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Covenant Logistics Q1 2025 Earnings Report
Covenant Logistics Group announced financial and operating results for the first quarter ended March 31, 2025.
Key Takeaways
Covenant Logistics Group reported a decrease in total revenue and adjusted earnings per diluted share for the first quarter of 2025, primarily due to sub-par equipment utilization caused by inclement weather and avian influenza outbreaks. Despite this, the company remains confident in its strategy, expecting modest rate increases in Expedited, higher margins in Managed Freight, and revenue growth in Dedicated, Managed Freight, and Warehousing divisions for the second quarter.
Total revenue decreased by 3.4% to $269.355 million compared to the prior year quarter.
Adjusted earnings per diluted share decreased to $0.32 from $0.42 in the prior year quarter.
Operating income increased to $7.627 million from $4.335 million in the prior year quarter.
The company completed a small tuck-in acquisition in the Dedicated division, expected to be immediately accretive to equipment utilization and earnings.
Covenant Logistics
Covenant Logistics
Covenant Logistics Revenue by Segment
Revenue by Segment
Expedited - Truckload Revenue
CapyFin.comDedicated - Truckload Revenue
CapyFin.comManaged Freight Revenue
CapyFin.comWarehousing Revenue
CapyFin.com Forward Guidance
Covenant Logistics Group anticipates an incrementally improving general freight market with better balanced capacity and demand. The company is focused on executing quickly, gaining operating leverage, capturing new dedicated contracts, and evaluating acquisition opportunities to grow profitably and generate meaningful returns.
Positive Outlook
- Modest rate increases secured in Expedited segment.
- Higher margins expected in Managed Freight segment.
- Revenue growth anticipated in Dedicated, Managed Freight, and Warehousing divisions.
- New $50 million stock repurchase program reaffirms confidence in the future.
- Expect margins to expand on existing Warehousing operations as start-up phase rolls off and rate negotiations are concluded.
Challenges Ahead
- Uncertainty around global trade policy may cause temporary disruption to improvement.
- Slow capacity exits could delay the path to a 2025 recovery of the freight economy.
- Tentative baseline expectations for net capital equipment expenditures are $55 million to $65 million, subject to change.
- Increased prices of new equipment and potentially lower values of used equipment could impact returns.
- Facility-related cost increases and start-up costs for new business in Warehousing have impacted operating income.