Earnings call transcript Q4 2022

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Operator

Welcome to today's Covenant Logistics Group Fourth Quarter Earnings Release Conference Call.

Our host for today's call is Tripp Grant. [Operator Instructions] I would now like to turn the call over to your host. Tripp, you may begin.

Tripp Grant

Thank you, Ross. welcome call. Covenant and quarter Group's everyone, conference XXXX morning, to Logistics the fourth Good

website reminder, call are a results filings Securities and As and this that to Litigation publicly the statements uncertainties comments at risk review Reform forward-looking Private statements. available differ the prepared and under We the most financial by any materially. Act, on our cause recent I'm which call could undertake Copy subject David Hogan, Please www.covenantlogistics.com/investors. revise our risks no joined on Parker, will update to actual or contain SEC obligation Paul is forward-looking factors. additional to information today of Bunn. Joey

on XX a into the as I'd jumping first quarter, reflect take to whole. Before to like a moment

in XX% revenue, and capital stock the leverage. year all debt it for a the marked it's truckload low specialized approximately consecutive returns of while record but company year acquired remarkable carrier, maintaining repurchased of of As earnings, moderately We a many ways, small record and highly outstanding profitable the results. us safety second

also and We business the our progress warehousing. and our improved model managed in of segments freight grew Asset-Light comprised core Dedicated our made contracts in through on segment operating

has strong well the of we sheet believe our positioned well our and freight the for future. improved of Although us tailwinds be a balance strong combination may the cycle behind us, operating model

are and to and team improved, company of we made whose grateful commitment today much is possible. Our dedication members all this our

adjusted to was more the of tractor improved the least market of downsizing per our expedited and capacity customers operations, a efficient ratio stability while an working we essentially basis, growing did successfully adjusted revenue believe and a performed improve AAT, significant quarter. generate revenue less. brokerage selectively team higher our more well On fourth the Consolidated with to fleet income. XXXX, contracted in during with and our overcame margin fourth flat long-term compared on than better inflationary adjusted now acquiring with net Focusing quarter Through transition. the and operating cost of dedicated we

basis, impact towards share considerable, environment. a the up and growing results allocation On XX%. were repurchase Freight of under the our in earned to soft. year-over-year feel These adjusted EPS to adjusted rates sequential quarter difficult negative an turned EPS are with but prior Freight pressure. were are continuing fourth was volumes capital

of equipment In headwinds. addition, continue and to availability cost inflation provide and parts

with In first of customer driver, playbook and primary be ahead, around is difficult resolve revenue many due removed operations in we needed quarters. environment, underperforming particularly and fleet, source -- cost half our future results tractors factors new on quarter, the expired dates, been parts have year. lease headwinds lease in XXXX additional availability to considerations. turn-ins tractors, the operational of lease lease whose and Several used throughout transpired units negative time for leased a And tractor trade terms have group expect this prep of remains year-over-year the cost our for reported to our including significant which due the that parking from period. receiving high. looking maturity income to tractor consistent in adjustments to The and the comparisons our over delaying order urgency our

the estimated any write expiration of period impairment in caused of period these accrue and resulting charge. units, future the these the before lease to in asset down the in the a costs on disposal right-of-use abandonment The leases units us

our to believe this we possible. quarter, start year the manner the is in costly best most the new in Although opportunity cost-efficient

to share quarter. year million and to increasing per income the adjusted earnings quarter ago highlights increasing XX% the for compared X% Key include $X.XX $XX.X per net share adjusted to

throughout net our the income percentage, a per share program. earnings shares repurchase outpaced acquired growth year due under the share As growth to

During X.X% for by compared million revenue $XXX the the approximately Total to declined million year. quarter, bringing repurchased freight $X.X shares, to to XXX,XXX total the the we XXXX quarter.

asset-light Our freight with by freight Managed primarily and revenue Freight our asset-based volumes and fewer the revenue combination reduced compared overflow XX because brokerage a declined year. warehousing of truckload peak trucks segment's combined -- XX%, grew of of to XX% the season rate muted prior

in and and adjusted a increase. in Truckload Gain related all to the on play basis contributed insurance on prior an was to total to of compared million quarter year. compared cost quarter, Salaries increasing in for the continue million to headwinds $X.X $X mile wages, role major maintenance the prior our per $X.XX the this sale equipment results quarter.

