CVLG - Earnings call transcript Q4 2024 | Covenant Logistics Group, Inc.

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Operator

Welcome to today's Covenant Logistics Group Fourth Quarter Earnings Release and Investor 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. Mr. Grant, you may begin.

James Grant

welcome Call. Covenant and Quarter Group everyone, Conference XXXX morning, to Logistics the Fourth Good

reminder, call are obligation undertake a results filings Securities revise and As and this or that to to Litigation the statements uncertainties forward-looking risk review any Reform publicly Private differ under most materially. update Act our cause recent no which could subject Please risks will to statements. actual contain SEC forward-looking We factors.

our financial additional www.covenantlogistics.com/investors. information and website comments on at available prepared Our are

Joining me today call are CEO, Bunn; and David Paul on the Parker; COO, President, Dustin Koehl.

results, would comment whole. quarter's the addressing moment as a to to Before the a year I like take on

We the and executing the we will weak XXXX more the strategic over possible improving For durability focus without XXXX, our environment, the on make Covenant work demonstrated in goal. of to and on In a our have model in term. great general ahead. control talented our that on a model factors been consecutive financial consistent company within will commitment a common team continue made results second profitable which year, year continue strides business our freight would to long and in not

freight positives The our expectations Consolidated and operating expectations. primarily expedited roughly result our results consistent X.X% quarter. of warehousing which general, improvements multiyear below of of execution Asset-Light X.X%, quarter include: performed On new in segment. as managed our and as grew the and managed consolidated Dedicated exceeded adjusted Year-over-year within a negatives deliver agreements margin highlights with the a freight was freight warehousing. on consolidated now result grew includes target, for a the in by for revenue segments, quarter our income customer the Dedicated and profitability to Focusing offset operating segment while expectations. basis, on

average XX is in X.Xx yielding of adjusted year adjusted net December X.X% million decline associated leverage to ago. to On compared indebtedness million, $XX.X capital the approximately months XX of primarily The and in XX of a of our return months average increased XX.X%. CapEx XX of by was The debt-to-capital at $XXX.X to average versus an age attributable prior with fleet. age the Our slightly December as to invested ratio invested ratio declined capital year. our and increase basis, the X.X% growth the acquisitions, reducing base average an on tractors

[ quarter performance color little and yielded a the the a adjusted from providing Hurricane disruptions operating ratio. impact early business The strong more the XX% Now quarter finished in individual Expedited of network ] the on segments. of or rates units to higher Compared largely were XX freight the fleet services specialized size XXX X.X% government period. average tractors average and shrunk to offset Helene in the by fleet, prior within our by Expedited's year, AAT. volumes

size various to fleet the based and this flex up expect of We market modestly factors. down on

allocating on past improving our fleet profitable general we more aligns pleased or and in units improve average durability $XX.X XXX growth service more above-market with freight with in by high or be that with rate the returns focus requirements, term. less to our an XX.X% market While exiting over XX.X% and business. quarter, with of XXXX, revenue approximately accomplishment operating strategic capital conditions years Dedicated experienced business margins of XXXX the resulting in are as the segment in over margin will profitable our quarter two fourth through long increases, the grew adding million the of operations the compared consistent plan

wages to due headwinds Helene higher impact claims expense. volume the for our of a normal operating the quarter the the erosion year-over-year and quarter sequential of were this we driver in maintenance shutdowns short fell and a are Costs internal pleased In salaries, with result hurricane expectations. also margin and than as and we in and segment, both midweek While growth quarter, for of Southeast issues, with experienced the prolonged and holidays. the profitability expense reductions operations customer

as quarter seizing of our profitability we believe available. dedicated We quarter forward, remain is if ] freight by Going fleet, for services successful provide will are peak and capitalizing on our XXXX. best-in-class opportunities the well areas we carry on exceeded focused asset-based growth to improved likely service expectations providing the believe that our not in margin customers. growing and strategy our value-added in [ We into the result. Managed for overflow profitability segments specifically fourth that in Freight controlling from on is as achieved costs,

