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Covenant Logistics Group Announces Third Quarter Financial and Operating Results

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Covenant Logistics Group (CVLG) reported Q3 2024 earnings of $0.94 per diluted share and non-GAAP adjusted earnings of $1.09 per diluted share. Key highlights include year-over-year freight revenue growth of 2.1%, operating income growth of 7.2%, and non-GAAP adjusted operating income growth of 8.3%. The company achieved a $36.6 million sequential reduction in net indebtedness while improving fleet age. Total revenue was $287.9 million, with operating income of $16.2 million. The company's 49% equity investment in Transport Enterprise Leasing contributed $4.0 million in pre-tax net income, down from $5.3 million in Q3 2023.

Covenant Logistics Group (CVLG) ha riportato utili per il terzo trimestre del 2024 di $0,94 per azione diluita e utili rettificati non-GAAP di $1,09 per azione diluita. I principali risultati includono una crescita dei ricavi da trasporto dell'2,1% rispetto all'anno precedente, una crescita del reddito operativo del 7,2% e una crescita del reddito operativo rettificato non-GAAP dell'8,3%. L'azienda ha ottenuto una riduzione sequenziale di $36,6 milioni del debito netto, migliorando nel contempo l'età della flotta. I ricavi totali sono stati di $287,9 milioni, con un reddito operativo di $16,2 milioni. L'investimento in equity del 49% dell'azienda in Transport Enterprise Leasing ha contribuito con $4,0 milioni di reddito netto ante imposte, in calo rispetto ai $5,3 milioni del terzo trimestre del 2023.

Covenant Logistics Group (CVLG) reportó ganancias del tercer trimestre de 2024 de $0,94 por acción diluida y ganancias ajustadas no-GAAP de $1,09 por acción diluida. Los aspectos destacados incluyen un crecimiento interanual del 2,1% en los ingresos por flete, un crecimiento del 7,2% en el ingreso operativo y un crecimiento del 8,3% en el ingreso operativo ajustado no-GAAP. La compañía logró una reducción secuencial de $36,6 millones en la deuda neta mientras mejoraba la antigüedad de su flota. Los ingresos totales fueron de $287,9 millones, con un ingreso operativo de $16,2 millones. La inversión del 49% de la compañía en Transport Enterprise Leasing contribuyó con $4,0 millones en ingresos netos antes de impuestos, en comparación con $5,3 millones en el tercer trimestre de 2023.

Covenant Logistics Group (CVLG)는 2024년 3분기 조정된 주당순이익 $0.94와 비-GAAP 조정 주당순이익 $1.09를 보고했습니다. 주요 하이라이트로는 전년 대비 화물 수익 증가 2.1%, 영업 이익 증가 7.2%, 비-GAAP 조정 영업 이익 증가 8.3%가 있습니다. 이 회사는 $36.6 백만의 순부채 감소를 이루었으며, 차량의 노후화도 개선했습니다. 총 수익은 $287.9백만이며, 영업 이익은 $16.2백만입니다. 회사의 49% 지분 투자인 Transport Enterprise Leasing은 $4.0 백만의 세전 순이익에 기여했으며, 이는 2023년 3분기의 $5.3 백만에서 감소한 수치입니다.

Covenant Logistics Group (CVLG) a annoncé pour le troisième trimestre 2024 des bénéfices de 0,94 $ par action diluée et des bénéfices ajustés non-GAAP de 1,09 $ par action diluée. Les points forts incluent une croissance des revenus de fret de 2,1 % par rapport à l'année précédente, une croissance du revenu opérationnel de 7,2 % et une croissance du revenu opérationnel ajusté non-GAAP de 8,3 %. L'entreprise a réalisé une réduction séquentielle de 36,6 millions de dollars de son endettement net tout en améliorant l'âge de sa flotte. Les revenus totaux se sont élevés à 287,9 millions de dollars, avec un revenu opérationnel de 16,2 millions de dollars. La participation de 49 % de l'entreprise dans Transport Enterprise Leasing a contribué à hauteur de 4,0 millions de dollars de bénéfice net avant impôts, en baisse par rapport à 5,3 millions de dollars au troisième trimestre 2023.

