CVLG - Earnings call transcript Q2 2024 | Covenant Logistics Group, Inc.

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Operator

Welcome to today's Covenant Logistics Group Second Quarter Earnings Release and Investor Conference Call.

Our host for today's call is Tripp Grant. This time all participants will be in a listen-only mode. Later we will conduct a question-and-answer session. Would now like to turn the call over to your host Trip Grant, you may begin.

James Grant

you. Thank and call. Covenant everyone, quarter Group to conference XXXX welcome morning Logistics the second Good

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

Compared the growth the quarter and consolidated well core ago, primarily $X.X weakness our $XX.X year-over-year to freight performed increase of revenue Dedicated. Our million. The $XX.X XX% adjusted of increased units, environment. X.X%, X.X% truckload revenue tractor income Our highlights leasing equipment count and adjusted or operating The a asset-based improved primarily company segments, a principally from by higher combined Dedicated growth overcoming quarter interest million expense both the our consisting million a approximately second XXX operating Expedited pre-tax our from flat segments, because of from in $X.X TEL. Key $XXX.X tractor or business or X.X% to and segment consisting to and $X.X income derived approximately in revenue was income reduction million year in earnings counts with within was in by lingering increased of tractor million adjusted asset-based income of asset-light in freight million derived by the overall to in Managed freight average by truckload ago. Freight was grew a segments total essentially pre-tax current year XXXX in include: freight second net million compared for was per average and and $XX.X increase Warehousing. Adjusted the offset our quarter operating investment,

operating expense to company to settlement its net a gain/loss result revenue average equipment of total year $X.XX prior new increased on sale increases total equipment and related tractor compared costly in $X.XX adjusted and per Fixed and $X.XX the or increased XX%, mile, lowest compared expense compared development claims combined the result expenses the and achieved current year, truckload claims period ratio fleet our equipment to with a large prior operations per XX.X% prior year. Within depreciation, mile or segments, maintenance history or per Dedicated in newer, soft total the X%, XXX of claim. XX.X% or in a leased as more related mile, count cents expenses, declined units by costs, and period including used by and of Our equipment grew a as market. Insurance one prior operating the XX%.

June equipment XX gains maintenance at period. XX investment a diluted ago. XX a revenue revenue in earnings $X.X of on prior compared for loss a and pretax age declined capital year. TEL per and million to improved quarter, equipment $XX compared share million TEL's market, result in per suppressing compared as expense. the sale approximately to for in resulted interest to gain year-over-year to in primarily consisting quarter, was the share, the million net used net Our to contribution versus sale the increased the $X months growth our of average of specialized $X.XX both diluted of produced equipment ago softening $X.XX CapEx. The producing for The equipment CapEx the months fleet year year

basis, return months ratio XX% Our adjusted yielding in average leverage from average for Xx debt-to-capital of growth trailing invested and an ratio is prior versus was associated year-over-year average to an capital of operating income and million, age was $XXX.X on approximately adjusted reduced with increase fleet. capital the net quarter of particularly in as indebtedness the the XX.X%. June invested X% XX attributable current the our CapEx decline segment base of reducing asset-light The acquisitions, year. XX our and Managed the On Freight

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

M. Bunn

to but Expedited freight an operating year with was growing million, a X.X%, in XX%. successful $X profitability in or point experienced Thanks of adjusted revenue ratio compared approximately by the deterioration XXX-basis Tripp. prior

in headwinds year-over-year a count Although was as significant profitability in tractor average and both of casualty rate our with history adjusted cost prior income, compared and from claims XXX-basis a company operating primarily utilization. Dedicated both ratio revenue to expectations yielding freight result operating a in the best declines our year. while grew improvement successful X.X%, of fell growing representing point XX.X%, short the and

operating the the count the prior by quarter, year team the combination quarter. XX%. The purchased improved transportation reduction of the related improvement a of operating the X.X% Freight profit to current executed costs, adjusted the result acquisition, start and reduced average prior adjusted cargo significant claims the compared revenue operating to compared a reporting Transport successfully impact fleet's tractor the and year, ratio the an Sims in year-over-year. Managed year-over-year adjusted XX.X% of to was of primarily XX.X% During large in year, increasing freight up profit its increase experienced second for

