Chairman and Chief Executive Officer, David R. Parker, commented: "Our first quarter earnings were $0.17 per diluted share or $0.26 per diluted share on a non-GAAP adjusted basis. These results fell short of our expectations, largely as a result of severe weather shutdowns and fuel cost headwinds in January and February. However, freight volumes and rates improved in March, and we were encouraged by our positive operating performance and the momentum we carried into the second quarter. This momentum includes an expanding pipeline of new customers seeking committed capacity, rate increases with select existing customers, and the traditional seasonal improvement in freight volumes. Expedited and Managed Freight are expected to benefit first from the improving freight market. Given the characteristics of these segments, we believe there is significant operational leverage that will allow for sequential improvement throughout the year based on shifting market conditions. Our plan for the remainder of 2026 is to improve yields and reallocate assets to operations that improve our margins and returns. Based on a rapidly growing pipeline of customer demand, we expect to make significant progress assuming the current market momentum continues.
"Our 49% equity method investment with Transport Enterprise Leasing ("TEL") contributed pre-tax net income of $3.7 million, or $0.10 per share, was comparable to the 2025 quarter of $3.8 million, or $0.10 per share."
First Quarter Financial Performance:
Three Months Ended March 31,
($000s, except per share information)
2026
2025
Total Revenue
$
307,161
$
269,355
Freight Revenue, Excludes Fuel Surcharge
$
281,925
$
243,219
Operating Income
$
6,282
$
7,627
Adjusted Operating Income(1)
$
9,610
$
10,857
Operating Ratio
98.0
%
97.2
%
Adjusted Operating Ratio(1)
96.6
%
95.5
%
Net Income
$
4,420
$
6,563
Adjusted Net Income(1)
$
6,915
$
8,995
Earnings per Diluted Share
$
0.17
$
0.24
Adjusted Earnings per Diluted Share(1)
$
0.26
$
0.32
(1)
Represents non-GAAP measures.
Truckload Operating Data and Statistics
Three Months Ended March 31,
($000s, except statistical information)
2026
2025
Combined Truckload
Total Revenue
$
188,094
$
188,302
Freight Revenue, excludes Fuel Surcharge
$
163,013
$
162,329
Segment Operating Income(1)
$
8,408
$
7,739
Adj. Seg. Operating Income(2)
$
4,811
$
6,210
Segment Operating Ratio(1)
95.5
%
95.9
%
Adj. Seg. Operating Ratio(2)
97.0
%
96.2
%
Average Freight Revenue per Tractor per Week
$
5,576
$
5,416
Average Freight Revenue per Total Mile
$
2.76
$
2.53
Average Miles per Tractor per Period
25,961
27,521
Weighted Average Tractors for Period
2,274
2,331
Expedited
Total Revenue
$
84,671
$
94,693
Freight Revenue, excludes Fuel Surcharge
$
71,949
$
80,249
Segment Operating Income(1)
$
2,821
$
5,590
Adj. Seg. Operating Income(2)
$
683
$
4,655
Segment Operating Ratio(1)
96.7
%
94.1
%
Adj. Seg. Operating Ratio(2)
99.1
%
94.2
%
Average Freight Revenue per Tractor per Week
$
7,327
$
7,323
Average Freight Revenue per Total Mile
$
2.20
$
2.13
Average Miles per Tractor per Period
42,772
44,260
Weighted Average Tractors for Period
764
852
Dedicated
Total Revenue
$
103,423
$
93,609
Freight Revenue, excludes Fuel Surcharge
$
91,064
$
82,080
Segment Operating Income(1)
$
5,587
$
2,149
Adj. Seg. Operating Income(2)
$
4,128
$
1,555
Segment Operating Ratio(1)
94.6
%
97.7
%
Adj. Seg. Operating Ratio(2)
95.5
%
98.1
%
Average Freight Revenue per Tractor per Week
$
4,691
$
4,316
Average Freight Revenue per Total Mile
$
3.45
$
3.10
Average Miles per Tractor per Period
17,459
17,875
Weighted Average Tractors for Period
1,510
1,479
(1)
Segment operating income and segment operating ratio exclude indirect costs not directly attributable to any one reportable segment, amortization of intangible assets, impairment of goodwill, and contingent consideration liability adjustments to match the information our Chief Operating Decision Maker uses to evaluate the operating results of our reportable segments. The prior year periods have been conformed to this presentation.
(2)
Represents non-GAAP measures.
Combined Truckload Revenue
Paul Bunn, the Company's President commented on truckload operations, "For the quarter, total revenue in our truckload operations slightly decreased 0.1%, to $188.1 million. The decrease in total revenue consisted of $0.7 million more freight revenue and $0.9 million less fuel surcharge revenue, which varies with the cost of fuel."
