Covenant Reports Revenue, Earnings Decline for Q2
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Covenant Logistics Group Inc. reported a year-over-year decrease in revenue and earnings during the second quarter of 2023, the company reported July 26.
The Chattanooga, Tenn.-based truckload carrier posted net income of $12.3 million, or 91 cents a diluted share, for the three months ending June 30. That compared with $24.5 million, $1.56, during the same time the previous year. Total revenue decreased by 13.7% to $274 million from $317.4 million.
Covenant Logistics Group ranks No. 46 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 83 on the TT Top 100 list of the largest logistics companies.
“The freight market, consisting of a combination of freight rates and volumes, remained challenging throughout the second quarter,” CEO David Parker said. “While the 2023 results fall short of our 2022 results, we are pleased with the resiliency of our model in what we believe to be the trough of the freight cycle.”
Covenant Logistics announced the acquisition of dedicated contract carrier Lew Thompson & Son Trucking Inc. in its first-quarter earnings April 27.
“We are also pleased with the initial operating results of Lew Thompson & Son Trucking,” Parker said. “Lew Thompson & Son is a dedicated contract carrier specializing in poultry feed and live-haul transportation. Their results are consolidated within our dedicated operating segment.”
The combined truckload business reported revenue decreased 15.2% to $185.3 million from $218.4 million during the prior-year quarter. Operating Income decreased 48.2% to $9.06 million from $17.5 million. The decline in total freight revenue consisted of $13 million less freight revenue and $20.2 million less fuel surcharge revenue. The drop in freight revenue primarily related to the ongoing execution of a capital allocation program. The segment includes expedited and dedicated truckload operations.
• Expedited revenue decreased 14.4% to $104.1 million from $121.6 million. Operating income fell 60.2% to $5.82 million from $14.6 million.
• Dedicated revenue dropped 6.1% to $81.2 million from $96.8 million. Operating Income increased 12.6% to $3.24 million from $2.88 million.
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• Managed freight revenue slipped 21.1% to $63.3 million from $80.3 million during the same time last year. Operating income decreased 76.1% to $1.95 million from $8.63 million. The segment declines primarily were due to reduced volumes of high-margin overflow freight from both expedited and dedicated truckload operations.
• Warehousing revenue increased 37.2% to $25.2 million from $18.4 million. Operating income grew 3.4% to $780,000 from $754,000. The increase in revenue mostly was driven by the year-over-year impact of new customer business added during the current year.
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