of to On compared XX. to new number small year's a increase favorable age proud -- per X%. average last was a for September accident the The rate year DOT year X our prior period months, safety are almost previous fleet miles from company consecutive development side, December reduction insurance in expense at a of prior approximately beating from the that XX The to XX of by a the mile unfavorable record safety total million our record, despite X-month claims was report quarter. years results, we per contributed $X.XX

XXXX, For the order, to of equipment year. age increase throughout we original been and to anticipate our average we sequential the able have tractor our improvement

a share share leasing versus to Tel year produced period. $X.XX $X.XX investment diluted per compared per ago company diluted Our

invested was $XX.X debt-to-equity at XXXX was XX.X% and XX Our versus the of in year. on million prior Return XX.X% ratio indebtedness yielding net ratio a capital leverage X.XXx for XX.X%. December of

Now, a Paul little items color on will affecting business individual more provide the the segments.

Paul Bunn

XX% the in are the us and rate seek the improvement to the our XX more additional the combination segments compared to had deeper of grew Thanks, as XX% revenue into for freight expedited expedited a the quarter drove Tripp. year allowing prior result a results of AAT increases quarter The driver consolidated the operating moment to a tractors. quarter, acquisition market, our and loosening first tractors. we dive Taking to operating what related

a by October that utilization to are quarter, was with major rate resulted and We improved play freight Ian. maintenance in Hurricane from impact and sores increased and headwinds expedited from pleased insurance which Cost our margins. FEMA in the the this We continue wages, the our resolve help of quarter costs and a forward. going of plan claims in and to significant in improve the combination the number will work of impact equipment prior believe period segment condensed replacement

Driver pay time. present the remains at stable

Our Dedicated XX% trucks offset of to increase the segment compared in by number had a freight or in of average XXX X% as revenue a in total period, per 'XX X% result the reduction truck. a quarter reduction revenue in the

product target, of X year-over-year fleet based were the cost exiting to segment with because pleased on experienced the sequential margin, our reducing improvement the same of which primarily counts customers our of expedited we've business reduction are unprofitable profitability reduced and intentionally segment. volumes. is we with fleet both impacting increases, Although this factors: and fell we short existing in a The

this fleet. reduction work margins improve by Managed customer The a to the in of truckload our in significant asset-based a in contractual revenue from freight revenue, reduction to Freight of the by overflow peak to experienced a less our quarter continue in We mix, freight them product profit. of XX% operating operating total diligently compared freight segments, XX% the revenue more and and year. segment terms improving younger, efficient a offset in prior was reduction reduction

more quarter, that experiencing environment. pleased able environment much Freight but to expense we competitors was of in the Managed margins anticipate We for are now softening volumes are We for a fact competing with hold aggressive significant margin at the with compression the margin. aggressively this

the saw business smallest segment, the largest year, all although the segments operational of our start-up customers Our of the a resulting new of became revenue from in to of compared year, which X December. warehouse increase in XX% in the prior

this and phenomenal with the job start-ups, we've team achieved revenue intense executing and in which time-consuming. the are We segment, in a has are line pleased both these growth top done

segment, throughout year. we've growth However, sequential despite seen top the in deterioration line margins the in this

in customers. continue rate focus be to labor and mid- digits XXXX through Our the to existing segment improved restore grow with utilization and increases this will high single profitability to to

million quarter compared net the to $X.X million year Our prior minority TEL of $X.X income pretax investment for produced in in the period.