Our XXX.X% saw XX%. adjusted of profit a an the in year, ratio prior freight increase to a increase compared and of Warehouse operating reporting operating segment X.X% adjusted revenue

decreased the quarter of to to largely X,XXX and $X.X net ago on in X.X% XX TEL in million truck its of contributed the this within approximately and the deterioration million year TEL $X.X in in inflation Our year income by pre-tax its XXXX. trucks pre-tax second in XX suppressing in declined market, the historical The to trailer labor quarter We period. of compared prior X,XXX. to sale the of quarter, XX% profitability continued are pleased reduced the net investment minority fleet by which adequate income equipment. TEL's decreased gains was by used growth the struggled for quarter produce with segment, equipment significant and periods fleet to during revenue decrease by versus versus improvement rapid returns due

remain Regarding third future: which quarter our to at improve we freight excess capacity we year, exiting conditions. a continuing believe the the the about by we the catalyst outside facilitate with slowly demand, of outlook improved uncertain remain carrier Absent for are enter general an fundamentals we As market conditions pace produce unsustainable to of growth the we quarter, In our operating to freight income XX our sequential necessary last we optimistic model the business over and the operations third momentum the by as year. these months. growth improve. Despite durability the throughout meaningfully about evidenced will challenges, have believe that core

contributions Although, this interest from much be costs reduced the company. TEL, and higher we about of by excited are our will growth earnings direction of offset

true founder to Lastly, Doug wit entrepreneurial by TEL. will for were a it sad we is and and who deep Doug Doug generosity, fortunate CEO to with friend him. news Carmichael, know was and the all Known spirit, to quick who passing him. enough all of Covenant dearly with that his of be partner recognize worked missed

and we talented the now will the for them leaves the Although had. we Doug, look We legacy you ensuring of working he open for more call has continued up honor TEL with Doug's ever will behind any to management the success time most team and questions. business. Thank to forward closely miss your

Operator

will with Scott come Research. first Our from Instructions] [Operator Group question Wolfe

Scott Group

It just So their bottomed. rates, start talked that to perspective of can, have here? just about seeing sounds things of confident maybe where the we broader with, move things. are your starting Knight can how on contract recover perspectives But the spot we quickly from and last things some you're your increasingly if market. same rates night own above like

David Parker

and bottom of I it David. And of think the We about same us for has true or that month in that June all and we've definitely days pretty the way. June just of was It's first then available that freight so started more middle of hit held started feeling is -- this July. month and of middle seeing was we the the Scott, I lot to Hey XX a good May. things May. think the Yes, started better

So we it of middle started to was where really May the see.

So next and all I it's the leave. a going we're few figuring sensing be years have bottomed for that to to we've to layup. continues been long capacity I that last take in capacity kind of has got at I think But going That all capacity do that's leave, that and the feeling -- think how months. I for where kind we're because to today out until that X out think what things of the is

in which years. we've the either give take haven't I'm we're environment. But you done actually with, X that's XX rate taken in increases pleased idea, X thrilled and my kind the days So that of on with we to last that, way, an

so to have that and our things. willing got have are discussions least of we and those about -- costs kind And actually and customers open at

So go all to we're And say to with. not the are not but events full-fledged to in that. rate and that the ones now. We momentum the yet last ones are to go X performing well over customer, that that have that those starting years happened are have are don't have looking going the rollout increases happen we're every talks at

Scott Group

of don't helpful. X, have increases, know. like rate I of said like out X is perspective you like That's any X Do you out that X XXX?

