The Chattanooga-based trucking giant Covenant Logistics drove profits to a record high in the first three months of the year as freight demand and rates more than offset higher fuel and labor costs.
Covenant Logistics Group Inc. reported Wednesday that its adjusted net income more than doubled from a year ago to $22.6 million, or $1.32 per share – the highest quarterly earnings in the company’s history.
“Despite economic indicators pointing to a slowing freight economy, the first quarter’s freight environment remained robust as a result of strong economic activity, low inventories and supply chain disruptions, accompanied by constrained capacity due to a national driver and equipment shortage,” Covenant CEO David Parker said in the company’s earnings report released after the stock market closed Wednesday. “The first quarter yielded strong results from each of our four operating segments, including sequential improvement in our dedicated truckload segment.”
Covenant also announced Wednesday that it completed its purchase of AAT Carriers Inc. in February and has repurchased 1.1 million shares of stock so far this year while initiating and paying a first-quarter dividend.
“The steps we have taken this quarter represent continued progress towards our strategic plan and are a sign of our commitment towards creating value for our shareholders,” Parker said.
Total revenue in the truckload operations for Covenant grew 22% to $187.7 million with 218 fewer trucks, compared to 2021. The revenue increase consisted of $20.2 million higher freight revenue and $13.6 million higher fuel surcharge revenue. The increase in freight revenue is primarily related to a 26% increase in average freight revenue per truck, offset by an 8.6% decrease in the average operating fleet size that has resulted from the constraints of an extremely tight driver market.
Salaries, wages and related expenses increased by $9.6 million over last year. On a cents per total mile basis, salaries, wages and related expenses increased by 22 cents per mile. Driver pay increased $7.8 million, or 17 cents per total mile.
– Compiled by Dave Flessner