COVENANT LOGISTICS GROUP, INC. COVENANT LOGISTICS GROUP ANNOUNCES FOURTH QUARTER FINANCIAL AND OPERATING RESULTS AND INITIATES QUARTERLY CASH DIVIDEND
CHATTANOOGA, TENNESSEE - January 26, 2022 - Covenant Logistics Group, Inc. (NASDAQ/GS: CVLG) ("Covenant" or the "Company") announced today financial and operating results for the fourth quarter ended December 31, 2021. Additionally, the Company announced that it will initiate a quarterly cash dividend of $0.0625 per share in the first quarter of 2022. The Company's live conference call to discuss the quarter will be held at 10:00 A.M. Eastern Time on Thursday, January 27, 2022.
Chairman and Chief Executive Officer, David R. Parker, commented: "We are pleased to report fourth quarter earnings of $1.05 per diluted share and non-GAAP adjusted earnings of $1.07 per diluted share (1). For 2021, we generated over $1 billion in revenue, the highest annual earnings per share in our history, and a 13% return on average invested capital. We were also successful in moving assets to longer term customer arrangements, lowering our asset intensity and reducing our debt. We look forward to building on these results in the coming quarters, and the quarterly dividend we are announcing today is an expression of our confidence in the future.
"In the fourth quarter we experienced the continuation of an exceptionally strong freight market resulting from growing economic activity, low inventories, and supply chain disruptions, accompanied by constrained capacity due to a national driver and equipment shortage. These conditions have continued into the first quarter of 2022.
"Our asset-based segments, Expedited and Dedicated, contributed approximately 58% of total revenue in the quarter and performed well in an environment characterized by strong freight demand, an extremely competitive driver market, workforce volatility due to COVID-19, and rising costs. Our Expedited segment grew revenue and produced adjusted margins similar to the fourth quarter last year, with improved pricing and utilization overcoming significant driver pay increases and a smaller available fleet. We also implemented multi-year contracts with certain major customers that should lessen the impact of economic cycles on this segment. Our
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Dedicated segment improved year-over-year and sequentially by producing higher revenue and better margins, progress needed to meet our targeted returns. Compared with the fourth quarter of 2020, operating margins in Expedited and Dedicated were negatively impacted by approximately 250 basis points primarily related to catch-up vesting of prior year performance- based compensation due to our record results, incremental costs to secure short-term capacity to service short-term freight commitments and lack of gain on sale due to delays in equipment deliveries, all of which are not expected to continue into 2022.
Our asset-light segments, Managed Freight and Warehousing, contributed approximately 42% of total revenue in the quarter and combined to generate favorable margins and returns. Managed Freight produced record performance as a result of strong execution and effective coordination with our Expedited and Dedicated segments. Warehousing was able to grow revenue but fell short of our margin goals mainly due to start-up rent on a new facility and increased labor costs.
We are also pleased to report that Transport Enterprise Leasing, our 49% equity method investment, contributed pre-tax net income of $5.2 million, or $0.23 per share, compared to $3.0 million, or $0.13 per share, in the 2020 quarter."
A summary of our fourth quarter financial performance:
Three Months Ended December 31, | Year Ended December 31, | ||||||||
($000s, except per share information) | 2021 | 2020 | 2021 | 2020 | |||||
Total Revenue | $ | 294,228 | $ | 225,228 | $ | 1,046,003 | $ | 838,561 | |
Freight Revenue, Excludes Fuel Surcharge | $ | 267,022 | $ | 210,856 | $ | 949,913 | $ | 776,218 | |
Operating Income (Loss) | $ | 18,237 | $ | 9,566 | $ | 67,162 | $ | (14,027) | |
Adjusted Operating Income (1) | $ | 18,824 | $ | 13,233 | $ | 71,205 | $ | 26,865 | |
Operating Ratio | 93.8% | 95.8% | 93.6% | 101.7% | |||||
Adjusted Operating Ratio (1) | 93.0% | 93.7% | 92.5% | 96.5% | |||||
Net Income (Loss) | $ | 17,732 | $ | (25,665) | $ | 60,731 | $ | (42,718) | |
Adjusted Net Income (1) | $ | 18,169 | $ | 10,438 | $ | 61,287 | $ | 18,681 | |
Earnings (Loss) per Diluted Share | $ | 1.05 | $ | (1.50) | $ | 3.57 | $ | (2.46) | |
Adjusted Earnings per Diluted Share (1) | $ | 1.07 | $ | 0.61 | $ | 3.61 | $ | 1.08 |
(1) Represents non-GAAP measures.