an quarter's equipment that throughout to group TEL of fourth a on approximately has to and million. good a adjustment $X.X similar equipment. The producing quarter the of tail, results the a it cycles, due we sale by gains typically strong expected is believe the impacted on for of be specific to and sold term. make in equipment track is depreciation bad record specific negatively isolated and was to model adjustment soft near quantity adjustment this Although of is especially soft accelerate

million X,XXX to quarter year quarter truck and the quarter in fleet trailer the decreased ago quarter, in X,XXX. fleet XXX was a 'XX. versus million. revenue balance After distribution to XX% our the TEL's approximately more the assets sheet grew of pretax is by a its other operating which versus fourth XXX our in than TEL investment $XX by increased tail, trucks grew its during consolidated profit in included receiving by XX% in and $X

through to clients their on and clients, lease in business for earnings and a to quarter-to-quarter. of are equipment the and purchase fleets TEL managing equipment As reminder, and focus trucks of programs is small a leasing procurement trailers disposition in shippers Due to program. of losses and from can gains normal robust fluctuate the the sale a cause model, sale by business and part equipment on the

year, is test no but XXXX prepare we as will also doubt We resiliency improve. a can team for been it year view a outlook opportunity there and model areas Regarding for. has it's working our of to our the anticipating where continue of be to challenging operating identify the our that hard to and future; a

primary a strategic As plan. on such, focus progress our long-term our continued remains

we improving that short replacement also in strong plan both costs be our to in from reduced environment margin equipment are and an at We improve and see a term on fuel cost and our profile. perspective. opportunities aggressively the economy, cost to operations, safety pressured rate operating With maintenance results, insurance focused will improve

market softer We continued expect the inflationary a well from market as renewals contract during pressures. headwinds as

have equipment improved factors, volatility program casualty the in safety costs However, acquisition, share insurance than made earnings periods AAT results, less including we expect upgrade and the plan repurchase sales from we on company-specific based reduced our economic team, our in weakness. resulting investments of and prior

expect a customer cyclical benefit to and full-service our low of we less Over strategically through shareholders. X logistics equipment capital available been past range shifted cash investment has leverage to provide full our base liquidity industries generation, our allocation with a years, the year, focus. Even heavy to opportunities our

up your time. open for the I you call to Thank any questions. for want

Operator

And [Operator Instructions] Jason our comes from Seidl from Cowen. first question

Jason Seidl

off freight Paul, first kick a little and bit talk to truckload. jump in then things and I the about wanted managed

us that a can you consider you what maybe maybe guess compression. takes and all from said it And the prepare then is us puts freight the it of out On you is Because managed give of this significant there? of I to walk just basically margin seems side, for range some like marketplace. pressures how in maybe significant? the through bad out coming competitive

Paul Bunn

Jason. Yes,

on say I'd competitive the right now. what out managed The freight Here's crazy market side. there is

to As far going it's truckload as -- would margins. to historical I say brokerage return

our a been numbers. in those us, the levels. multiple margins of to kind that I've pre-supply is just kind brokerage but And these not number think I there. returning pre-pandemic margins issue, of historic margins seen mid-single-digit of out chain businesses more than brokerage are back that competitors And truckload several are others Everybody have times running operate. brokerages

right buy just volume And last years. departments, are departments to back to our there's peers trying so And there are it no doubt folks to space of recoup costs return those few we're numbers. there out a in go lot this and logistics the traffic seeing trying now. from like

XX%, small these are XX% we're lot That seeing at. they're a purge. of run below just a And carrier rates XX%, unsustainable it's just what of said, a can where kind

But the small going what these whole side below cost couple the years, to XX% spot the money market stacked you or carriers think through. can't running forever. and run to some go up the brokerage XX% some of But last on I truckload they're and start making the have your industry of is it.

Jason Seidl

and contract what's that's percent between clear. And no, of right now? No, transactional your business

Paul Bunn

contract, XX% now. that XX% Probably right about spot XX%, business in

Jason Seidl

just the drying loads? spot that the is from market more in terms And up of spot

Paul Bunn

get rates bid a And it, the then many brokers and -- another Yes. contract those of they do stuff. folks to are that number kind and keep doing

Jason Seidl

a over asset-based want good bit of to that said the pricing seeing. little the contracts get the gains basically a the private this maybe expectations has lot to companies you're that What market the of you're side are and held signed bunch days. that's I last month, this now a for here sort of in We to deteriorated season? some that talk going out they during deterioration about your XX bid you call Okay, a of the jump color. and earlier

Paul Bunn

I what our quite volume XX% reductions. to I the straight giving mean digits the not of you giving margin X lot now, expedited you when mean the price from don't -- single But A on having they up a from to Here's because lot is we're loads just I pressure. were -- between on XYZ customers tell opposed take they it's trucks months flat a coming is customer customers. right I you, of to than little will freight reductions to there's on mean somewhere reduced have a just expedited side, our ago. had, less low coming and customer say. would up frankly, the ours freight as margins fill lot of to more broker are I

either freights is what you're and and to or right bucket your not as You're replacement getting the of. out -- the as you now profitable got freight going refill broker

so on And pushing what's truckload that's margins.