Managed to closely new we margin grow improved available forward, mid-single the digits goals seek prior XX.X%. to to the customers with overflow nature XX%, reporting capital Freight year from opportunities adjusted ratio which profit will costs operating profitable on segment operating this with return when of business. Warehousing its optimize asset-light capitalize of adjusted revenue our an Going an in Asset-Based generate acceptable to longer-term and yield given on compared by the work

inflation segment to the and in which in cost pipeline obtain struggled this We growth grow produce we are through high our growing was revenue profitability robust plan are business In within continue customers. digits. returns this when organic pleased ability from rapidly and the years single increases to the in operating a management. Longer-term to and adequate income with prior two future, to goals segment, profitability outpaced the over rate labor improvement the

$X.X its the the X,XXX due larger for increased and the a largely Our in truck at XXX its TEL for TEL was to period. cost XX% weighted the income debt fleet and bad versus by quarter higher trucks in by of equipment, year by versus compared increased in expense ago net of to trailer with decreased trailers debt rate. contributed interest expense number year and average decrease The increase the more million net fleet in costly a XX% of fourth customers $X by newer, of to X,XXX operating pretax to quarter minority investment X,XXX. income more Revenue quarter fleet pretax XXXX. associated small approximately prior the a higher to quarter of the million

Regarding our outlook for the future.

consolidated XXXX for now to general fundamentals of based years. industry improved us improve to the The compared pricing allowing what expect a assumptions. the last XXXX to with freight earnings is the have on following from than We [ ] two negotiate better posture allow

the trend yield contracts we under new the growth Assuming expansion evaluating The and Expedited, of expected Managed to contracts. nonspecialized achieve specialized is throughout we are dedicated as year-over-year revenue contracts increase to The improved as expect pricing renew. build and Freight is certain expected year business to several Dedicated level continues, opportunities.

on costs lackluster and the margins However, new associated XXXX with in a for this near production forecast during segment start-up term. may contracts weigh poultry

Based continue new will incremental the equipment. and Covenant. progress [ used recovery major we in will the to these on fluctuations of believe are no market for We safety year ] XXXX be for and make assumptions, claims and management. on industry There a

goal to while continuing our and freight and improve in Our growth steadily customer to opportunities mix is businesses. review niche our margins

services. aligned needs, investors long-term returns who remains developing need primary value-added customers team by network filling our with improve to objective our truly and to Our

the with for alternatives capital us. Thank and modest for to full range leverage allocation liquidity, available have call now of you any time, we Additionally, we questions. and open your the significant will

Operator

from Imbro first Daniel question Stephens. with will Our come Instructions] [Operator

Daniel Imbro

on a bit a level. David, to maybe little want I of start higher

then feel Another the you early improve. to us of some is you feels either last mile that How XQ winter quarter comment, about in some through And saw about January going? year? season here Tripp, per sequential to size how it you talk just can can mentioned, seeing how how you revenue It like I positive weather on the when you're momentum we compare increases. expect bid rate weather? we're And impact? the you guess, indicators profit up thinking does cycle. or also about rate help

David Parker

take days, I'll last Houston Chattanooga, that. we the you, but from Florida, tell for particular, weeks. I the paralyzed Daniel, would and Yes, weather tough the I'll three but in two it's South, got first we've weeks, -- of [ know Atlanta, to two or inches say ] in been and all here that us in X two the as snow Yes.

done isn't weather If in Wednesday, does far you Year's effects New my what and it it the the can I in -- do mind, which weather. because then so January, has separate affect Christmas, for -- with

transportation. somewhere market the mid-summer, I of from customer at. is happening. you the ecstatic, I at am use and that what felt waiting Aside what that the and tell where mind environment activity have all we've that if pretty month on that's couple And time, I a really a would I company or all a a XXXX out believe that we're say I what good you And as in I'm of And pleased, our I going think of that, word freight. the to going would happy, very good. telling this just tell And that that year And the that rates going months. be say July, long I been environment what And that is far there's you the -- I separate it's by we're from in for bid what my accomplishment freight's is something on of in both freight in -- for a happening March, know want something so we're very standpoint. years. lot and best I X.X to for come really that -- having from a that's June, whatever really to two, last that is look is to weather very teammates believe happening within our I'm

of saying, go this it's ago And can't, could, is but were we think goal on we to try market, talks rate when goal was and wanted somewhere not we January X% what have October okay, try the a customers so believe could, and but we with we it. for our three Freight's we again, Freight's going to go this bad, but anyway maybe can, the just -- we it. to is September we back have But we our that and out going in far October and maybe and want, I We get we months taken customer. can X% October. that to to weren't we're effect, between increases I go our sure were