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Truckload Operating Data and Statistics
Three Months Ended December 31, | Year Ended December 31, | |||||||||
($000s, except statistical information) | 2021 | 2020 | 2021 | 2020 | ||||||
Combined Truckload | ||||||||||
Total Revenue | $ | 169,674 | $ | 145,674 | $ | 661,604 | $ | 608,854 | ||
Freight Revenue, excludes Fuel Surcharge | $ | 142,670 | $ | 131,406 | $ | 566,213 | $ | 546,974 | ||
Operating Income (Loss) | $ | 6,855 | $ | 3,068 | $ | 31,707 | $ | (22,573) | ||
Adj. Operating Income (Loss) (1) | $ | 7,149 | $ | 6,184 | $ | 33,804 | $ | 12,985 | ||
Operating Ratio | 96.0% | 97.9% | 95.2% | 103.7% | ||||||
Adj. Operating Ratio (1) | 95.0% | 95.3% | 94.0% | 97.6% | ||||||
Average Freight Revenue per Tractor per Week | $ | 4,732 | $ | 4,032 | $ | 4,509 | $ | 3,872 | ||
Average Freight Revenue per Total Mile | $ | 2.24 | $ | 1.90 | $ | 2.07 | $ | 1.85 | ||
Average Miles per Tractor per Period | 27,805 | 27,867 | 113,485 | 109,622 | ||||||
Weighted Average Tractors for Period | 2,294 | 2,480 | 2,408 | 2,702 | ||||||
Expedited | ||||||||||
Total Revenue | $ | 85,924 | $ | 75,855 | $ | 337,063 | $ | 320,202 | ||
Freight Revenue, excludes Fuel Surcharge | $ | 71,782 | $ | 69,434 | $ | 289,350 | $ | 291,471 | ||
Operating Income (Loss) | $ | 5,585 | $ | 4,782 | $ | 33,064 | $ | (7,037) | ||
Adj. Operating Income (Loss) (1) | $ | 5,585 | $ | 6,111 | $ | 33,064 | $ | 9,305 | ||
Operating Ratio | 93.5% | 93.7% | 90.2% | 102.2% | ||||||
Adj. Operating Ratio (1) | 92.2% | 91.2% | 88.6% | 96.8% | ||||||
Average Freight Revenue per Tractor per Week | $ | 6,557 | $ | 5,687 | $ | 6,498 | $ | 5,031 | ||
Average Freight Revenue per Total Mile | $ | 2.06 | $ | 1.87 | $ | 1.97 | $ | 1.82 | ||
Average Miles per Tractor per Period | 41,925 | 40,016 | 172,080 | 144,636 | ||||||
Weighted Average Tractors for Period | 833 | 929 | 854 | 1,108 | ||||||
Dedicated | ||||||||||
Total Revenue | $ | 83,750 | $ | 69,819 | $ | 324,541 | $ | 288,652 | ||
Freight Revenue, excludes Fuel Surcharge | $ | 70,888 | $ | 61,972 | $ | 276,863 | $ | 255,503 | ||
Operating Income (Loss) | $ | 1,270 | $ | (1,714) | $ | (1,357) | $ | (15,536) | ||
Adj. Operating Income (Loss) (1) | $ | 1,564 | $ | 73 | $ | 740 | $ | 3,680 | ||
Operating Ratio | 98.5% | 102.5% | 100.4% | 105.4% | ||||||
Adj. Operating Ratio (1) | 97.8% | 99.9% | 99.7% | 98.6% | ||||||
Average Freight Revenue per Tractor per Week | $ | 3,692 | $ | 3,040 | $ | 3,417 | $ | 3,066 | ||
Average Freight Revenue per Total Mile | $ | 2.46 | $ | 1.94 | $ | 2.19 | $ | 1.88 | ||
Average Miles per Tractor per Period | 19,755 | 20,590 | 81,284 | 85,284 | ||||||
Weighted Average Tractors for Period | 1,461 | 1,551 | 1,554 | 1,594 |
(1) Represents non-GAAP measures.