Covenant Logistics Group (CVLG) hat für das dritte Quartal 2024 Ergebnisse von $0,94 pro verwässerter Aktie sowie nicht-GAAP bereinigte Ergebnisse von $1,09 pro verwässerter Aktie gemeldet. Zu den wichtigsten Highlights gehören ein Umsatzwachstum im Frachtbereich von 2,1% im Jahresvergleich, ein Anstieg des Betriebsergebnisses um 7,2% und ein Wachstum des nicht-GAAP bereinigten Betriebsergebnisses von 8,3%. Das Unternehmen erreichte eine sequentielle Reduzierung von $36,6 Millionen bei den Nettoverschuldungen und verbesserte gleichzeitig das Alter der Flotte. Der Gesamtumsatz belief sich auf $287,9 Millionen, mit einem Betriebsergebnis von $16,2 Millionen. Die 49%ige Eigenkapitalbeteiligung des Unternehmens an Transport Enterprise Leasing trug mit $4,0 Millionen zu den vorsteuerlichen Nettogewinnen bei, was einen Rückgang von $5,3 Millionen im dritten Quartal 2023 bedeutet.

Positive
  • Freight revenue growth of 2.1% year-over-year
  • Operating income growth of 7.2% to $16.2 million
  • $36.6 million reduction in net indebtedness
  • Dedicated segment freight revenue increased 23.5%
  • Average fleet age improved by one month
Negative
  • Expedited segment freight revenue decreased 4.7%
  • TEL investment income declined from $5.3M to $4.0M
  • Managed Freight operating income declined 34.5%
  • Loss on sale of equipment of $0.2M vs gain of $0.6M in prior year

Insights

The Q3 2024 results show a mixed performance for Covenant Logistics. Earnings of $0.94 per diluted share and freight revenue growth of 2.1% demonstrate resilience in a challenging market. The company's strategic shift towards dedicated operations is paying off, with dedicated segment revenue increasing 23.5%.

Key positives include debt reduction of $36.6 million and improved fleet age. However, the 34.5% decline in Managed Freight operating income and softer expedited segment performance indicate ongoing market pressures. The company's net indebtedness ratio improvement to 35.4% from 38.1% shows strong balance sheet management.

The outlook remains cautious, with management expecting slow market recovery. Investors should monitor the company's ability to maintain pricing power and operational efficiency in this challenging environment.

The operational metrics reveal important trends in Covenant's business model transformation. The increase in dedicated fleet size by 168 units while maintaining a young fleet age of 20 months shows strategic positioning towards more stable revenue streams. The 8.7% increase in dedicated revenue per tractor per week demonstrates strong execution in this segment.

The 8% increase in per-mile driver costs reflects industry-wide challenges in driver retention and specialized service requirements. The decline in expedited segment performance, with 4.8% lower revenue per tractor, signals continued softness in spot market rates and volumes. The company's focus on multi-year contracts may provide stability but could limit upside potential when market conditions improve.

CHATTANOOGA, Tenn., Oct. 23, 2024 (GLOBE NEWSWIRE) -- Covenant Logistics Group, Inc. (NYSE: CVLG) (“Covenant” or the “Company”) announced today financial and operating results for the third quarter ended September 30, 2024. The Company’s conference call to discuss the quarter will be held at 10:00 A.M. Eastern Time on Thursday, October 24, 2024.

Chairman and Chief Executive Officer, David R. Parker, commented: “We are pleased to report third quarter earnings of $0.94 per diluted share and non-GAAP adjusted earnings of $1.09 per diluted share.

“Highlights of our third quarter’s results include year over year freight revenue growth of 2.1%, operating income growth of 7.2%, and non-GAAP adjusted operating income growth of 8.3%. We were also pleased with a $36.6 million sequential reduction of our net indebtedness, composed of total debt and finance lease obligations, net of cash (“net indebtedness”), while improving the average age of our fleet by one month. Our core business continues to perform well despite the prolonged general freight market down cycle, as a result of capitalizing on new value-added commercial opportunities where available, allocating equipment investments toward more profitable operations, and controlling costs.

“Our 49% equity method investment with Transport Enterprise Leasing (“TEL”) contributed pre-tax net income of $4.0 million, or $0.22 per share, compared to $5.3 million, or $0.29 per share, in the 2023 quarter. The decrease in pre-tax net income for TEL was primarily a result of deterioration in the equipment market, suppressing gains on sale of used equipment, and increased interest expense associated with higher interest rates on equipment related debt.”

