Covenant Logistics Group Inc. on Monday reported record high quarterly earnings for the three months ended June 30, rising 71% over last year as the Chattanooga-based trucking giant added AAT Carriers this year and improved its overall pricing for its shipments.
Covenant said it earned $24.6 million, or $1.63 per share, in adjusted earnings in the second quarter. A year ago, Covenant earned $15.4 million, or 96 cents per share, in adjusted earnings in the same period.
“These results were achieved despite unprecedented cost inflation, unusually high insurance costs, minimal gain on sale of used equipment and a softening in the freight market,” Covenant CEO David Parker said in a statement released after the stock market closed Monday. “We expect both cost inflation and softening of the freight market to continue in the second half of the year.”
Covenant repurchased $30 million of stock in the first quarter of 2022 and added another $75 million stock repurchase in the second quarter.
Staff Photo by Gillian Bolsover A Covenant Transport truck drives along I-24 over Cummings Highway on Wednesday, July 23, 2008.“We purchased approximately 1.3 million shares in the second quarter and, through July 22, 2022, have purchased a total of 2.4 million shares during 2022, demonstrating our strategic commitment towards creating value for our shareholders,” Parker said.
Covenant reported 65% of its operating income in the quarter came from its expedited and dedicated fleet lines, which Parker said “performed well in an environment that is constrained by equipment shortages and sharp inflationary costs.
“Our Expedited segment grew revenue and improved adjusted margins compared to the second quarter last year. The addition of AAT 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,” he said.
Shares of Covenant Logistics, which is traded on the Nasdaq Exchange, were trading up Monday night after the second quarter earnings were released. Parker said he expects profits to continue to improve during the rest of 2022.
“For the second half of 2022, we expect moderating freight demand, greater driver availability and continuing cost inflation,” Parker said in the company’s second-quarter report. “Absent a substantial, near-term deterioration in market forces, we expect a combination of higher revenue, improvement in our dedicated segment, the contribution of AAT, continued focus on cost control and our ongoing stock repurchase program to generate adjusted earnings per diluted share for the second half of 2022 in excess of the same period in 2021.”
– Compiled by Dave Flessner