Covenant Logistics Group (NYSE:CVLG) FY Conference Summary Company Overview - Covenant Logistics is a provider of transportation and logistics services operating through four segments: expedited, dedicated, managed freight, and warehousing [1][2] - The company has transformed from a singular trucking company into a diversified logistics company over the past five years [2][3] - Covenant operates approximately 2,300 to 2,400 tractors and over 5,000 trailers, with around 6 million square feet of warehousing [4][5] Financial Performance - Covenant reported a revenue run rate of approximately $1 billion, with segment revenues as follows: - Team business: approximately $300 million - Dedicated transportation: $300-$325 million - Managed freight: $200-$250 million - Warehousing: $100-$115 million [5][6] - The company generated $0.44 earnings per share (EPS) in Q3, which was considered unsatisfactory compared to industry peers [7] Market Conditions - The company is currently in a prolonged down cycle, lasting 40 months, which is significantly longer than the historical average of 18 months [12][13] - The freight cycle is characterized by a supply-demand imbalance, with many competitors struggling financially [12][16] - Covenant's management believes they are well-positioned to weather the downturn due to their diversified business model [19] Strategic Focus - The company aims to maintain a balanced asset base, targeting a 50-50 split between asset-based and asset-light operations [8] - Covenant emphasizes shareholder returns through accretive M&A, share repurchases, and dividends [3][32] - The management team is described as young and driven, with a focus on long-term growth [3][8] Segment Insights - **Expedited and Dedicated Segments**: These are asset-intensive, with dedicated transportation now comprising about 30% of total revenue, heavily focused on the poultry business [20][24] - **Managed Freight and Warehousing**: These segments are asset-light, with managed freight accounting for about 25% of the business and warehousing providing steady revenue with a run rate of about $110 million [26][28] - The company has made strategic acquisitions, including a poultry business and a defense-related transportation business, which have shown strong growth [10][11] Competitive Landscape - Covenant differentiates itself from competitors by offering a unique mix of services, including leasing and warehousing, which is not commonly found in public carriers [34][35] - The company faces competition from larger players like J.B. Hunt and Werner, but believes its niche focus provides a competitive advantage [35][36] Challenges and Opportunities - The current down cycle is expected to lead to consolidation in the industry, with smaller, undercapitalized companies likely exiting the market [43][46] - Covenant's equipment leasing business has seen increased bad debt, indicating stress among smaller operators [44] - The management is optimistic about future opportunities as the market stabilizes and rates normalize [46] Conclusion - Covenant Logistics Group is navigating a challenging market environment with a diversified business model and a focus on strategic growth. The company is well-positioned to capitalize on potential opportunities as the freight cycle eventually turns upward.

Financial Performance - Total revenue for the third quarter of 2025 was $296.9 million, an increase of 3.1% compared to the third quarter of 2024[106] - Freight revenue, excluding fuel surcharges, was $268.8 million, reflecting a 4.0% increase year-over-year[106] - Net income for the third quarter was $9.1 million, or $0.35 per diluted share, down from $13.0 million, or $0.47 per diluted share, in the same quarter last year[106] - Total revenue for the three months ended September 30, 2025, was $296.889 million, an increase from $287.885 million in 2024, primarily driven by an $8.9 million increase in freight revenue for Dedicated and an $8.8 million increase for Managed Freight[121] - Freight revenue for the nine months ended September 30, 2025, reached $788.591 million, compared to $762.796 million in 2024, with significant contributions from Dedicated and Managed Freight segments[121] Operating Income and Expenses - Operating income decreased to $7.9 million from $16.2 million in the third quarter of 2024[106] - Fuel expense for the three months ended September 30, 2025, was $29.506 million, representing 9.9% of total revenue, consistent with the previous year[125] - Net fuel expense for the three months ended September 30, 2025, increased to $3.334 million, or 1.2% of freight revenue, primarily due to lower fuel surcharge recovery[129] - Salaries, wages, and related expenses for the three months ended September 30, 2025, were $109.745 million, accounting for 37.0% of total revenue, a decrease from 38.5% in 2024[123] - Operations and maintenance costs increased to $19,352 million for the three months ended September 30, 2025, representing 6.5% of total revenue, up from 6.1% in 2024[131] - Revenue equipment rentals and purchased transportation rose to $72,908 million for the three months ended September 30, 2025, accounting for 24.6% of total revenue, compared to 22.4% in 2024[133] - Insurance and claims expenses increased to $14,179 million for the three months ended September 30, 2025, which is 4.8% of total revenue, up from 4.3% in 2024[136] - Depreciation and amortization expenses reached $22,953 million for the three months ended September 30, 2025, representing 7.7% of total revenue, compared to 7.4% in 2024[141] - Interest expense, net was $3,468 million for the three months ended September 30, 2025, which is 1.2% of total revenue, slightly up from 1.1% in 2024[145] Investments and Financing - Total indebtedness increased by $48.7 million to $268.3 million, primarily due to stock repurchases and acquisition-related payments[106] - The company repurchased approximately 1.6 million shares of Class A common stock for $36.2 million during the nine months ended September 30, 2025[173] - The Board approved a stock repurchase program authorizing the purchase of up to $50 million of Class A common stock[173] - Payment of contingent consideration liabilities related to the acquisition of LTST was $8.0 million in 2025, compared to $3.0 million for AAT in 2024[172] - The company reported net proceeds of $16.3 million from notes payable and Credit Facility in 2025, down from $47.3 million in 2024[171] Future Outlook - The company expects modest contraction in its Truckload fleet while anticipating growth in asset-light segments[103] - Future outlook includes potential demand drivers from unwinding excess inventories and government policy clarifications[104] - The company expects driver and non-driver pay and benefits to continue increasing due to wage inflation and higher healthcare costs[124] - The company anticipates fluctuations in net fuel expenses as a percentage of revenue due to factors like diesel prices and fuel surcharge