And a X.X% pleased probably rate the of happened Paul, so very what's on, I'm XX% with -- business? increase [ we're we have, and ] around

M. Bunn

XX%. Yes. XX%,

David Parker

Of here's January, customers what XX% have of of our is all to us business, that goal our X.X% because the told XX%, in increases been the which then give is. we our about this enough goal gracious and

goes there's of that X% in market into no doubt. back get of us I to depression, in June, to and I'm going the think to in back. you're Our I to X% able the June month expect be January in goal believe going the to January. come If but is And of month don't happen to because go seeing not that's what then

tell I just this that to looking So exactly as [ then up in the getting all of I'm look bids you, days and the caught I was ], where couple bids. going at to last

weeks of won year, numbers happening. we this it first more I you customers, in It's all brand-new I'm six with tell than this is year in stuff have would then won that bid We I with XX% that. ] know. last year. very pleased And the is [ months three

weeks what I And than that bids excluding higher and was being two ago happening the months successful. we're is are Something three ago, rates calling peak. at

I'm hope pleased So answered I with what's but happening. your very questions, Daniel, I

Daniel Imbro

some And Like through Is once a those look No, year? bit stable, of that light that's revenue transitory the if been how of issues? should there's think catch-up continuing can about temporary, That's I I into just that how feel year? Dedicated competition first just maybe kind some maybe could the on there a little that shed any quarter. happening any we there? with pass, business. there helpful. does And lost? these shutdowns, was then Is guess, transitory -- playing you more through outside that the is customer the focus that these is

David Parker

run run at, -- tell I I'm what to need want trucks, XX, used the I these into years, in and -- that it's now it, last and I want I to the but where have as questions. the has providers. years, Dedicated we we're in are to to years. talking will of need you other and built Dedicated what two I run XX well two Great my as in that I to a here rid To that opinion, XX don't trucks, Dedicated that's internally where give happened. last I my market the is they the freight. can't at trucks running Yes. saying is they they're from Yes, the you exactly to XX, don't two me, happened That's already customers -- last run -- XX can't Dedicated, standpoint FYI. get

market Dedicated customers today. all that And today that. wanted that think of where their already ones they've fleet, at dedicated in that I market, already the have it that the has because the is that flatlined that's wanted that. be customers where rightsize get out to done to done we ones flatlined they've And all And the are the one-way want it's at. in -- to are is

so think And going that this into we're flatlined. I year

that's in you as to continue and don't another when and all we know days. would any be over could poultry Lord I about I state, goal we region, in help Then know the never Now it any tell any it tidbits that, I good, know, doesn't been all what know, it's means. spreads not And continue and the it that is that in hurts. like is as country. it X.X AI but to will years all that that XX not we as that particular, the -- it for we that it is hurt said, AI hit business, learn, -- learned I farm, -- have

regions has of anyway. is hear country of just couple not we And seen what we have the in so so a far it's it of stationary been far, what and

we're in poultry. not states Now all our with

may not here not farms -- doesn't there. it But farms that's true it been -- us, and couple of So be it statement. of it's takes a farms a for a because just And of cities. that couple city It hits certain city as Modesto say or within those the [indiscernible], the of quarantined It's farms -- Arkansas. let's don't whole is in that the not farms. city the

So be doing it hit and other are well. two that farms farms get might the

turkeys chickens weeks it the at and then the to the new And chickens so good that chicken to states for arrived go that turkeys, takes determine growth what for chicken's transpires then and for they three give itself, or is the that idea. chicken growth bad or destroy chicken's chickens. weeks two that to And time the if And the in process. an take weeks upon take can whether new you the farms it's depending can of X it or XX to of

three weeks, three or it's is X or two it's then weeks So weeks, Turkey before and XX back weeks get you production. two into

account. lose happening Now because up of XX they the down that and happens, XX road X-day that make now customers supplies because tremendous that amount when road, there's on and a a on they're you're got ends their the sure there weeks say, to don't we're I their down to understand we're, trying to work week that weeks catch they've sitting their what what said, the XX, up is is Turkeys,

do happened is supply their just within they're got trucking that with you can. on they soon as the to protecting protect events Well, to as go your Just poultry like them customers. possibly and customers the we they

running them. And so it it that's down that when three all have or X/X -- XXX heard that's farms trucks we have what poultry. seen. affects and like doesn't maybe what affects it's two go we not And of No,

in event got probably November, you're there. a And ]. far a [ the had that I we've what working that be think started and So it's trucks that's to about March couple we've with, numbers in so now. December hundred of seeing

be got stays normal, pray back to another to X and then think normal. X weeks things AI hoping that I will or we've

it's on chickens now time do growing it's chicken I I of tough So being back. they the what with think is I and all understand get and the over is -- think personally the that and with, through with over what over with disposed is of really the chickens is to the deciding

and I come to instead because our good March and happened will of work I what's weeks. that it business us, extremely expect something of heal to part to that's work X-day X-day there's go itself, think weeks be So will that

