 | % | 93.1 | % | 95.0 | % | 91.1 | % | 90.9 | % | 93.5 | % | 92.0 | % | 97.3 | % | 97.2 | % | ||||||||||||||||||||
| (1 | ) | Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating income and operating ratio to consolidated non-GAAP Adjusted operating income and Adjusted operating ratio. |
| (2 | ) | "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets. |
FAQ
What were Covenant Logistics Group's Q2 2024 earnings per diluted share?
What was the adjusted operating income for Covenant Logistics Group in Q2 2024?
How did Covenant Logistics Group's net income perform in Q2 2024?
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How did Covenant Logistics Group's truckload operations perform in Q2 2024?
What were the key financial metrics for Covenant Logistics Group in Q2 2024?
Did Covenant Logistics Group's net indebtedness change in Q2 2024?
