CVLG · Covenant Logistics Group, Inc.

Covenant Logistics Group reported Q1 2026 results that fell short of expectations, with GAAP EPS of $0.17 and adjusted EPS of $0.26, compared to $0.24 and $0.32 in the prior year quarter. The miss was attributed to severe weather shutdowns and elevated fuel costs in January and February, which pressured margins. Total revenue increased 14.0% to $307.2 million, driven by strong growth in Managed Freight (up 59.6% year-over-year from acquisitions) and Dedicated (up 10.9%), partially offset by a 10.3% decline in Expedited freight revenue due to a reduction in tractors. Operating income fell to $6.3 million from $7.6 million, and the GAAP operating ratio worsened to 98.0% from 97.2%. On an adjusted basis, operating income was $9.6 million versus $10.9 million, with adjusted operating ratio of 96.6% versus 95.5%. The company highlighted that March showed improving freight volumes and rates, and management expressed optimism about momentum entering Q2, citing an expanding pipeline of new customers, rate increases with select customers, and seasonal improvements. The equity method investment in TEL contributed $3.7 million pre-tax net income, comparable to the prior year. Balance sheet improved with net debt decreasing $51 million to $245.3 million, and leverage ratio dropping to 37.6%. Cash and equivalents stood at $11.2 million, with $57.5 million available under the ABL facility. Net capex guidance for 2026 remains at $40-50 million, significantly below 2025 levels, as the company sold unproductive equipment and reduced new equipment purchases. Management expects gradual improvement throughout the year, with Expedited and Managed Freight segments benefiting first from improving freight market conditions.