Covenant Logistics is taking another step in its leadership transition from its founder and longtime CEO David Parker to the next generation of executives leading the Chattanooga-based trucking company.
Covenant, which reported a jump in third quarter profits Thursday with the sale of its California terminal, also announced that Paul Bunn, 44, will become president of the company in January. Bunn was formerly chief operating officer and part of the “office of the CEO” created by Covenant two years ago.
Joey Hogan, who is 60 years old and had been company president, is moving to a part-time role as executive vice president “focused on strategic planning, mentoring the leadership team, government relations and other special projects,” according to a company statement released with Covenant’s third quarter earnings.
“Several years ago, we identified the next generation of leaders for Covenant, and I asked Joey to guide their development,” Parker said in an announcment of the leadership change. “In large part due to Joey’s unique skills and selfless personality, we are now blessed with strong leaders across our business units and corporate staff, which is reflected in the strongest financial results in our history.”
On Thursday, Covenant reported third quarter profits of $50.5 million, or $3.39 per share. Earnings were more than double the $20.1 million, or 97 cents per share, earned in the same period a year ago, although most of the profits came from a one-time $38.5 million gain from the sale of the company’s California terminal.
Shares of Covenant rose Friday by more than 9% in response to the earnings announcement. Parker said Covenant repurchased 1 million shares of stock in the third quarter, and he expects a backlog of demand and holiday shipping acitivity to keep shipping demand up in the fourth quarter although with lower profit margins as costs continue to rise.
“As we look toward 2023, we anticipate a difficult freight environment coupled with cost inflation, which will pressure margins,” Parker said. “Absent a substantial, near-term deterioration in market forces, we expect to finish the fourth quarter with over a billion dollars of total revenue and freight revenue for the year and while we expect fourth quarter margin to worsen compared to the third quarter because of the third quarter gain on sale of a California terminal, we expect adjusted margin in the fourth quarter to be similar to that of the third quarter.”
Parker, who founded the former Covenant Transport in 1986, said Covenant Logistics has recently achieved “a more resilient operating model” to lower volatility throughout economic and freight market cycles and the management team is focused on improved margins.
Parker said Hogan “has earned the right to step back on his terms” after 25 years with the company.
“He has been a great partner and a true leader in every manner, which was most recently evidenced when he said, ‘Paul is ready,'” Parker said in the earnings release. “As grateful as I am for Joey’s contributions, I’m equally grateful to have Paul Bunn stepping into the president role. Paul’s ability to bridge financial and operating roles and communicate our goals and values is a key component in strengthening our company.”
— Compiled by Dave Flessner
Contributed photo by Covenant Logistics / Paul Bunn