A summary of our third quarter financial performance:

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
($000s, except per share information) 2024  2023  2024  2023 
Total Revenue $287,885  $288,721  $854,145  $829,588 
Freight Revenue, Excludes Fuel Surcharge $258,599  $253,377  $762,796  $730,503 
Operating Income $16,235  $15,141  $36,147  $44,556 
Adjusted Operating Income (1) $19,327  $17,854  $52,797  $46,714 
Operating Ratio  94.4%  94.8%  95.8%  94.6%
Adjusted Operating Ratio (1)  92.5%  93.0%  93.1%  93.6%
Net Income $13,033  $13,506  $29,202  $42,434 
Adjusted Net Income (1) $15,224  $15,388  $41,297  $42,698 
Earnings per Diluted Share $0.94  $0.99  $2.11  $3.09 
Adjusted Earnings per Diluted Share (1) $1.09  $1.13  $2.98  $3.12 
                 
(1)  Represents non-GAAP measures.                
                 

Truckload Operating Data and Statistics

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
($000s, except statistical information) 2024  2023  2024  2023 
Combined Truckload                
Total Revenue $199,029  $193,661  $590,457  $560,068 
Freight Revenue, excludes Fuel Surcharge $170,039  $158,625  $500,005  $461,877 
Operating Income $11,896  $10,498  $22,201  $35,979 
Adj. Operating Income (1) $14,464  $12,840  $37,281  $37,009 
Operating Ratio  94.0%  94.6%  96.2%  93.6%
Adj. Operating Ratio (1)  91.5%  91.9%  92.5%  92.0%
Average Freight Revenue per Tractor per Week $5,637  $5,677  $5,672  $5,618 
Average Freight Revenue per Total Mile $2.41  $2.33  $2.38  $2.34 
Average Miles per Tractor per Period  30,733   32,076   93,196   93,480 
Weighted Average Tractors for Period  2,295   2,126   2,252   2,108 
                 
Expedited                
Total Revenue $104,314  $113,419  $317,795  $318,388 
Freight Revenue, excludes Fuel Surcharge $87,363  $91,689  $262,881  $259,316 
Operating Income $6,467  $7,522  $16,019  $22,613 
Adj. Operating Income (1) $7,000  $8,549  $17,619  $23,883 
Operating Ratio  93.8%  93.4%  95.0%  92.9%
Adj. Operating Ratio (1)  92.0%  90.7%  93.3%  90.8%
Average Freight Revenue per Tractor per Week $7,452  $7,830  $7,454  $7,669 
Average Freight Revenue per Total Mile $2.09  $2.12  $2.08  $2.14 
Average Miles per Tractor per Period  46,796   48,586   140,191   139,739 
Weighted Average Tractors for Period  892   891   901   867 
                 
Dedicated                
Total Revenue $94,715  $80,242  $272,662  $241,680 
Freight Revenue, excludes Fuel Surcharge $82,676  $66,936  $237,124  $202,561 
Operating Income $5,429  $2,976  $6,182  $13,366 
Adj. Operating Income (1) $7,464  $4,291  $19,662  $13,126 
Operating Ratio  94.3%  96.3%  97.7%  94.5%
Adj. Operating Ratio (1)  91.0%  93.6%  91.7%  93.5%
Average Freight Revenue per Tractor per Week $4,484  $4,124  $4,484  $4,185 
Average Freight Revenue per Total Mile $2.87  $2.69  $2.84  $2.67 
Average Miles per Tractor per Period  20,521   20,165   61,855   61,162 
Weighted Average Tractors for Period  1,403   1,235   1,351   1,241 
 
(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 2.8%, to $199.0 million, compared to 2023. The increase in total revenue consisted of $11.4 million more freight revenue, partially offset by $6.0 million less fuel surcharge revenue. The increase in freight revenue primarily related to operating 169 or 7.9% more average tractors combined with an increase in freight revenue per total mile, partially offset by a reduction in utilization compared to the prior year.”

Expedited Truckload Revenue

Mr. Bunn added, “Freight revenue in our Expedited segment decreased $4.3 million, or 4.7%. Average total tractors increased by 1 unit to 892, compared to 891 in the prior year quarter. Average freight revenue per tractor per week decreased 4.8% as a result of a 1.2% reduction in freight revenue per total mile and a 3.7% reduction in utilization.”

