Covenant Logistics Group Inc. achieved record quarterly earnings this spring, beating analysts expectations as freight shipments rose along with the economic recovery in the past year.
The Chattanooga-based trucking company said Wednesday it earned $15.4 million, 0r 96 cents per adjusted share, in the three months ended June 30 - the highest quarterly profits in the company's 35-year history. The results easily topped Wall Street projections, which analysts had predicted, on average, would total 67 cents per share in the second quarter.
The company said it expects profits and sales to remain higher this year as trucking demand strengthens and Covenant continues its cost streamlining efforts.
Revenues rose 33.7% above the year-ago levels in the most recent quarter to $256.3 million, also well above the average sales estimate of $225.3 million among analysts who follow the company.
In the same period a year earlier during the worst of the pandemic, Covenant reported a net loss of $22.3 million, or $1.31 per share, on sales of $191.7 million.
"In the second quarter, we saw freight market demand firing on all cylinders as a result of growing economic activity, low inventories, and supply chain disruptions, accompanied by constrained supply due to an intensifying national driver shortage," said David Parker, the founder and CEO of Covenant Logistics. "These conditions have continued into the third quarter."
The yearly comparisons are complicated some by the ongoing changes in Covenant's business mix due to the downsizing of the refrigerated fleet and solo tractor count in the company's expedited business, Parker said.
File photo / David Parker"We expect year-over-year comparability to be clearer in the second half of 2021," he said. "Although we are pleased with these results, we recognize the opportunity for further improvement, particularly in our Dedicated segment."
Parker said Covenant is working to improve rates and contractual terms with customers "who are not yielding the level of consistent profit we expect from this segment of the business," Parker said.
"In the long run, this means holding ourselves accountable for improved margins and returns across all aspects of our business," he said.
Expedited and managed freight service offerings have exceeded company expectations through improvements in equipment utilization, rates and an exceptionally strong spot rate market.
The second quarter results announced after the market closed Wednesday helped to boost the price of Covenant's stock in after- market trading on the Nasdaq exchange. Covenant shares closed up 1.8% Wednesday at $19.41 per share. The company's stock is up by more than 31% so far this year.
Covenant Logistics' cross-town rival, U.S. Xpress Enterprises, will report its second quarter results on Thursday.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340