Expedited Truckload Revenue
Mr. Bunn added, "Freight revenue in our Expedited segment decreased $8.3 million, or 10.3%. Average total tractors decreased by 88 units or 10.4% to 764, compared to 852 in the prior year quarter. Average freight revenue per tractor per week was comparable to the prior year quarter, as higher rates were offset by fewer miles per tractor."
Dedicated Truckload Revenue
"For the quarter, freight revenue in our Dedicated segment increased $9.0 million, or 10.9%. Average total tractors increased by 31 units or 2.1% to 1,510, compared to 1,479 in the prior year quarter. Average freight revenue per tractor per week increased 8.7% as a result of improved productivity from our agricultural protein related fleet which was negatively impacted by avian influenza during the prior year period."
Combined Truckload Operating Expenses
Mr. Bunn continued, "Our combined truckload operating expenses increased approximately 22 cents per total mile or 8%, primarily resulting from changes in business mix that offer higher revenue per mile and more consistent volumes accompanied by lower miles per unit and higher costs. General inflation and elevated fuel prices as a result of the recent Iran conflict also impacted our costs.
Managed Freight Segment
Three Months Ended March 31,
($000s)
2026
2025
Freight Revenue
$
90,731
$
56,850
Segment Operating Income(1)
$
3,703
$
3,540
Adj. Seg. Operating Income(2)
$
3,587
$
3,349
Segment Operating Ratio(1)
95.9
%
93.8
%
Adj. Seg. Operating Ratio(2)
96.0
%
94.1
%
(1)
Segment operating income and segment operating ratio exclude indirect costs not directly attributable to any one reportable segment, amortization of intangible assets, and contingent consideration liability adjustments to match the information our Chief Operating Decision Maker uses to evaluate the operating results of our reportable segments. The prior year periods have been conformed to this presentation.
(2)
Represents non-GAAP measures.
"For the quarter, Managed Freight achieved a 59.6% year over year increase in freight revenue, primarily attributable to the integration of assets acquired during the fourth quarter of 2025. However, the segment operating ratio and adjusted segment operating ratio were negatively impacted compared to the same quarter last year due to heightened costs associated with securing capacity. Although margin compression is a headwind in the current quarter, we believe it is a signal of stronger freight fundamentals, allowing for improved pricing opportunities later in the year.
Warehousing Segment
Three Months Ended March 31,
($000s)
2026
2025
Freight Revenue
$
27,552
$
24,040
Segment Operating Income(1)
$
1,778
$
1,843
Adj. Seg. Operating Income(2)
$
1,212
$
1,298
Segment Operating Ratio(1)
93.6
%
92.4
%
Adj. Seg. Operating Ratio(2)
95.6
%
94.6
%
(1)
Segment operating income and segment operating ratio exclude indirect costs not directly attributable to any one reportable segment, amortization of intangible assets, and contingent consideration liability adjustments to match the information our Chief Operating Decision Maker uses to evaluate the operating results of our reportable segments. The prior year periods have been conformed to this presentation.
(2)
Represents non-GAAP measures.
"For the quarter, Warehousing's freight revenue increased $3.5 million, primarily from onboarding a significant new customer in the fourth quarter of 2025. Segment operating income and adjusted segment operating income were comparable to the prior year period because new business startup expenses and operational inefficiencies more than offset the additional revenue. Looking ahead, we expect activities within this startup to normalize and operating income margins to recover to the high-single digit range."
Capitalization, Liquidity and Capital Expenditures
Tripp Grant, the Company's Chief Financial Officer, added the following comments: "At March 31, 2026, our total indebtedness, composed of total debt and finance lease obligations, net of cash ("net indebtedness"), decreased by $51.0 million to approximately $245.3 million as compared to December 31, 2025. In addition, our net indebtedness to total capitalization decreased to 37.6% at March 31, 2026 from 42.3% at December 31, 2025.
"The decrease in net indebtedness in the first quarter was primarily a result of selling a large amount of unproductive used equipment and buying very little new equipment.
"At March 31, 2026, we had cash and cash equivalents totaling $11.2 million. Under our ABL credit facility, we had $29.0 million in outstanding borrowings, undrawn letters of credit outstanding of $19.9 million, and immediate available borrowing capacity of $57.5 million.
"At the end of the quarter, we had $1.6 million in assets held for sale that we anticipate disposing of within twelve months. The average age of our tractors increased to 26 months compared to 20 months a year ago. Given the mix change between our high mileage expedited fleet and lower mileage dedicated fleets, going forward, we anticipate the average age of our equipment to range from 25 to 28 months.
"Our expectations for net capital equipment expenditures in 2026 remains unchanged and currently ranges from $40 million to $50 million, which is a significant reduction compared to 2025."
