CVLG - Earnings call transcript Q1 2021 | Covenant Logistics Group, Inc.

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Operator

Please be aware that each of your line is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. [Operator Instructions] At this time, I would now like to turn the conference over to Joey Hogan. Please go ahead sir.

Joey Hogan

Thank you. Logistics Quarter Covenant Call. the to Group Conference First Welcome

of will everyone, statements Private As Act for call Securities contain Reform the a reminder of this forward-looking meaning within Litigation XXXX. the

forward-looking risks without and statements differ from files review contemplated those with subject Please Forward-looking the statements. disclosures uncertainties, materially forward-looking We update and are risk most in recent any XX-Q. our actual factor or and publicly to results and section, our or the could to and circumstances undertake the or obligation limitation, XX-K no occur. SEC, subsequent that including statements revise form may

of in XXXX. first and did the is was company the versus best bearing an of work and by the tractor a $XXX last reminder, history, results. perspective, an volatile David exceed The in going Chief our Officer, $.XX we’ve website in record X% quarter, first were; of a grew to our in XXX over same financial able result consolidated covenanttransport.com/investors. team. while a was the best We're XXXX. honored smaller Parker, to quarter XX% the our exceptional share the which our information Paul multi-service prepared logistics available the was per quarter fleet highlights fruit serve resolve Operating our year, or our to Chief the Bunn; around copy to Grant. As Chairman to company previous start first adjusted EPS team division lead excitement comments more Tripp and at the team and morning additional revenue In first Accounting CEO, quarter trucks, of of our hard this quarter From XX% operating in revenue with Officer, reported we’re I’m and our Expedited to than transforming quarter summary, on XXXX joined we our and period. XX% and our compared and is our by our million

and Our first to we through minimal casualty Warehousing compared in our XX% was third claims prior insurance to best insurance history significantly reduce first compared Managed of grew Despite period Freight and were able quarter segments rising premium our cost, quarter reduced recent quarters. XXXX. combined incidents the to costs cost,

per sale company has soft investment Our We during in a equipment customer recovered of large quarter, resolution share. $X.XX Bancorp the which approximately fourth in call of leasing the the Triumph segment of was an with a received million resulted our TEL the XXXX $XX regarding earnings TFS dispute market XXXX. from quarter from share fully issue the to and by increase associated that funding reserved indemnification us all during

accrual funds some allowed accrual. opportunity collect to able us fourth our was TBK of quarter our reverse to the Additionally, that to related $X.X million

quarter. offers Additional, to On the the purchase truck opportunities, reduction Please quite first The the contributed about continues appeared mile revenue lane of week. year strong our $X freight this approximately per Providing our stock affecting improvement per a flat. little last for able per rate we Expedited we by XX% unit basis, that division still solo the a XXX revenue items business improvement Expedited to reported evidenced in color well recall for more be truck and had million. of shares on units; a in closure performed and to the were division market XXX,XXX and a at unit. that

count of opportunity. Dedicated and XX% place was our division team The in and per early increasing the of X% increase pay the a quarter However, the in in to challenge, XXXX. trucks truck the earnings since haul unseated with January the in continues XXXX changed strength be mix we contributed second increasing gives merged a separate transitions, as and and XX%. confidence common a market miles system segment we but the by per eliminating put approach to and to quarter. long-term length nice of resolved under overall solo be There complete been fourth structure The materially The which increase transition fleets reduction large fleet, driver enterprise continues contract huge need attention thereby March, the our the a of by to continue this leadership X% leadership in We system. into us throughout truck to There of customer and industry expect was division three some negotiations. earnings which Dedicated take improvement the know accounts will downsize the be to segments, merger has revenue May. operating in and in

overflow Our continue to capacity. strategic continuing plus increases very experienced works the growth The we full capabilities market with unit brokerage drive Managed unit. Freight Freight as enterprise revenue service huge division and closely committed this primarily robust capitalize driven both sales Expedited us growth, to This by freight. and Dedicated providing in and on divisions excite our

We operating high in lower based are volumes the capital on even gross cautious business. and this Nevertheless, ratio can return be about unit the for margins as margins is at long-term sustainability this volatile. of the non-asset

