Covenant Logistics Group, Inc., through its subsidiaries, offers a portfolio of transportation and logistics services to customers throughout the United States. Primary services include asset- based expedited and dedicated truckload capacity, as well as asset-light warehousing, transportation management, and freight brokerage capability. In addition, Transport Enterprise Leasing is an affiliated company providing revenue equipment sales and leasing services to the trucking industry. Covenant's Class A common stock is traded on the NASDAQ Global Select market under the symbol, “CVLG.”
(1) See GAAP to Non-GAAP Reconciliation in the schedules included with this release. In addition to operating income (loss), operating ratio, net income, and earnings per diluted share, we use adjusted operating income (loss), adjusted operating ratio, adjusted net income, and adjusted earnings per diluted share, non-GAAP measures, as key measures of profitability. Adjusted operating income (loss), adjusted operating ratio, adjusted net income, and adjusted diluted earnings per share are not substitutes for operating income (loss), operating ratio, net income, and earnings per diluted share measured in accordance with GAAP. There are limitations to using non-GAAP financial measures. We believe our presentation of these non-GAAP financial measures are useful because it provides investors and securities analysts with supplemental information that we use internally for purposes of assessing profitability. Further, our Board and management use non-GAAP operating income (loss), operating ratio, net income, and earnings per diluted share measures on a supplemental basis to remove items that may not be an indicator of performance from period-to-period. Although we believe that adjusted operating income (loss), adjusted operating ratio, adjusted net income, and adjusted diluted earnings per share improves comparability in analyzing our period-to-period performance, they could limit comparability to other companies in our industry, if those companies define such measures differently. Because of these limitations, adjusted operating income (loss), adjusted operating ratio, adjusted net income, and adjusted earnings per diluted share should not be considered measures of income generated by our business or discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.
This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as “expects,” “estimates,” “projects,” “believes,” “anticipates,” “plans,” “could,” “would,” “may,” “will,” "intends," “outlook,” “focus,” “seek,” “potential,” “mission,” “continue,” “goal,” “target,” “objective,” derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In this press release, statements relating to future availability and covenant testing under our ABL credit facility, expected fleet age, equipment, cost, and warranty coverage, net capital expenditures, capital allocation alternatives, progress toward our strategic goals, and the statements under “Outlook” are forward-looking statements. The following factors, among others could cause actual results to differ materially from those in the forward-looking statements: Our business is subject to economic, credit, business, and regulatory factors affecting the truckload industry that are largely beyond our control including cost inflation and global supply chain disruption that could affect (i) the volume, pricing, and predictability of customer demand, (ii) the availability, pricing, and delivery schedule of equipment and parts, (iii) the availability and compensation of employees and third-party capacity providers, and (iv) other aspects of our business; We may not be successful in achieving our strategic plan; We operate in a highly competitive and fragmented industry; We may not grow substantially in the future and we may not be successful in improving our profitability; We may not make acquisitions in the future, or if we do, we may not be successful in our acquisition strategy; Increases in driver compensation or difficulties attracting and retaining qualified drivers could have a materially adverse effect on our profitability and the ability to maintain or grow our fleet; Our engagement of independent contractors to provide a portion of our capacity exposes us to different risks than we face with our tractors driven by company drivers; We derive a significant portion of our revenues from our major customers; Fluctuations in the price or availability of fuel, the volume and terms of diesel fuel purchase commitments, surcharge collection, and hedging activities may increase our costs of operation; We depend on third-party providers, particularly in our Managed Freight segment; We depend on the proper functioning and availability of our management information and communication systems and other information technology assets (including the data contained therein) and a system failure or unavailability, including those caused by cybersecurity breaches, or an inability to effectively upgrade such systems and assets could cause a significant disruption to our business; If we are unable to retain our key employees, our