Outlook
Mr. Parker concluded, "Solid economic demand and shrinking industry-wide driver capacity are creating a favorable environment for building project pipelines and improving yield and revenue per tractor. With most of our revenue under contracts ranging from one to three years in duration, we expect to see gradual improvement beginning this quarter and extending for several quarters to come. As contracts become available, we intend to be nimble in allocating our equipment and people toward the relationships that produce long-term value through adequate margin and returns. Our momentum continues to build this year, and I can feel the energy and enthusiasm of our team who are running the business. While we will always be required to navigate certain circumstances in this business, it is much more fun to navigate them with a strong tail wind."
Conference Call Information
The Company will host a live conference call tomorrow, April 24, 2026, at 10:00 a.m. Eastern time to discuss the quarter. Individuals may access the call by dialing 877-550-1505 (U.S./Canada) and 0800-524-4760 (International). An audio replay will be available for one week following the call at 800-645-7964, access code 3895#. For additional financial and statistical information regarding the Company that is expected to be discussed during the conference call, please visit our website at www.covenantlogistics.com/investors under the icon "Earnings Info."
About Covenant Logistics Group
Covenant Logistics Group, Inc., through its subsidiaries, offers a portfolio of transportation and logistics services to customers throughout the United States. Primary services include asset- based expedited and dedicated truckload capacity, as well as asset-light warehousing, transportation management, and freight brokerage capability. In addition, Transport Enterprise Leasing is an affiliated company providing revenue equipment sales and leasing services to the trucking industry. Covenant's Class A common stock is traded on the New York Stock Exchange under the symbol, "CVLG."
(1) See GAAP to Non-GAAP Reconciliation in the schedules included with this release. In addition to operating income, segment operating income, operating ratio, segment operating ratio, net income, and earnings per diluted share, we use adjusted operating income, adjusted segment operating income, adjusted operating ratio, adjusted segment operating ratio, adjusted net income, and adjusted earnings per diluted share, non-GAAP measures, as key measures of profitability. Adjusted operating income, adjusted segment operating income, adjusted operating ratio, adjusted segment operating ratio, adjusted net income, and adjusted earnings per diluted share are not substitutes for operating income, segment operating income, operating ratio, segment operating ratio, net income, and earnings per diluted share measured in accordance with GAAP. There are limitations to using non-GAAP financial measures. We believe our presentation of these non-GAAP financial measures is useful because it provides investors and securities analysts with supplemental information that we use internally for purposes of assessing profitability. Further, our Board and management use non-GAAP operating income, segment operating income, operating ratio, segment operating ratio, net income, and earnings per diluted share measures on a supplemental basis to remove items that may not be an indicator of performance from period-to-period. Although we believe that adjusted operating income, adjusted segment operating income, adjusted operating ratio, adjusted segment operating ratio, adjusted net income, and adjusted earnings per diluted share improves comparability in analyzing our period-to-period performance, they could limit comparability to other companies in our industry, if those companies define such measures differently. Because of these limitations, adjusted operating income, adjusted segment operating income, adjusted operating ratio, adjusted segment operating ratio, adjusted net income, and adjusted earnings per diluted share should not be considered measures of income generated by our business or discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.
This press release contains certain statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements may be identified by their use of terms or phrases such as "expects," "estimates," "projects," "believes," "anticipates," "plans," "could," "continue," "would," "may," "will," "intends," "outlook," "focus," "seek," "potential," "mission," "continue," "goal," "target," "objective," derivations thereof, and similar terms and phrases. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. In this press release, statements relating to equipment age, net capital equipment expenditures and related priorities, benefits, and returns, capital allocation alternatives, expectations for the general freight market, including rates and capacity, our ability to achieve our desired business mix, the driver market, future margin and return on capital, progress toward our strategic goals and the expected impact of achieving such goals, and the statements under "Outlook" are forward-looking statements. The following factors, among others could cause actual results to differ materially from those in the forward-looking statements: Our business is subject to economic, credit, business, and regulatory factors affecting the truckload industry that are largely beyond our control; We may not be successful in achieving our strategic plan; We operate in a highly competitive and fragmented industry; We may not grow substantially in the future and we may not be successful in improving our profitability; We may not make acquisitions in the future, or if we do, we may not be successful in our acquisition strategy; Global conflicts could adversely impact our business and financial results; Increases in driver compensation or difficulties attracting and retaining qualified drivers could have a materially adverse effect on our profitability and the ability to maintain or grow our fleet; Our engagement of independent contractors to provide a portion of our capacity exposes us to different risks than we face with our tractors driven by company drivers; We derive a significant portion of our revenues from our major customers; ...
