CHATTANOOGA, Tenn., Jan. 23, 2025 (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, 2024. The Company's conference call to discuss the quarter will be held at 10:00 A.M. Eastern Time on Friday, January 24, 2025. All references made to share or per share amounts in this press release have been retroactively adjusted to reflect the effects of our recent 2-for-1 stock split.
Chairman and Chief Executive Officer, David R. Parker, commented: "We are pleased to report fourth quarter earnings of $0.24 per diluted share and non-GAAP adjusted earnings of $0.49 per diluted share, on 27.9 million weighted average diluted shares outstanding after giving effect to our recent 2-for-1 stock split. These results mark the end of another successful year despite a challenging general freight environment, and I could not be happier with how our team has planned and adjusted throughout the year.
"The fourth quarter once again highlighted the impact of our diversified business model. This quarter, our Dedicated segment's adjusted profitability fell short of our expectations due to greater-than-anticipated temporary customer shutdowns and volume reductions, as well as higher costs related to guaranteed driver pay and a large current period casualty claim expense. However, our asset-light segments, including Managed Freight and Warehousing, outperformed expectations by providing overflow capacity for our asset-based segments, executing on peak opportunities, and focusing on cost control. Additionally, our Expedited segment capitalized on a better peak season and improved network balance to deliver solid results on a smaller fleet.
"Our 49% equity method investment with Transport Enterprise Leasing (TEL) contributed pre-tax net income of $3.0 million, or $0.08 per share, compared to $4.7 million, or $0.13 per share, in the same quarter of 2023. The decrease in pre-tax net income for TEL was primarily due to softening of the equipment market, which suppressed gains on the sale of used equipment, and increased interest expense associated with higher interest rates on equipment-related debt.”
A summary of our fourth quarter financial performance:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| ($000s, except per share information) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Total Revenue | $ | 277,331 | $ | 273,985 | $ | 1,131,476 | $ | 1,103,573 | |||||||
| Freight Revenue, Excludes Fuel Surcharge | $ | 251,145 | $ | 240,006 | $ | 1,013,941 | $ | 970,509 | |||||||
| Operating Income | $ | 8,613 | $ | 14,267 | $ | 44,760 | $ | 58,823 | |||||||
| Adjusted Operating Income(1) | $ | 17,943 | $ | 17,132 | $ | 70,740 | $ | 63,846 | |||||||
| Operating Ratio | 96.9 | % | 94.8 | % | 96.0 | % | 94.7 | % | |||||||
| Adjusted Operating Ratio(1) | 92.9 | % | 92.9 | % | 93.0 | % | 93.4 | % | |||||||
| Net Income | $ | 6,720 | $ | 12,795 | $ | 35,921 | $ | 55,229 | |||||||
| Adjusted Net Income(1) | $ | 13,687 | $ | 14,791 | $ | 54,977 | $ | 57,508 | |||||||
| Earnings per Diluted Share | $ | 0.24 | $ | 0.47 | $ | 1.30 | $ | 2.00 | |||||||
| Adjusted Earnings per Diluted Share(1) | $ | 0.49 | $ | 0.55 | $ | 1.98 | $ | 2.08 | |||||||
| (1) Represents non-GAAP measures. | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| ($000s, except statistical information) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Combined Truckload | |||||||||||||||
| Total Revenue | $ | 190,418 | $ | 184,039 | $ | 780,875 | $ | 744,107 | |||||||
| Freight Revenue, excludes Fuel Surcharge | $ | 164,479 | $ | 150,367 | $ | 664,484 | $ | 612,244 | |||||||
| Operating Income | $ | 2,379 | $ | 10,593 | $ | 24,580 | $ | 46,573 | |||||||
| Adj. Operating Income(1) | $ | 10,530 | $ | 12,935 | $ | 47,811 | $ | 49,945 | |||||||
| Operating Ratio | 98.8 | % | 94.2 | % | 96.9 | % | 93.7 | % | |||||||
| Adj. Operating Ratio(1) | 93.6 | % | 91.4 | % | 92.8 | % | 91.8 | % | |||||||
| Average Freight Revenue per Tractor per Week | $ | 5,444 | $ | 5,344 | $ | 5,613 | $ | 5,549 | |||||||
| Average Freight Revenue per Total Mile | $ | 2.48 | $ | 2.31 | $ | 2.41 | $ | 2.34 | |||||||
| Average Miles per Tractor per Period | 28,795 | 30,410 | 121,935 | 123,896 | |||||||||||
| Weighted Average Tractors for Period | 2,299 | 2,141 | 2,264 | 2,116 | |||||||||||
| Expedited | |||||||||||||||
| Total Revenue | $ | 98,666 | $ | 105,432 | $ | 416,461 | $ | 423,820 | |||||||
| Freight Revenue, excludes Fuel Surcharge | $ | 83,816 | $ | 84,463 | $ | 346,697 | $ | 343,779 | |||||||
| Operating Income | $ | 6,143 | $ | 6,247 | $ | 22,162 | $ | 28,861 | |||||||
| Adj. Operating Income(1) | $ | 6,676 | $ | 7,272 | $ | 24,295 | $ | 31,156 | |||||||
| Operating Ratio | 93.8 | % | 94.1 | % | 94.7 | % | 93.2 | % | |||||||
| Adj. Operating Ratio(1) | 92.0 | % | 91.4 | % | 93.0 | % | 90.9 | % | |||||||
