On the Q&A portion of the call, CEO David Parker said the company’s average rate increase across the first three weeks of January was “around that 3.5% number,” while cautioning it was too early to declare a full trend. He also said January bids were up 33% versus the fourth quarter, attributing the activity to customers trying to get ahead of capacity constraints and to Covenant receiving bids from new customers. Parker added that cargo theft has “ticked up a little bit” in recent months and said some cust ...

Core Insights - Covenant Logistics Group reported a net loss in the fourth quarter but expressed confidence in improving freight fundamentals, anticipating stronger performance in the second half of 2026 [1] - The company noted that spot rates increased significantly in the fourth quarter, with revenue trends improving across all business units in early January [2] Financial Performance - Adjusted fourth-quarter results met expectations despite challenges such as a prolonged U.S. government shutdown, high insurance claims, capacity costs, and startup expenses in warehousing [1] - The company has secured low- to mid-single-digit contractual rate increases for its expedited fleet starting in the first quarter, with further increases anticipated in the second quarter [3] Industry Trends - The freight market is evolving towards equilibrium between shippers and carriers, with indications that the market may already be at equilibrium [2] - Industry-wide driver and truck capacity may continue to decline due to regulatory pressures, cost inflation, and insurance risks, potentially tightening capacity as 2026 progresses [4] Strategic Initiatives - Covenant is intentionally shrinking and reshaping its asset-based fleet to enhance returns, expecting to operate a smaller fleet by the end of 2026, with planned net capital expenditures of $40 million to $50 million [5] - The company aims to grow higher-service, specialized dedicated operations while moving away from commoditized freight, achieving an adjusted operating ratio of 92.2 in the dedicated segment during the fourth quarter [6] Growth Prospects - The dedicated segment showed consistent improvement throughout the year, with a fleet growth of approximately 6.3% as the company continues to win new business and focus on high-service niches [7]

Financial Data and Key Metrics Changes - Consolidated freight revenue increased by 7.8% or approximately $19.5 million to $270.6 million [6] - Consolidated adjusted operating income shrank by 39.4% to $10.9 million due to margin compression in several segments [7] - Net indebtedness increased by $76.9 million to $296.6 million, yielding an adjusted leverage ratio of approximately 2.3 times and a debt-to-capital ratio of 42.3% [7] - Average age of tractors increased to 24 months from 20 months year-over-year [8] - Adjusted return on average invested capital was 5.6% compared to 8.1% in the prior year [8] Business Segment Data and Key Metrics Changes - The expedited segment reported an adjusted operating ratio of 97.2%, which did not meet expectations due to external challenges including a U.S. government shutdown [8] - Dedicated segment achieved a 92.2 adjusted operating ratio, the best for any quarter during the year, with a fleet growth of 90 average tractors or approximately 6.3% [9] - Managed freight saw significant revenue improvement due to the Star Logistics Solutions acquisition, but margins were compressed due to rising costs [10] - Warehousing segment experienced a 4.6% increase in freight revenue but a decline in adjusted operating income due to startup costs and operational inefficiencies [11] Market Data and Key Metrics Changes - The freight market is evolving towards equilibrium, with spot rates rising meaningfully and increased bid activity from shippers [3] - Bids in January were up 33% compared to the fourth quarter, indicating heightened interest from shippers [23] - Concerns about capacity and increased cargo theft have influenced shippers' demand for high-value programs [24] Company Strategy and Development Direction - The company aims to reduce balance sheet leverage and improve return on capital through fleet optimization and targeted rate increases [5] - Focus on growing high-service niches within the dedicated segment while reducing exposure to commoditized freight [9] - The acquisition of Star Logistics Solutions is expected to be accretive to earnings in the first half of 2026, diversifying the business mix [6] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about improving freight fundamentals and the ability to capture operating leverage in 2026 [12] - The first quarter is expected to be impacted by seasonality and extreme weather, but improvements are anticipated later in the year [12] - Management highlighted the importance of rate increases to improve margins and expressed optimism about ongoing conversations with customers [16][54] Other Important Information - The company has deferred some trades and moved a group of assets to held-for-sale status to improve operations and balance sheet [4] - The strategic focus for 2026 includes integrating the Star acquisition and preparing for new business opportunities [34] Q&A Session Summary Question: What are the expectations for price increases in the expedited segment? - Management indicated that the average price increase is around 3.5% for the first three weeks of January, with optimism about ongoing conversations with customers [15][16] Question: How is the warehousing segment performing? - Revenue is up, but profit is down due to startup costs; management expects improvement in the coming quarters [25][30] Question: What is the outlook for managed freight revenue? - Revenue is expected to be flat to up on a sequential basis, with growth anticipated in the third and fourth quarters [64] Question: How will the company respond to potential demand recovery in 2026? - The strategy will focus on reclaiming profits lost over the past four years and ensuring rates are acceptable before increasing capacity [95][96] Question: What percentage of the customer book renews in each quarter? - Approximately 40% of customers renew in the second quarter, with 60% expected to take multiple rate increases [99][100]

Covenant Logistics Group (NYSE:CVLG) Q4 2025 Earnings call January 30, 2026 10:00 AM ET Company ParticipantsDavid R. Parker - CEODustin Koehl - COOJoey Hogan - EVPPaul Bunn - PresidentTripp Grant - CFOConference Call ParticipantsDan Moore - AnalystJason Seidl - AnalystJeff Kauffman - AnalystReed Saiya - AnalystScott Group - AnalystOperatorWelcome to today's Covenant Logistics Group Q4 2025 Earnings Release and Investor Conference Call. Our host for today's call is Tripp Grant. At this time, all participants ...