The the job growth. its We profitable customers. solid, leadership this time Warehousing for year startups delivering one continues year. being, new doing pipeline team great the its is expected robust and a last additional startup is service division had to For the huge

the pleased level current with have we we direction the half. ago around unit very are growth unit. out a versus in revenue Overall, can this this in As size, be of in startups the expect unless second we additional the choppy half as year the growth second reminder, to revenue

show question excited and in to first fourth about the the providing to our feel years Regarding the we’re outlook we’ve rest year, this although are start this in years, for intra not beginning as specific year. earnings guidance. quarter over the year-to-year. a No for consistent earnings as of XXXX the we our better through is range model, more been less that quarter the transformation working We with well earnings few in last

to on the be market the the balancing market utilization for Casey, will now, cost time and divisions improving freight the continue and for open primarily challenging the for focus short-term and driver help Dedicated headwinds, long-term. will division, questions. other Thank offset margin to the price now improvement while Managed will provide We insurance. casualty your you Freight feel Our call for opportunities we

Operator

take [Operator first line question. is your your please state Caller Instructions] live, name. We'll our

Jason Seidl

Cowen. morning? Hey this How you guys. Jason This Seidl are from is

Joey Hogan

Hey, Jason. morning. Good

David Parker

Jason. Hey

Jason Seidl

some here, to seems guys were that you little of concentrate want some numbers March. the the made to and that changes where have you segment be a I bit were Dedicated most in sort upside, the obvious to improved then that on alluded

of You could also profitability think some told about expand to where customer upon problem in if you and directionally that? let's to is your child XQ; going And base then us guys done among might that be you can say you you profit? the what turn have

Paul Bunn

Hey, is Paul. How you this this Jason, doing morning?

Jason Seidl

Good sir.

Yourself?

Paul Bunn

Doing well, doing well.

of March. quarter, effect, in of So, looking whether at effect hence had sorry thing, really underestimate It -- don't improvement the the negative one kind it's in March significant the a February. first back

rate really before call -- some we've of it kind about -- the couple of going market of would way good count started. dedicated And its is large the it contracts improved runs commoditized with I the in of right soaring business got increases business increases half those we're and to rate have and at half June, dedicated long-term a that about is and now said number had timeframe. that acceptable business We've get we're have is up, July the driver A to margins pricing.

to get to but driver the should them. going want going the see and But in service some of partner you're some the as improvement, quarter, where And customers, it and for have from not going second with where expect we're In this quarter, and market we're is. to dynamic incremental continue to they're momentum. we're pay to the that So, getting, here's call as us be I to think it second kind keep you're quarter people that wait be the especially third moving with going where -- than help fade better going maybe it then anywhere we black see long-term. it into I'll to

So, I that helps hope you.

Jason Seidl

Paul. of good And sort look would at dedicated that what it half? long-term when does we half No, the of consider you that OR of sort business put contracts, upon the you would

Paul Bunn

Yes, probably low XX.

Jason Seidl

Low XXs.

there what pay more Okay. we down And the are of increases the pay? in I driver coming road terms mean from here? expect market, should

Paul Bunn

and see solo would to of a be kind is happens say with market. a competitors approach of dictated our what by on Expedited we're I the wait going that And taking with side. lot and the

the really in numbers. just miles not wages received going but Our the trucks, we're expedited the put to well, good increase pay pay was of those of on increase, drivers are the really W-X terms

On the upwards pockets, Dedicated be have say going than to would adjusted not. it's to but way more side, accounts I in are

on is several And what a I so for XX% making better, or in tell of are for perspective. returns we're quartile ones calling not good which of pay. accounts and here's red, the bottom XX% analysis The those we're Those -- doing driver now. where pay, between right done kind we've lot -- correlation are week, are green of a we're there's an in we've number what pay, this you, got from accounts driver of, money a that the the accounts pretty a that

move got bunch in and to fill-in we're steady -- we that's now. location to so to to back. expensive going pay increases. it's filling to yes, help how of profitability not overall, to rate what's have -- And with is And right driver get very going to be drivers. depends a fleet us just -- much specific on tariff going But so have the It's Dedicated

Jason Seidl

sense. makes that Yes,

you the the at the for last how Can quarter about on segment, we look an you should just growth was a year? On throughout bit moved question guys. little excellent that Logistic -- obviously, talk