Operator

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

Jason Seidl

second, bird recovery for [ Lou last look flu the did this ]? a hit, the on for time Sticking how Thompson

M. Bunn

flu thing say year. I Jason, one would is every hits bird

we some so that, the this had before didn't we've year And year. own talked time to last We business the but them.

the bad year, in, would call it, than winter it, more. others. And some. say said, so a I year season, flu David of months. years every kind little too had year we've had weather of And but worse a This year, of call element just some some wasn't like Last it are the we there's

think seasonal. the year other I it's piece is out, pointed first It's thing. And there's term would then help it's point -- thing, there generally that, the various I and on out that with -- the depending so that And full that amount David industry kind various is and a supply then any? not as just after are vertical. in demand some happens the of short in nature of catch-up generally Does

Jason Seidl

that Paul. your think said Yes, the I did to does. saying that what flat. used you? for Is you're I go I think mishear now? Or something appreciate you to equipment mentioned that, I marketplace I remain you in to market the back expectations Tripp, wanted right

James Grant

No.

I equipment some used market. think we've the seen stabilization in

moved, equipment having it. -- earlier year, take in we what looking There's just we interest move interest ]. QX, we've sales, on and to drive I down and losses we it think of the in volumes There's of ins bit in getting the some starting from volumes in we're terms before were that seen and actually equipment. little but a tractors [ in to the at used weren't were were

ratio in that the if that will, We equipment on is in was side, just costs, was equipment it like there's solid some low to and for fixed true that it high numbers and you joke, and where think not but have off used one that signs really headwind. lot this, QX was kind We're the start will the think a just just the not a and good good a you cost, revenue we will low those things when sign recipe stabilization, with it's I come side with of of I stabilization seeing equipment starting we the of weather. I also because hit say that especially of that don't of improve, operating us variable on improve but and really volumes, had quarter, it's earnings. the the spring a good will bit to But -- always maybe a market. some continue market, had used a market which QX, first in So

David Parker

[indiscernible] that. It you can tell I

James Grant

on That's up the be going and right. and a stuff shape. that selling was is we pretty stuff COVID really side We the behind got the even And year maintenance out were good stuff. last pulling of bit beat the with previous to we're quite year in some for

we've out what So expect we're looking forward XXXX. got in some we're quality our stuff to maintain coming and to and seeing fleet,

Jason Seidl

there really Tripp. great That's color

sort year bit. them look with maintaining me this marketplace, of shrinking? a to them? is Let like? are Are enthusiasms? accounts to level some a fleets sort of over they looking there customer switch trying regular what When the and Are little the grow out how Are existing they Dedicated they competition Dedicated of in you're

M. Bunn

see say lot you I What a Jason, [ David shrinking. what to it's I ] people I'll go of really don't said, think would Paul.

the is incumbency. years. that really and think and on there been of competition think have happened of to lean folks last there, -- also a of are a lot continue lot most two I in out I

I new And competitive a the continue specialized ratios, it's we driver, so trailer more pretty call type van specialized XX-foot maybe you, what lot specialized dedicated, still so badges, especially trailer. heavy to of more I specialized would it's dry tell stuff getting out commoditized the and in focus on where Dedicated there. trucks, type truck

on in pick, there's a keep business, the but out lean And better harder. that continue I so And the that's on there, think to the it little tree, because higher path harder up term. it's long to it's we'll stickier that of margin for some we and fruits going

Jason Seidl

a to I weather had back like last had we I though little want to before. mean, even weather last than it you year, mean worse that flip -- lot storms some in year, a haven't bit. I the areas this you're is getting them just feels

I after seeing that How talk [ that amount should you for Orleans. knowing think we your commented costs more XQ, there removal snow dollar time. this right? CFO [indiscernible]? for of New first from think Just be full about about the to ] could I have [indiscernible] well what a sort you're into this,