Dedicated Truckload Revenue

“For the quarter, freight revenue in our Dedicated segment increased $15.7 million, or 23.5%. Average total tractors increased by 168 units or 13.6% to 1,403, compared to 1,235 in the prior year quarter. Average freight revenue per tractor per week increased 8.7% as a result of a 6.7% increase in freight revenue per total mile and a 1.8% increase in utilization.”

Combined Truckload Operating Expenses

Mr. Bunn continued, “Compared to the prior year, our truckload operating cost per total mile decreased 3 cents, or 1.0%, on a per total mile basis, primarily due to the declining cost of fuel.  On a non-GAAP or adjusted basis, where fuel expense is offset with fuel surcharge revenue, our truckload operating cost per total mile increased 7 cents or 3.2% compared to the prior quarter, primarily due to increases in salaries and wages, partially offset by a decrease to insurance and claims expenses.”

“Salaries, wages and related expenses increased year-over-year by 10 cents, or approximately 8%, on a per total mile basis, primarily due to increases in driver pay and workers compensation related costs. As we grow our dedicated fleet in niche services, it requires hiring and retaining skilled drivers to operate specialized equipment on loads that typically have a shorter length of haul, resulting in higher costs on a per total mile basis. In the period, we also incurred a large current period workers compensation claim that resulted in a year over year unfavorable variance to our combined truckload operating expenses.

“Insurance and claims expense decreased by 2 cents, or approximately 8%, on a per total mile basis, compared to the prior year quarter as a result of lapping the settlement of a large claim incurred in the prior year. Given our self-insurance limits, the amount of expense recognized from period to period can fluctuate.

“Fixed and variable expenses related to revenue producing equipment, including operational and maintenance costs, leased and rented equipment, depreciation, and loss on sale was roughly flat year over year on a per total mile basis. In the third quarter of 2024, we recognized a loss on sale of equipment of $0.2 million, compared to a gain of $0.6 million in the prior year quarter.”

Managed Freight Segment

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
($000s) 2024  2023  2024  2023 
Freight Revenue $63,385  $69,713  $186,668  $193,868 
Operating Income $2,451  $3,742  $8,050  $6,905 
Adj. Operating Income (1) $2,716  $3,854  $8,843  $7,177 
Operating Ratio  96.1%  94.6%  95.7%  96.4%
Adj. Operating Ratio (1)  95.7%  94.5%  95.3%  96.3%
 
(1)  Represents non-GAAP measures.
 

“For the quarter, Managed Freight’s freight revenue decreased 9.1%, from the prior year quarter. Operating income declined 34.5% and adjusted operating income declined 29.5% compared to the third quarter of 2023. The year over year reduction in freight revenue is a result of softer volumes of available profitable freight. Operating income fell short of our expectations for the quarter as a result of less year over year freight revenue and a large cargo related claim incurred during the quarter.”

Warehousing Segment

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
($000s) 2024  2023  2024  2023 
Freight Revenue $25,175  $25,039  $76,123  $74,758 
Operating Income $1,888  $901  $5,896  $1,672 
Adj. Operating Income (1) $2,147  $1,160  $6,673  $2,528 
Operating Ratio  92.6%  96.4%  92.3%  97.8%
Adj. Operating Ratio (1)  91.5%  95.4%  91.2%  96.6%
 
(1)  Represents non-GAAP measures.
 

“For the quarter, Warehousing’s freight revenue increased 0.5% versus the prior year quarter. Operating income and adjusted operating income for the Warehousing segment increased $1.0 million compared to the third quarter of 2023, as a result of improvements to direct labor costs and the year over year impact of customer rate increases that have taken effect.”

Capitalization, Liquidity and Capital Expenditures

Tripp Grant, the Company’s Chief Financial Officer, added the following comments: “At September 30, 2024, our total indebtedness decreased by $11.6 million to approximately $236.7 million as compared to December 31, 2023. In addition, our net indebtedness to total capitalization decreased to 35.4% at September 30, 2024 from 38.1% at December 31, 2023.