Paul Bunn

similar If the stays to as it is market going as you're see returns. I today, think hot

in is on happens we think to going Managed long to cycle be dependent is. I how think you what Freight stay this

is before, large market. that percentage of that said the we where play we've spot segment, As in a

we up And have among a expedited customers Dedicated number with. freight and of And that a of are rates of lot a and spot so business a are seeing you're type that in and of Expedited lot pop freight there there lot customers. spot

see And similar you'll down so hot in were on of goes mean I the start market rest be to a off, you're to probably that going like little to volume is a the that the freight see number. trail margin QX bit. going up the maintains. division how and If if overall the going things going year business is QX, dependent how for

than more is the goal offset freight. Our or by to returns growing Dedicated from to have perspective time that declining a managed offset

Jason Seidl

That makes sense. somebody always. I'll turn to appreciate there. safe Gentlemen, the I as time Be else. it over out

Paul Bunn

Thanks Jason.

Joey Hogan

Jason. Thanks

Operator

live, Thank take question. name. your you. our we'll And line next please your is state Caller

Jack Atkins

Good great. Thank It's Atkins from for Stephens. you everybody. taking morning my Jack questions. Hey,

Joey Hogan

Hey Jack.

David Parker

Hi Jack.

Jack Atkins

So, points there kind last I to Paul, me that -- if kind of let think in how quarters terms in terms next out sort drivers, start time. perspective, of we're feels just from there on certainly of of one you because cycle I a dovetail given could this several just we're an elongated the it your play difficulty in what cycle just of guess, for finding like hearing of out

you've in So, the love to take perspective your wants question. the maybe But David, I'd tenure all given I just know get who industry and to your seen. don't

fleet? on and able sort able how drivers we rates we to from are how be you to from a Just go are get going both perspective, going be to we to enough the where here, of grow to think

David Parker

Hey Jack.

get all, a know. drivers? we how it's enough environment. I of difficult First do Basically, don't

part lid environment does Some on as of all we that keep capacity, know. a difficult

-- my I we I be at -- I preface and -- was five about always a way of a I to norm, meeting management going based about know on the I've this teammates seeing because had not worried don't for is think the guess and environment, talking Washington couple lot when The think is GDP do a think that now, next But big two So, year for freight years, years, more, grandchild I X% be to I growth years, we're only be it's you I our was it blessing last to how what think times. is some pay if next two doing. old week, as going a it. if going a had of I of to

be And going the to it so over years, hot. next the environment is I freight of as I relates couple mean, think

want little probably, I to today, I think it are we'll X%, it's say have or X% it still X%. numbers be could well, be a going while bit, that will a stay are X% to to I GDP X%, never standpoint. I you could or But from it failing sensed down. we goes or freight and we mean that -- slow but at felt

that of that, what States. Dedicated couple up, and side, he's and I because letting And you to see of years of market here, XXX throughout of right, here, lot having the got the about XX having we've a driver kind XX over all in you done to that the sided of a trucks trucks And I being Dedicated different that the we're Paul talk pockets, don't United trucks Expedite and on go to do see markets that so And pay. top solid of because there, on to heard that what we're then environment.

So, dependent this improved. could upon same, gets situation the best And them drivers to but you picture while that, we're a is, going -- is it's pay that at to he worse. it's paint have not

got one is, XX,XXX, all And got where is figure based out to percentage we're I'm trying that pays to talking Another trying we're about go figure starting and more pay there. to came that to to that the it that or stat we up where up, that know to driver firm all is to attention friend pay other just the out and or out XX,XXX personal of that's the all to. working kind We carriers attention thing. pay to that XXX,XXX, drivers

are out that The think of XX,XXX. second of in just to give couple the XX,XXX. finding we're thing, at lot that going the last as we're driver, though, that process this down drivers I is that But say a in a the months those road let's numbers happy we're

they're to in And in drivers pay first coming work percentage And is XX. the three more in worth of because because quickly, they for two -- that XXs for things if to it we and XXs rather last than four XXs, got of one been saying your is not the that where honest what little the happy points it's getting bit that's they're very unless the they're but is Now, home. away or where me, you're the stay happy be market we're that the making the to the equipment home has about they're making want of and less stay XX,XXX give a more. quarter

that So, I of think have none that's us calculated. an interesting dynamic got

There's me to nothing to we the over one medium So, drivers. drivers that's years. going where tells at. have out And there are available that two I'm be don't that readily

-- then situation overall. two to And our we're looking I'm going have -- so driver and past the as trucking capacity by percentage owned the could to I companies pressure capacity points, three working at say

to pipelines needed couple it's what to remain our believe are to the going over of says the think what -- able I to going good. business, And to I want our accomplish that So, going that and to to be continue accomplish we're accomplish we're that segment, years. tight, we the next be