recovery[130] - The company expects operations and maintenance costs to rise due to wage and parts inflation, as well as the condition of the driver market[132] - The company expects insurance and claims expenses to remain volatile, with potential increases in accrual rates due to adverse claims development[138] Operational Metrics - The company operated 2,434 tractors and 6,851 trailers as of September 30, 2025, with an average tractor age of 1.9 years and an average trailer age of 5.8 years[119] - The average tractor fleet age was 1.9 years as of September 30, 2025, providing flexibility in managing the fleet[163] - The company noted a decrease in total miles run by independent contractors from 7.9% and 8.2% in 2024 to 7.7% and 7.2% in 2025 for the three and nine months ended September 30, respectively[133] - The company took delivery of approximately 482 new tractors and 712 new trailers in 2025, compared to 691 new tractors and 757 new trailers in 2024[170] Cash Flow and Working Capital - Net cash flows provided by operating activities decreased to $88.1 million for the nine months ended September 30, 2025, compared to $100.9 million for the same period in 2024[169] - The company had working capital of $2.1 million as of September 30, 2025, a significant decrease from $32.6 million at December 31, 2024[162] - Net cash flows used in investing activities were $89.2 million for the nine months ended September 30, 2025, a decrease from $104.2 million in the same 2024 period[170] - Net cash flows used in financing activities were approximately $31.9 million for the nine months ended September 30, 2025, compared to $36.1 million provided in the same 2024 period[171] Equity Investments - The equity investment in TEL generated $3.6 million in pre-tax earnings, compared to $4.0 million in the prior year[106] - Income from equity method investment for the three months ended September 30, 2025 was $3,578,000, compared to $3,993,000 for the same period in 2024, indicating a slight decline[147] Market and Risk Factors - There have been no material changes to critical accounting policies and estimates during the three and nine months ended September 30, 2025[175] - Market risks have not changed materially from those reported in the Form 10-K for the year ended December 31, 2024[176] - Cash flows may fluctuate due to capital expenditures, stock repurchases, dividends, and strategic investments[174]

Core Insights - Covenant Logistics Group is experiencing unprecedented bid levels from customers due to concerns over trucking capacity, with bids increasing by 17% since August [1] - The freight industry is facing a significant exit of capacity, influenced by government policy enforcement regarding English language standards, although the full impact is currently obscured by a consumer spending pause and market uncertainty [2] Government Policy Impact - The Trump administration has intensified enforcement on commercial driving, including stricter ID requirements and ineligibility for non-U.S. citizens to obtain Commercial Driver's Licenses (CDLs) [3] - The Federal Motor Carrier Safety Administration has been directed to enhance enforcement of English language proficiency standards among truck drivers, with non-compliance leading to out-of-service violations [4] Market Dynamics - The expected capacity exits are anticipated to help rebalance the trucking market, aligning supply and demand, but may lead to increased procurement costs for Covenant, potentially constraining margins despite customer rate increases [5] - Shippers are proactively seeking bids to secure capacity and mitigate anticipated rate increases in the trucking market for 2026 [6] Rate Trends - Current overcapacity and insufficient freight are keeping contract rates flat, contrary to earlier forecasts of a 2% to 4% increase in contract rates for 2025, with actual increases around 1% due to delays in rate cuts and tariffs [7]

Core Insights - The trucking market is experiencing significant changes, with a prolonged downturn nearing an inflection point as smaller carriers exit the market due to regulatory and insurance pressures [1][2] Financial Performance - Covenant Logistics Group reported third-quarter revenue of $296.9 million, with adjusted earnings of $0.44 per share, down from $0.54 in Q3 2024 [2] - The truckload segment's operating income fell to $9.2 million from $23.1 million a year earlier, impacted by rising insurance, wages, and maintenance costs [3] Market Dynamics - The exit of small carriers is tightening freight capacity in regional markets, although national spot rates have not yet responded [2] - Freight revenue per total mile increased by 5% year-over-year, but lower utilization led to a decline in overall efficiency [4] - The expedited segment's freight revenue decreased by 9% year-over-year to $80.2 million, while dedicated operations grew by 11% year-over-year to $91.6 million, driven by new contracts in the protein supply chain [4] Industry Outlook - The brokerage division is experiencing margin compression due to enforcement actions and equipment under-utilization, but this may benefit asset carriers as rates are expected to rise [5] - The company is delaying new truck purchases due to uncertainty over tariffs on imported heavy-duty trucks and components, despite having a healthy fleet and balance sheet [5] - Carrier sentiment at the upcoming American Trucking Associations' annual conference is expected to reflect cautious optimism, with a belief that current regulatory and inflationary pressures will lead to future gains [6]

Financial Data and Key Metrics Changes - Consolidated freight revenue increased by 4%, or approximately $10.2 million, to $268.9 million year-over-year [3] - Consolidated adjusted operating income shrank by 22.5% to $15 million, primarily due to increases in the truckload segment [3] - Net indebtedness increased by $48.6 million to $268.3 million compared to December 31, 2024, yielding an adjusted leverage ratio of approximately 2.1 times and a debt-to-capital ratio of 38.8% [3] - Adjusted return on average invested capital was 6.9% versus 8.1% in the prior year [3] Business Segment Data and Key Metrics Changes - The expedited segment yielded a 93.6% adjusted operating ratio, which is an increase of 160 basis points compared to the prior year [4] - The dedicated segment's adjusted operating ratio was 94.7%, falling short of both the prior year and long-term expectations [5] - Managed freight exceeded both revenue and adjusted operating income compared to the prior year but fell sequentially due to the loss of a short-term customer [5] - The warehousing segment experienced slightly below prior year freight revenue and adjusted operating income, yielding an adjusted operating ratio of 92.1% [7] Market Data and Key Metrics Changes - The average fleet size in the expedited segment shrunk by 31 units, or 3.4%, to 861 average tractors [4] - The company anticipates a challenging fourth quarter due to a soft