“The decrease in net indebtedness in the first three quarters of the current year is primarily attributable to cash flows from operations exceeding our net capital investment in revenue equipment of $72.9 million and the final post-acquisition earnout payment of $10.0 million related to AAT’s operational performance. Based on our current capital allocation plan, we anticipate additional reductions to our net indebtedness in the fourth quarter of 2024.

“At September 30, 2024, we had cash and cash equivalents totaling $35.2 million. Under our ABL credit facility, we had no borrowings outstanding, undrawn letters of credit outstanding of $19.7 million, and available borrowing capacity of $90.3 million. The sole financial covenant under our ABL facility is a fixed charge coverage ratio covenant that is tested only when available borrowing capacity is below a certain threshold. Based on availability as of September 30, 2024, no testing was required, and we do not expect testing to be required in the foreseeable future.

At the end of the quarter, we had $4.9 million in assets held for sale that we anticipate disposing of within twelve months. The average age of our tractors decreased to 20 months compared to 23 months a year ago.

“For the balance of 2024, our baseline expectation for net capital equipment expenditures is $15 million to $20 million and reflects our priorities of maintaining the average age of our fleet in a manner that allows us to optimize operational uptime and related operating costs, and offering a fleet of equipment that our professional drivers are proud to operate. We expect the benefits of improved utilization, fuel economy and maintenance costs to produce acceptable returns despite increased prices of new equipment and potentially lower values of used equipment.”

Outlook

Mr. Parker concluded, “Although we are pleased with our results for the period, our belief is that the overall general freight market will take time to meaningfully improve. The combination of lingering excess carrier capacity and the lack of an immediate catalyst to improve volumes, feeds our thesis that improvements will be slow and steady. While we are seeing some green shoots in the form of new dedicated business awards and a small number of customer rate increases, these wins have somewhat been offset with softer than anticipated volumes, particularly in our Expedited segment. Additionally, we remind investors that our less volatile operating model, consisting of a large percentage of multi-year contractual agreements, will likely take time to execute and recognize the benefits of operational leverage than our historical model if and when freight demand and pricing improve materially. 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, October 24, 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 New York Stock Exchange 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, the expected impact of our self-insurance limits, expectations for the general freight market, 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 49% owned subsidiary, Transport Enterprise Leasing, faces certain additional risks particular to its operations, any one of which could adversely affect our operating results; We could determine that our goodwill and other intangible assets are impaired, thus recognizing a related loss; Our Chairman of the Board and Chief Executive Officer and his wife control a large portion of our stock and have substantial control over us, which could limit other stockholders' ability to influence the outcome of key transactions, including changes of control; Provisions in our charter documents or Nevada law may inhibit a takeover, which could limit the price investors might be willing to pay for our Class A common stock; The market price of our Class A common stock may be volatile; We cannot guarantee the timing or amount of repurchases of our Class A common stock, or the declaration of future dividends, if any; If we fail to maintain effective internal control over financial reporting in the future, there could be an elevated possibility of a material misstatement, and such a misstatement could cause investors to lose confidence in our financial statements, which could have a material adverse effect on our stock price; and The effects of a widespread outbreak of an illness or disease, or any other public health crisis, as well as regulatory measures implemented in response to such events, could negatively impact the health and safety of our workforce and/or adversely impact our business and results of operations. The declaration of future dividends is subject to approval of our board of directors and various risks and uncertainties, including, but not limited to: our cash flow and cash needs; compliance with applicable law; restrictions on the payment of dividends under existing or future financing arrangements; changes in tax laws relating to corporate dividends; deterioration in our financial condition or results: and those risks, uncertainties, and other factors identified from time-to-time in our filings with the Securities and Exchange Commission. 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.

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 September 30,  Nine Months Ended September 30, 
($s in 000s, except per share data) 2024  2023  % Change  2024  2023  % Change 
Revenues                        
Freight revenue $258,599  $253,377   2.1% $762,796  $730,503   4.4%
Fuel surcharge revenue  29,286   35,344   (17.1%)  91,349   99,085   (7.8%)
Total revenue $287,885  $288,721   (0.3%) $854,145  $829,588   3.0%
                         