James Grant

the here I I weather to us January so down say, than have has headwind time just XX years, shut done been has more even the safety and what roads volume But of a XX I well. of in of the would lot for we're last been first, roads pure some us fantastic shutting that kind navigate this quantity February, before we're was about a terms through Jason, shut to mean, these and down are that of can severe challenges, our times and down a of the at probably department purposes. for have of job end safety things just to in helping weather in say is, any

say. And what kind I here's a fantastic maybe also to is a say reminding So better, to It's not covenant problem -- us difficult but feel just just job help would I'm this problem. they've because is that widespread it's there. myself industry an This weather. done of

help. to going not it's mean I So

a that we've focusing want than it the I -- want of $X.XX put or business. whether [ by good the hard perspective. earnings of some overshadow an momentum. way. weather to $X.XX was we saying, so things to that good a on other but David doing I it We're we've temporary part 'XX. It's it's and got going to it's hurts me safely. just say, it. the really don't overshadow managing things from operating hurt, going it don't Let But to like got good control ] much in that, can job

M. Bunn

Jason, you like point, incrementally if feel But help David see and yesterday, versus things worse of a talking year weather the dealing look pretty right skies now. to you weather and good ahead I will this the forecast, it's when maybe year. at is -- were Tripp's we're this because this sunny last we weather, not with lot

of say, you So coming it's look kind sunny "All at the forecast going right, good be beach partly and to of but it's truckers. some for the tomorrow, maybe there's picture weather cloudy, the

Jason Seidl

last, tell not a things great you to of some from warehouse trying side growth? much time? not like the getting different just push type things. tariffs worried And job a of in but is of the but certainly sort Is about How real customers can that? it there ahead any of warehousing real, and of least, on just is obviously, maybe Or

M. Bunn

I say, a we Jason, would don't do lot.

port heavily aren't affected volumes. Our really warehouses by

And think set are there I so that probably with their out business. are some warehousing folks

a run different was hope spot Tripp XX remarks, than a prepared you warehouse it it production rate lot is customer's back say starting ago. of where warehouse too, from see in of we at of can his said is a settle I as function a lot in I months and of would go quarter third kind is the look Ours that that think volume just production kind domestic run and what XX, a of and into hopefully to you're when

James Grant

Yes.

the to want and the always to context on picture. up in this Just add of I to larger that, frame

top You go about revenue. back to XXXX, $XX was of our million division warehouse line

labor of month. every businesses environment And make increases. My optimize over new at we growing is and years badges, going trying when So 'XX on inflation straightened finally trying new but it up cost efficient growth with lot for got was that point an is couple we've between it customer thing, adjust and one course in growing with through XX% in grown of terms a to the contracts there of of inflation and of and noise 'XX, out a going rapid XXXX. kind was rate to

consistent we've good seen to margin really, single so And they've digits, a division really but they've also year, some about too, organic growing the the margins. pretty been probably for And you've high it. all pipeline warehousing continue proud was got is for best what in and QX that really been XXXX, group. the

and this spinning the so doing done And they've fabulous, job. cash that and done a been they've has great off organically

Operator

Our Group next Wolfe question Research. from will come Scott with

Scott Group

I I'm want it getting start-up the and make to call, and the just start starts he's and then David When and weather right. costs you and So about ecstatic talking poultry something talking happening. sure message is

the term think And don't to about for you difference -- sort how if so about think maybe is the a about guess, near there's to way Any help answer margins, the the think of right ultimately, think about what's way there's that? I -- I year? what's model here? know should a QX and in the earnings how the we But year. us should

M. Bunn

I'll I'll to flip David. Scott, it start and So

that 'XX for the think to is because the I earnings of are your grow some there truckload because do some think what industry. fundamentals to 'XX we we're up setting you're hearing we point, within us of going I over weather. could acceleration be think, near-term say believe headwinds

QX like you every quarter. going to be of cadence worst. Just are be about just transportation And to and going next QX be the earnings, probably QX is the our if always best QX company, will best. think the

little is hearing bit short-term think but headwinds, what a a of long-term opportunity. I us And say so lot of you're

Scott Group

that really, we're feel And about, customer then, is actual your Is going on by comments really can to there hey, David, to visibility and that? we really March based it. feel feel? we're that [indiscernible]? Or What's to discussions it June, going something the a