Paul Bunn

all said you to now something about situation just -- is can how a tough, paying serve. driver has right You main it'd now. tough grow to hard so fleet, so The right to the pay hold much grow it's growing is a be driver fleet do fleet

Jack Atkins

absolutely. what others. And that's Yes. No, -- yeah, hearing from we're

certainly the to super-cycle your implemented been this managed to you've at very structurally the on those with it, is get couple year and be able has to top about business. you as the in profitability excited have -- businesses backdrop I you a this And look you put efforts Dedicated? But undertaking so you your half years. the out year, when of pretty to of context, over And you type need Expedited, freight improve of all be changes got next put type guess kind that of to of of last strong of a over be the really this guys comments

David Parker

through and exactly. now from ago, true. XX we've XX never knowing produced ago, going. months Yeah, people this turning us a that where our some of have was are virus that thing company And entirely around, I if that is it's we numbers Correct. of we months about think told our none producing you're standpoint time The this

or long. I market just could straightened getting and we better to again, is for in the y'all Now, none mean and the us, of work with runway, operation and helped made, not most it's and that's the good know, will we're that our with of background about, five straightened or out, made been part what pipeline do going just was out. runway to I very, its we shut the in we mean the down the kind this at business. got decisions our talked we we are we has those we're get and in improvement to straightened They're things. et known week customers. year. internally, as they yes, and up our its And cetera. got it the today, we've the work because Dedicated us is everything ask you not it's out, to Dedicated assets one plan. years, And our on quarter XX see work years that But were has the excited last a solo second plan, that was words very ones we're of decide been to get we've can't why And to using where with a tremendously. And we

Paul Bunn

it, we But help we piece it's hope help the bit. call so the driver all government the subsidies monster of well if and and with some or might the around know, that competitor bill when, David may our a on probably an add is in construction, is general, spending, I'd energy that argue -- But little other get a planned. could thing that one we when infrastructure on let's Jack, mentioned, hand, that's industry.

wealthy approved gets that are pull the now. don't again, need a if those or as be be if to it's going going to So, jobs because they be where going that's they're to to matter -- I is, because, from -- are when, to whatever proven, big gets -- and have when probably market but it's paid if

So, do? I to The drive And right limited. capacity kinds -- another does be up in going going it major all capacity that that going question all is on that's what -- too. think is not OEs, constraint, affecting be are major, labor, does out a think, limited it's of which now industries the is that's view But to inflation a the manufacturers there, a They're be capacity. way. to ramping or I

So, because the pricing, labor, commodity because costs. of because of

capacity part of be the reasonable. growing going And I'm couple to of so looking to fleet for, significant crazy, this to be capacity people with not I the years It's at it's equation, what's David word right I think XXX%, be going next least the going agree is amounts.

Jack Atkins

Okay, bring that's Trump, cash conversation Last into flow, the it are turn great. around to love year the very this you helpful. because capital I'll needs over. question, not here I'd

she of help be about know, thinking in that's that? should we we is for release I get through CapEx your net XXXX plan the us free press think what about, is for cash flow you the year. says think How this in $XX kind I believe million. can

Joey Hogan

Yes.

down perspective buy our we a call, took to bit a QX, pay because but debt stock a step to it. as So, is the get to indemnification debt backwards back continue little plan and of we from in

the So, neighborhood flow perspective, of XX. from I free a probably the year, of think cash in rest

Jack Atkins

Appreciate time, to Thanks great hear. for the That's great. that's again Okay, it. guys.

Joey Hogan

Yes.

Operator

our question. Thank Caller five, you. please line We'll take [Operator your is Instructions] next state your name.

Scott Group

Research. Yes, Thank Wolfe Scott guys. Good Group morning from you.

Joey Hogan

Scott. Hey

David Parker

Hey Scott.