David Parker

or XX I that of of all X mean the so business. the couple it's last anything let's Scott. out in really -- of mean, X -- to literally and that's out say weeks,

that to question that's X become our we it's at. So the just is where with that the thrilled XX? on call, I'm is get in going but Hey, would as X beginning So X. years, third conference really quarter be,

James Grant

That's into. gotten than X we've more

David Parker

years. than I've had Its in X more X

Scott Group

any no else's. seeing then so up improvement turns? held that -- than margin much yes you whenever lot Does margins the and your you from And, think better way just anybody in of cycle And have, a totally. preclude obviously,

David Parker

us last or spot what say as not participate to We the from I seeing. And you're just as not about do business. the lows high this and be our that X or not won't thing that X% about be standpoint only think highs going this a could of X% during be in for the are the X -- us following you for know, exactly Scott, market there market. years. even much we low, you is spot as -- turnaround is going the are going But to

it's business, goes we're spot we will our rate X%, market of uplift. If going or $X that X% we experience if rates at. X%, up won't a your XX% but up where So have the that. But like uplift X%, of the get to it big to going go mile to if back in somebody's and that's not XX% X%, we're our get

what saying? I'm know You

M. Bunn

add our on when about to what Yes. go ORs Scott, I mean, of I Want running David Yes, on. crazy it's This said do the to spot and model that. -- XX they're drop consolidated, to want yes, these add carriers have rates in ability doesn't the to some Paul. is that. down and

On the the you percentage period. huge other hand, a back seen purchased that of is, I kind haven't in know, 'XX-'XX what as we think we of shares

do just got And a think of little of bit so with we've leverage, lot earnings I a rate.

a we're rate way. go that not when -- as if and to at So point, can a point little that and bit said, now. David we of get When long

the kind not in look not have yes, And mean, we're X and a of I quarter. so think OR -- effect. up it's model. I It XX to that's just a going balancer

to get going some On we the a up ain't the low given other rate OR hand, XX the of either and count. you benefit should and quarter look X share get

Scott Group

one. makes last one sense. I just all could ask If That

just of sort You put improvement some talked earnings, about color thinking in sequential way margins, how around in third quarter? whatever to QX. about the you're Any

M. Bunn

the is third pretty Weather say good. generally a got of lot I'd What is workdays. quarter's

any I'll give that don't think, number want on And But to give. know he out wants sequential color -- pretty I mean, improvement. to there. I we we're so I confident let a Tripp put

James Grant

in be our and is a at market our shutdowns play business our QX best a Absent Thanksgiving Tripp. have contractual peak our the strange model quarter generally holidays, Christmas happening, anymore. is of typically or negatively. I the impact we because where look unexpected of should our year, don't QX. QX much and With And the holidays something this very of Scott, change, that lot lot we Yes.

I it. to Thanksgiving what lot quarter. To you But stay. things quarter us a bit think of improvement And a QX of depreciation we're poultry don't the those on that can insurance a in of and is is But bit QX. lot so and little insurance want trends out hot the the is on. good any lot you side better a put -- from ready of from improvement get a some QX, a to and, taken numbers We've get I reductions to absorbed one for little of But compared on would called third there's on some any out business better the very of gets similar better holidays, operationally. I'm not costs we I here hoping that I costs. We do think volume seeing So workdays that. increased saw we do say, and last of hopefully could Paul's the -- with the release volumes, where point, are headwinds we there. called I the The in getting Dedicated and the in an legacy see, business. there's year

So of coming I bit margin little cost. a may be think from

Operator

Our come Seidl with next from Jason will Cowen. TD question

Jason Seidl

Doug to look condolences drill your the to down bit and we a Wanted segments. some at how My on of family. little should

then Freight insight little to positively into us of division how, Dedicated Expedited a move think the give sort forward about tractor I we this stronger the as from Then move than impacted through bit should a you look we forward was Expedited of maybe year? as maybe we we sort little impacted should maybe how XQ and XQ? if Dedicated a surprised How think year? And little next Managed claims the weaker. bit expected. count can claims the we us how then at

M. Bunn

I and some I'll or mean, provide Chip I color commentary. Yes. think let

coming the I rest truck say, flattish and got we've say I deals think would on, I Dedicated, the count, few on is the mean, we've year. I some going would a off. of got deals new

is for minus a truck And it mean, significant or Dedicated see count growth little it so tell but bit you, plus truck the of would don't might of is. But I goal. mean, -- XXXX. in I just budgeting what I I be our a I count XX, kind that's we're

calls X Dedicated seeing they've to take I'm months, in the So, the X years. shippers in last been than willing more more willing last

year, of And is lot next pipeline as QX-ish, QX-ish out probably of so there, not the more we've balance grown much year, a in is pipeline you the this as already but know, the Dedicated.