David Parker

to all CEO see every to more last it, starting it, two that as to of is, But two I'm a there And Yes. on that freight last when we're seeing been we we bid to starting we're said, we're that concrete ] all the that all tell in it's weeks. the see have feel, now awards sense years me, not but won about a the we're you three sense hoping. to I of volume. I get would in hadn't that and feel of analysts [ done us. you to type years, coming two starting going just is I and wondering better, thank it's

happening [indiscernible] And it's depression. February worst tells opposite. is so me cetera, that the January, months see all unless I puts a I of we When going us year, et Trump into somehow see know, is last that that cetera, two to which, as the January don't et if better. that, -- get in

get I better will think the forward. going economy

So been of slower take but what whole it as speak. to it's economy capacity it seeing [ us going to be help capacity going leave I there's It's And will low freight, will and as believe any more capacity [ lead that less think believe I the to us ] continue the and wanted continue leave, then industry. I there is out will to what to has be and I do, definitely to going that we ]. I'm

Scott. So that's what I'm say, attempting to

Scott Group

nice niche keep guys smaller have any Are just of another earnings this nicely finding found closer And a years we acquisitions in helped you last few maybe downturn. profitable up that really deal? to lastly, the but have couple

James Grant

and sign be but what this be to that always and for which going share said of dividend, up number years. to lot we're I'd disciplined And operated look we've checked. playbook the of And under the always for, we we're acquisitions. same that we've going in last boxes a a and there's to we're repurchases looking, I need what few say includes think things, operate we under before,

lookout, I but is part that playbook. we or can't to or not, of say So got really it go one but we're ready the the on comment

Operator

And we'll Partners. Vertical to move Kauffman Jeff next with Research

Jeffrey Kauffman

want out believe versus that's David, I to of Do seeing. you're confidence that's more decisions the about feel kind business on truck follow that business Or making comments the and changing you it's market out there? the visible you believe for the do what capacity changing ] it's what more change actually up you're [ there? and the is

David Parker

Jeff. question, Great

those. of both it's think I

getting is environment the that better. think I

is think better. I getting optimism

when stuff I are think even optimistic, that more. start people they buying

thrilled going to to whether think that corporate what the the But activity on the it generate process environment, which or you the that's Optimism, an was are getting And automotive starting it. ready I produces I is that, that to happening to taxes, doing. more it's for use I what whatever happens think word personal in economic States think what see definitely we're of banking I from freight [ of there. part or United us. in want with is and Jeep is think or to is people happen ] beginning I see

three these is last So tell of anything last bids that happy bid. two, I do, optimism side some in one with these that the in But for the it win we didn't like years. part. didn't did three higher on I capacity. than years two of the that or then you year is bids before ] business I the I running last done We've or can at done, think they win year I we business it. the won done [ think And when that rates we other and were three of weeks, we're we've any And have I'm business. just

And so bid. winning on I'm the

place. that's And good days weather me of even could I in telling a be we January, consecutive underneath get would X we'll nice that if could believe this, really again, something we believe in in January capacity. we -- is seeing pretty freight get So about I

] mean in freight's back things Jeff, started yet. that's what the if I that happens are for companies -- And they was start New that or happen Anyway, And usually getting hits the said, go. of I may month start people guy, XX been Chicago, [ it the that spending railroad we're with back then think Those roads it's or get whoever keep But are underneath, the or everybody. three down I Indiana, up, Orleans the hurts I [indiscernible] that's January. South, because teammates it got that because saying. know kind it ] by back. -- south, of when are the our in schools March it's good, two think is and only I'll usually. in South that south, to days. They it ] nothing going snow you believe until a you reinvesting. CSX better here telling March. going and I'm we gonna There's XX-hour XX in I'd really I'm blip When and optimism say, going we're going I'd [ happens people for not thing to know hours [ have to so more two shut hits hits I So of what what the storms may the

Jeffrey Kauffman

with you inflation You're now? Tripp, Question is inflation on areas in What awesome. what stubborn can. seeing on areas you for being I right seeing moderating? ] are you are a still going the cost what cost are roll. And cost inflation Tripp, This business? seeing [ if

James Grant

Yes.