Scott Group

in So, you of first about the if Expedited year? doing talk there? quarter, and the the those rest the margins just on And think about X% side, trends you can we're pricing margins just underlying

Joey Hogan

in the Yes. Scott, been very last half months, quarter, expect on been Expedited definitely last pricey two the there's continue. And good. first doubt we a has no January, the strong has side and that it over -- that the very sometime -- to is

in that raise of a the They're are those got more that that going we to Expedited of have. are -- been the or those be pulled but that expect in those kind We negotiation quarter. those of to side. three first accounts four opportunities up. And pricing And topic couple have are up lot we've already there's counts, yearly pulled

operated it's instead dealing over working XX% And XX%. year we they're allow that with going also that that of the there got got So, they're another But XX%, to We're that's rest that that period couple to price. do volatile, on April downsize accounts May it environments, I already expect, those know, time so at have that about won't of them in, our are taken. top not that expect we've long-term really -- higher be one using of demand a five, looking Expedited in we with a our expect those we at tough ahead new in months And any that got we it's they to model time. -- you that until of the going second May multi-year think the environments, XX%. we're the can we've year as and in to -- fleet XX%. actually I We environments, be tough it The comes is the couple to contracts the and coming and contracts elect go to we customers. of business on that benefits able is a be timeframe, we're today that customers believe our it that we get have of if great we -- -- always of total number some XX% They're total, to that, we're back out is is XX% going to in say is one in when up. we was said, one it's XX% it's being know

those. multi-year contracts they're anyway, So, on

So, prices be. instead anyway, LR will to that me, the of that is at the important we said the is to that most running there thing continue that model XX% most important that were to But end, we thing where XX% it I to really believe increase. is today used

David Parker

is the I'd about always is Scott quarter was that we're it talked think once good Expedited trying thing of at a pie last history. we the I add grow When to call bigger there versus it. much in times, piece difference

grew model. which added So, we it, to the volatility factor the of

we're Now, not.

could isn't have well. we're Now, size, the fleet not the the very decision, size, itself. whether happy but or to it drivers, to the we strategically if that the not it's planning continue improve because wanted feed question we to, but made fleet the thing, we're we to very to Take pressure to performing capital of division base the off inside that that grow grow and is with

lived or hadn't volatility not. in I lot whatever. wish the in a significantly, goodness, that’s of trucks successful itself, past different XXX my we of XXX if will mind, helps only that trucks cycles in who's it in or the that that says, oh of But time and tell question which or that through done my So, the

So, living it. we're now with

a but of that's move that's the time versus growth, so time. the that, for volatility a lot to as contributed And a that's frankly, answer more at the only past, will us wrong lot significant

out. plays that how we'll So, see

would as margins? comment margins, you on would how Paul, the As how far

Paul Bunn

of to is I the year the same kind again, comment. stays that high, think If back stays goes the on, market as incrementally high. driver better

better. those. better I dealing incrementally think Won't weather it'll quarter, get not materially, be some but with each of incrementally and

Scott Group

a just range just comments I'm the for closer Expedited we kind level? putting is up? would that the Why closer OR this an we'd right is be wouldn't business, XX% If that to where together. that to Can those start to trending environment XX%. I think I follow XX% of

Paul Bunn

Good question, Scott.

to XXXX. we not temporary quite yet; want the we're back start to did bit think of into be coming costs of A. model kind where a disclose we B, I

So, did little through being did But that. ended we we it a about than that bit work we up less nevertheless, talk thought.

And so we're that and that we to think will transition continue. in that

first said, the also. XX% Expedited's is best that history, Now quarter in

is first always -- quarter worst could I the So, for quarter Expedited.

I year it a so had that we've off it's good started year the yes, market, think but well. -- Expedited very And started off -- the

David Parker

to be XX%? first Yes, know, Yes. an it quarterly know. going sequentially? every better to -- going is is should Scott, improve than each the I quarter don't But it you get to

Scott Group

Yeah.

I so benefits of And upside. made though here tremendous, market. yes, chasing big mixed business improve here. seeing we're picture, point sort on reduce your guess changes cyclicality we're in of a of is, and we've profitability the lot And to the But, cyclicality not the

we don't pressure, the much the that when think if of cyclicality, see emerges. So as and we'll environment of downside

Joey Hogan

the difficulty all It the in been plan. frankly, been lot all that's question Absolutely, us for has here a given that, confidence. the think I the last of the there's are that. about where us. on But year, I working We've for they're we transition actually think last no five years-ish, accelerated, would say. I But of

see as quarter We're less. didn't prepared quarter much -- Fourth the We go down. near from was to standpoint. quarter We're go comments, a either. to we move we near fourth in in As and starting cyclicality. down good prior go the as freight year, up as didn't much. We a not said, the going

more and the less had the from prior we year, going than less so in but be will then volatility, we've or past. see in cycles to And hope, year-to-year you're