business, financial condition, and results of operations could be harmed; Seasonality and the impact of weather and other catastrophic events affect our operations and profitability; We self-insure for a significant portion of our claims exposure, which could significantly increase the volatility of, and decrease the amount of, our earnings; Our self-insurance for auto liability claims and our use of captive insurance companies could adversely impact our operations; We have experienced, and may experience additional, erosion of available limits in our aggregate insurance policies; We may experience additional expense to reinstate insurance policies due to liability claims; We operate in a highly regulated industry; If our independent contractor drivers are deemed by regulators or judicial process to be employees, our business, financial condition, and results of operations could be adversely affected; Developments in labor and employment law and any unionizing efforts by employees could have a materially adverse effect on our results of operations; The Compliance Safety Accountability program adopted by the Federal Motor Carrier Safety Administration could adversely affect our profitability and operations, our ability to maintain or grow our fleet, and our customer relationships; An unfavorable development in the Department of Transportation safety rating at any of our motor carriers could have a materially adverse effect on our operations and profitability; Compliance with various environmental laws and regulations; Changes to trade regulation, quotas, duties, or tariffs; Litigation may adversely affect our business, financial condition, and results of operations; Increasing attention on environmental, social and governance matters may have a negative impact on our business, impose additional costs on us, and expose us to additional risks; Our ABL credit facility and other financing arrangements contain certain covenants, restrictions, and requirements, and we may be unable to comply with such covenants, restrictions, and requirements; In the future, we may need to obtain additional financing that may not be available or, if it is available, may result in a reduction in the percentage ownership of our stockholders; Our indebtedness and finance and operating lease obligations could adversely affect our ability to respond to changes in our industry or business; Our profitability may be materially adversely impacted if our capital investments do not match customer demand or if there is a decline in the availability of funding sources for these investments; Increased prices for new revenue equipment, design changes of new engines, future uses of autonomous tractors, volatility in the used equipment market, decreased availability of new revenue equipment, and the failure of manufacturers to meet their sale or trade-back obligations to us could have a materially adverse effect on our business, financial condition, results of operations, and profitability; Our 49% owned subsidiary, Transport Enterprise Leasing, faces certain additional risks particular to its operations, any one of which could adversely affect our operating results; We may incur additional charges in connection with the disposition of substantially all of the operations and assets of TFS; We could determine that our goodwill and other intangible assets are impaired, thus recognizing a related loss; Our Chairman of the Board and Chief Executive Officer and his wife control a large portion of our stock and have substantial control over us, which could limit other stockholders' ability to influence the outcome of key transactions, including changes of control; Provisions in our charter documents or Nevada law may inhibit a takeover, which could limit the price investors might be willing to pay for our Class A common stock; The market price of our Class A common stock may be volatile; We cannot guarantee the timing or amount of repurchases of our Class A common stock, or the declaration of future dividends, if any; If we fail to maintain effective internal control over financial reporting in the future, there could be an elevated possibility of a material misstatement, and such a misstatement could cause investors to lose confidence in our financial statements, which could have a material adverse effect on our stock price; and We could be negatively impacted by the COVID-19 outbreak or other similar outbreaks. In addition, there can be no assurance that future dividends will be declared. The declaration of future dividends is subject to approval of our board of directors and various risks and uncertainties, including, but not limited to: our cash flow and cash needs; compliance with applicable law; restrictions on the payment of dividends under existing or future financing arrangements; changes in tax laws relating to corporate dividends; deterioration in our financial condition or results: and those risks, uncertainties, and other factors identified from time-to-time in our filings with the Securities and Exchange Commission. Readers should review and consider these factors along with the various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.