freight market and company-specific factors [8][9] Company Strategy and Development Direction - The company plans to improve margins through rate increases, exiting less profitable business, and adding more profitable business [4] - The strategy includes growing and diversifying the managed freight segment, with an acceptable return in capital expected from mid-single digit operating margins [7] - The company is focused on investing in areas that provide value-added services for customers while reducing exposure to commoditized end markets [5] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued challenges in the fourth quarter due to a soft freight market and specific issues such as increased claims accruals and the impact of the U.S. government shutdown [8][9] - There is optimism about the pace of recovery in the freight market, driven by government policies and consumer demand improvements [9] - Management expressed excitement about the potential for rate increases after four years of stagnation, with bids up 17% since August [23] Other Important Information - The company has been managing costs effectively, with a focus on matching headcount to freight volumes and controlling overhead [74] - There is a cautious approach to fleet expansion due to uncertainty in truck pricing and tariffs [50][52] Q&A Session Summary Question: Insights on market capacity and its impact - Management discussed the challenges in the market regarding capacity exits and the lack of impact on national spot rates despite tighter local markets [12][13] Question: Impact of government shutdown on Department of Defense business - Management indicated that about half of the Department of Defense business would be lost during the shutdown, with a partial recovery expected once operations resume [61][62] Question: Expectations for pricing and bid activity - Management noted that low single-digit rate increases are being discussed with customers, reflecting inflationary pressures [48] Question: Share repurchase strategy - Management acknowledged the potential for share repurchases but emphasized a cautious approach given the current market environment [83]

Financial Data and Key Metrics Changes - Consolidated freight revenue increased by 4% year-over-year, amounting to approximately $268.9 million, which is an increase of about $10.2 million [3] - Consolidated adjusted operating income decreased by 22.5% to $15 million, primarily due to increases in the combined truckload segment [3] - Net indebtedness as of September 30 increased by $48.6 million to $268.3 million compared to December 31, 2024, resulting in an adjusted leverage ratio of approximately 2.1x and a debt-to-capital ratio of 38.8% [3] - Return on average invested capital on an adjusted basis was 6.9%, down from 8.1% in the prior year [3] Business Segment Performance - The expedited segment had an adjusted operating ratio of 93.6%, which was below expectations but improved by 160 basis points year-over-year [4] - The dedicated segment's adjusted operating ratio was 94.7%, also falling short of both prior year and long-term expectations, despite a fleet growth of 136 tractors, or approximately 9.6% [5] - Managed freight exceeded both revenue and adjusted operating income compared to the prior year but saw a sequential decline due to the loss of a short-term customer [6] - The warehousing segment experienced slightly lower freight revenue and adjusted operating income compared to the prior year, with an adjusted operating ratio of 92.1% [7] Market Data and Key Metrics Changes - The company anticipates a challenging fourth quarter due to a soft freight market and company-specific factors, including increased claims accruals and the impact of the U.S. government shutdown on volumes for the Department of Defense [8][9] - The company expects that as capacity exits the market accelerate, the cost to procure transportation will likely constrain margins in the managed freight segment [9] Company Strategy and Industry Competition - The long-term strategy focuses on growing and diversifying the managed freight segment, with an acceptable return on capital expected from mid-single-digit operating margins [7] - The company plans to exit less profitable business and invest in high-service niches within the dedicated segment [5] - Management expressed optimism about the freight market's recovery pace, driven by government policies affecting driver regulations and capacity exits [9][19] Management's Comments on Operating Environment and Future Outlook - Management noted that the fourth quarter is expected to be unseasonably soft, with challenges from increased claims, government shutdown impacts, and customer bankruptcies [8] - There is a belief that consumer demand will improve with monetary easing and the resolution of trade tensions, which could positively impact the freight market [9] - Management is optimistic about the potential for rate increases after years of stagnation, with recent bids showing increases of 2.5%-4% [23] Other Important Information - The average age of tractors increased to 23 months from 20 months a year ago due to share repurchase programs and acquisition-related payments [3] - The minority investment in TEL contributed a pre-tax net income of $3.6 million for the quarter, down from $4 million in the prior year [7] Q&A Session Summary Question: What is the capacity backdrop and its impact on national spot rates? - Management discussed the complexities of capacity exits and the regional variations in spot rates, noting that some areas are experiencing tighter conditions while national rates have not yet reflected this [12][15] Question: How does the government shutdown affect the Department of Defense business? - Management indicated that about half of the Department of Defense business would be lost due to the shutdown, with some freight potentially returning once operations resume [61] Question: What are the expectations for pricing and bid activity in 2026? - Management noted that low single-digit increases are expected, but significant inflation in costs necessitates higher rates [48] Question: How is the company managing costs in the current environment? - The company has focused on aligning headcount with freight volumes and has implemented cost-cutting measures to manage overhead effectively [74][75] Question: What is the outlook for share repurchases given current valuations? - Management acknowledged that shares are undervalued and indicated that while there is potential for share repurchases, no commitments were made at this time [82][84]

