CVLG - Earnings call transcript Q3 2021 | Covenant Logistics Group, Inc.

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Operator

Excuse me, everyone. We now have our speakers in conference. 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] I would now like to turn the conference over to Joey Hogan. begin. Please

Joey Hogan

morning Covenant Good Quarter Group Welcome Call. Conference everybody. Victoria. Logistics to Third Thanks

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

Operating and know we Parker; We and and what our by proud joined We're work our morning strong We Chief the revenue remain summary provider. www.covenantlogistics.com, most Forward-looking section statements uncertainties, current appreciative cause year a prepared are, publicly on statements. Tripp We're new Form we start contemplated extremely Difficulty] full including logistics that Officer, recent focused Chief direction. or do. transform forward-looking going [Technical with Please those reflect share. once Form this limitation, teammate's financial issues Bunn; continue risks in new review differ have efforts of XX-Qs. our no Risk the from I'm for as CEO, to our in to obligation website. at the service available events into and comments without our Grant. After that we the We statements Investors achieved our more update our materially filings with to plans, good could and to by undertake is business again Chairman section still to subject strategic we are circumstances. to subsequent of our have our David and second information quarter. per a and Accounting a any record forward-looking of or Factors our the copy our our additional A XX-K revise Officer, on earnings to the and quarter, Paul disclosures SEC, website

we goods has $XXX of In were within pandemic product the the to highlights the certain shown the be key chain industry million has disruption, will continue. road since to began. Additionally, wheel communities. consistently the I'm grew proud industry quarter to time compared keep during and and leadership, and will quarter. behind remain summary, XXXX sacrifice XX% a extremely The this the we on great that moving resolve, freight supply revenue our to warehouse of stayed

asset-based less versus third revenue group Our truckload the of grew quarter with X% XXXX trucks. XXX

Our XX% compared the third less segments grew of asset-intensive quarter XXXX. Freight and Managed combined warehouse to

XX On period, the year mile solid produced we safety side, the years. per in third for another XX% a DOT ago rate below quarter lowest rate accident quarter being

claims offset premiums rising benefit. cost and industry inflation this across some Although our insurance and of

quarter total the little each color Our TEL to leasing bit lastly, of million company investment affecting second by reducing quarter capitalize year $XX on the produced -- period. then began. ago since business indebtedness year continue able the another of per contributing an flows versus more year the of $X.XX capital on units. our to items $XX a And another for net strong million cash since this Providing strong a additional by share we're the

year. Our Managed the strong performance its Freight continued for division

in Difficulty] division the primarily largest over its the in Growing year-to-date Its the Results XX% our today. revenue quarter right robust operating imbalance able dedicated, that expedited about also grew by the long-term [Technical in pricing diligent XXX high quarter top-line continues own capacity our improve industries. adding a Difficulty] Difficulty], the to freight relationships sustainability lead for capitalizing the and to focused productive [Technical basis leadership of year the retail are nicely. marketplace quarter. for where and our sustainable to division inside doing very its long-term. produce from it's unit, time, Covenant strategic is of and the need revenue heritage handling times. supply/demand operating our providing this OR for but about a excited return basis and This utilization per versus market. to and growth $XXX various remains dynamics. customers. customer first that eclipsed this by the in with the For quarter revenue plus on customers, octane mark us developing team and even with and were freight is shippers XX% freight the on during increase our group. and million The project Both day's are really end ago for truck. team attributable keeps right great base, for on led be Even strategic customers the though cautious investment results, We're We've continue the We're that past within [Technical to value, Expedited been on the profit on teams strong we slow the job partners and the customers ratio a unit as continues to supply points provision ratio capacity XX.X busy direction up the looking for

being some driver bad negative OR it's ever been. as side, division being high are our this per down our wages quarter. goal Dedicated Driver XXs market third accidents the on versus we've are lost division. slightly average this XX% XXX, in basis number mile of this as fell year-ago. capacity, one the tractors The in short On a up in of With as the but segment the issue

month and transition XXs target. as automotive well rough but of and in of other With movement, lot a businesses did with a July July, August hot wages. expenses September our month mostly was shutdown equipment hit the of driver The

and up per beginning improvement XXXX. being XX% versus quarter sequentially the is of versus quarter, X% up to revenue accelerate the truck second However,

seen at the in X% the fleet several positive end. is Another situation truck that our of quarters but quarters, the only opened open quarter lowest in we've