Financial Data and Key Metrics Changes - Consolidated freight revenue increased by 7.8% or approximately $19.5 million to $270.6 million [6] - Consolidated adjusted operating income decreased by 39.4% to $10.9 million due to margin compression in several segments [7] - Net indebtedness increased by $76.9 million to $296.6 million, resulting in an adjusted leverage ratio of approximately 2.3 times and a debt-to-capital ratio of 42.3% [8] - Average age of tractors increased to 24 months from 20 months year-over-year [9] - Adjusted return on average invested capital was 5.6%, down from 8.1% in the prior year [9] Business Line Data and Key Metrics Changes - The expedited segment reported an adjusted operating ratio of 97.2%, which did not meet expectations due to external challenges including a U.S. government shutdown [9] - Dedicated segment achieved a 92.2 adjusted operating ratio, the best for any quarter during the year, with a fleet growth of 90 average tractors or approximately 6.3% [10] - Managed freight saw significant revenue improvement due to the Star Logistics Solutions acquisition, but margins were compressed due to rising costs [11] - Warehousing segment experienced a 4.6% increase in freight revenue, but adjusted operating income declined due to startup costs and operational inefficiencies [12] Market Data and Key Metrics Changes - The freight market is evolving towards equilibrium, with spot rates rising meaningfully and increased bid activity from shippers [3] - Bids in January were up 33% compared to the fourth quarter, indicating heightened interest from shippers [24] - Concerns about capacity and cargo theft have increased among shippers, influencing their bidding strategies [26] Company Strategy and Development Direction - The company aims to reduce balance sheet leverage and improve return on capital through fleet optimization and targeted rate increases [5] - Focus will be on growing high-service niches within the dedicated segment while reducing exposure to commoditized freight [10] - The acquisition of Star Logistics Solutions is expected to be accretive to earnings in the first half of 2026, diversifying the business mix [6] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about improving freight fundamentals and expects to capture operating leverage in 2026 [13] - The first quarter of 2026 may be impacted by seasonality and extreme weather, but improvements are anticipated later in the year [13] - Management believes that the trucking industry is beginning to recover, with increased bids and new business at higher rates [77] Other Important Information - The company has deferred some trades and moved a group of assets to held-for-sale status to improve operations and balance sheet [4] - The company plans to integrate the Star acquisition and focus on capital allocation efficiency in 2026 [35] Q&A Session Summary Question: What are the expectations for price increases in the expedited segment? - Management indicated that the average price increase is around 3.5% for the first three weeks of January, with positive conversations with customers [16][17] Question: How is the warehousing segment performing? - Management expects improvements in the warehousing segment, with Q1 anticipated to be better than Q4 due to the onboarding of new customers [31] Question: What is the outlook for managed freight revenue? - Managed freight revenue is expected to be flat to up sequentially, with incremental growth anticipated in the third and fourth quarters [62] Question: How will the company respond to potential demand recovery in 2026? - The company plans to reclaim profits lost over the past four years and focus on rate increases rather than adding excessive capacity [96] Question: What percentage of the customer book renews in each quarter? - Approximately 40% of customers renew in the second quarter, with 60% expected to take multiple rate increases [99][100]

Covenant Logistics Group reported a fourth-quarter net loss as impairment charges and higher insurance costs weighed on results, even as core operating performance came in roughly in line with management expectations. The carrier posted adjusted earnings of $0.31 per share, compared to $0.49 in Q4 2024. Total revenue rose 6.5% year-over-year to $295.37 million. Chattanooga-based Covenant Logistics Group (NYSE: CVLG) provides truckload, expedited, dedicated, and logistics services across the U.S. “Our ad ...