Financial Data and Key Metrics Changes - Consolidated freight revenue increased by 4%, or approximately $10.2 million, to $268.9 million year-over-year [3] - Consolidated adjusted operating income shrank by 22.5% to $15 million, primarily due to increases in the truckload segment [3] - Net indebtedness increased by $48.6 million to $268.3 million compared to December 31, 2024, yielding an adjusted leverage ratio of approximately 2.1 times and a debt-to-capital ratio of 38.8% [3] - Return on average invested capital was 6.9% versus 8.1% in the prior year [3] Business Line Data and Key Metrics Changes - The expedited segment yielded a 93.6% adjusted operating ratio, which is an increase of 160 basis points compared to the prior year [4] - The dedicated segment's adjusted operating ratio was 94.7%, falling short of both the prior year and long-term expectations [5] - Managed freight exceeded both revenue and adjusted operating income compared to the prior year but fell sequentially due to the loss of a short-term customer [5] - The warehousing segment experienced slightly below prior year freight revenue and adjusted operating income, yielding an adjusted operating ratio of 92.1% [6] Market Data and Key Metrics Changes - The average fleet size in the expedited segment shrunk by 31 units, or 3.4%, to 861 average tractors [4] - The company anticipates a continuation of a soft freight market in the fourth quarter, influenced by company-specific factors and a general market downturn [7][8] Company Strategy and Development Direction - The company plans to improve margins through rate increases, exiting less profitable business, and adding more profitable business [4] - There is a focus on reducing fleet in the dedicated segment that is exposed to commoditized end markets while investing in value-added services [5] - The long-term strategy includes growing and diversifying the managed freight segment, with an acceptable return in capital expected from mid-single digit operating margins [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the freight market recovery despite current challenges, citing government policies and consumer demand improvements as potential catalysts [8] - The fourth quarter is expected to remain challenging due to a soft freight market and specific company factors, including increased claims accruals and the impact of the government shutdown [7][8] - Management is optimistic about the potential for rate increases after years of stagnation, with recent bids showing increases [21] Other Important Information - The minority investment in TEL contributed a pre-tax net income of $3.6 million for the quarter, down from $4 million in the prior year [6] - The company is prepared to execute quickly to capture market share and operational leverage when the market environment improves [8] Q&A Session Summary Question: Insights on capacity exits in the market - Management noted that there is a significant concern regarding capacity exits, particularly due to regulatory changes affecting non-domiciled drivers [12][13] Question: Impact of government shutdown on Department of Defense business - Approximately half of the Department of Defense business will be lost during the shutdown, with some freight potentially returning once operations resume [53] Question: Expectations for Q4 performance - Management indicated that Q4 is expected to be softer than usual due to various challenges, including the government shutdown and market conditions [34][68] Question: Share repurchase strategy - The company acknowledges that shares are undervalued and has options available for share repurchases, but no commitment was made to specific buyback amounts [78]

Financial Data and Key Metrics Changes - Consolidated freight revenue increased by 4% or approximately $10.2 million to $268.9 million [3] - Consolidated adjusted operating income shrank by 22.5% to $15 million primarily due to increases in the combined truckload segment [3] - Net indebtedness increased by $48.6 million to $268.3 million compared to December 31, 2024, yielding an adjusted leverage ratio of approximately 2.1 times and a debt to capital ratio of 38.8% [3] - Return on average invested capital was 6.9% versus 8.1% in the prior year [4] Business Segment Performance - The expedited segment had an adjusted operating ratio of 93.6%, which increased by 160 basis points year-over-year [4] - The dedicated segment's adjusted operating ratio was 94.7%, falling short of expectations, but the fleet grew by 136 tractors, approximately 9.6% compared to the prior year [5] - Managed freight exceeded both revenue and adjusted operating income compared to the prior year but fell sequentially due to the loss of a short-term customer [6] - The warehouse segment experienced slightly below prior year freight revenue and adjusted operating income, yielding an adjusted operating ratio of 92.1% [6] Market Data and Key Metrics Changes - The average fleet size in the expedited segment shrunk by 31 units or 3.4% to 861 average tractors [4] - The company anticipates a challenging fourth quarter due to a soft rate market and company-specific factors impacting volumes [8] Company Strategy and Industry Competition - The company plans to improve margins through rate increases, exiting less profitable business, and adding more profitable business [5] - The management is optimistic about the freight market recovery pace despite current challenges [9] - Recent government policies regarding driver regulations are expected to accelerate capacity exiting the market, which may lead to tighter supply and improved rates in the future [9][20] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about increased claims accruals, the impact of the U.S. government shutdown on volumes, and customer bankruptcies affecting business [8] - The company is optimistic about the long-term demand recovery driven by government investments and easing monetary policies [9][24] - Management noted that the freight market has not seen rate increases in four years, but recent bids have shown increases of 2.5% to 4% [30] Other Important Information - The minority investment in Tel contributed pretax net income of $3.6 million for the quarter compared to $4 million in the prior year [7] - The company is in a wait-and-hold mode regarding fleet purchases due to uncertainty in pricing [68] Q&A Session Summary Question: Insights on market capacity exits - Management discussed the complexities of capacity exits and the regional variations in spot rates, noting that enforcement of regulations is leading to tighter capacity in certain states [12][14] Question: Impact of government shutdown on DOD business - Management indicated that about half of the DOD business would be lost during the shutdown, with some freight potentially coming back once the government reopens [72][75] Question: Expectations for Q4 performance - Management expects Q4 to be softer than Q3 due to various challenges, including the government shutdown and market conditions [46][48] Question: Pricing and bid activity - Management noted that while low single-digit increases are being discussed, significant inflation in costs necessitates higher rates [60][61] Question: Share repurchase strategy - Management acknowledged the potential for share repurchases given the current undervaluation of shares, but emphasized a cautious approach [108][110]