Combined Truckload Revenue
Mr. Parker commented on truckload operations, "For the quarter, total revenue in our truckload operations increased 16.5%, to $169.7 million with 186 fewer trucks, compared to 2020. The revenue increase consisted of $11.3 million higher freight revenue and $12.7 million higher fuel surcharge revenue. The increase in freight revenue primarily related to a 17.3% increase in average freight revenue per truck, offset by a 7.5% decrease in the average operating fleet size that has resulted from the constraints of an extremely tight driver market. The increase in average freight revenue per truck for the fourth quarter of 2021, was a result of an increase in average freight revenue per total mile of 17.9%."
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Expedited Truckload Revenue
Mr. Parker added, "In our Expedited segment, average total tractors decreased by 96 units or 10.3% to 833, compared to 929 in the prior year quarter. Freight revenue in our Expedited segment increased $2.3 million, or 3.4%. Average freight revenue per tractor increased 15.3% due to an increase of 19 cents per total mile, or 10.2%, in average freight revenue per total mile, along with a 4.8% increase in utilization.
Dedicated Truckload Revenue
"For the quarter, freight revenue in our Dedicated segment increased $8.9 million, or 14.4%. Average Dedicated tractors decreased by 90 units or 5.8% to 1,461, compared to 1,551 in the prior year quarter. Average freight revenue per tractor increased 21.4% due to an increase in average freight revenue per total mile of 52 cents, or 26.8%, offset by a 4.1% decrease in utilization."
Combined Truckload Operating Expenses
Mr. Parker continued, "Our truckload operating cost per total mile increased 49 cents on a GAAP basis, largely due to increases in salaries, wages and related expense, fuel and operations and maintenance expense. On a non-GAAP or adjusted basis, operating expenses per total mile increased 31 cents. The differences between GAAP and non-GAAP operating costs includes adjustments to offset fuel expense with fuel surcharge revenue and to exclude the expense associated with the amortization of intangible assets.
"Salaries, wages and related expense increased year-over-year $9.8 million on an absolute basis. On a cents per total mile basis salaries, wages and related expense increased 23 cents. Driver pay increased $6.0 million, or 15 cents per total mile, due to significant increases implemented across both our expedited and dedicated fleets, and wage hikes for our shop technicians added another 1 cent per mile. Annual merit increases and incentive compensation associated with the favorable results of the business increased approximately 4 cents per mile, and other personnel related costs such as worker's compensation insurance, payroll taxes and 401(k) contributed to the remaining portion of the increase for the category. Despite multiple driver pay increases implemented throughout the year, driver and other compensation headwinds are expected to continue for the foreseeable future as a result of the tight employment market being experienced across our industry.
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"Operations and maintenance related expense increased year-over-year by $3.9 million, or 7 cents per total mile, compared to the 2020 quarter primarily due to increased costs of recruitment and onboarding activities, parts and maintenance activities and OS&D claims. We incurred an additional $1.5 million in costs related to the recruitment and onboarding of drivers, approximately $1.4 million in parts and maintenance costs and $1.0 million in OS&D claims when compared to the prior year quarter.
Managed Freight Segment
Three Months Ended December 31, | Year Ended December 31, | ||||||||
($000s) | 2021 | 2020 | 2021 | 2020 | |||||
Freight Revenue | $ | 108,132 | $ | 64,884 | $ | 321,236 | $ | 177,579 | |
Operating Income (Loss) | $ | 10,952 | $ | 5,375 | $ | 32,461 | $ | 4,482 | |
Adj. Operating Income (1) | $ | 10,988 | $ | 5,539 | $ | 32,986 | $ | 8,129 | |
Operating Ratio | 89.9% | 91.7% | 89.9% | 97.5% | |||||
Adj. Operating Ratio (1) | 89.8% | 91.5% | 89.7% | 95.4% |
(1) Represents non-GAAP measures.
"For the quarter, Managed Freight's freight revenue increased $43.2 million, or 66.7%, from the prior year quarter. Operating income and adjusted operating income for the Managed Freight segment was $11.0 million, compared with $5.4 million and $5.5 million, respectively, in the fourth quarter of 2020. Managed Freight's favorable results for the quarter were primarily attributable to the robust freight market, executing various spot rate opportunities and handling overflow freight from both Expedited and Dedicated truckload operations.
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Covenant Logistics Group Inc. published this content on 26 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 January 2022 21:33:02 UTC.