headwinds that Tripp Expedited. I called it the out, it, think said and you Jason affected insurance

will better cost I get standpoint, from think a that number next quarter.

a you'll get think of to of we proud in year smaller benefit And claims really and a that see so, back a didn't Warehousing, number Freight the I to you're operating. money this segments, quarter, expecting QX year. last how but see our I QX and Expedited versus lot mean, quarter. Managed we're they're but make last X were of

take mean, a model, revenue that exposure less to every I sure of not OR. I the I just it XX% we'll make is not kind Managed XXX% our mean, that's paints in to less so And think so, black XX% division to that probably -- OR. in month. Freight We're and it run to going just run brokerage and

don't think see back in because and I you're doubled had of slump. you've seeing that it going while the so, Warehousing in similar, I numbers some that keep anything that cost a solid But business, work business X and stuff going of the in And to to quarters out little range. And back 'XX we changing 'XX in issues took forward. seen to

Jason Seidl

color. great that's Well,

think, forward? you gears pipeline we have really, me to your And successful guys? about strong M&A strategy your a does network. the how some last obviously, the How shift you years, Let should adding mean, over look think going for guys few components M&A I very with been little bit. I

David Parker

would of that coming like you really across are we're happened, I is. I to Those flooded sale what us. always are probably that's best for we're have And truckload our to interest we anymore looking. starting is Jason, the that desk opportunities -- think And be not every our people coming that's what States that, you. United kind carrier upon and and thing the purchased tell across seen acquisition what is in

that I the on of itself. kind out one. And say X X number discussions would We're our to may X. acquisitions X timing the and and of that's out piques when have presents opportunity you of interest open So

do on that's we it's something So company. but tomorrow something something like. it's any not -- closed, got that anybody not is something or any ready it to on we that But

James Grant

really the know position deal, we've and while lot business and of we're that done company. M&A looking today. And going Yes. on agree environment the we and if And things an a next that the full Officer, thinking and that trying I'm fact the whether what good blessed are of I'll about able at on then in given leadership an actually probably Whether don't perfect I thing land you on to you going the is hopefully, now, some hands I acquisition guess, level laps, jump But a We've growing add we executed to we're our at really thing our the to together we discipline for of at partners XXXX, our are quite Thinking happens with know. disciplined a add now on, I would to what we beginning. this it. as the debt to knows. But that of with I us within the an look and good new period that some additional always and had I a that comments I it if if upswing. We to people this, think about end don't in another opportunities and very we're say. really do and some that we've know we've our the got opportunities to in like can the third our to look too, be is, quarter choose are of closer in Dustin, position Covenant for I and -- quarter do Operating than past addition of terms And the I honestly with that we've we mention been time. Jason. in some great we're promotions if to going and that to be just cusp was of anybody other M&A exercise or we happens I think about into family. And David's Chief right

Operator

question Our Daniel Imbro Stephens. next will from with come

Daniel Imbro

start the I'll on Maybe Dedicated side.

to just and I startups that think keep about those you to advantage talk you are just you've the broadly, it you others live quarter. maybe into is, the aren't more are? continue more is in Why business, then you guys that the talk some here? win if as this the you businesses Can winning in advantages just Are talked what giving guys those you what's growing like, kind expound what Can about specialized have? side, about grown what can haul? And competitive business? of

M. Bunn

Daniel. couple I said, had legacy a the the the startups side QX we in was more as of things, startup larger Yes, specialty mean, well. That of So side business. the on in

poultry I continue we call and attack so businesses. Dedicated both to And legacy what or specialized our

the things that that we there good space -- customers really team are and our some the in do think a operationally has got really good like. think reputation, I I

especially to that those going I specialized keep we're that's focus. drivers, of time Dedicated have our to so trailers, our grow sensitive kinds trying requirements. specialized business, mean, And that's all

Daniel Imbro

capacity across similarly more market capacity think to because when is you that the power this Have And this a the seen of subsector. today part seeing exit is harder then well? we leave specialized that as maybe gives pricing about market, focus, we