Paul Bunn

the doing because of who the we're long-term exposed, Joey for, getting less maybe about really expediting volatile, doing being things. of a what Scott size as know, it couple kind the You constriction and and we're being and not kind on talked and dedicated last dedicated, and of aiding in, made things where probably helping is And also getting the consistent. is returns to the the that make we other the Those structure year. drugs, cost are them changes don't margins biggest XX% we then of the forget key those that. more dialing need

Joey Hogan

thing XX, in even remind here mean, had a weather it me, I though is in one expedite I -- hit February. Now, to the friend hard

hit impact earnings our Expedited the XX and the achieved in of still lot first most, a so And quarter. the group

or been quarter that for February minimum have a probably of quarter Scott, and the for two hit negative So would that just was in on three the -- weather the points to two Expedited.

you that ran or been If probably if something hadn't had April had an you XX. that weather,

Scott Group

you, Appreciate Thank helpful. Very guys. it. Okay.

Paul Bunn

Thanks, Scott.

Joey Hogan

Thank you.

Operator

our [Operator Please your you. next we'll your state take question. line live. And name. Instructions] Caller, is Thank

Dan Moore

guys. How Hey, we are doing?

David Parker

this? is Who Good.

Dan Moore

is with This Scopus. sorry. I'm Dan Moore

David Parker

Dan. didn't Good you. Hey, to hear. We hear

Dan Moore

Paul, no I a operating quarter, wanted extremely view and a most and guys And, on you ago. on I progressing segment and said like peers No tend line as people important ask I'd that focus of challenging not think turnaround little with obviously X%. Scott thing Congratulations One a double success organization worries. the focus worries, long-term second on digit to bit dedicated. not dedicated the X%, to you is to much on kind to returns the of And, are your through. was great environment. as What more

is fact, you able like, you long-term? about, what impediment. And your What profile it something, and that talk on to to you're of would us long-term. guess, be the sounds Could in the Someone north targeting? a necessary is deliver return argue in sounds like little XX driver the it of to environment bit that that I is to biggest kind assets want returns generate business

that, there's need anything if aware Thanks. be to Beyond else we of?

Paul Bunn

now, weights three I got -- to operate, very be one time. -- would we got under We've through around some getting in recruit, think that some low XXs. I said, say right them accounts segment right Joey think Dan. double pleased leadership you we've And all that together, Yeah. There's that long operate we're I -- of good that a really legacy get system, accounts, dedicated journey, I number, digit would XX to, space. bring people all accounts mean, recruiting operating one as gone have this under one team. it. a trying we One to a as group know, down

have those evident to things that of business. just and we're they're to that somebody that the right commoditized, either first we just of we value have to And more those the to going there's want our in then kind and have bucket. stay and to of There's those. true history. are you customers there's who culture tried And, two to there's to our open customers And more talked and dedicated, that accounts it, what going to the become with groups who's the One the we're have to have give we in and our, about, the see of customers is, go can to say, or hardest your bucket. we've has trucks, the kind and of, that trucks customers is profile now, going

OR. also ago weeks few company, a XXX or yanking bunch not we honor run somebody XX with XX, out, to talked we're about met not We're we just going of word. bunch that But get to going know, -- trucks another trucks a we're dedicated You our out. of to

Joey Hogan

-- on on most, And neat the just the opportunities important that dedicated, things our complimentary in that also, that Expedited, scratching that of to with we're a is his the between at the role Dan, it's leadership operation on is it nature one him Paul's services, surface change compliment take side. truck the on especially of the side, just and

trying from couple a standpoint. run driver kind there. regard. of We've -- there's it, there there really but a of neat exposed projects are think ball a think, to especially But move in the there I really complimentary, think that I I that there's talked about been

various something just the complimentary it's it's driver they're that, yes, not that, into some But so and is standalone. services side. nature between there And this

well. internally helps as I think us there's some opportunity there. That

Paul Bunn

and we're Dan, had mean, to move my options, we in strategically career that covenant the here just we've Yeah. collaboration a come To Joe's them looking years the know, best starting And how got never down leave. XX driver do manage and point, to path. we've you probably of I give lifecycle at that

we're so where And take a work lot -- it. might still excited about, to But there's do. we're it of

Dan Moore

know have just to you all a contracts, I on, what follow-up Could of opportunity when touch one don't touch we percentage don't know within And multi-year? an a of contracts those as year, of those are that. dedicated? you'll to had Because XXX%

Paul Bunn

them two-thirds of of by pledged have them September will September We by two-thirds XX, XX.

think we'll we I QX. so in are closer And know where to

notice there's five And through working months, So, earlier are that some take number might them we're so of four right you that months. June, that a requirements some I have there's know, now. said those July,

Joey Hogan

that. And so the the is that, will I quarter where we think second do field know in

Paul Bunn

Yes.