Jason Seidl

bit market Okay. than on I offset fleet Fair had savings little Talk pressures newer was help it than to probably the thought wanted the seeing. enough a the you far can about the of we're little in to changes going you bit fleet, talk that newer a some be. obviously, that. maybe before, a about

Tripp Grant

pretty the been it no from running may equipment more Yes, older some out at of to I is with really we've able new doubt be we're price of that than ops that. that the looking And spend, equipment the maintenance on couple last and perspective help than fleet. on There's of about vocal calls the cost taking a our costly that of equipment. older

in Just up XXXX. look ops for a and $X.XX in basis, cents this got $X.XX costs to division ran mile mile. a our sequentially, it And -- and just you When maintenance worse per worse and Truckload if a our up frame at you, XXXX, mile. look it ran we worse. on

we've to on And the in of XXX decided got And to early or trade And those the beyond about top in tractors, in it more through already so was it being new received. acquiring our quarter plan. what pretty we got where scheduled incremental tractors acquisition in quarter get XXXX of this. front incremental were fourth in year we front aggressive which landed on units the of were we

We've also plan our XXXX. trade for bumped up

was in somewhere tractors neighborhood anticipating I and closer XXX the to think order our get original of to XXX now.

park fact in units. release, the And short with so the We went and we identified fleet, units term what talked tractors the and proactively them this about leased XXX the did these just we were expensive that and compounded which in units. earnings went the most out ahead those the in call

were of we that then had we assets of costs, out had all these were that And done, in. bit We all setting and it operated being so being deployed that and that equipment. of generating to created able we a them leased turn excess logjam said and weren't newer little had received of equipment we're a and

going do that I specific costs. get So, meaningful and to in see want numbers don't I to into both think but ops improvement maintenance you're

trading just adjusted own. going I And selling you to vehicles. million exclude up you'll We're we had because vehicles the that in to on we're going year, I when equipment going gain $X if next out selling to think, we're improvement be which the not even be used we to going the sale year, was also leased meaningful see cost terminal what over sale, is this you're see, be though about -- about think or you little that of think going million $X.X

improvement some on year. And see so in you'll gain next sale meaningful

equipment. we So think could in fixed the newer for also equipment even but is that believe and going equipment cost we of meaningful fuel improvement that flattish, the price improvement and maintenance ops be in with though meaningful economy up,

Jason Seidl

you $XX say when X $XX or million? year, referring clarifications. you just are Tripp, One, million next to

Tripp Grant

to in past... the the in I've stuck past. got I'm live

Jason Seidl

Sure.

Tripp Grant

talking I'm about XXXX.

I'm -- Sorry sorry.

referring was to then. I right, You're and XXXX

Jason Seidl

for mile thing maintenance the into trucks put on us? worsening is $X.XX you're perspective so a say, as new throughout can What wanted a I the cost to the went that So went you you bringing so it in, year. $X.XX to other you mile for these

Tripp Grant

better. Exponentially,

cost little if think in the had to the we think the the had I too. parts because to ops of particularly number trucks a say other see parts and help $X.XX per uptime that throughout the I $X.XX we have hard is the know in between require realistic back fleet XXXX, costs tires, parts utilization. bit them We we down. units, cost to there mile, that X dedicated I considerable this a number were But keep XX all uptime and that and of -- number putting customer were fleet have that to would cost don't what could we and component to in in and the per XXXX think all of key mile. it's been inflation. lands there just excess it with because EPA $X.XX our had XX cost get I because trucks It's and you labor, have of us somewhere would maintenance of of consider of utilization, will of And significant

sort when that an think So But and see expedited muddy gets -- to going includes and segment, truckload both just of do reconciliation truckload it larger cost to which maintenance. at and the bit looking of I some improvement -- in by overall trying a little ops you're efficiency dedicated.