Despite the quarter rates to to quarter. a and continue early quarter, a for to in strategic customer location. We Operating tight Nevertheless, to new added grow rare XXXX. pipeline Warehousing and in several step progress contract we but costs loss one market handful and prior due to excited customer took additional in that from remain additional it building a of facility very back the was of the months. the the revenue labor pandemic and are remain at next with a profitability of meaningful Continued among for from for late one relates relocated labor We the and a customers track division impacted negatively particular revenue this as division. strong customer a growth rent improvement committed perspective, revenue resumption additional on income perspective a on utilization, in necessary.

future. for the our Regarding outlook

“we're getting of to our the caught Expedited remains and in For focus the for our long-term. profitability not running and balance market”. the continue XXXX, the Freight of improve dedicated A, spot up segment Managed

peak focused to be small on us Additionally, relative will previous our remain initiatives. for allowing to further the us past,

driver anticipate benefits We and and compensation headwinds definitely with supply. continue transportation non-driver parts and along cost equipment logistics. and to is and affecting Inflation

side, to customers value cost to bright increases our pass-through expect the services. able that to be On we

for for and quarter XXXX As we're opening, we – the results. expect open we for note, things time with approximating we for third the will we're up close supply/demand earnings questions. to All Victoria, strong imbalance to feel now considered, a this you Thank very your on out quarters. the next going call continue feeling few

Operator

[Operator Thank Instructions] question. first And our take you. we’ll

Scott Group

Research. from you. Group Wolfe Hey. Good morning, It's guys. Thank Scott

Tripp Grant

morning. Hey, Scott. Good

Scott Group

or about on to industry sort what that happening the driver improve. the want you're if broadly in and follow-up to with counts to tractor just seeing driver that's you Maybe a market? I seated think you talk of more respect to comment the starting from about standpoint, that specific

Paul Bunn

Paul. is this Scott, Hi Yes.

launched just week in of say I a light pay actually July light So let and July. still August. the in pay the went Dedicated kind count picture sequentially. side on me rough did even [Technical the a We and team of paint would throughout pretty that quarter was unseatedness increases the Expedited Difficulty] increase first or second backwards material the of of pretty Expedited in we lot

won’t because of little think the Expedited, it's into stories. and break Dedicated -- I'm I So a it bit different it's

quarter that early on. And bouncing, awesome levels, floodgates more just the are it's of that it of the on side. So open Dedicated been started up was as I kind couple the And only October. decent in Expedited the weeks went it's really not we've and call some would seeing last bounce whilst unseated trucks

So, fare.

July, On we in bit. And Dedicated. the Dedicated probably by off pay started couple and August, increases last actually the the fell and we late in September, little side, needed, seeing early drivers September, we a say weeks June in lot late were getting stabilize a of unseated I that's the would

better here was Expedited the couple worse little so, roller And of in got better, with them. coaster a past got of Dedicated both weeks. it's couple last of It's he’s gotten worse. gotten here a the weeks. bit in

in weeks of if week better. some noise. are couple it there's and bounciness July, June of materially but last so, a the macro But, And or put are first September view, total not and you better in than -- October,

Scott Group

year for That's in And just preliminary amazing pretty what grow of next you do year? this that from Okay. terms pricing takes results you then, next and helpful. to around the have the maybe thoughts And again some are just earnings, puts year? ability see

David Parker

Scott. Hey, This Hey, is things. two David.

is then go upon stay goes does not to going depend side know as backwards. at today be coin where great you economy that, of own your if it's all year, we this it what it truck it the does year. – backwards, that Next the as or is If

out something So, the you'll it watch market. stays to have do. it mind, increases we the figure that my what throughout to way in just and is, If going see double-digit that is it's

And be so, to I very think year. that's good going a

of going that disrupter mean, people go. maintenance, on I standpoint going by and economy just a by costs be to economy the are will increases. happening, to supply upon to the I which are go still to down, to the wins, of a going to take be there. equipment do increases in be next to way, go from going year, cost it's -- of major is really headwinds way going on if even have are But continue There's rate there's lot the chain to driver rates rates to -- up. They're is up. absorbed slows going think out in-house the and they're paying it going that the depend all take a But what's our

Scott Group

yet starting yet? season at all bid Is or XXXX not

David Parker

yet. Not No.