Core Insights - Covenant Logistics Group reported lower third-quarter earnings due to overcapacity and muted freight demand impacting the trucking industry [1][2] - Adjusted earnings per share were $0.44, down from $0.54 in Q3 2024, while total revenue increased by 2.8% year-over-year to $296.9 million [1][5] Financial Performance - The truckload segment's operating income fell to $9.2 million from $23.1 million a year earlier, affected by rising insurance, wages, and maintenance costs [2] - Freight revenue per total mile increased by 5% year-over-year, but lower utilization led to a decline in overall efficiency [3] - The expedited segment's freight revenue decreased by 9% year-over-year to $80.2 million, while dedicated operations grew by 11% year-over-year to $91.6 million, driven by new contracts in the protein supply chain [3] Future Outlook - The company anticipates a decline in fourth-quarter adjusted earnings per share, citing reduced contributions from its transport enterprise leasing affiliate and the loss of a major managed freight customer [4] - Covenant is evaluating contracts in its truckload business for potential improvements or exits, expecting modest contraction in its combined truckload fleet while focusing on growth in asset-light segments [2]

[Company Announcement & Executive Summary](index=1&type=section&id=Company%20Announcement%20%26%20Executive%20Summary) Covenant Logistics Group announced Q3 2025 results and a conference call, with the CEO commenting on mixed segment performance and strategic initiatives [Announcement Details](index=1&type=section&id=Announcement%20Details) Covenant Logistics Group announced Q3 2025 financial and operating results, with a conference call scheduled for October 23, 2025 - Covenant Logistics Group, Inc. (NYSE: CVLG) announced financial and operating results for the third quarter ended September 30, 2025[2](index=2&type=chunk) - A conference call to discuss the quarter is scheduled for 10:00 A.M. Eastern Time on Thursday, October 23, 2025[2](index=2&type=chunk) [Chairman & CEO Commentary](index=1&type=section&id=Chairman%20%26%20CEO%20Commentary) CEO David R. Parker reported Q3 2025 diluted EPS of $0.35 ($0.44 adjusted), noting flat asset-light performance, lower Truckload results, and reduced TEL earnings - Third quarter results were **$0.35 per diluted share**, or **$0.44 per diluted share on a non-GAAP adjusted basis**[3](index=3&type=chunk) - Asset-light business units showed essentially **flat year-over-year performance**, while Truckload business units had lower performance due to higher costs and under-utilized equipment[3](index=3&type=chunk) - The company continues to invest in and grow dedicated fleet services with new start-up contracts, while evaluating other Truckload business contracts for improvement or exit[4](index=4&type=chunk) - The 49% equity method investment with Transport Enterprise Leasing (TEL) contributed pre-tax net income of **$3.6 million ($0.10 per share)** in Q3 2025, down from **$4.0 million ($0.11 per share)** in Q3 2024, primarily due to accelerated customer bankruptcies[5](index=5&type=chunk) - Acknowledged the unexpected passing of Lew Thompson, founder of Lew Thompson and Son Trucking Company, which was acquired in April 2023[6](index=6&type=chunk) [Third Quarter Financial Performance](index=1&type=section&id=Third%20Quarter%20Financial%20Performance) Covenant Logistics Group reported increased total revenue for Q3 2025 but significant declines in operating income, net income, and EPS on both GAAP and adjusted bases [Consolidated Financial Highlights](index=1&type=section&id=Consolidated%20Financial%20Highlights) Covenant Logistics Group reported a 3.1% increase in total revenue for Q3 2025 but significant declines in operating income, net income, and EPS Q3 2025 vs Q3 2024 Consolidated Financial Performance | Metric | Q3 2025 ($ in thousands) | Q3 2024 ($ in thousands) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Total Revenue | 296,889 | 287,885 | 3.1% | | Freight Revenue, Excludes Fuel Surcharge | 268,840 | 258,599 | 4.0% | | Operating Income | 7,926 | 16,235 | -51.2% | | Adjusted Operating Income (1) | 14,977 | 19,327 | -22.5% | | Operating Ratio | 97.3% | 94.4% | +290 basis points | | Adjusted Operating Ratio (1) | 94.4% | 92.5% | +190 basis points | | Net Income | 9,093 | 13,033 | -30.2% | | Adjusted Net Income (1) | 11,517 | 15,224 | -24.3% | | Earnings per Diluted Share | 0.35 | 0.47 | -25.6% | | Adjusted Earnings per Diluted Share (1) | 0.44 | 0.54 | -18.5% | [Non-GAAP Adjustments](index=3&type=section&id=Non-GAAP%20Adjustments) Q3 adjusted financial results included a net gain of $0.1 million from a litigation settlement, offset by employee separation, lease abandonment, and software abandonment expenses - The third quarter included approximately **$0.1 million in net items** excluded from adjusted financial results[8](index=8&type=chunk) - A **$3.8 million gain** from discontinued operations related to a litigation settlement was recorded[8](index=8&type=chunk)[9](index=9&type=chunk) - Offsetting expenses totaled **$3.7 million**, including **$1.4 million** for employee separation, **$0.4 million** for lease abandonment and customer exit costs, and **$1.9 million** for abandonment of long-lived software[8](index=8&type=chunk)[9](index=9&type=chunk) [Segment Operating Results](index=3&type=section&id=Segment%20Operating%20Results) The Combined Truckload segment saw slight revenue growth but significant operating income decline, while Managed Freight grew and Warehousing remained stable with future growth anticipated [Truckload Operations](index=3&type=section&id=Truckload%20Operations) The Combined Truckload segment experienced slight revenue growth but a significant decline in operating income and worsened operating ratio due to rising costs [Combined Truckload Revenue & Operations](index=3&type=section&id=Combined%20Truckload%20Revenue%20%26%20Operations) Combined Truckload revenue increased slightly, but operating income declined significantly due to lower utilization and higher costs - Total revenue in truckload operations increased **0.3% to $199.7 million**, with freight revenue growing **1.0%** due to a **4.6% increase** in the average tractor fleet, partially offset by lower equipment utilization[13](index=13&type=chunk) Combined Truckload Operating Data (Q3 2025 vs Q3 2024) | Metric | Q3 2025 ($ in thousands) | Q3 2024 ($ in thousands) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Total Revenue | 199,652 | 199,029 | 0.3% | | Freight Revenue, excludes Fuel Surcharge | 171,765 | 170,039 | 1.0% | | Segment Operating Income (1) | 9,178 | 23,066 | -60.2% | | Adj. Seg. Operating Income (2) | 9,977 | 14,464 | -31.0% | | Segment Operating Ratio (1) | 95.4% | 88.4% | +700 basis points | | Adj. Seg. Operating Ratio (2) | 94.2% | 91.5% | +270 basis points | | Average Freight Revenue per Tractor per Week | 5,445 | 5,637 | -3.4% | | Average Miles per Tractor per Period | 