Joey Hogan

with, which looking quarter. idea. second to laid. to field implemented going ones our third to that And that, that have think We're not know then will ones be the think we're going successful quarter, that, going an ones the be at is how will we'll know are I be with. we're But successful in the but which pipeline, or I that not,

Paul Bunn

solving, in goes the of it or pipeline, that engineering, but fit more smaller saying, just fleets commoditized partnership, And that without value, accounts Dan, to probably first problem pipeline all I would maybe I the not fleets. commoditize, compared its that mean, mean, that bucket

Dan Moore

again great the through it. of Got best on quarter luck year. balance Congrats and a of the

Paul Bunn

Thanks, Dan.

Joey Hogan

Thanks, Dan.

Operator

Thank name. next you. state Caller, question. Please We'll line is [Operator our take your Instructions] your live.

Nick Farwell

This I've think you Can released. I Nick Farwell. me, Joey? is been hear David?

David Parker

Nick. Hi, can. I

Nick Farwell

missed I over the number months comment six morning. the about or What flow. annualized? was I'm I next apologies. Good curious free cash the

Joey Hogan

So we the flow million kind be the cash months. free think it's in to about next $XX of of neighborhood going of for nine

If you through Q quarters will four. for

Nick Farwell

Got you.

the achieved very mid the it's swift as dedicated do you have low OR And environment, a reasonable normalized, question once is of more get and XX even with that given in to believe seems old, to below do sort you something other example, that Thank OR? a what much. stabilized whatever an David, not hell means is, their Okay. XX XX

David Parker

I in sprinkled said, XX. sitting But allow XXs, there, our then there's the looking as to a and where at see quite and few us XXXs, XX earlier, that businesses about those. just our is is XXs internal you one And, what fleet, of it, mean, half XXs, as we'll you of the let's dedicated going of market that Yes. half we're is heard having, and there's say, I'm to to the down in there go. it's Yes, discussions also get to XX, here low Nick. goal first

those So these questions, earlier, fourth it, first we're next points one some Joey first those can it's confident for toward either things And another or assets, of we underperforming that take quarter, that quarter, feel time that the get of of year he why quarter, working that's XX sale. from one said and that. second it get that I released out

what fleet the we our So, acceptable to second what get down you you're half we to our got our and and I range. other say, in first it get mean, just are saying -- is and But is those that sales, -- exactly there, is got -- number. seeing we in what studying half it

Nick Farwell

you what's do a get about do environment? I do OR think parameters, you over you haul And what bit you hell same would the can think sustainable, the say, Where commented -- again, road normalized might be business? the in of in know, where under you've sort you a long whatever

David Parker

XX Expedited breakeven at XX%. the be Yes, to yes. kinds We And is operate operated do on That And that, the XX. when with of get first OR. used we was came kind XXs. believe XX really is that forever. we make that it where little it is because then and money, the to into would quarter we really was quarter became, those of then XXs -- the And model in things, fourth and a

honest was about it see of thought out February, of you that just and you for in XX so the the heard that the two and snow is of XX talk to February, it's cost there. -- of I that a or Wyoming XX. and the at that kind we the get and to them us we month high. possibilities to that, Expedited, not XX. they sitting And long, of first and the all could I of XX came truck too of in hours. with ice XX, the quarter cost And XX can just But changed in have with people points it And it And to just three two in weeks because cost cost stuff, two lack be a

And so the that. of XX% we're you its less going was, today total saw to when is that XX, than make even and it it

it and February a XX the is high whether the and us range, was high operated it's OR XX February, or now there we a horrible XX, to three So the in XX, XX. points. can month in with XXs, that February was And but in the you two costs or of tell in XXs I it's

or XX. been So we've almost I quarter but but say may been XX never can the quarter, that have the there, first first at

not in then comfortable capacity, environment. the at that unbelievable, normal today XX a feel is that's XX, is normal, XX because XX is probably frayed said, to today or I when And so is number

bottoms It's and statement. probably than And it where better can in earlier said -- XX better. at need there. that to it's years. anyway, get -- We're our those trying. than it that? about we're five about So P&L Yes, you the can. costs, points been working better we've look ever get And off But Paul to

of so of this the I'm company. so cut proud and costs we're continuing cut have We much folks, costs. to out

making don't you as absolutely it April time cut some did insurance as going it every better have the it X, costs, XX% headwinds. financial So is we long a as operating up standpoint, from there's

hope I question. answered so And I your

Nick Farwell

Yes.

