Covenant Logistics Group Inc. hauled in less revenue and profits in the second quarter than it earned a year ago as the freight market continued to soften this spring.
The Chattanoooga-based trucking giant reported Wednesday that adjusted earnings in the three months ended June 30 totaled $14.4 million, or 91 cents per share, on revenues of $274 million. In the same period a year ago, Covenant Logistics had an adjusted net income of $25.6 million, or $1.56 per share, on revenues of $317.4 million.
"The freight market, consisting of a combination of freight rates and volumes, remained challenging throughout the second quarter," Covenant CEO David Parker said in an earnings report released after the stock market closed. "While the 2023 results fall short of our 2022 results, we are pleased with the resiliency of our model in what we believe to be the trough of the freight cycle."
Parker said Covenant completed its acquisition of Lew Thompson and Son Trucking Inc. in April, adding a dedicated contract carrier specializing in poultry feed and live haul transportation.
Paul Bunn, Covenant's president and chief operating officer, said revenue from the company's truckload operations decreased 15.2%, to $185.3 million. The company had 268 fewer drivers than a year ago, Bunn said.
"The decrease in freight revenue primarily related to the ongoing execution of our capital allocation program, including reduction of tractors associated with less profitable contracts, growth of units allocated to the AAT business unit acquired in 2022, and the acquisition of Lew Thompson and Son this quarter," Bunn said. "Our truckload operating cost per total mile decreased 28 cents per total mile or 9.7% compared to the prior quarter, primarily as a result of reduced fuel costs"
Last week, Chattanooga's biggest tuck carrier — Knight-Swift Transportation Holdings Inc.— reported an even bigger drop in profits after buying U.S. Xpress Enterprises on July 1.
Knight-Swift had an adjusted net income of 49 cents per share, compared with adjusted net income of $1.41 in the second quarter of 2022. During the second quarter of 2023, Knight-Swift's revenue fell from a year ago by 20.8% to $1.6 billion.
"The absence of typical seasonal demand support reached its fourth consecutive quarter, with absolute demand falling to its lowest point yet for our truckload businesses in April before stabilizing at modestly better levels for the balance of the quarter," company President David Jackson said in the earnings release. "Logistics continues to navigate a very weak demand environment."
— Compiled by Dave Flessner