For further information contact:
Joey B. Hogan, President
JHogan@covenantlogistics.com
Tripp Grant, Chief Accounting Officer
TGrant@covenantlogistics.com
For copies of Company information contact:
Brooke McKenzie, Executive Administrative Assistant
BMcKenzie@covenantlogistics.com
| Covenant Logistics Group, Inc. | |
| Key Financial and Operating Statistics | |
| | | Income Statement Data | |
| | | Three Months Ended March 31, | |
| ($s in 000s, except per share data) | | 2022 | | | 2021 | | | % Change | |
| Freight revenue | | $ | 257,614 | | | $ | 200,688 | | | | 28.4 | % |
| Fuel surcharge revenue | | | 33,971 | | | | 20,201 | | | | 68.2 | % |
| Total revenue | | $ | 291,585 | | | $ | 220,889 | | | | 32.0 | % |
| Operating expenses: | | | �� | | | | | | | | | |
| Salaries, wages, and related expenses | | | 95,338 | | | | 82,586 | | | | | |
| Fuel expense | | | 35,502 | | | | 22,822 | | | | | |
| Operations and maintenance | | | 17,936 | | | | 14,719 | | | | | |
| Revenue equipment rentals and purchased transportation | | | 83,661 | | | | 57,236 | | | | | |
| Operating taxes and licenses | | | 2,740 | | | | 2,585 | | | | | |
| Insurance and claims | | | 9,179 | | | | 7,838 | | | | | |
| Communications and utilities | | | 1,170 | | | | 1,247 | | | | | |
| General supplies and expenses | | | 8,934 | | | | 8,183 | | | | | |
| Depreciation and amortization | | | 13,445 | | | | 14,087 | | | | | |
| Gain on disposition of property and equipment, net | | | (167 | ) | | | (923 | ) | | | | |
| Total operating expenses | | | 267,738 | | | | 210,380 | | | | | |
Operating income
| | | 23,847 | | | | 10,509 | | | | | |
| Interest expense, net | | | 555 | | | | 743 | | | | | |
| Income from equity method investment | | | (6,785 | ) | | | (2,960 | ) | | | | |
| Income from continuing operations before income taxes | | | 30,077 | | | | 12,726 | | | | | |
Income tax expense
| | | 7,910 | | | | 4,145 | | | | | |
| Income from continuing operations | | | 22,167 | | | | 8,581 | | | | | |
| Income from discontinued operations, net of tax | | | - | | | | 2,559 | | | | | |
Net income
| | $ | 22,167 | | | $ | 11,140 | | | | | |
| Basic earnings per share | | | | | | | | | | | | |
| Income from continuing operations | | $ | 1.34 | | | $ | 0.51 | | | | | |
| Income from discontinued operations | | $ | - | | | $ | 0.15 | | | | | |
Net income
| | $ | 1.34 | | | $ | 0.66 | | | | | |
| Diluted earnings per share | | | | | | | | | | | | |
| Income from continuing operations | | $ | 1.32 | | | $ | 0.50 | | | | | |
| Income from discontinued operations | | $ | - | | | $ | 0.15 | | | | | |
Net income
| | $ | 1.32 | | | $ | 0.65 | | | | | |
| Basic weighted average shares outstanding (000s) | | | 16,602 | | | | 16,954 | | | | | |
| Diluted weighted average shares outstanding (000s) | | | 16,769 | | | | 17,086 | | | | | |
| | | | | | | | | | | | | |
| | | Segment Freight Revenues | |
| | | Three Months Ended March 31, | |
| ($s in 000's) | | | 2022 | | | | 2021 | | | % Change | |
| Expedited - Truckload | | $ | 80,647 | | | $ | 69,273 | | | | 16.4 | % |
| Dedicated - Truckload | | | 73,377 | | | | 64,588 | | | | 13.6 | % |
| Combined Truckload | | | 154,024 | | | | 133,861 | | | | 15.1 | % |
| Managed Freight | | | 86,151 | | | | 51,397 | | | | 67.6 | % |
| Warehousing | | | 17,439 | | | | 15,430 | | | | 13.0 | % |
| Consolidated Freight Revenue | | $ | 257,614 | | | $ | 200,688 | | | | 28.4 | % |
| | | | | | | | | | | | | |
| | | Truckload Operating Statistics | |
| | | Three Months Ended March 31, | |
| | | | 2022 | | | | 2021 | | | % Change | |
| Average freight revenue per loaded mile | | $ | 2.67 | | | $ | 2.13 | | | | 25.4 | % |
| Average freight revenue per total mile | | $ | 2.36 | | | $ | 1.91 | | | | 23.6 | % |
| Average freight revenue per tractor per week | | $ | 5,204 | | | $ | 4,132 | | | | 25.9 | % |
| Average miles per tractor per period | | | 28,331 | | | | 27,809 | | | | 1.9 | % |
| Weighted avg. tractors for period | | | 2,302 | | | | 2,520 | | | | (8.7 | %) |
| Tractors at end of period | | | 2,318 | | | | 2,571 | | | | (9.8 | %) |
| Trailers at end of period | | | 5,455 | | | | 5,555 | | | | (1.8 | %) |
| | | | | | | | | | | | | |
| | | Selected Balance Sheet Data | | | | | |
| ($s in '000's, except per share data) | | 3/31/2022 | | | 12/31/2021 | | | | | |
| Total assets | | $ | 660,069 | | | $ | 651,662 | | | | | |
| Total stockholders' equity | | $ | 358,882 | | | $ | 349,699 | | | | | |
| Total indebtedness, comprised of total debt and finance leases, net of cash | | $ | 50,612 | | | $ | 28,474 | | | | | |
| Net Indebtedness to Capitalization Ratio | | | 12.4 | % | | | 7.5 | % | | | | |
Leverage Ratio(1) | | | 0.39 | | | | 0.24 | | | | | |
| Tangible book value per end-of-quarter basic share | | $ | 15.27 | | | $ | 17.10 | | | | | |
(1) Leverage Ratio is calculated as ending total indebtedness, comprised of total debt and finance leases, net of cash, divided by the sum of operating income, depreciation and amortization, gain on disposition of property and equipment, net, and impairment of long lived property and equipment. |