28,306 | 30,733 | -7.9% | | Weighted Average Tractors for Period | 2,400 | 2,295 | 4.6% | [Expedited Truckload Revenue & Operations](index=3&type=section&id=Expedited%20Truckload%20Revenue%20%26%20Operations) Expedited freight revenue decreased by 8.2% due to fewer tractors and lower utilization, leading to a significant drop in operating income - Freight revenue in the Expedited segment decreased **$7.2 million (8.2%)**, primarily due to a **3.4% reduction** in average total tractors and a **5.0% decrease** in average freight revenue per tractor per week from lower utilization[14](index=14&type=chunk) Expedited Truckload Operating Data (Q3 2025 vs Q3 2024) | Metric | Q3 2025 ($ in thousands) | Q3 2024 ($ in thousands) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Freight Revenue, excludes Fuel Surcharge | 80,184 | 87,363 | -8.2% | | Segment Operating Income (1) | 5,079 | 12,272 | -58.6% | | Adj. Seg. Operating Income (2) | 5,140 | 7,000 | -26.5% | | Average Freight Revenue per Tractor per Week | 7,082 | 7,452 | -5.0% | | Weighted Average Tractors for Period | 861 | 892 | -3.4% | [Dedicated Truckload Revenue & Operations](index=3&type=section&id=Dedicated%20Truckload%20Revenue%20%26%20Operations) Dedicated freight revenue increased by 10.8% due to more tractors and higher revenue per tractor, despite a utilization decrease - Freight revenue in the Dedicated segment increased **$8.9 million (10.8%)**, driven by a **9.7% increase** in average total tractors and a **1.0% increase** in average freight revenue per tractor per week, despite a **5.7% decrease** in utilization[15](index=15&type=chunk) Dedicated Truckload Operating Data (Q3 2025 vs Q3 2024) | Metric | Q3 2025 ($ in thousands) | Q3 2024 ($ in thousands) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Freight Revenue, excludes Fuel Surcharge | 91,581 | 82,676 | 10.8% | | Segment Operating Income (1) | 4,099 | 10,794 | -62.0% | | Adj. Seg. Operating Income (2) | 4,837 | 7,464 | -35.2% | | Average Freight Revenue per Tractor per Week | 4,529 | 4,484 | 1.0% | | Weighted Average Tractors for Period | 1,539 | 1,403 | 9.7% | [Combined Truckload Operating Expenses](index=5&type=section&id=Combined%20Truckload%20Operating%20Expenses) Rising operating costs, particularly in salaries, wages, insurance, and equipment, negatively impacted Truckload segment operating margins - Rising operating costs in the Truckload segment negatively impacted operating margins compared to the prior year, primarily due to salaries, wages, insurance, and both variable and fixed expenses for equipment operation[15](index=15&type=chunk) - Salaries, wages, and related expenses increased approximately **4% per total mile** year-over-year, driven by growth in the dedicated protein supply chain business and employee separation costs[16](index=16&type=chunk) - Insurance and claims expense for the current quarter was **4 cents per mile**, or **24% higher** than the prior year on a per total mile basis, due to large claims, and is anticipated to remain elevated in Q4[17](index=17&type=chunk) - Equipment related expenses (Operations and maintenance, Depreciation and amortization) increased approximately **8 cents per total mile (15%)** compared to the prior year, mainly due to unproductive equipment and higher recruiting/onboarding costs[18](index=18&type=chunk) [Managed Freight Segment](index=5&type=section&id=Managed%20Freight%20Segment) The Managed Freight segment experienced a 14.0% increase in freight revenue, with operating income improving by 0.4% and adjusted operating income by 11.7% in Q3 2025 Managed Freight Operating Data (Q3 2025 vs Q3 2024) | Metric | Q3 2025 ($ in thousands) | Q3 2024 ($ in thousands) | Change (%) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Freight Revenue | 72,220 | 63,385 | 14.0% | | Segment Operating Income (1) | 2,960 | 2,946 | 0.4% | | Adj. Seg. Operating Income (2) | 3,035 | 2,716 | 11.7% | - The growth in this segment is attributable to new business awarded in the year by a large customer that will no longer continue in the fourth quarter[20](index=20&type=chunk) [Warehousing Segment](index=5&type=section&id=Warehousing%20Segment) The Warehousing segment's Q3 2025 results were comparable to the prior year, with slight reductions in revenue and operating income, but Q4 growth is anticipated from a new facility Warehousing Operating Data (Q3 2025 vs Q3 2024) | Metric | Q3 2025 ($ in thousands) | Q3 2024 ($ in thousands) | Change ($ in thousands) | | :-------------------------------- | :-------------- | :-------------- | :--------- | | Freight Revenue | 24,802 | 25,175 | -373 | | Segment Operating Income (1) | 2,498 | 2,751 | -253 | | Adj. Seg. Operating Income (2) | 1,963 | 2,147 | -184 | - Anticipating growth in the Warehousing segment in Q4 from a large new facility start-up with an existing customer scheduled to begin in November 2025[21](index=21&type=chunk) [Capitalization, Liquidity and Capital Expenditures](index=7&type=section&id=Capitalization%2C%20Liquidity%20and%20Capital%20Expenditures) Net indebtedness increased by $48.7 million to $268.3 million, raising the net indebtedness to total capitalization ratio to 38.8%, with Q4 capital expenditures projected [Capitalization, Liquidity and Capital Expenditures Overview](index=7&type=section&id=Capitalization%2C%20Liquidity%20and%20Capital%20Expenditures%20Overview) Net indebtedness increased to $268.3 million, raising the capitalization ratio to 38.8%, driven by acquisitions and stock repurchases, with Q4 capital expenditures projected - Total indebtedness, net of cash ('net indebtedness'), increased by **$48.7 million to approximately $268.3 million** at September 30, 2025, compared to December 31, 2024[22](index=22&type=chunk) - Net indebtedness to total capitalization increased to **38.8%** at September 30, 2025, from **33.4%** at December 31, 2024[22](index=22&type=chunk) - The increase in net indebtedness was primarily due to acquisition-related payments of **$19.2 million** and repurchasing approximately **$36.2 million** of common stock[23](index=23&type=chunk) - At September 30, 2025, cash and cash equivalents totaled **$2.7 million**, with **$90.1 million** in available borrowing capacity under the ABL credit facility[23](index=23&type=chunk) - Expectations for net capital equipment expenditures in the fourth quarter are **$15 million to $20 million**[25](index=25&type=chunk) [Outlook](index=7&type=section&id=Outlook) The company anticipates lower Q4 Adjusted EPS due to various negative factors but remains optimistic for intermediate to long-term market improvement and earnings growth [Short-Term Outlook](index=7&type=section&id=Short-Term%20Outlook) Q4 Adjusted EPS is expected to be sequentially lower than Q3 due to reduced TEL profits, government shutdown impact, increased claims, and loss of a Managed Freight customer - Adjusted EPS for the fourth quarter is expected to be **sequentially lower than the third quarter**[25](index=25&type=chunk) - Reasons