Scott Group

Okay.

David Parker

we kind have time the it's start. our of quarter conference will fourth when By it call,

Scott Group

you. Got

guys. time. Okay. All right. you Thank the Appreciate

David Parker

Scott. Thanks Okay.

Operator

you. Thank

Our Atkins comes Stephens. Jack with question next from

Jack Atkins

good… Hey,

David Parker

Hi, Jack.

Paul Bunn

Hi, Jack.

Jack Atkins

taking my morning, for good Thanks Hey, questions. everyone.

take give bit a guys you So are more out, maybe kind these an I color Freight Paul. and process us -- get of that some start of secure. get particularly as to how where feeling to longer I know sort you to don't guess, But curious Managed within And, can Can that you XXXX? want that go or commitments, be this stands? are steps little term we would the if just update taking on we you Expedited about give if into maybe on and Joey, of

David Parker

I -- on couple optimize things. so give to standpoint portion Yes. significant try want we a agreements. only a Expedited This from Freight business what I I engineer side, the would -- network, that on an to we've stickier the exact the we a calling driver significant and to feeling the But Jack would business don't where standpoint. a say of portion is say an portion longer customer are know that we're we're as term a worked really Expedited good. the percentage, of to business, its significant within it of and

we're of And doing -- there're hybrids not kind it's those it's by somewhere not not of in that, It's there. customer, OTR there's -- agreements OTR. as and dedicated, look exactly between. -- some it not -- it's so, It's it's things filling-ish. depends the And on not in but hopefully as how

nicely. push path to I so, continuing we're And think down that

say, with that's it lock the Freight to business months a right there's And I'll percentage, XX continuing greater side, we're in contracts. as business, or lot right on some, the a great of handful now base not doubt. something of in call We're I everyday. there's Managed working work to there, no a spot On type hard would customers of

Jack Atkins

that David, longer maybe That's how terms mean, -- over those you I seen Okay. place, do feel like you I And once to term give into is maybe, of you trend place, some kind term the As get the business perspective if context. is, like encouraging go of positioned, a -- how a would longer hear. longer be rather? whatever commitments would in whatever maybe or curious, in you've the if kind challenging we Market, contracts XXXX, kind But, more of we of, Freight to in term -- business cycles. that within

David Parker

Yeah.

Jack Atkins

a feels the to have the where, to -- a there’re position like cyclicality. heck made in peaks you -- going Because putting of troughs guys and a lot weather progress business of it be

David Parker

Yeah.

Jack Atkins

less. the but is there volatility -- much

David Parker

Jack, would this of been has say, the I team the and mean, part a accomplish been around XXXX. I it excited. over what starting last year I've never and early able unbelievable is half, the to pre-pandemic

So we've been our to Expedited your real half the and a as with on is the strategic that's more it's agreements get under going going down there's questions for portion as since to to this been, it's side, a year of be up our plan. make difficult and trucks. not is big been slowdown a it And to the critical be to contractual down much business be next those us, because road to market out because going customers and of not has the it that the as going Expedited

go a where to that. cannot still customers got get day getting done. -- at load the Now I more now. large of negotiating we're that is the little But we're we it's I'm trucks. but it's go a do fire right couple more to in because there, bit, utilization think And of process And chance going of some is end may we're still at now. they not with we're a And down excited on XX% our that still the load the it a got there,

to that a good And to by when it of not the be, is evident to we're slow, it protect things still going on quarters I you're seeing of in XX XXXs. going Yes. from OR last fact going that Expedited going down? to the to to degree. And on couple operate division get is slow is the not you’ve so mean, business. it it's the But what

So I'm excited about that.

better history we're in And side wish to with But in here the this, the we're I them need attacking really years those as and think same not going great of look to headways, only have whatever see a what making at, the runway we've company, as look going accounts, been about me the the company healed do the and the the a I in be accounts ever I dozen dozen is Managed because and a or we the of still amount the is on quarter best Dedicated of runway, thing OR, I business the to it's that of other. could talked and attack long. them, you history been has got That's at excited. are a with Freight. the profitability, XX quarter process attacking means. the once about And Paul's one better best that

to on I the As And I got six that, customers get five a at that of couple or I say Exposure healed them. look the spot only that the of besides want six or that we side business, side. five would there's

but probably rest think there. to couple of that, we're next happy to success. anyway, attempt build out one-third there gives with I them get having meetings an all success there, the So their of I'm the more I And we're But months idea. that you think

