Covenant Logistics Group announced financial and operating results for the second quarter ended June 30, 2025, including an all-time record for freight hauled.
Chairman and Chief Executive Officer David R. Parker said, “We are pleased to report second quarter earnings of $0.36 per diluted share or $0.45 per diluted share on a non-GAAP adjusted basis.
“The highlight of our second quarter’s results was year-over-year freight revenue growth of 7.8 percent to $276.5 million, an all-time high for any quarter in the history of our enterprise. This milestone was achieved despite an operating environment that remained competitive throughout the quarter across many Expedited, Managed Freight, and non-specialized equipment Dedicated accounts. As the general freight market improves, we believe we are well positioned to capitalize on opportunities that improve margin and return on capital. We are also pleased to announce that during the quarter we were successful in repurchasing approximately 1.6 million shares of outstanding common stock at an average price of approximately $22.69 per share, amounting to $35.2 million of our $50.0 million stock repurchase program.
“Our 49 percent equity method investment with Transport Enterprise Leasing (“TEL”) contributed pre-tax net income of $4.3 million, or $0.12 per share, roughly in line with the prior year quarter’s results of $4.1 million.”
Combined Truckload Revenue
Paul Bunn, the Company’s President commented on truckload operations, “For the quarter, total revenue in our truckload operations decreased 0.9%, to $199.6 million. The decrease related primarily to $4.5 million less fuel surcharge revenue, which varies with the cost of fuel. Freight revenue grew by $2.6 million, or 1.5%, as a result of a 4.9% increase in average tractor fleet, partially offset by lower equipment utilization.”
Expedited Truckload Revenue
Mr. Bunn added, “Freight revenue in our Expedited segment decreased $5.7 million, or 6.4%. Average total tractors decreased by 50 units, or 5.5%, to 860, compared to 910 in the prior year quarter. Average freight revenue per tractor per week decreased 1.0% as a result of a 3.5% decrease in utilization, partially offset by a 2.4% increase in freight revenue per total mile.”
Dedicated Truckload Revenue
“For the quarter, freight revenue in our Dedicated segment increased $8.3 million, or 10.2%. Average total tractors increased by 162 units, or 11.7%, to 1,546, compared to 1,384 in the prior year’s quarter. Average freight revenue per tractor per week decreased 1.4% as a result of a 7.7% decrease in utilization, partially offset by a 7.0% increase in freight revenue per total mile.”
Combined Truckload Operating Expenses
Mr. Bunn continued, “Rising operating costs in our combined truckload segment negatively impacted operating margins compared to the prior year quarter. Higher costs primarily include salaries, wages and related expenses and operations and maintenance costs necessary to seat and operate our equipment. Most expense increases were expected, as they relate to growth in high-service and low-mileage operations. The expense increases were partially offset by a 5.9% increase in revenue per total mile.
“Salaries, wages and related expenses increased year-over-year by 7 cents, or approximately 6%, 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 and maintenance professionals to operate and maintain specialized equipment on loads that typically move heavy weights on non-paved roads with shorter lengths of haul, resulting in higher costs on a per total mile basis.
“Operations and maintenance expenses increased 2 cents per total mile, or approximately 10%, compared to the prior year quarter primarily due to increased maintenance on Dedicated equipment in niche service areas with high stress demands on equipment and short length of haul.
“Fuel expense for the current quarter was comparable to the prior year on a cents per total mile basis. However, when the cost of fuel is netted with fuel surcharge revenue, the impact to operating income was unfavorable by 5 cents per total mile. As fuel quickly fluctuates in price, the impact to our fuel surcharge recovery model may be delayed, resulting in temporary favorable or unfavorable margins. In this case, compared to the prior year, quickly rising fuel prices at the end of the quarter created an unfavorable impact to our operating income.
“Safety continues to be our priority as we consistently strive to raise our own standards by hiring highly qualified drivers, implementing proactive training sessions, and investing in and implementing the latest safety equipment and technology. For the past several years, our safety statistics have been at or near the best in our history. Insurance and claims expense for the current quarter was comparable to the prior year on a cents per total mile basis. Given the self-insured portions and limits of our insurance program, and the risk of extremely large awards and settlements in our industry (so-called “nuclear verdicts/settlements”), the amount of expense recognized from period to period can fluctuate materially.