M. Bunn

specialized in think Yes. space. don't I the

of out we I think deals, the well -- now, it's Dedicated think there we're a pretty right carriers. deals most and couple lot got of competing I against capitalized of a

not in out going that mom most Dedicated are are And that specialized so and the the pops of of deals business. space

Daniel Imbro

as bit. a of is getting building stepping a more do little more That is what driving May. some your you with you curve? a sense Is guess, the customers, inventory speak you pull this makes demand peak of And sense. you back normal this then seasonally shape think are I beginning normal seasonally ahead this maybe David, season? in forward? mentioned Like,

David Parker

same do we retail. the asking question question. said, That that much don't Great It's -- we're internally. we do

because is don't every -- retail I that that the is don't any I so But see we're I I to folks retail non-retail have of non-retail ready year not of kind the nicely, of getting say which pre can made September all ready port and -- timeframe doing. think. but for X% Apple is peak am on which is But every up seen would there did, analysts, I that year And some business peak you launch a enough very out little majority in that's that do a wonder me we we're sure, is vast the not the business for port do -- have some big of I getting some just is that that it. we bit, business and deal. not question, see in -- though seeing on the And make pre going about a that like mean freight the But kind you wonder there. Dan. believe -- I'm and I've therefore, written business. sure. I'm so peak definitely

just and I Because that. those little not out feeling. we're freight of one but what freight So out of ready I of know. I contribute Angeles And may to lasts. liking the Every our up, I'm we we're sensing that are sure. of because but bit Savannah I'm season, be and just not those both out feeling. us, some ports X us hope truckers are our to main be it some know don't are just pre Los it's a definitely would really of peak what of the Houston. pre peak

Operator

Kauffman with [Operator Instructions] will And Jeff from Partners. question Vertical Research our come next

Jeffrey Kauffman

can't of tough the very quarter. in that things what view itself, the months? positive you're of both changed of I've changing How yourselves. control, things there's hope and terms then the those last you in things or there's of we and seeing that events. But, to button heard down within results has behaviors you are environment about your terrific things that the kind commentary this over X could are a that can changing the curious, lead industry I'm Just control

David Parker

Well, yes, are great those questions.

last strongly I we've involved to X industry down and years, been that the those immune these people or that say people walked things and been people can't and journey, years, as at I very on P&L, work it go things control. last trailer to I and the in raising has we've payroll that mean, that truck attempt walking think we I and that, the anyway X inflation. that the the looked it's get for not into X think can mean, all of is something very we've kinds And to our we tire not can and them, and segments will control trucking diligently. But immune that you things. And, we XX% the have in I door, this reinsurance. in

even we Some as take we just up it lot a though out, cost a in we've Been the possibly -- line of in tremendously as can. able items put successful are to we And try been can't the some of that. control, much negate of to areas. lot areas that

doing, you a effort, that, look we because very sure have our all scrubbing the we of $X.XX to why are X of for And do. that took last buying mean, says and Is good. a have that example, out for up a Leading things we because been we that the give increases, that $X.XX? not We and rate it's of I anything P&L those $X, buy continue years. what can the we to earnings again an happened. of been sudden Jeff, we're make that's So because is for we've -- little

they and control make I this that's team. hurt least can controlling as for been couple And so they things can. the I proud years. the as last to control can't think am am to the I And of of try possibly they things the of philosophy really it really

James Grant

that seeing sheet we with Yes. has at is were make part a what -- that, expanding what the we're us had provided it been and the looking the and logistics provider. It income on said more done a be of a and or and the we think a disposal done team just a the do. job good what do, with of allocation David to be as optimizing I got And trying -- allocation, we but talking and I flexible that but and about much to we the meant to decide of looking of good of balance started to really nimble, downsizing that's just and really lot statement big story at -- would which possible. And too is few lot to I us that more well the or more a this add capital, whatever factoring we've the well approach of some capital as to freight sure XXXX continue opportunities moving, served to freight years in focused of our assets it over the think think has were we sale starting us something last moving on has it benefits tied at. allows lot terminals, I a is that to capital And a to business away little be went

