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Covenant Logistics Group reported increased earnings on lower income during the third quarter, the carrier reported Oct. 26.
The Chattanooga, Tenn.-based dry van and refrigerated truckload fleet posted net income of $7.5 million, or 43 cents a diluted share, for the three months ending Sept. 30. That compared with a net loss of $3.1 million, or a loss of 17 cents a share, during the year-ago period. Total revenue decreased 4.4% to $210.8 million from $220.5 million.
The results were mixed on Wall Street. Analysts were looking for 53 cents per share and quarterly revenue of $203.30 million, according to Zacks Consensus Estimate.
“We were pleased with the progress on executing our strategic plan, which is focused on growing our more consistent and profitable freight commitments, improving margins, improving return on capital, and managing leverage at a reasonable level,” CEO David Parker said in a statement.
He added that revenue before fuel surcharges essentially was constant compared with the 2019 quarter. Parker also noted that the company reduced its tractor fleet nearly 18%, which caused profitability to improve. Covenant Logistics also paid down about $175.6 million of debt and lease obligations over the past year.
“On an adjusted basis, net income for the third quarter of 2020 was second best of any third quarter of the past decade and third best of any quarter overall in the past five years,” Parker said. “Nevertheless, we are in the early stages of implementing our plan, and we expect ups and downs as we work toward implementing lasting changes.”
The combined truckload segment reported revenue decreased 15.7% to $149.5 million from $175 million the prior year. The truckload segment includes expedited and dedicated shipments. Operating income for the segment increased to $3.4 million from a loss of $5.6 million during the 2019 quarter.
The managed freight segment reported revenue increased 35.2% to $47.6 million from $33.3 million. Operating income for the segment increased 121.7% to $2.1 million from $506,000 during the prior-year quarter.
The warehousing segment reported revenue increased 12.3% to $13.6 million from $12 million in 2019. Operating income for the segment increased 3.6% to $1.29 million from $1.24 million during the previous year’s third quarter.
The company’s subsidiaries include Southern Refrigerated Transport, Star Transportation, Landair Holdings and Covenant Transport Solutions.
Covenant Transport Services ranks No. 43 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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