Joey Hogan

want I on question clarify to cash flow. Nick, your just quick, Hey, something real

CapEx XX. about thinking net right of we're We've $XXX the year got about tax for If some We've now, debt payments. net of got cash rest the you're million.

down try by So if you to about get $XX net million think about it, to we're to to $XX million debt XX/XX. of going

the So a that numbers bit. changes little

Nick Farwell

you. Got

an $XX $XX still a accomplishment. Okay. That's hell $XX million. million million -- of to

Joey Hogan

Yes. consistency see the the cash that Yes. in the that month-to-month, to non-truck flow. of growth quarter-to-quarter of is there's contributed model and the can you the generation, another The it, growth that cash week-to-week, really I think place

Nick Farwell

example, the the guys in on supply hypothesis David haul around it a have yet and I'm critical just obviously, we've and you demand business. for talked this you you contracting changed their for and factor. trucking an while truckers other have dramatic contracted is, business, are talked, observation, Joey, might business one have about long that companies drivers, And sense. carriage And your constraints as in the is significant a hasn't in a haul while long been side, other curious,

increased probably pandemic, current if the anything, this it's rate hence, with dramatically, fact, clearly, increases. In

low the be better time, I not haul by supply and sounds imbalance to could some restructured being have if I bizarre, me this is could with might stable but curious than perhaps earlier, of of road for -- number the it what demand, in conjure period know XXs. up haul just would maybe sustaining I three rather been exceeding over the business see it long demand I'm pricing yet So with and a companies, significant business, would the in seem something two, years. long that your still

Joey Hogan

there's gun competition the Yes, years the probably whenever seen, is, think -- factors several over call we've I think it really grows. pricing it Expedited explodes, -- little shot Nick, a yes, that I

different I through the the going other cycles LTL think call freight around be competition space. Now, let's will forward, mainly it providers, the

know the And a so whether union lot of LTL outsourced, amounts, non-union. all or is we certain

they those are there seen, the Expedited is side, amount private shippers big some of we've even the produce and customer the there's a we an our there's pay. the so big And company an side, on there's that huge LTL space, serve amount And really produce amount side, in swallowers a an then product. on the pay, an Expedited won't on shippers they'll and there's LTL

for And to so say very snugging where be -- tried I'm line to it my respectful you that and that. don't well, up they I going to we've grow so own, give

them provide outsider fuel up And where on those service still to so where is that on that again constantly I'll depends put give require of it where the it where can't is pushes and rail. top then go because pricing and and so to trying does segments notch I'll a fool you is, both where pricing does is and find that's you're the of service where

push that rail so trying can when it customers pay and can are the spot things do that you brackets than the some and to higher that all price container, space or them all watch, have stuff. those and so to have go get themselves big do, quote, to the and And a does we chassis the that you're try

I as spot years. our to, opinion. supply where there's I which I on still agree a gone across are speaks you It's I in the just when stuff you then low. go paragraphs is though got a calls And at you, agree and to ago, least put with Expedited several think, directionally. overall good of chain, it's David think just for so couple I ago, with is inventories said, stupid

Nick Farwell

you much. I Thank for business the it, guys mean you capacity. with very in capacity. trucking has Joey. It's appreciate anyone legitimate intriguing that I don't just environment very but you,

Joey Hogan

agree. I Yes. Yes.

David Parker

Thanks Nick. Casey, we have any other questions.

Operator

And [Operator queue. Instructions] no further questions speakers, we have in

David Parker

look I for Casey. everybody Thanks on lot. to call. quarter. Thanks forward joining Thanks, Okay. next the visiting you us a with all

Operator

today's This Thank ladies concludes gentlemen. and teleconference. you,

disconnect. You may now

Covenant Logistics (CVLG) 27 Apr 212021 Q1 Earnings call transcript