David Parker

of couple you Jeff. more a examples, And give I'd

case. I X told on years, statements X showing that's hope get not line we books which good $X if a X report, can got though too. But can even statement critical which all last correct I'm also take look that the years it's accidents mile this from of we'll hoping of statements. When you start to some are you that through million our becomes us seeing that, $X.XX insurance We a last of got you next insurance hey, on item and running mile we that we benefit. the thing the reaping the that for made say, happening, million internally and lows. the Tripp been -- a are, $X.X those, the that eventually keep some accidents expecting flow you we're -- at you're something heard made I've accidents, we accidents DOT going have, then X million us for Let's start it, if per we those also Tripp the that's for know, in we've accidents low, of got stuff. Well out things got costs to to so I've eventually -- tell forward. historical you and accidents because and keep we'll those the sudden

at a an we months. or X up. I utilization the showing it's is something the We of the and line can't say accidents I for though settlements just numbers little look kind definitely months year-to-date the us, that bit year best help XX%, start going there's second not of think though this are Expedited the quarter. for XX% the control cases. down to even utilization would up double was the of second side, ability in We will example in quarter, X So digit control down to that can court our the the

destinations. And numbers decisions you'll that that. the on that environment, horrible to need the freight on right -- once there, us start numbers, during that you we're -- we but fact the And we to think saying be the once said somebody the we a is Expedited being what sure making said, freight, will right some digit utilization great we're evident helps they insurance our as we're earlier double be. seeing in time places, So may making up going a by no

couple examples of getting better -- the but of can't can how at control So things things we control, that are those we a it. are that

Jeffrey Kauffman

that an kind this do the opportunity eventually played the which think that to that result even this And part though how light of finished you, And a as about tunnel see is, of of way, market the do markets or form. changes think how it's going of the next And begets different some of end comments shape for the think in is one, be question, and not stabilize? when your out? you downturn we're I every we we the here. What are, kind is things, at downturn with

David Parker

Yes.

even a also that we say moved last States. out years of even the OTR, got is as OTR, I through fleet in the team thrilled United of this you of couple though is me the things have largest Expedited but We couple it's could -- think that specialized.

brother does of run. everybody's we So that drivers the run team not amount

will things scale in the most out going to our of treated them years there phone us it for That's for entered load OTR. We it's we OTR, right. We realize. And all great bit customers find New times trucks, this we're because in XXXX them we partnership. have that that great, more away customers, right. customers not them year good has the reupped tell for And us, on that or long those of our changed we be percent to they've means was running with customers, the That and not best less and we is rate just entered treated that's are a so a find but this the XX. that you down XX. it's done we specialized did, us that us of a term months. little to X, give XX been trucks and There there you, we going things not a revenue to one am term of will agreements to want one they're said, fair which probably that have is scale X and long specialized On about at it comes if Even XXXX could XXX during have to we're I went a a and out they on to proven but X to on given and let And very XX, than to partnership or there and how when be OTR, that's we about XX. of be we Jersey on got XX us. it of X a me could been last for Expedited we Chicago of our of now And when and right the a solo you X down X trucks worried taken I'm the that from at and there what to is rate, will make trucks today. little, have agreements we freight to competitors our a

of want And it the say say, would Dedicated number? side so business, is that specialized. XX% a to that we Is on true have XX%, Dedicated, shaped I of Paul that the market. I Jeff, our

M. Bunn

XX% sure, yes, say for XX% XX%, I'd to Yes, specialized. XX%

David Parker

would we're And that -- are I say I say that would -- we XX% out

M. Bunn

commoditized. of Out

David Parker

of Out of the years. commoditized X last

need one we're rid that And so worried Dedicated the a we And blessing got all already that that it's it we're lose. of with got about, been We've spot market not going customers that's want we're did and the what us and now those. really them. do to side,

had the with going you I it, it, operating the park and I see, steps of reshaped be can to most couldn't -- with it They're The out you warehouse. to you a warehouse went Dedicated. I told on mean, great. Freight. growing Expedited. doing I and environment I they -- doing our then are. back our left black here. the what this black. guys We're the guys am them in in gals I and the we're of about it there and couple mean won't see about on month out. I that not I happier are that's in So in a thrilled decided have to Managed mean, in so the the be be those the doubling just ago back. as black they do and knocked Yes, them hug. did a more guys it, those because not back of team mean, gave are to feel take red. the