for lower Q4 Adjusted EPS include expected lower profits from the minority investment in TEL due to credit losses, impact of the U.S. government shutdown on Department of Defense business, expected increase in claims accruals, and loss of a large Managed Freight customer[25](index=25&type=chunk) - These negative factors are expected to more than outweigh a modest peak season boost to Expedited and Managed Freight[25](index=25&type=chunk) [Intermediate to Long-Term Outlook](index=7&type=section&id=Intermediate%20to%20Long-Term%20Outlook) The company is optimistic for the intermediate to long term, expecting improving market conditions, accelerating capacity exits, and internal growth in dedicated and warehouse businesses - The company is **optimistic about the intermediate to long term**, expecting improving market conditions[26](index=26&type=chunk) - Capacity exits in the freight environment appear to be accelerating, and there are potential demand drivers from unwinding excess inventories, tax/monetary policies, and trade policy clarification[26](index=26&type=chunk) - Internal plans include growing certain dedicated and warehouse businesses and holding or downsizing other Truckload capacity until returns improve[26](index=26&type=chunk) - Expected outcome is operating leverage and higher earnings and return on capital over time, though individual quarters may be volatile[27](index=27&type=chunk) [Additional Information](index=7&type=section&id=Additional%20Information) This section provides conference call details, a company overview, explanations of non-GAAP measures, forward-looking statements, and contact information [Conference Call Information](index=7&type=section&id=Conference%20Call%20Information) Details for accessing the live conference call on October 23, 2025, and information for accessing the audio replay and additional financial data online - A live conference call will be held on **October 23, 2025, at 10:00 a.m. Eastern time**[27](index=27&type=chunk) - Access the call by dialing **877-550-1505 (U.S./Canada)** or **0800-524-4760 (International)**[27](index=27&type=chunk) - An audio replay will be available for one week at **800-645-7964, access code 3895**[27](index=27&type=chunk) [Company Overview](index=7&type=section&id=Company%20Overview) Covenant Logistics Group provides diverse transportation and logistics services across the U.S., including asset-based and asset-light solutions, and has an affiliation with Transport Enterprise Leasing - Covenant Logistics Group offers a portfolio of transportation and logistics services throughout the United States[27](index=27&type=chunk) - Primary services include asset-based expedited and dedicated truckload capacity, and asset-light warehousing, transportation management, and freight brokerage[27](index=27&type=chunk) - Transport Enterprise Leasing (TEL) is an affiliated company providing revenue equipment sales and leasing services[27](index=27&type=chunk) [Non-GAAP Measures Explanation](index=7&type=section&id=Non-GAAP%20Measures%20Explanation) The company uses non-GAAP measures like adjusted operating income and EPS to provide supplemental profitability information, excluding non-recurring items, but notes their limitations - Non-GAAP measures (e.g., adjusted operating income, adjusted net income, adjusted EPS) are used as key measures of profitability[27](index=27&type=chunk) - These measures provide supplemental information for investors and analysts, and management uses them to remove items that may not be an indicator of performance from period-to-period[27](index=27&type=chunk) - Non-GAAP measures are not substitutes for GAAP measures and have limitations, including potential comparability issues with other companies[28](index=28&type=chunk) [Forward-Looking Statements](index=9&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements subject to risks and uncertainties, which could cause actual results to differ materially from expectations, with no obligation to update - The press release contains forward-looking statements, which are based on current beliefs and expectations and are subject to risks and uncertainties[29](index=29&type=chunk) - Factors that could cause actual results to differ materially include economic, credit, business, and regulatory factors, competition, driver compensation, fuel price fluctuations, dependence on third-party providers, IT system failures, and various operational and market risks[29](index=29&type=chunk) - The company disclaims any obligation to update or revise any forward-looking statements to reflect actual results or changes in factors affecting the information[30](index=30&type=chunk) [Contact Information](index=10&type=section&id=Contact%20Information) Contact details are provided for M. Paul Bunn (President), Tripp Grant (Chief Financial Officer), and Brooke McKenzie (Executive Administrative Assistant) for further information - Contact information for M. Paul Bunn (President), Tripp Grant (Chief Financial Officer), and Brooke McKenzie (Executive Administrative Assistant) is provided[31](index=31&type=chunk) [Key Financial and Operating Statistics (Tables)](index=11&type=section&id=Key%20Financial%20and%20Operating%20Statistics%20%28Tables%29) This section presents key financial and operating statistics in tables, including income statement data, segment freight revenues, and truckload operating statistics [Income Statement Data](index=11&type=section&id=Income%20Statement%20Data) Detailed income statement data for Q3 and YTD September 30, 2025, shows increased total revenue but declines in operating income, net income, and diluted EPS Income Statement Data (Q3 & YTD Sep 30, 2025 vs 2024) | ($ in thousands, except per share data) | Three Months Ended September 30, 2025 | Three Months Ended September 30, 2024 | % Change | Nine Months Ended September 30, 2025 | Nine Months Ended September 30, 2024 | % Change | | :---------------------------------- | :------------------------------------ | :------------------------------------ | :------- | :----------------------------------- | :----------------------------------- | :------- | | Freight revenue | $ 268,840 | $ 258,599 | 4.0% | $ 788,591 | $ 762,796 | 3.4% | | Fuel surcharge revenue | 28,049 | 29,286 | (4.2%) | 80,507 | 91,349 | (11.9%) | | Total revenue | $ 296,889 | $ 287,885 | 3.1% | $ 869,098 | $ 854,145 | 1.8% | | Total operating expenses | 288,963 | 271,650 | 6.4% | 841,982 | 817,998 | 2.9% | | Operating income | 7,926 | 16,235 | (51.2%) | 27,116 | 36,147 | (25.0%) | | Net income | $ 9,093 | $ 13,033 | (30.2%) | $ 25,496 | $ 29,202 | (12.7%) | | Diluted earnings per share | $ 0.35 | $ 0.47 | (25.5%) | $ 0.94 | $ 1.06 | (11.4%) | [Segment Freight Revenues & Truckload Operating Statistics](index=11&type=section&id=Segment%20Freight%20Revenues%20%26%20Truckload%20Operating%20Statistics) This section details segment freight revenues and truckload operating statistics, showing mixed performance across segments and declining