enant Logistics (US:CVLG)2026-01-29 21:59Financial 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].