Jack Atkins

guys you years I down strengthen another paying really it absolutely. gives over flexibility know the balance step a over has of sheet. the quarter significant No, made strategic last of last couple been And here. you And the to lot And priority debt. another

to kind How guys have to you the Would maybe of thinking tender as you the M&A hear, opportunities? capital sheet of looking maybe that guys kind you Dutch the opportunities you the quarter. forward to and about are you at returning shareholders strategically next balance are but year during move curious the use that perhaps, speak over a You also announced how both half?

Paul Bunn

Yes.

think a balance I gives capitalized no there's of Jack, lot well question, flexibility. obviously, a sheet you

and continue without that just view where are let's lower, very presented opportunity. was stock felt about so we on when just our that going the with to what's long-term And lower carefully. was company strongly into we'll very -- of say watch the today, We getting

total, a business, we're Second, my playing better out. as In total, as in model side, just Navy lot is opinion, the what the far better and M&A said. feeling the about

where is, So, a either addition, I we make in or with to pursue think Yes. the balance externally? it are sheet ready internally

strategic but scale And so, we're the market very now. we're to value do be saying getting that and the something already is hot into things doing right that is now. trying add I'm our hot, ready growth complement not market services. what and we're to right But being

of really good some a And think dedicated outside. with the place better it. be. is a be. the place obviously, everybody's us everybody's the to believe with stick lot Obviously, And will, in it's I a table mean, majority good a Expedited if opportunity the feel aligned mind long-term We of We have some It's not the franchise. that. I we the about consistency learning division with will it question of gives So, the to downturn? all that back it on of

know confident is handled So, get But we probably is with brokerage so, that till there -- we strong. ago, of or weeks. Brokerage, not? did long, there. whether what years are for term, whether commitment customers/partners its loads we've and is won't long these Christmas launch Allegro we good for a question, We could long, it's everybody done public. good highly in We've And a right now, pull or consumer dedicated. that you I it's we're off Obviously, and launches. long freight, that returns standpoint that. long, It's will, of. mean, a product project me, to if really the peak, it's freight job long, no go known other we it's are all big This managed products, XXX very one been a handled that back. not the our from long, historically that managed that supplier the shippers. whether question. agreements two strong We've I'll time,

yet, capitalize we've the And And right of that doing now. we've to on heritage bit a with going continue shipping to that and had community. so -- got we're we're that quite

trying of try all that we're do that. to to business, to to it's that, way grow not the But what more. and and It's so, do we internally not doing solidify to -- both go going And we're our keep and those. recognize

And so is. will let where stay it

where look to keep and but want stay to one I to call is say think wildcard, keep we me, If to up it If go, we just is, providing standards. working a It's our to externally, its hard across the important, future. about it. more there, industry for to the our off but and we're tails it's you of it's and the can for that and that back industry and marketplace to marketplace And working and as it because comparisons but more angle the Covenant don't up the service standards, shippers. backs it we're You all huge. that, hard a model us really and it external going that's

So, the the how me that out. is model we're question. that But is playing to excited big

the XX% And Expedited I mean, mean Dedicated and growing. out. the models a largest call the real one freight as is X% of I and division I'm things most plan managed revenue, said, models was playing about. same, out. excited quarter. it And quick, the that's about Just I were of warehouse XX%, the in

David Parker

on debt million quickly again, today. goal had March I before, And ago Yeah, been back And but XX And at impressed opportunities current our there. our XXXX just internally us I've a biggest on were They're lot has where yesterday, becoming opportunity at of $XXX provide have. months been Joey looking And out with of million to said because has point. got is this Joey's debt, of net to goal. business does sitting we that there's debt, opportunities. not with at to M&A opportunities where align strategic we we're at from impressed been I've we've the had the I of place. a we've really the $XXX over but free, a well add certainly that look are internal to we're that's net what all moving and direction. stay discipline to improvement went of But XXst business our really no that that with focused we've that flying we was priorities.

me. of to has discipline doing impressive the that been really So

Jack Atkins

Sounds time the appreciate great. really guys, Thanks again for it.