and think I maintenance seeing costs. moderation some we're ops in

prices, our because seen what the if and equipment. on underneath side starting will. I spend, around selling we about considering like the things, fleet, XXXX doubt with by would to variable I in the we're you our the equipment legs profitability some taken feel just it's costs, no now unprecedented. in sale us shots and hard used things get refreshment capital younger I running think of -- in maintenance moderation just we've at what and have it, of side And a there's say to 'XX the -- define equipment were and fire fleet 'XX And

in would where thing XXXX. certainly QX. better say, about I XXXX, headwind a year throughout feeling was other the the in of kind that and we're The of But am I really us, just at shocked in cost insurance

of wildcards of there. other one fuel. then bit is And at couple that's volatility So our bit there's a the all little something of driver that in outside to little thing pay. I'm just That's say, a XXXX, looking that a being there's control, but of

see strengthen, that you and of think I in period some to maybe also market begins those the the areas go market cost absorbed help XXXX in for But a we've driver to certain increases. increases longer to turn and a think be of we if improvement time, see to even in pay. that able offset you some and could I some see

be I'd say to hesitant that be neutral. we're cost So to going

next get but bottom year, we but can some down lot in think line to throughout we'll I just of little to get by increases, business the rates alone. and think the of a the rates that can dropping rate think the show we've if these I see gotten, operational a I year, of bit inflation not continue rates just that leverage the we

Operator

will question Newland Vermut next with Our from come Michael Capital.

Michael Vermut

A question for you.

shape. to from at good that's four then into Everybody as the been point we've had balance environment, guys getting maybe of through it's much huge -- but it's here, say, we're here it time pretty one's seems like a we're disconnect. group. in no to largest what for sheet, opportunities get there? sheet it's How there here"? about balance the And that the the for versus than There's XXx. versus It buyback looks future much entering touched you can't past talk bright years, as downturn. better to are XXx, or So shape. closer you about as we I'd got out is at XXx three to this standpoint. Is what sheet, as trading we're where the -- start on that look We're the kind right, spread leverage worse really are the we're And the thinking guys a we "All like right? go been. we've a great a The look so charts better balance performed We've else much earnings. a It's at

James Grant

say. Yes. And what would Without a I here's doubt, Mike.

slightly and levered. But bridge the comfortable But continue out benefits of number we about from between Xx our $XXX I split the model. looking perhaps find thinking a don't approximately [ done be at there, share the and We moving had activities and leverage can't to still talk ]. we say, Xx we're the where it and or get said for past that Over the opportunistic. for I what right also before things here in the focusing that you down will control can't And past. to have we're we're just today, if repurchases, at in was be the 'XX, it for we've that that mean flexes are we've [ longer X.Xx close earlier, saw post 'XX above stated to or million may ], average. standpoint Xx is the built term, leverage. within we and may think of strongly I to of we've reasons, which about to is like I'd And capital like a kind or M&A think up And at it discount going pretty about be of we're we a thinking [ are us are your we we bought, of very successfully. on gap. or Xx I I in going thing I we building a is repurchases. very, allocation point, This without time we needle perfect thing $XX EBITDA done stock at ] fit the believe but comfortable to but that X.Xx and target growth completely a some we're and If significant acquisitions that completely the Xx we find with margin. is that a just mean, think

I there as that think So to opportunities well. there's that do

there's as ton move of in our going past. So stock to the we've we're used And think that we it I playbook a the in continue forward. continued upside to use way the

M. Bunn

of about position not the alternatives about covenant defense offense, -- for talks I Tripp those value say, allocation going But for playbook. sense capital shareholders. whatever from to I'd think talk thing that operating one of long-term -- we're We a we're the it the time. creation makes the to be all be Mike, most going

what creates and passively out keep what And pushing announce, so value to offense way figure just our most just of the the sitting comes not long on -- think to going but we're we're it's hearing looking term. kind nothing from to I actively a playbook, at back those

Michael Vermut

probably Yes. yes, just and acquisitions maybe decent there seems that we've but how with here, a there's as No, performed outlook this through it's the it we downturn idea out well. got, better

good So choices. it's all

Operator

questions time. no at moderator are additional like for to I'd the to closing further or turn any It remarks. appears this conference back there our

James Grant

joining for interest your everyone, to you, we Thank quarter. Thank today forward us look and safe. Covenant, you. Yes. in and with next you Stay speaking

Operator

And today's this concludes call. attending. you for Thank conference

Covenant Logistics (CVLG) 24 Jan 252024 Q4 Earnings call transcript