Covenant Logistics Group Inc. hauled in its best first quarter profits in the company's history despite not achieving expected results in its dedicated freight line business.
The Chattanooga-based trucking giant said Monday that net income for the first quarter totaled $11.1 million, or 65 cents per share, after reporting losses in the same period a year ago. Earnings, adjusted for non-recurring gains, were 56 cents per share.
David Parker, CEO of Covenant Logistics, said Monday he was pleased by the first quarter results and looks to make further gains by the company's ongoing restructuring.
"We are less than a year into restructuring our business and have substantial remaining opportunity for further improvement," Parker said in an earnings release issued after the market closed Monday. "In the short run, this means continuing to improve or replace under-performing freight contracts, and in the long run, this means holding ourselves accountable for improved margins and returns across all aspects of our business."
Parker said the freight market this year is "noticeably stronger" and even strengthened sequentially from the fourth quarter, which is traditionally the busiest shipping period of the year.
"This was due to growing economic activity, supply chain disruptions, and an intensifying national driver shortage, all of which have continued into the second quarter," Parker said. "Going forward, our short-term focus will be to improve the profitability of our Dedicated segment. The freight environment and our new business pipeline are both currently robust, which we believe will support our commercial plan."
Parker said Covenant's Dedicated segment continued to operate below expectations primarily due to under-performing contracts covering approximately 50% of Dedicated revenues.
"We are working with customers to improve the profitability of these contracts through rate negotiations and contract structure," Parker said.
Covenant Logistics shares have increased nearly 29% since the beginning of the year. But ahead of Monday's earnings announcement, shares of Covenant Logistics fell nearly 2.5% in trading Monday on the Nasdaq exchange.
- Compiled by Dave Flessner
File photo / David Parker