Operating expenses:                        
Salaries, wages, and related expenses  110,815   102,314       317,523   302,753     
Fuel expense  28,545   35,173       88,590   100,692     
Operations and maintenance  17,690   16,984       46,838   50,328     
Revenue equipment rentals and purchased transportation  64,434   72,046       193,940   203,045     
Operating taxes and licenses  3,227   3,381       8,871   10,161     
Insurance and claims  12,241   13,074       44,779   36,810     
Communications and utilities  1,330   1,254       4,005   3,753     
General supplies and expenses  11,937   11,774       47,244   38,169     
Depreciation and amortization  21,222   18,182       64,460   51,701     
Loss (gain) on disposition of property and equipment, net  209   (602)      1,748   (12,380)    
Total operating expenses  271,650   273,580       817,998   785,032     
Operating income  16,235   15,141       36,147   44,556     
Interest expense, net  3,204   2,637       10,341   5,530     
Income from equity method investment  (3,993)  (5,335)      (11,763)  (16,659)    
Income from continuing operations before income taxes  17,024   17,839       37,569   55,685     
Income tax expense  4,141   4,483       8,817   13,701     
Income from continuing operations  12,883   13,356       28,752   41,984     
Income from discontinued operations, net of tax  150   150       450   450     
Net income $13,033  $13,506      $29,202  $42,434     
                         
Basic earnings per share (1)                        
Income from continuing operations $0.98  $1.03      $2.19  $3.21     
Income from discontinued operations $0.01  $0.01      $0.03  $0.03     
Net income per basic share $0.99  $1.04      $2.22  $3.24     
Diluted earnings per share (1)                        
Income from continuing operations $0.93  $0.98      $2.08  $3.06     
Income from discontinued operations $0.01  $0.01      $0.03  $0.03     
Net income per diluted share $0.94  $0.99      $2.11  $3.09     
Basic weighted average shares outstanding (000s)  13,177   12,947       13,137   13,082     
Diluted weighted average shares outstanding (000s)  13,901   13,679       13,827   13,739     
                         
(1)  Total may not sum due to rounding.


  Segment Freight Revenues 
  Three Months Ended September 30,  Nine Months Ended September 30, 
($s in 000's) 2024  2023  % Change  2024  2023  % Change 
Expedited - Truckload $87,363  $91,689   (4.7%) $262,881  $259,316   1.4%
Dedicated - Truckload  82,676   66,936   23.5%  237,124   202,561   17.1%
Combined Truckload  170,039   158,625   7.2%  500,005   461,877   8.3%
Managed Freight  63,385   69,713   (9.1%)  186,668   193,868   (3.7%)
Warehousing  25,175   25,039   0.5%  76,123   74,758   1.8%
Consolidated Freight Revenue $258,599  $253,377   2.1% $762,796  $730,503   4.4%


  Truckload Operating Statistics 
  Three Months Ended September 30,  Nine Months Ended September 30, 
  2024  2023  % Change  2024  2023  % Change 
Average freight revenue per loaded mile $2.80  $2.64   6.1% $2.74  $2.66   3.0%
Average freight revenue per total mile $2.41  $2.33   3.4% $2.38  $2.34   1.7%
Average freight revenue per tractor per week $5,637  $5,677   (0.7%) $5,672  $5,618   1.0%
Average miles per tractor per period  30,733   32,076   (4.2%)  93,196   93,480   (0.3%)
Weighted avg. tractors for period  2,295   2,126   7.9%  2,252   2,108   6.8%
Tractors at end of period  2,306   2,149   7.3%  2,306   2,149   7.3%
Trailers at end of period  6,484   5,871   10.4%  6,484   5,871   10.4%


  Selected Balance Sheet Data 
($s in '000's, except per share data) 9/30/2024  12/31/2023 
Total assets $1,009,795  $954,438 
Total stockholders' equity $431,552  $403,420 
Total indebtedness, comprised of total debt and finance leases, net of cash $236,704  $248,329 
Net Indebtedness to Capitalization Ratio  35.4%  38.1%
Leverage Ratio(1)  1.76   2.14 
Tangible book value per end-of-quarter basic share $19.74  $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 September 30,  Nine Months Ended September 30, 
GAAP Presentation 2024  2023  bps Change 2024  2023  bps Change
Total revenue $287,885  $288,721      $854,145  $829,588     
Total operating expenses  271,650   273,580       817,998   785,032     
Operating income $16,235  $15,141      $36,147  $44,556     
Operating ratio  94.4%  94.8%  (40)  95.8%  94.6%  120 
                         