Joey Hogan

Thank, Jack.

David Parker

Jack. Thank,

Operator

take our next Thank ahead. please question. you. We'll Caller, go

Bert Subin

good Thanks Hey, time. for morning. the

David Parker

name. it? Who I'm is sorry, we hear your didn't

Bert Subin

thing went is the Bert Subin Stifel. Sorry, This blank. with

David Parker

Hey, Bert.

Joey Hogan

Sure. Hi, Bert.

Bert Subin

guys. Hi, doing? are How you

David Parker

Good.

Bert Subin

mentioned the You board, wages just smaller Do carrier that's inflation the tailwind as your And So because cost keeping doesn't growth beyond business up -- of the pick about way think of remarks. the that across what's prepared on think do that just higher that's up the XXXX? impact if typically Is part the your of at you even bay? up a pick the back supply in to you end as fast paying side you right equation? as think it? you of the equation gets maybe

David Parker

And Yeah, we is do. what economy I of depending or going is big on the that not all but there to yes, we small Bert, is inflation think our have is think upon, all how But the got, carrier a how be difficult don't takes we're small carrier. And that a to on them. mean, know hurting. for a going a now to going numbers are it's negotiating small small be not time I to does. company guy, what decimating right I equipment

about that they to if have it. going they're going slowdown through. to stop. going go economy, wall not of yeah, And to small any costs so going are the it's And those to in to be have carrier. difficult And no There's a some the for very doubt are there's

Joey Hogan

somebody now. think I availability trailers -- to maybe like you the cost the And there's talking night, talked equipment. gold of then buckets there's of little driving the of right other mean that were and there are the out about, if we Bert, equipment, running

to, it XX the changing so for you is talk sees the cost And And who nobody is availability months. tight. matter up, that doesn’t going

them coming there's yourself, or they because XXXX got gets bar you the about talking you ahead equipment get year, maybe this well, that then out XXXX, and company there's timeframe. XXXX we're talking And XXXX. they're -- truckers the lot ask put then next to generally resale in because beyond and so phenomenon the issues. start EPA the time changes of folks and engine, first are kind got to technology And the year of And to new on engine of free through you of trying technology, a leasing

And you be I so start squeeze on a kind couple… deal, it start and a could mentioned that you doing so as kind of is of, you equipment, again, XX you see – XX, think for it months it's this – tailwind probably

Tripp Grant

year be to seven a age hate mean, XX old I a carrier we're so. still what would average small or truck, there, months I running

age and average mean, another will going their there implode itself not age years, a old or XX. that continue you're two because going because can't trailers, manufacturers, maintenance – but trucks order the our year. of to tractors. we increase in not average but with get So maintenance going order going – – our to truck you're I dues, sitting a costs the to seven want this talk tractors We're that mean, our about run manufacture is let's And I year we're just next our where get them. they to will it's total We're not to

David Parker

and dominated carrier. X,XXX, size seven small is that And Difficulty] average – is [Technical by the XX,XXX know which trucks. Knights Remember, as the RR we includes average

So in they buy – the trucks. buy used market. don't they new They

now used so And market silly, truck for. is used as the what far is a as right selling

up smaller hauled will, being So it's you market, is spot that obviously, carriers. if holding the by the assuming markets

then for needs truck And than so need that to that, how folks going whenever fund the they you add so freight. add rates how are pay propped or would a call And – truck, normally, that's to, whether “in a still cheap XX% are the up. let's goodness. the they are to – to they and locked got more economy future” to a But paying going smaller are they truck the have that and today. replace capital the or you XX%, been it if or yeah, interest future, affects then

that's your or in so you pretty big years that the three the worked through next a two way is cycles. And kind of question in

got you've The it's equipment fleets so got if business really is And whatever got thing capital so Can larger supply. extend, is we you've the are, for means, the my weather storm our and equipment good structure, because now flexibility the you've – that big flexibility, of can plans, the us – that, too. continue you I and in right and course have cycle move just trade normal issue tough. an

that. could that argue, until there's with moves, some I So inflation coming

We're we're thing, If with shouldn't in – the that, equipment. freight, other business business you're moving mean not us I moving we're in of then freight. moving because geeked again of get able yes, to move and everybody the of now up the about on all sale,

