Covenant Logistics Group, Inc. announced financial and operating results for the second quarter ended June 30, 2020, including a net loss of $22.3 million.
The results reflect the classification of the company’s former factoring segment, Transport Financial Solutions (“TFS”), the assets of which were sold on July 8, 2020, as discontinued operations.
Notable results for the quarter included the following:
- We incurred approximately $29.3 million of net expenses related to reducing our terminal network and operational tractor and trailer fleet, changing our business mix, and reducing our non-revenue generating fixed costs.
- Total revenue of $191.7 million, a decrease of 11.7 percent compared with the second quarter of 2019.
- Freight revenue of $179.6 million (excludes revenue from fuel surcharges), a decrease of 6.8 percent compared with the second quarter of 2019.
- Operating loss from continuing operations of $29 million and an operating ratio of 115.1 percent.
Adjusted operating income of $1.0 million and an adjusted operating ratio of 99.5 percent. This compares with operating income of $7.0 million and an operating ratio of 96.8 percent and adjusted operating income of $7.8 million and an adjusted operating ratio of 96 percent in the second quarter of 2019.
- Net loss of $22.3 million, or loss per share of $1.31. This compares with net income of $6.1 million, or earnings per diluted share of $0.33 in the second quarter of 2019. Adjusted net income of $0.5 million, or adjusted earnings per share of $0.03. This compares with adjusted net income of $6.6 million, or adjusted earnings per diluted share of $0.35 in the second quarter of 2019.
- The second quarter consolidated net loss and adjusted net income included a $0.4 million, or $0.02 per share, pass-through earnings from the company’s 49 percent equity investment in Transport Enterprise Leasing (“TEL”). This compares to a $1.8 million, or $0.10 per diluted share, pass-through income from the Company’s investment in TEL included in consolidated net income and adjusted net income in the second quarter of 2019.
Chairman and Chief Executive Officer David R. Parker commented, "In the second quarter, we made significant progress in our efforts to restructure our business units, terminal network, and management team to focus our talent, time and capital on areas where we believe we have the ability to grow and produce a consistent, acceptable margin. The changes are extensive, and we expect them to be ongoing through the end of the year.
"In terms of second quarter results, the changes in our business mix, the restructuring gains and charges, and the impact of Covid-19-related business restrictions, particularly by automotive, airline and certain retail customers, make comparisons difficult. Moreover, certain strategies we implemented reduced our revenue during the quarter while cost savings are expected to be realized on an ongoing basis. Overall, I am pleased with our current position, which features strong liquidity, a de-leveraged balance sheet, lower overhead costs, increased accountability and speed of decision making, and re-aligned business units.
“In terms of the freight market, the second quarter was very weak during April and improved sequentially each quarter. The automotive and automotive supplier customers in our dedicated truckload operations returned to normalized levels in July. On a seasonally adjusted basis, July was better than normal, and the freight environment has continued to improve in August.
“During the second quarter of 2020, we executed a number of decisions and transactions consistent with our strategic plan, including the sale or exit of certain real estate, downsizing unprofitable operations, and reallocating fleet assets. The net financial impact of these actions negatively impacted our second quarter results."