Non-GAAP Presentation 2024  2023  bps Change 2024  2023  bps Change
Total revenue $287,885  $288,721      $854,145  $829,588     
Fuel surcharge revenue  (29,286)  (35,344)      (91,349)  (99,085)    
Freight revenue (total revenue, excluding fuel surcharge)  258,599   253,377       762,796   730,503     
                         
Total operating expenses  271,650   273,580       817,998   785,032     
Adjusted for:                        
Fuel surcharge revenue  (29,286)  (35,344)      (91,349)  (99,085)    
Amortization of intangibles (2)  (2,372)  (2,220)      (7,116)  (5,142)    
Gain on disposal of terminals, net  -   -       -   7,627     
Contingent consideration liability adjustment  (720)  (493)      (9,534)  (2,485)    
Transaction and executive retirement  -   -       -   (2,158)    
Adjusted operating expenses  239,272   235,523       709,999   683,789     
Adjusted operating income  19,327   17,854       52,797   46,714     
Adjusted operating ratio  92.5%  93.0%  (40)  93.1%  93.6%  (50)
 
(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
September 30,
  Nine Months Ended
September 30,
 
  2024  2023  2024  2023 
GAAP Presentation - Net income $13,033  $13,506  $29,202  $42,434 
Adjusted for:                
Amortization of intangibles (2)  2,372   2,220   7,116   5,142 
Discontinued operations reversal of loss contingency (3)  (200)  (200)  (600)  (600)
Gain on disposal of terminals, net  -   -   -   (7,627)
Contingent consideration liability adjustment  720   493   9,534   2,485 
Acquisition transaction costs and executive retirement bonus  -   -   -   2,158 
Total adjustments before taxes  2,892   2,513   16,050   1,558 
Provision for income tax expense at effective rate  (701)  (631)  (3,955)  (294)
Tax effected adjustments $2,191  $1,882  $12,095  $1,264 
Tennessee works tax act  -   -   -   (1,000)
Non-GAAP Presentation - Adjusted net income $15,224  $15,388  $41,297  $42,698 
                 
GAAP Presentation - Diluted earnings per share ("EPS") (4) $0.94  $0.99  $2.11  $3.09 
Adjusted for:                
Amortization of intangibles (2)  0.17   0.16   0.51   0.37 
Discontinued operations reversal of loss contingency(3)  (0.01)  (0.01)  (0.04)  (0.04)
Gain on sale of terminal, net  -   -   -   (0.55)
Contingent consideration liability adjustment  0.05   0.04   0.69   0.18 
Acquisition transaction costs and executive retirement bonus  -   -   -   0.16 
Total adjustments before taxes  0.21   0.19   1.16   0.12 
Provision for income tax expense at effective rate  (0.06)  (0.05)  (0.29)  (0.02)
Tax effected adjustments $0.15  $0.14  $0.87  $(0.10)
Tennessee works tax act  -   -   -   (0.07)
Non-GAAP Presentation - Adjusted EPS $1.09  $1.13  $2.98  $3.12 
 
(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 September 30, 
GAAP Presentation 2024  2023 
  Expedited  Dedicated  Combined Truckload  Managed Freight  Warehousing  Expedited  Dedicated  Combined Truckload  Managed Freight  Warehousing 
Total revenue $104,314  $94,715  $199,029  $63,385  $25,471  $113,419  $80,242  $193,661  $69,713  $25,347 
Total operating expenses  97,847   89,286   187,133   60,934   23,583   105,897   77,266   183,163   65,971   24,446 
Operating income $6,467  $5,429  $11,896  $2,451  $1,888  $7,522  $2,976  $10,498  $3,742  $901 
Operating ratio  93.8%  94.3%  94.0%  96.1%  92.6%  93.4%  96.3%  94.6%  94.6%  96.4%
                                         
Non-GAAP Presentation                                        
Total revenue $104,314  $94,715  $199,029  $63,385  $25,471  $113,419  $80,242  $193,661  $69,713  $25,347 
Fuel surcharge revenue  (16,951)  (12,039)  (28,990)  -   (296)  (21,730)  (13,306)  (35,036)  -   (308)
Freight revenue (total revenue, excluding fuel surcharge)  87,363   82,676   170,039   63,385   25,175   91,689   66,936   158,625   69,713   25,039 
                                         