Jason Seidl

over repurchases. estimates by This year, a of for in financials. repurchasing still same just shares terms to down the be it did last, anybody's were very in aggressive somebody great own share explanation. supporting and Are your you guys year a to to last year going turn see you as and we them. 'XX? Obviously, else. I'll going aggressive That's And way your you overall be is Expectations

Tripp Grant

don't future, today. there's what we $XX may approved we have on on I on that market Obviously, we is but do want that. out plans about the that what the and on have the to the do we to that going our of choose of we're availability million have what have comment it in public information choose, -- still evaluate And number so what repurchased are but there to to we that. different in sheet options if we and not today. strength in been balance We'll do a we've

it's disclosure So public been of there today. arsenal the decision things certainly in act there's what's of to we something no that on, us committing could beyond no additional or out but

Jason Seidl

Okay.

appreciate Sounds always. I good. the really gentlemen. time as

Tripp Grant

Jason. Thanks,

Operator

And our from question Atkins from comes next Stephens. Jack

Jack Atkins

great. Okay,

take to of that of months. all maybe about that to back given going commented the sound So, I quarter mute in ask guess trends the the like bit on few a business back of could maybe the work of we first a able about kind few of you do sort last last Paul, you're years, think here, the a seeing quarters, bearish bit, sort over the in sort been you last cyclicality I'd have to but about, business step in guys more and how you've the think you've into the done you trends the you but the and couple

think few of earnings it? sort as business to business the how the outlook you about of mid-single-digit managed over think XX% think guess, trough months? transportation for about margins. to changed your is to on the rate Or that you down today for managed still I freight based any run peak So in XX% last Do sort has the

Paul Bunn

goal. each down still probably Jack, I to our in still that's for is shooting day -- That's it's and range. what every that XX% XX% would we're say

internally haven't We goal given that for up on XXXX.

I'll we a about years. step might you're had we I XX%, a we your XX% back. take to on so have big a mean step point, talk or meeting To long down yesterday, been And XX% taking some trough, frequently. historically, peak back. that and it

we've or the to something. the you years and made XX go back next X.XX made If year

but going Is be what the deal be so XX%? just to the lot be know. XX% A in be of up ago. Is market XX%? it that's type saw going to going And for to going XX I to to be it's not anywhere Is reductions. us, years it it XX%? going like don't is you

still whole Or in there's much that We're falls? becoming for compared very the volatility changes achievable of model, that of it, shooting general we're to further for So is the does how in the less we're day years. off kind to the think XX% function less every it bounce market it's volatile. probably were to to, still call the reducing little stay XX I big the on while. last how a prior And is, I'm reduction. -- it volatile, the XX XX% confident bottom compared going or doubt does in in bottom? no And years a vein But of that materially still

Jack Atkins

that's normal helpful that -- that. I guess of think I no about about first appreciate quarter, the way about the you kind that you've know as up. Yes. think I I And and framed doubt factors play of that out and there. this that a at the or all XQ are XQ worse trend to to people see at given should we kind seasonality lot of looking better are

strong November guys guys didn't been much may but you like kind have of fourth You it which you and a had October, have December. sounds boosting the season quarter, -- really in peak

the the business feel into run or the is about like there? quarter, so. business mean rate that's like a based right January about in the way I $X.XX So today, that that one I know on think -- you is as consensus ballpark the first the feel tough you you're seeing the you is do trends trending too. in Do

Paul Bunn

January but reasonableness. we in to mean of that's did. the here's it tough it's I range peg Yes, off what

I stout hopeful a insurance. mean, $X.XX $X.XX insurance. back. a You Chip we was November, interest don't a we October We're run had pulled talked mile the said no But mile month, peak, definitely about December,

but tell in going are again, there, would cost quarter no look soft to our the so we first structure cost things for quarter. you are I our structure fourth is out doubt the -- than And that, better

So revenue won't cost be will as but be structure robust, our better.

Jack Atkins

Okay.