were it. a If to you on sell going you're make truck today,

not to What's cost what run So business What's again your tomorrow? that's tomorrow? okay, business tomorrow? isn't answer, off on sale what about is. the so the the business because What's – an a

going some that think to earnings able want keep price I so low list. order-ish opportunity year our for cycle obviously you're a gaining of helping stock for help we're to I aren't. have and year, cycle ahead don’t to And some that’s to we're big zone. is there's big this to sales, have this a Ones gains And their on folks trade

is equipment smaller I for folks, my a issue next – the good huge the a huge in issue which is is bullish survivors. a is it's think over So two the the – or opinion years, three

kind to demand prices for survivors. hit, going It's I the the think opinion. good imbalance its it's the my question a supply, thing whenever of help

Paul Bunn

thinks Nobody are could maintenance Nobody going labor trucks If thinks this, say going it fuel is nobody is probably Nobody But going down. you down. down. going thinks like down. thinks you to – bad. its if run the just take spot different you're in if you that have environment, people on you spot hurt think whenever a an rates rates, going inflationary

Bert Subin

guess inputs less ability I versus when answer. the unitize, some and equipment other so I maintenance, a got that's maybe at your a look no, little is, degree, X,XXX, that's insurance, side to tires, different. so transitory, great three trucks are to it as Yes, you

So it sound like with you guys that. agree would

David Parker

Yes.

Joey Hogan

Yes.

Bert Subin

So appreciate that.

Just me. for one follow-up

by been contracts. On you challenge? competition moving there's your -- like are some over a say year, last labor you carriers virtue lot the the exiting of of sounds into space have been shippers of side, Clearly dedicated okay situation. the It the just has a would

why would I what they if an think, So, alternative? do mean, you exit have didn't they

David Parker

exiting exiting maybe say, a curve one -- taken model in top can us they think a the to them than they or get maybe couple would better have they -- rates but the model way up. because where just of more other they work we some situations, I may for

Paul Bunn

other And -- living rid to what, sales. of are through we know, that second I think we plant or do XX% there's this shutting We back, going XX% involved fleet a [Technical XXX I see in I our the when of go nightmare quarter what, but zero, half saw had, so, and plus down go. the of all the had going second States, about when put to things of you the in of halfway to And, start trucks portion, that's can't going that the fleet may run it in but pandemic, never tremendous we still but about we'll was automotive. need and saying, XXX they're about the doing we're automotive fleet, XXX had amount cost quarter the week. and big trucks we're pipeline, are where all a through. is, the you determine where got trailers We've that. of you we on that Difficulty] costs start to handle United that but goes. XX% every that And XXX getting of of of trucks mean, a business, our the down and from come mean, one that over I can't the them taken that to the other in the

Bert Subin

that. Maybe quick on just follow-up one

XX and XX, business contracts, sort after -- you of the about still trucks you've historically think about of that to XX, swath strategy to You dedicated that go opposed -- think working? sort as talked talked I trying right pieces is does of that's with larger

Paul Bunn

but they XX -- big mods get takes you're When but for deploy easier bitty trucks but a to takes deals. lot to and up taking more XX fill it while is what is, faster, you here's are mods those it on It I'd it there. and it say, -- a swings little

that. make And point, a cost it But adding to or accounts. with tell we're top you're up trailers lot so, what a to you exiting XX trucks of got are XXXs, David's just do or there's in I XX and drivers and XXX lot of -- to would all and when there's the those you, moving

things, just of in customers the supply quarter, them major to One in to do XX add of had to the three had on dedicated and of four chain one forks. issues top the dedicated, them [Technical our of third with Difficulty] the

some have business downsize your chain the Joey, David were customers ran and part -- of the so, to when supply said, quarter. And for dedicated it's the the four ran reason -- issues, full and of that's then most major top XX again, as cost

Bert Subin

Thanks for so time. the much

David Parker

Thanks, Bert.

Operator

our [Operator take go ahead. Instructions] We'll Caller, next please question.

Jason Seidl

Hey, guys. Cowen. Jason Seidl from is This

David Parker

Hello, Jason.