shut So, anyway, up. I'll

Operator

from our Capital question will And come Newland Vermut Michael with next

Michael Vermut

come so years, years trading There's way for and here else. been quarters, shareholder on ago anyone done compared I years least Congratulations am and one a better here no downturn far of We're this sitting year at quarter. what -- all great looking with to a you've and have that's at we've than average. out see question. doing and Right? So a think multiple company this in XX before. no the completely the we've so And worst it's as money we leverage market I is years. given it's question do -- know that something downturn what this model way that the that been it's downturns we we've well now the probably this And we've with, company, this to point I it's losing transformed would right? that was had as don't group -- one discount, and right? And say, the a but let's still The of and these the through how now different this company, we've in think still this transform on company that asked there. we're I that XX we've we're come know -- next I going comes, turns, to the changed, in built

not that. Is there don't that there with see happened $X peak. the people side so that understand doesn't Street Covenant I $X in the is And here? still the there's doing on that we're think to anything roughly at contract that model at understand So something and this Because and it far? there leverage we're understanding still goes this has what we'll year

James Grant

I can this, off. it kind Mike. finish start of Tripp, This Paul No. on is And and let

stuff. leverage. public of be the of plenty timing little mean, XX% different opportunities bit -- almost of I out The the contractual that operating think other and of there's some there because a we're truckload carriers timing I all that our from may for of of

And a key think who in be I the process is good of us in value service the to so and very a on who've a could we the mentioned basis, to to need think David little asked than fair opportunity and this. and intentional bit downturns about And for gone very to You that we're things we kind of to do of our customer-by-customer, for I going of valued of in back of. and about and how to be them returns and XX%, I were is, things improve say to a understanding may through a fairness customers return. And, in think adequate is it the kind fair the the this been be good going thing get truckload the for numbers margins to of brokerage would when got But tight, provide what and who all up us earlier. best to it need did, and making urgent the And we're people be quicker done, we we this, and that get raises. ton and start and said increases. But and seeing fair that of with some us one customers 'XX, there's we customers opportunities you XX% to mentioned world the to really go us had customers. that on got 'XX took for is to I fair rate absolutely were customer when we that of to have the improve front we fair we we quick and kind front in them mix we've

So --

M. Bunn

I going again, on other model whatever X% had the line high. the should less is numbers out over that could can they that or no think a thing share earnings I rates a simple give what sometimes. you do $X you -- numbers the add pretty a we leverage should leverage in think and bottom pretty with only of increases with to answer and we've said, to leverage or I'm Mike, do, to to the -- the it simple share better and person, through you've as try I rate this create X% some of just out cost, point, happen. And I'd period those we're callers, the Tripp get increasing on the lot a I rate, than like count whenever to or told think can flow into historically those absorbed it's, it's comes year the costs, your get. referred this already one hopefully, to keep to what they'll other push rates people so think model And to ability And a I should people going is, that

Michael Vermut

would if are. discount at And way this that you at we'd we a trading premium at Yes. you a with a it at we in performed think not look the be downturn,

So --

David Parker

XXX%. I agree

Michael Vermut

guys in you tell have this downturn let what done me one's done No you.

Or The on more Are the that that the focus what -- was be Jason up do will we carriers? second on following Is thing it is when looking, -- specialized specialized finally in there asking. areas? we're just more M&A, when

M. Bunn

Yes. something. it's mean, say I'd specialized I yes. --

David Parker

hard. Something's

a Something niche. that is great

Something that brother. everybody's

that's difficult. Something

Yes. that. that Something all

Michael Vermut

it's to guys to you see Covenant. done amazing look, -- Well, what you've

day So we'll be one rewarded. keep on going really and

David Parker

I believe that. Thank you, will. We Mike.

Operator

Grant, no this time. to [Operator it the back are at questions further Mr. there you. conference turn I'll Instructions] appears And

James Grant

and I just interest this next quarter Thank Jen. their in everybody conference Thank to just quarter's participating for want call. you, thank we Logistics to you. Yes. Covenant look forward and

Operator

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

Covenant Logistics (CVLG) 25 Jul 242024 Q2 Earnings call transcript