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Covenant beats Q2 earnings estimates despite ‘softening’ freight market

Truckload carrier posts earnings record for any quarter with EPS of $1.63

Covenant Logistics Group reported Monday after the market close second-quarter earnings of $1.63 per share on total revenue of $317.3 million, a 23% increase compared to the same period in 2021.

Chattanooga, Tennessee-based Covenant beat analysts’ expectations for earnings per share of $1.36 and revenue of $288 million, in spite of “unprecedented cost inflation, unusually high insurance costs, minimal gain on sale of used equipment and a softening in the freight market,” said Chairman and CEO David R. Parker.

“For the second half of 2022, we expect moderating freight demand, greater driver availability, and continuing cost inflation,” Parker said in a statement.

“Beyond 2022, with diligent execution and teamwork we believe the power of our operating model will speak for itself throughout economic and freight market cycles. We expect to grow our market share, continue to improve our operations, and be a stronger, more profitable, and more predictable business with the opportunity for significant and sustained value creation.”    

Revenue per tractor per week increased 20% to $5,457. Miles per tractor declined 2.1% year over year to 28,956 during the second quarter, while freight revenue per total miles increased from $2 to $2.45.

Covenant’s expedited freight division posted the largest gain during the second quarter year over year, increasing revenue to $75.3 million, or 23%, to $92.7 million.

“Our expedited segment grew revenue and improved adjusted margins compared to the second quarter last year,” Parker said. “The [acquisition] of AAT Carriers Inc. in the first quarter of 2022 and improved pricing were able to overcome reduced utilization and significant cost increases from driver pay, fuel, insurance, parts and maintenance.”

The company will host a call at 10 a.m. Tuesday to discuss the second-quarter results with analysts.

Covenant Logistics GroupQ2/22Q2/21Y/Y% Change
Total revenue$317.4$256.323%
Truckload combined:
Total revenue$218.4$169.229%
Freight revenue (ex fuel) $168.2$14516%
Average tractors2,3712,451-3.2%
Revenue per loaded mile$2.77$2.2423%
Revenue per total mile$2.45$222%
Revenue/tractor/week$5,457$4,55120%
Adjusted OR%92%94.1%-2.2
Managed freight:
Revenue$80.2$71.612%
Adjusted operating income$8,627$7,31618%
Adjusted OR%89.2%89.6%-0.4%
Expedited freight:
Revenue (ex fuel)$92.7$75.323%
Adjusted operating income$14.6$10.243%
Adjusted OR%83.3%86.4%-3.5%
Dedicated freight:
Revenue (ex fuel)$75.4$69.68.3%
Adjusted operating income$3,175410674%
Adjusted OR%95.8%99.4%-3.6%
Adjusted EPS$1.63$0.9670%
Revenue & operating income in millions

Watch: FreightWaves carrier update for July 25 shows reefer volume remains strong.

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The FREIGHTWAVES TOP 500 For-Hire Carriers list includes Covenant Logistics (No. 45).

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Noi Mahoney

Noi Mahoney is a Texas-based journalist who covers cross-border trade, logistics and supply chains for FreightWaves. He graduated from the University of Texas at Austin with a degree in English in 1998. Mahoney has more than 20 years experience as a journalist, working for newspapers in Florida, Maryland and Texas. Contact nmahoney@freightwaves.com