Okay, be get Or within that get about back maybe on to of I'd I they're your of what their levels are ordering the of the levels their guess thinking customers need business? you can your -- you levels. curious quarter? business sort the year? And we'll we in I helpful. do maybe trends normal and of their what sort do customers replenishment, take that second the maybe you of that's to half normal your you to of the mean, think something second kind inventory that's direction maybe in telling are how about Just see think the telling about

David Parker

is I to That's this I negative second to that I would Jack, an been. GDP. we say all we hit in be seen think economic well. think since going below second that that kind have the going believe just there. where the it's have we that as there are points bottom are a I relates of Yes, standpoint of what really around month and David. is down We've it transportation, I believe. quarter bullet January not Thanksgiving. believe downward And that That's X that trough that been Thanksgiving, I first as from

second of and GDP up of start even Coca-Colas if it it's negative in hot and there. is gets level to at or April first it So and I'm optimistic I in the look on end as buying going the in quarter pick things, second more freight it the and and -- May even those think industry us And GDP that bottom gets dogs when the negative quarter, kind the a they down and warm growth. warm all are

will believe And the a so for that I industry. tailwind be that

right levels. And a it I industry for the that a itself and doing levels tailwind as what corrected. inventory quarter soon will a that's will happens, because lot are that that be also their are of event correcting as in our when the about inventory second be now, are customers believe

muddle And so the -- would we're through that. about January, to would I'm just is better And in think mean I'm I that of be it good. you pipeline month having optimistic optimistic the but than it.

If not seen think far, We're I'm across only been brother "broker" what that on talking that the board. it. us to or pressure of to optimistic reduction up. got X and rate -- I the what's from Everybody brokerage I've to X were about levels the side we've we the thus it's the us eliminate get beaten about has outside of having happened go accounts.

especially ever are take pricing Coast. coming And time. mean be look rates for kind very would happy West on are is gone I've off seen. where has our at if this Xs present the rates I the from I X% the I -- usage. at rates. The that brokerage XXXX pathetic, and thing the the of I it's most horrible

everything West because very I and and the boats aren't but in a that in the Coast that's been China think Chinese of -- lot New and of lasted Year's happening has longer difficult. coming

hold breath seeing. get flat, Paul the And some the of to as to just accounts more of we with picture, hold there pleased rates. probably a or are hope our very what we're got that That that -- so nose to take and out pray rates. we down, some horrific again, because we're said, started X bit there the I'm that up. little a X little off our And That's and got and able rates out

of the to we're a brokerage rates in down. it's the because I of right is everything I It's in have that really really double Yet I'm XX next believe almost believe bunch hope pipeline, and be going are the the replace can their not next holding. down we that's replaced days if -- to and I not because XX we're going freight days, what

to get down downward So I the going but rates, of it just there. just it's so far X% on -- haven't January down, help in on what it's I'm seeing seen again. if that I double go floating that with market being

So, hopefully that helps.

Paul Bunn

what the and to thing you questions that. asked peak David volatility to changes is add said going in about and early and all the one trough your that -- I'm

would itchy what commoditized bad and path, but the that day. the down on are going we're to commoditized path we say. niche dedicated? on And value to do. to everywhere need what need I heavy Or really or really niche we're you, are I Here's would quarter's hazmat tell market that get value XX And going be and or I the that they people last people word market. really or used XXX%. haul they need call. our and customer, -- that to feel XX. like providing a teams we're we trying that's going every this are there. more value, And we we to I in are every here of bit market. and working things in for to have where a commoditized where probably where to we're and there -- become -- still We our add niche keep But find well business to going little add stuff day, holding incredibly they just saves value-add we're want do people can that eventually, Good there's do us,

freight. pressure geographies, it's And a is having the point places in us have this have we're market. don't business. enough certain haul we still so of of where really in to X protecting David's it's points that's bit thus broker And and are to freight And part in we far where what commoditized little then --

keep So good. working will on X it those we be things,

Jack Atkins

young David, love Okay. maybe for I really it because attrition all that, appreciate this. I you too. seen get just career hand thank the a about guess to such of and market. man. commentary, just on over But cycles you that I makes and a think your for guess lot sense, I'll the in last I'd David, over. of question, No, all sort your take you've capacity

to You capacity talked about XXXX really least at markets. how see I the with rates that playing lot we've guess doesn't it we trigger being needs in or see normally you you like at can would levels happen from what a seen think really over so? come tell. feel sort yet, certain of really attrition out do at do But out of months situation rates expect levels? X the these we to next that What to capacity