| Average Freight Revenue per Tractor per Week | $ | 7,291 | $ | 7,024 | $ | 7,416 | $ | 7,501 | |||||||
| Average Freight Revenue per Total Mile | $ | 2.13 | $ | 2.09 | $ | 2.09 | $ | 2.13 | |||||||
| Average Miles per Tractor per Period | 45,036 | 44,081 | 185,340 | 183,717 | |||||||||||
| Weighted Average Tractors for Period | 875 | 915 | 894 | 879 | |||||||||||
| Dedicated | |||||||||||||||
| Total Revenue | $ | 91,752 | $ | 78,607 | $ | 364,414 | $ | 320,287 | |||||||
| Freight Revenue, excludes Fuel Surcharge | $ | 80,663 | $ | 65,904 | $ | 317,787 | $ | 268,465 | |||||||
| Operating Income (Loss) | $ | (3,764 | ) | $ | 4,346 | $ | 2,418 | $ | 17,712 | ||||||
| Adj. Operating Income(1) | $ | 3,854 | $ | 5,663 | $ | 23,516 | $ | 18,789 | |||||||
| Operating Ratio | 104.1 | % | 94.5 | % | 99.3 | % | 94.5 | % | |||||||
| Adj. Operating Ratio(1) | 95.2 | % | 91.4 | % | 92.6 | % | 93.0 | % | |||||||
| Average Freight Revenue per Tractor per Week | $ | 4,310 | $ | 4,090 | $ | 4,436 | $ | 4,162 | |||||||
| Average Freight Revenue per Total Mile | $ | 3.01 | $ | 2.66 | $ | 2.88 | $ | 2.67 | |||||||
| Average Miles per Tractor per Period | 18,818 | 20,207 | 80,556 | 81,387 | |||||||||||
| Weighted Average Tractors for Period | 1,424 | 1,226 | 1,370 | 1,237 | |||||||||||
| (1) Represents non-GAAP measures. | |||||||||||||||
Paul Bunn, the Company's President commented on truckload operations, "For the quarter, total revenue in our truckload operations increased 3.5%, to $190.4 million, compared to 2023. The increase in total revenue consisted of $14.1 million more freight revenue, partially offset by $7.7 million less fuel surcharge revenue. The increase in freight revenue primarily related to operating 158 or 7.4% 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 $0.7 million, or 0.8%. Average total tractors decreased by 40 units to 875, compared to 915 in the prior year quarter. Average freight revenue per tractor per week increased 3.8% as a result of a 1.6% increase in freight revenue per total mile and a 2.2% increase in utilization.”
Dedicated Truckload Revenue
"For the quarter, freight revenue in our Dedicated segment increased $14.8 million, or 22.4%. Average total tractors increased by 198 units or 13.2% to 1,424, compared to 1,226 in the prior year quarter. Average freight revenue per tractor per week increased 5.4% as a result of a 13.2% increase in freight revenue per total mile partially offset by a 6.9% decrease in utilization.”
Combined Truckload Operating Expenses
Mr. Bunn continued, "Operating expenses in our combined truckload segments were a significant headwind for us in the quarter. Compared to the prior year, our truckload operating cost increased 18 cents, or 6.6%, on a per total mile basis. The drivers of the increase primarily include salaries and wages associated with driver pay, increased operations and maintenance costs to operate our equipment, increased insurance expense associated with current period auto liability claims, increased depreciation expense associated with higher prices of newer equipment, and the recognition of a $6.3 million expense associated with an earnout payment related to our 2023 acquisition of Lew Thompson & Son (which we have chosen to exclude from our non-GAAP adjusted results).
"Salaries, wages and related expenses increased year-over-year by 13 cents, or approximately 10%, on a per total mile basis. The increase was driven primarily from the year-over-year impact of significant growth in our dedicated protein supply chain business. 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.
"Operations and maintenance expenses increased 2 cents per total mile, or approximately 13%, compared to the prior year. The primary factors driving the growth relate to a combination of an increase in parts and service to repair equipment that experienced an unusually large amount of damage in the quarter.
"Insurance and claims expense increased by 2 cents, or approximately 11%, on a per total mile basis, compared to the prior year quarter as a result of a large current period claims incurred. Given our self-insurance limits, the amount of expense recognized from period to period can fluctuate.
"Fixed expenses related to revenue producing equipment, including leased and rented equipment, depreciation, and gain on sale increased slightly by 1 cent on a per total mile basis, compared to the prior year quarter. In the fourth quarter of 2024, we recognized a slight gain on sale of equipment of $0.1 million, compared to a gain of $0.2 million in the prior year quarter.”
Managed Freight Segment
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| ($000s) | 2024 | 2023 | 2024 | 2023 | |||||||||||
| Freight Revenue | $ | 62,271 | $ | 65,035 | $ | 248,939 | < | ||||||||