Covenant Logistics Group, Inc. cut its fleet by nearly 18% last year but maintained similar revenue as the Chattanooga-based trucking giant streamlined its operations and reduced overhead outside of its core business.
"During 2020 we strategically repositioned our enterprise around our Dedicated, Expedited, Managed Freight, and Warehousing business units, reduced our fixed overhead and capital deployed in non-core businesses, flattened our management structure, and improved our margins," Covenant CEO David R. Parker said Monday..
The changes were not without costs, however. Covenant incurred about $44 million in charges from its discontinued factoring business in the fourth quarter of 2020.
As a result, Covenant reported a fourth-quarter net loss of nearly $25.7 million, or $1.50 per share, compared with earnings of $1.2 million or 6 cents per share a year earlier. Adjusted for one-time costs, however, earnings rose to $10.4 million of 61 cents per share, in the final three months of 2020. The results were generally in line with analysts' projections.
For all of 2020, Covenant reported a net loss of $42.7 million, or $246 per share, compared with earnings of $8.5 million, or 45 cents per share. But adjusted for the one-time writeoffs, Covenant improved its profitability last year, boosting its adjusted net income to $18.7 million, or $1.08 per share - nearly double the $11.4 million, or 57 cents per share, in the same period a year earlier.
"We exit 2020 more profitable and generating higher return on capital excluding the restructuring costs," Parker said. "Our mission for 2021 is clear: seat more of our tractors, continue to control costs, and improve the profitability of certain legacy contracts in our Dedicated segment that generate unacceptable returns."
Parker said he expects Covenant will be more profitable in the first half of 2021 despite cost increases for the trucking company, including the biggest wage increase ever provided for the company's expedited drivers in Covenant's 35-year history earlier this month to help address an ongoing driver shortage.
Covenant said its board on Monday approved a stock repurchase program to buy up to $40 million of the company's Class A stock "from time-to-time based upon market conditions and other factors."
Shares of Covenant closed Monday ahead of the earnings report at $15.97, down 3 cents per share. Although Covenant's stock is up 7.8% so far this year, the company's stock remains at less than half of its peak price of $36.55 reached in March 2015.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340