David Parker

Yes.

mean we going it's that thus because DOT look you I has at what think will negative. capacity I see reduction the numbers, I in that happened forward, far, if new think

you the trucking is number But and were but good, folks a company in onesie, for Those Holland have driving there market they mile, Tuesday many. felt just and yet got somebody do to that what's $XXX into has drivers me trucks. one. not been for into not drug I so coming -- grew is And left trucks came think happened, trucks drivers marketplace. entries the Those I mean, new or I started those Jack, have spot and they've That's it -- X drivers because the not for that you, trucks. are not that the just truck Warner

still And so we got same capacity. the of amount

XXXX that's cost to cost with can't market X so today. does in X, business. stay think where and you XXXX, plus rates going is think haul I XXXX but in And the you're X equal

think all of the virtually we that truckload They're of a next months, I trucks virtually. full. of guys, going is So because in capacity will our couple are us rush full see

And of next leaving think couple seeing the I in start you'll capacity quarters. so that's what

Paul Bunn

I've small going and won't the people Yes, vendors hold Jack. rates deal rates few of truckers weeks at from but that's with for to that And talking the again, had worried deal truckers of yesterday. delinquency some eventually some credit little ones But up that that run see think to credit they're to -- and I can't where we're these of you to say, some or are the capital little it down. going and mention it's a one It's while. small made a vendors, talked I over you're and lot truckers. period, their a big going don't capacity well, couple money X- spot big wake last and And with on to there of vendors to forever, day their again, to in a that's hitting trucker departments -- limits trend just now. is left But right X-month getting pretty a truckers

Jack Atkins

it. appreciate Really

Operator

And our Bert from Subin Stifel. from next comes question

Bert Subin

for some the just you a time. the comments of follow-up maybe Thank there. to David,

market a you've go been if future communicating few bearish I fundamentals. quarters, position a toward more freight I think back

is risk wind When to are the least of first comments, it starting what becomes your aggressive it think starting if you are the indicate your as even turn, dip think terms trucking about when Does more saying market? the we is covenant you're at side? things customers the I a here go to that So you finger of the as a more half. trending more optimistic as And market the in looking where terms downturn? in be the there spot maybe in to become to or do in little really put through during at bit from you simple of make want on perspective, trying your to

David Parker

more things so becoming customer are bullish. And kind time than from during we X it's I some if our to or of Number freight. from is of that the sales. with worked is TEL that care in bringing down because some kind about on customer I And for whatever value some that and one, think but and Yes. our their to -- being XXXX, chain; that things. more supply reporting have or am more freight management you supply then are of the more bringing need two, There I that I it's customer hard because standpoint, opportunities don't number in bottom, talked what not the business, X have value bullish are deeper XXXX deep presenting freight equipment and those when we things the since a the conversations XX of those do hit a great, and we've that Paul a of chain, we us. worked getting am getting hard and means, XX XX

not, customers, a XX because they not That's XX go to we do being the going when and where customer get one is they're understand that not ban abuse okay, and started to bringing going going running if that to no point hope we to UCO-hall just the get not is business. value value a pricing. to to not be enough other and in to just need have have the to you 'XX, trucks we we're or to dedicated leave calls. we're call, phone at and that. of because If are of because me, going end bringing going carrier But the I'm like our down commitments we your the from road used freight. We're to they I don't day, we

do don't them I Let go that. care.

whatever we We will whether other go whatever do our means, It us trucks, do means things. acquisitions, go it means do tells market to do. stock, the that reduce whether will it means repurchase

bullish there out opportunities going in bleak a a time there's So be that going lot I there am of to forward. very

good to do that security talking we how at some replace last we're would for about. good of the high anyway, that? and Now, are some is And accounts through involved one on all weeks, that high mean couple certain It we're up volume I the few X brokers accounts I I in volume the a got in. security. now watch or security. accounts because that's right loads things you're could high the looking It of is things say good us. do that X lot popping

for And opportunity that's great a so us.