utilization Segment Freight Revenues (Q3 & YTD Sep 30, 2025 vs 2024) | ($ in thousands) | Q3 2025 | Q3 2024 | % Change | YTD 2025 | YTD 2024 | % Change | | :-------------------------- | :------ | :------ | :------- | :------- | :------- | :------- | | Expedited - Truckload | $ 80,184 | $ 87,363 | (8.2%) | $ 243,662 | $ 262,881 | (7.3%) | | Dedicated - Truckload | 91,581 | 82,676 | 10.8% | 263,827 | 237,124 | 11.3% | | Combined Truckload | 171,765 | 170,039 | 1.0% | 507,489 | 500,005 | 1.5% | | Managed Freight | 72,220 | 63,385 | 13.9% | 206,620 | 186,668 | 10.7% | | Warehousing | 24,802 | 25,175 | (1.5%) | 74,429 | 76,123 | (2.2%) | | Consolidated Freight Revenue | $ 268,840 | $ 258,599 | 4.0% | $ 788,591 | $ 762,796 | 3.4% | Truckload Operating Statistics (Q3 & YTD Sep 30, 2025 vs 2024) | Metric | Q3 2025 | Q3 2024 | % Change | YTD 2025 | YTD 2024 | % Change | | :-------------------------------- | :------ | :------ | :------- | :------- | :------- | :------- | | Average freight revenue per loaded mile | $ 2.99 | $ 2.80 | 7.2% | $ 2.98 | $ 2.74 | 9.2% | | Average freight revenue per total mile | $ 2.53 | $ 2.41 | 5.0% | $ 2.53 | $ 2.38 | 6.3% | | Average freight revenue per tractor per week | $ 5,445 | $ 5,637 | (3.4%) | $ 5,469 | $ 5,672 | (3.6%) | | Average miles per tractor per period | 28,306 | 30,733 | (7.9%) | 84,456 | 93,196 | (9.4%) | | Weighted avg. tractors for period | 2,400 | 2,295 | 4.6% | 2,379 | 2,252 | 5.6% | | Tractors at end of period | 1,487 | 2,306 | (35.5%) | 1,487 | 2,306 | (35.5%) | | Trailers at end of period | 6,851 | 6,484 | 5.7% | 6,851 | 6,484 | 5.7% | [Selected Balance Sheet Data](index=12&type=section&id=Selected%20Balance%20Data) As of September 30, 2025, total assets increased, while total stockholders' equity decreased, and net indebtedness and its ratio to capitalization both rose significantly Selected Balance Sheet Data (Sep 30, 2025 vs Dec 31, 2024) | ($ in thousands, except per share data) | 9/30/2025 | 12/31/2024 | | :------------------------------------ | :-------- | :--------- | | Total assets | $ 1,025,608 | $ 997,768 | | Total stockholders' equity | $ 423,716 | $ 438,340 | | Total indebtedness, comprised of total debt and finance leases, net of cash | $ 268,336 | $ 219,620 | | Net Indebtedness to Capitalization Ratio | 38.8% | 33.4% | | Leverage Ratio(1) | 2.14 | 1.65 | | Tangible book value per end-of-quarter basic share | $ 10.03 | $ 10.17 | [Non-GAAP Reconciliation (Unaudited)](index=12&type=section&id=Non-GAAP%20Reconciliation%20%28Unaudited%29) This section provides unaudited reconciliations of GAAP to non-GAAP financial measures for consolidated and segment operating results, detailing specific adjustments [Adjusted Operating Income and Adjusted Operating Ratio (Consolidated)](index=12&type=section&id=Adjusted%20Operating%20Income%20and%20Adjusted%20Operating%20Ratio%20%28Consolidated%29) This reconciliation details adjustments to GAAP operating income and ratio, primarily for non-cash amortization, contingent consideration, and various one-time expenses Consolidated Adjusted Operating Income and Ratio (Q3 & YTD Sep 30, 2025 vs 2024) | (Dollars in thousands) | Q3 2025 | Q3 2024 | basis points Change | YTD 2025 | YTD 2024 | basis points Change | | :------------------------------------ | :------ | :------ | :--------- | :------- | :------- | :--------- | | GAAP Operating income | $ 7,926 | $ 16,235 | | $ 27,116 | $ 36,147 | | | GAAP Operating ratio | 97.3% | 94.4% | 290 | 96.9% | 95.8% | 110 | | Adjusted operating income | $ 14,977 | $ 19,327 | | $ 40,853 | $ 52,797 | | | Adjusted operating ratio | 94.4% | 92.5% | 190 | 94.8% | 93.1% | 170 | | Adjustments (Q3 2025): | | | | | | | | Amortization of intangibles | 2,653 | 2,372 | | 7,770 | 7,116 | | | Contingent consideration liability adjustment | 710 | 720 | | 2,130 | 9,534 | | | Employee separation costs | 1,375 | - | | 1,375 | - | | | Lease abandonment and customer exit costs | 429 | - | | 429 | - | | | Abandonment of long-lived software | 1,884 | - | | 1,884 | - | | [Adjusted Net Income and Adjusted EPS (Consolidated)](index=13&type=section&id=Adjusted%20Net%20Income%20and%20Adjusted%20EPS%20%28Consolidated%29) This reconciliation provides a detailed breakdown of tax-effected adjustments to GAAP net income and diluted EPS, including amortization, litigation settlement, and various expenses Consolidated Adjusted Net Income and EPS (Q3 & YTD Sep 30, 2025 vs 2024) | (Dollars in thousands) | Q3 2025 | Q3 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | GAAP Net income | $ 9,093 | $ 13,033 | $ 25,496 | $ 29,202 | | Non-GAAP Adjusted net income | $ 11,517 | $ 15,224 | $ 32,927 | $ 41,297 | | GAAP Diluted EPS | $ 0.35 | $ 0.47 | $ 0.94 | $ 1.06 | | Non-GAAP Adjusted EPS | $ 0.44 | $ 0.54 | $ 1.22 | $ 1.49 | | Adjustments (Q3 2025): | | | | | | Amortization of intangibles | 2,653 | 2,372 | 7,770 | 7,116 | | Discontinued operations reversal of loss contingency | (3,773) | (200) | (3,773) | (600) | | Contingent consideration liability adjustment | 710 | 720 | 2,130 | 9,534 | | Employee separation costs | 1,375 | - | 1,375 | - | | Lease abandonment and customer exit costs | 429 | - | 429 | - | | Abandonment of long-lived software | 1,884 | - | 1,884 | - | [Adjusted Operating Income and Adjusted Operating Ratio (Segment)](index=14&type=section&id=Adjusted%20Operating%20Income%20and%20Adjusted%20Operating%20Ratio%20%28Segment%29) This section provides segment-level reconciliation of GAAP operating income and operating ratio to adjusted figures for Expedited, Dedicated, Combined Truckload, Managed Freight, and Warehousing segments Segment Adjusted Operating Income and Ratio (Q3 2025 vs 2024) | (Dollars in thousands) | Expedited Q3 2025 | Dedicated Q3 2025 | Combined Truckload Q3 2025 | Managed Freight Q3 2025 | Warehousing Q3 2025 | | :------------------------------------ | :---------------- | :---------------- | :------------------------- | :---------------------- | :------------------ | | GAAP Segment operating income | $ 5,079 | $ 4,099 | $ 9,178 | $ 2,960 | $ 2,498 | | GAAP Segment operating ratio | 94.6% | 96.1% | 95.4% | 95.9% | 90.0% | | Adjusted segment operating income | $ 5,140 | $ 4,837 | $ 9,977 | $ 3,035 | $ 1,963 | | Adjusted segment operating ratio | 93.6% | 94.7% | 94.2% | 95.8% | 92.1% | Segment Adjusted Operating Income and Ratio (YTD Sep 30, 2025 vs 2024) | (Dollars in thousands) | Expedited YTD 2025 | Dedicated YTD 2025 | Combined Truckload YTD 2025 | Managed Freight YTD 2025 | Warehousing YTD 2025 | | :------------------------------------ | :----------------- | :----------------- | :-------------------------- | :----------------------- | :------------------- | | GAAP Segment operating income | $ 18,135 | $ 12,272 | $ 30,407 | $ 10,962 | $ 6,258 | | GAAP Segment operating ratio | 93.7% | 95.9% | 94.8% | 94.7% | 91.6% | | Adjusted segment operating income | $ 14,870 | $ 10,905 | $ 25,775 | $ 10,555 | $ 4,521 | | Adjusted segment operating ratio | 93.9% | 95.9% | 94.9% | 94.9% | 93.9% |