Financial Performance - Covenant Logistics Group reported a loss of $0.73 per diluted share for Q4 2025, with adjusted income of $0.31 per diluted share excluding impairment charges [3]. - Total revenue for Q4 2025 was $295.4 million, a 6.5% increase from $277.3 million in Q4 2024 [7]. - Freight revenue, excluding fuel surcharge, was $270.6 million, up from $251.1 million in the same quarter last year [7]. - The operating loss for Q4 2025 was $24.2 million, compared to an operating income of $8.6 million in Q4 2024 [7]. - The company reported a net loss of $18,257,000 in Q4 2025, compared to a net income of $6,720,000 in Q4 2024 [31]. - Total revenue for the three months ended December 31, 2025, was $188,943,000, an increase from $190,418,000 in the same period of 2024 [40]. - The adjusted net income for the year ended December 31, 2025, was $41,252,000, down from $54,977,000 in 2024, reflecting a decrease of approximately 25% [37]. - The diluted loss per share (EPS) for Q4 2025 was $(4), compared to an EPS of $0.24 in Q4 2024 [37]. Revenue Segments - Managed Freight segment revenue increased by 28.8% year-over-year to $80.2 million, driven by the integration of newly acquired assets [14]. - The Dedicated segment saw a 12.6% increase in freight revenue to $102.3 million, supported by a 6.3% increase in average total tractors [10]. - For the quarter, Warehousing's freight revenue increased by $1.1 million to $25.5 million, while segment operating income declined by $1.4 million to $1.4 million compared to Q4 2024 [17]. - Total revenue for the combined segments reached $776.474 million, with a breakdown of $373.294 million for GAAP and $403.180 million for non-GAAP [42]. Operating Efficiency - The average freight revenue per tractor per week in the truckload segment decreased by 7.8% to $5,327 due to lower utilization and revenue per total mile [9]. - Operating expenses on a non-GAAP adjusted basis increased by approximately 6% year-over-year, reflecting inflationary pressures and changes in business mix [11]. - The segment operating income for the combined truckload and freight segments was $10,705,000 for Q4 2025, compared to $19,121,000 in Q4 2024, indicating a decline of approximately 44% [40]. - The adjusted segment operating ratio improved to 94.4% in Q4 2025 from 95.2% in Q4 2024, showing enhanced operational efficiency [40]. - The company aims to improve operational efficiency, targeting a reduction in the operating ratio to below 94% in the next fiscal year [42]. Debt and Capital Expenditures - Total indebtedness increased by $76.7 million to approximately $296.3 million as of December 31, 2025, with net indebtedness to total capitalization rising to 42.3% from 33.4% year-over-year [18]. - The increase in net indebtedness was primarily due to $46.3 million in acquisition-related payments and $36.2 million in stock repurchases [19]. - The company anticipates net capital equipment expenditures of $40 million to $50 million in 2026, a significant reduction compared to 2025 [22]. - The leverage ratio increased to 2.89 in 2025 from 1.65 in 2024, indicating higher indebtedness relative to earnings [33]. Strategic Initiatives - The company acquired a truckload brokerage business with approximately $130 million in revenue, enhancing its logistics platform and customer base [6]. - The company plans to exit unprofitable business relationships and focus on high-value freight to improve free cash flow and balance sheet leverage in 2026 [5]. - The company aims to operate more efficiently and refine capital allocation while looking for new opportunities in 2026 [24]. - The company plans to focus on market expansion and new product development in the upcoming fiscal year [42]. Impairments and Adjustments - The fourth quarter included approximately $19.4 million in non-cash impairment charges related to goodwill and tractors pulled from service [22]. - Total adjustments for the fourth quarter amounted to $35.1 million, including $10.7 million for impairment of goodwill and $11.6 million for large claims settlement [23]. - The company incurred total adjustments before taxes amounting to $35,061,000 for Q4 2025, compared to $9,130,000 in Q4 2024 [37]. - The amortization of intangibles for the year ended December 31, 2025, was $10,770,000, up from $9,488,000 in 2024, indicating increased intangible asset amortization [37]. Operational Metrics - The average age of tractors increased to 24 months, with expectations for it to range from 24 to 26 months going forward [21]. - Average miles per tractor per period decreased to 28,795 in Q4 2025, down 6.9% from 26,812 in Q4 2024 [32]. - Average freight revenue per loaded mile decreased to $2.91 in Q4 2025, down 8.2% from $3.15 in Q4 2024 [32]. - Employee separation costs amounted to $1.302 million, indicating restructuring efforts within the company [42]. - The company incurred transaction costs of $149, which may relate to strategic acquisitions or partnerships [42]. - The abandonment of long-lived software resulted in a cost of $1.884 million, reflecting ongoing adjustments in technology investments [42].

CHATTANOOGA, Tenn., Jan. 29, 2026 (GLOBE NEWSWIRE) -- Covenant Logistics Group, Inc. (NYSE: CVLG) (“Covenant” or the “Company”) announced today financial and operating results for the fourth quarter ended December 31, 2025. The Company’s conference call to discuss the quarter will be held at 10:00 A.M. Eastern Time on Friday, January 30, 2026. Chairman and Chief Executive Officer, David R. Parker, commented: “Our fourth quarter resulted in a loss of $0.73 per diluted share, driven by impairment charges to g ...

Group 1 - Robert F. Abbott has been managing family investments since 1995 and incorporated options trading in 2010, focusing on covered calls and collars with long stocks [1] - Abbott is a freelance writer with a project aimed at providing information for new and intermediate-level mutual fund investors [1] - He holds a Bachelor of Arts and a Master of Business Administration (MBA) degree [1]

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.