for be the going one telling to bit the us. where number brokerage about it's Another little market is goes as would down, be that me a

out and that are to I So, for that's also seeing carrier some that in what think housing, there are what But happening. been value. do we've we're I things seeing years that again, bringing opportunities burn production that overcome think we're there can working in industrial be there's I

you math it's you do I have number Brandan. look Bert, far, will XX, negative, reasons I go you minus what It been that that's the so slammed what One at back in going positive. I told get why and on bit. come to I as of the a forgot our I'm I was will a not rates can But the not brokerage say. that, to

Joey Hogan

rate XX… business market We're trucks to We X us, were asking we dropped last to is like has is it, the fair reduction. This is is such and company you. you've the reason great very value. X bring we needed give different this job, recognize this that's our really Joey and it a is for when but verbalizing I the mean years not Thank our our hard -- a we're because dedicated And or teams the when us worked they're last it. do why you customers needed given dropped it. you down, a that And have not the Hogan. rates the for And

Paul Bunn

well, -- over We lot it. of have we taken with when far I have XX% turn, some aren't are situations and out. figure think, -- really that back have we'll a last folks could we been didn't pretty the advantage what us -- and piece we XX finding of another we in We Bert, is Dave were months our of didn't. that's as being right these said, the customers we're now that -- And fair to

Bert Subin

on the Yes, guys just of you about obviously talked the all volatility. things that's color. great reduction Maybe

your Can up X segments or items that a some ability obviously at And cyclical expedited you've going of XX% or/and down to that better managed the and to maybe whether things plus why expedited. both we sales least to going have down in those I your going has hold that freight and be, you lot at then done think because side, I in reasonable the a it's like cyclical improvement to you those provide that it's to where that and lot about managed been more in ability not think up in on a historically things think the of to pre-pandemic. likely are I just very to keep freight of expedited better this? obviously, on confidence XX% backdrop going some maintain color going end X was determine you range, If side it 'XX, back think, XX% or be dedicated. a

Paul Bunn

I these agreements. And Yes. tied freights agreements. managed have would say confidence Bart, expedited from long-term a long-term up in didn't other we standpoint, lot we're remember, of XX%-ish cycles freight of a

the expedited, into mean just our average structure. up rolls your which AAT, not and I -- of what do and addition the that's they carrier not it's expedited plus so just And

we have confidence so lot XXXX. how expedited going in is And up a in hold of to

margins we Managed Freight the top be going line said good to still but are it, we're revenue. compressed On I side, feeling really mean, about

said, in see -- a there as got dedicated Dedicated robust incremental improvement the over going last they've and got think has improvement to seen XX still I going dedicated, David year. see really has months, incremental -- you're you've side, in you're to on pipeline, to a next and I the And team continue expedite this robust Our think pipeline.

little going going Not going a it's continue to -- be improve. to dedicated incrementally to but harder, to is be

margins down, agreements got they've the going and AAT to then You've had on base XXXX. since we'll think we the long-term be that warehousing we business think expedited. side, to pipeline revenue are start but Managed the will will Trans in But go way grow there. I I been way high. in as -- entered continue And rightsize margins best we've business. I that think to is that And

Bert Subin

off Are Paul, getting sales follow-up impact the base? of Or So in saw that, to that managed as the remain modest of Do the to quarter think you bottom? we increase you does can that closer also down side quarter-over-quarter step elevated? a freight. in on the you and only new a first maybe sort

Paul Bunn

Yes.

of quarter, think new down and base [ph]. going forward margin first that will versus managed in the QX be freight will step same I your kind

Operator

this there at further gentlemen, And time, no be appears to questions.

Tripp Grant

for All and right, quarter. talking look forward you to us, everyone. joining next we to Thank you

Operator

This attending. call. conference Thank today's Thank you you. concludes for

Tripp Grant	Executive Vice President & Chief Financial Officer
Paul Bunn	Senior Executive Vice President & Chief Operating Officer
David Parker	Chief Executive Officer
Joey Hogan	President
Jason Seidl	Cowen
Jack Atkins	Stephens
Bert Subin	Stifel

Covenant Logistics (CVLG) 26 Jan 222022 Q4 Earnings call transcript