Jason Seidl

some we that going profitability improvement of at how the little bit But that quarter. on of, some Dedicated Understand, how you're jumped drill here were sort some So attheir to you're you apology, what, in new look and got of think should looking level a supply XXXX. of rid to down do look wanted quarter-over-quarter, there see accounts but the [ph] accounts, issues chain on and on as then and of the improvement. we're late at that I you speaking we

David Parker

ran be through would of sequentially high July. in XXs, OR that four. what through we're XXs going and We that kind bit improved that high once we And all got September we in a of confident once three Here's feel August cost say. we I from to September, got to

to incremental what improve fourth it right QX the to QX in QX, see coming. from you And improvement saw it's going that so quarter. Jason, we're so trying improvement at I is to And incremental think from you'll it and the and some now but -- leave

Jason Seidl

the customers? another to way. changed in quarter your Let business it What of new me over ask percent

David Parker

X% XX% process quarter X%. quarter in -- we the another in the right probably X% got and Here Yeah, then during now.

Jason Seidl

safe in changed the Is X%. are Another levels? it over profitability the to say that well have accounts that

David Parker

Yes.

Jason Seidl

Perfect. to Okay. That's it. good way look at

David Parker

Yes.

Jason Seidl

you I that much He seat want I how comment want does in to more right trucks. on it to at you cost a what asked. percentage that button Scott look that on put a to CD follow-up costs, recruiting new basis, When look pay, a question about asked another angle. from a increased at increased now? driver

Joey Hogan

to and XX%, QX probably just have pay too, are so from you're but recruiting, as Difficulty] then just the well XX%, are rates costs. driver cost and XX% increased the up about it's QX to the over of nicely up the going QX. but [Technical rates in Well, QX the Dedicated so XX%,

have Expedited Expedited sizable and coming July, as the going another the we pay we side next on in side, we On beginning said increase raised pay we're weeks. -- the pretty in to few out

Jason Seidl

little OR? Switching XQ Okay, look Obviously, up a of partially forward. Is warehousing we that going somewhere You of we side can about terms saw should things. fair business? where get in the costs you OR. the offsetting this in the some at to enough. talked between of and How over XQ the there bit spike

Joey Hogan

Here’s QX. I would more growth, QX, for say, and in revenue what investment you'll I think see more OR QX

Jason Seidl

sounds That enough. fair

tender. bit, Lastly, Dutch little a talk obviously, your

on wanted. current in than stock as as you apple probably on repurchasing your a get lower you before. of these Unfortunately, another anywhere levels? a the at basis regular you're many shares shares of price thoughts bite terms much You Any near today getting didn't where were

David Parker

wasn't and didn't it. I'm that's sell wanted Yes, too disappointed. going after play I Jason, really market The it think, recognizing we're to big, cheap, it. wait came good And minute, to that. oh, a not saw us, we the we We were Obviously, said, market out go and value. with

market moves. the So

strategy, So we our I want to buy. want

progress going on a that to value institute desire the remains and to our table, of which recognition so value and if on not sense, depending the Tripp at and we're and/or everything is program And going where make -- or comment regular as think But said, looking very of sheet closely. capital that said I we're very, balance the where because I anything around structure whatever. is, opportunities growth I'm earlier

Jason Seidl

position years That's nicer now you than always. appreciate You're ago. for time in few sure. a as were Gentlemen, your much a

David Parker

Thank you, Jason.

Operator

Thank you. We'll take our next question.

Unidentified Analyst

This stand strategy. you it? where going is Nick To Barwell that? hedging do And what strategy, comment to [ph]. degree your hedging degree little To implement you about you what implemented it? Joey, on bit you a could are fuel have

Joey Hogan

None, really pretty have the back, know none, don't as We've maybe. for we Nick, long had, and historically had right now, been we of fixed they a then a in time active to you of we've as And sure and time, is, it times between didn't. several anything Difference outstanding periods looking we now there we make -- was wish good weren’t. A: market. had we where was chapters there's cost possible. and our was as period where

well, the our say, are really really, times. a lot fixed. some kind were some And Today really willing going and -- through additional we of know our was to to I of with but was can we just money, a overall, of some periods was, so, transition them negative, some we cost did where were we various cost to take what on we lost as insurance of but it

more, it more, call a we're not if aggressive of It's market, It's with you interested that taking ever. you to approach we've will. it, little market. just the aggressive we're So, bit approach a and on not want whatever kind let's the say, that ride taken call ride and hedging. ever, kind of We're let's not

still more good. us, not the I percentage about impact recovery increase. the fuel strength We're am of net program. pretty The is to of of in and program surcharge. because than our after surcharge concerned surcharge of Our continues to the economy I'm to the really cost fuel good shape,

Unidentified Analyst

take time a you swing does surcharge, prices? statement consideration is gross into lag and If in how much the energy “cover” the sort the that of

Joey Hogan

XX%.