Total operating expenses  97,847   89,286   187,133   60,934   23,583   105,897   77,266   183,163   65,971   24,446 
Adjusted for:                                        
Fuel surcharge revenue  (16,951)  (12,039)  (28,990)  -   (296)  (21,730)  (13,306)  (35,036)  -   (308)
Amortization of intangibles (2)  (533)  (1,315)  (1,848)  (265)  (259)  (534)  (1,315)  (1,849)  (112)  (259)
Contingent consideration liability adjustment  -   (720)  (720)  -   -   (493)  -   (493)  -   - 
Adjusted operating expenses  80,363   75,212   155,575   60,669   23,028   83,140   62,645   145,785   65,859   23,879 
Adjusted operating income  7,000   7,464   14,464   2,716   2,147   8,549   4,291   12,840   3,854   1,160 
Adjusted operating ratio  92.0%  91.0%  91.5%  95.7%  91.5%  90.7%  93.6%  91.9%  94.5%  95.4%


  Nine Months Ended September 30, 
GAAP Presentation 2024  2023 
  Expedited  Dedicated  Combined Truckload  Managed Freight  Warehousing  Expedited  Dedicated  Combined Truckload  Managed Freight  Warehousing 
Total revenue $317,795  $272,662  $590,457  $186,668  $77,020  $318,388  $241,680  $560,068  $193,868  $75,652 
Total operating expenses  301,776   266,480   568,256   178,618   71,124   295,775   228,314   524,089   186,963   73,980 
Operating income $16,019  $6,182  $22,201  $8,050  $5,896  $22,613  $13,366  $35,979  $6,905  $1,672 
Operating ratio  95.0%  97.7%  96.2%  95.7%  92.3%  92.9%  94.5%  93.6%  96.4%  97.8%
                                         
Non-GAAP Presentation                                        
Total revenue $317,795  $272,662  $590,457  $186,668  $77,020  $318,388  $241,680  $560,068  $193,868  $75,652 
Fuel surcharge revenue  (54,914)  (35,538)  (90,452)  -   (897)  (59,072)  (39,119)  (98,191)  -   (894)
Freight revenue (total revenue, excluding fuel surcharge)  262,881   237,124   500,005   186,668   76,123   259,316   202,561   461,877   193,868   74,758 
                                         
Total operating expenses  301,776   266,480   568,256   178,618   71,124   295,775   228,314   524,089   186,963   73,980 
Adjusted for:                                        
Fuel surcharge revenue  (54,914)  (35,538)  (90,452)  -   (897)  (59,072)  (39,119)  (98,191)  -   (894)
Amortization of intangibles (2)  (1,600)  (3,946)  (5,546)  (793)  (777)  (1,600)  (2,583)  (4,183)  (182)  (777)
Gain on disposal of terminals, net  -   -   -   -   -   3,928   3,699   7,627   -   - 
Contingent consideration liability adjustment  -   (9,534)  (9,534)  -   -   (2,485)  -   (2,485)  -   - 
Transaction and executive retirement  -   -   -   -   -   (1,113)  (876)  (1,989)  (90)  (79)
Adjusted operating expenses  245,262   217,462   462,724   177,825   69,450   235,433   189,435   424,868   186,691   72,230 
Adjusted operating income  17,619   19,662   37,281   8,843   6,673   23,883   13,126   37,009   7,177   2,528 
Adjusted operating ratio  93.3%  91.7%  92.5%  95.3%  91.2%  90.8%  93.5%  92.0%  96.3%  96.6%
 
(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 was Covenant Logistics (CVLG) earnings per share in Q3 2024?

Covenant Logistics reported earnings of $0.94 per diluted share and adjusted earnings of $1.09 per diluted share in Q3 2024.

How much did CVLG's freight revenue grow in Q3 2024?

CVLG's freight revenue grew by 2.1% year-over-year in Q3 2024.

What was CVLG's operating income in Q3 2024?

CVLG reported operating income of $16.2 million in Q3 2024, representing a 7.2% growth year-over-year.

How much did CVLG reduce its net indebtedness in Q3 2024?

CVLG achieved a $36.6 million sequential reduction in net indebtedness during Q3 2024.

Covenant Logistics Group, Inc.

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