Unidentified Analyst

Okay.

Joey Hogan

About XX%.

Unidentified Analyst

activity, implications? average And more and -- it question it length Okay. other what on Coast? is customers, are -- in Has Did West your the ways restructure geographic quick it lanes? Expedited, is you in change what focus of Did this you your more of did the your longer-term it the you But focus haul? take Northeast? out you shrink what the as

Paul Bunn

five been Nick. This as Expedited it's probably, the to linked and last or average it's No, is an Hey, the haul six years. as franchise long or is in Paul. less

the say, So it's sign. it's, I'd more of

Unidentified Analyst

Great, Thank you, Paul.

Paul Bunn

just customers, the to is that a the long-term contracts that's Nick them firmed I nickel the those versus having years-and-years-and but somebody we've more, they'll a customers with would than us haul up, they so for it of lot during taking the tough had during gotten of we have say, us, did that cheaper years, we downtime, that be a than load times. that mile some

So that's does. really what the contract

engineered. [Technical then and that there's quote no in Freight dedicated XX% the and got of so, that's we've And Difficulty] again, And… our But Expedited.

David Parker

Yeah.

Paul Bunn

XX%. the from probably will that's that to probably of ABC going consistency. of back is up engineered. to turnover XX% on Freight back And that A that And go this or A. it's drivers group And number the better about was we A B mean, have of about I XX% the to unbelievable that year, started we're to up to that

David Parker

… say I

Tripp Grant

go way other stuff And -- ahead… we're in taking this

David Parker

in going state. to to the it but an was but of anecdotally, a and is trucks weak Tahoe a I I've up seen number or which and No. the insight Driving trucks of say perhaps Covenant Lake the to driving insight. down part in California I'm fair past, southern -- others. that Covenant at -- fair In –

Paul Bunn

Yeah.

David Parker

brand astounded. all Maybe LA. cetera. you the What UGAI, I of port last It US It's months, the it's long-haul name logistics. whatever enlighten especially and but take. truckers, And very Obviously, the three, case, four And unusual why would et find around Gordon, freight, US, the etcetera. I'm for can confusing. it's that's few I almost just, is call, that me worth, very over Gordon name

going got still that… freight are California same I'd changed You’ve a the of has say bit. XX% running of We're our first them all the particular to volume – same Difficulty] lanes not [Technical in

Paul Bunn

Yeah.

David Parker

… we've always ran.

of – own it’s no wonder, seeing with the a we And California not state got state some its is now said, predicting some -- – been XXX what's a could know, watch they ocean. into have in a just the That's years of whatever all craziness I ago XXX,XXX XX you're containers important trucks. California mean of So the for out of has. And itself. as we the these

still so, Coast. said, off assets "hey, that brands. they're out, the California that going but you're somebody carriers I of those to seeing saying, guarantee are many saying West see Covenant, go? all for freight, Managed it else and and years, does Covenant take a a California, my reason grow carriers that? somebody go I that's wants you lot used And else are California going the that but why that. to let's to controlling who's really another committed do that said, And We've logistics to there's been am to Freight not grid to let

Paul Bunn

David. Well, what That surprised totally endorse you're has I’ll you leave here second. a I And can much, Thank very saying. me.

David Parker

Okay.

Paul Bunn

David. Thanks,

Operator

session. question-and-answer or this conference I'll today's At back to closing the Mr. turn time, you. for Thank That concludes any remarks. additional you Hogan.

Joey Hogan

a talk Okay. everybody we'll participating. lot. for help. to quarter. Victoria, next for your thanks Thanks Thanks, And everybody,

Operator

your call. for today's you Thank concludes participation. This

disconnect. now may You

Covenant Logistics (CVLG) 21 Oct 212021 Q3 Earnings call transcript