Covenant Logistics Group, Inc. (NASDAQ:CVLG) Q3 2023 Earnings Conference Call October 26, 2023 10:00 AM ET

Company Participants

Tripp Grant - EVP and CFO

Paul Bunn - President and COO

David Parker - Founder and CEO

Conference Call Participants

Jason Seidl - TD Cowen

Jack Atkins - Stephens

Michael Vermut - Newland Capital

Scott Group - Wolfe Research

Operator

Welcome to today's Covenant Logistics Group Third Quarter Earnings Release Conference Call. Our host for today's call is Tripp Grant. At this time, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session.

I would now like to turn the call over to your host. Tripp, you may begin.

Tripp Grant

Thanks, Ross. Good morning, everyone, and welcome to the Covenant Logistics Group third quarter 2023 conference call. As a reminder, this call will contain forward-looking statements under the Private Securities Litigation Reform Act, which are subject to risks and uncertainties that could cause actual results to differ materially.

Please review our SEC filings and most recent risk factors. We undertake no obligation to publicly update or revise any forward-looking statements. A copy of the proposed comments and additional financial information is available on our website at www.covenantlogistics.com/investors.

I'm joined on the call today by David Parker, and Paul Bunn. We are pleased with our third quarter's results, which benefited from the full-quarter effect of the Lew Thompson & Son Trucking acquisition in the second quarter reflected in our Dedicated segment.

In addition, our Expedited segment benefited incrementally from the increase in demand for team-driver freight as a result of the closure of Yellow. However, more broadly, the overall freight environment remained challenging with few signs of immediate macroeconomic improvement.

Compared to a year ago, consolidated freight revenue was down 5%. The decline is primarily attributable to the combination of little to no overflow freight handled by our Managed Freight segment and a lower tractor count in our Dedicated segment. The reduction of tractors assigned to Dedicated resulted from exiting underperforming legacy contracts partially offset by acquiring Lew Thompson and Son.

The result was higher earnings on fewer trucks. Adjusted operating income declined approximately $4.6 million or 20% compared to the prior year quarter, primarily as a result of our Managed Freight segment which declined by approximately $4.7 million.

Adjusted net income decreased 32% to $15.3 million and adjusted earnings per share decreased 26% to $1.13 per share compared to the year-ago quarter. Weighted average diluted shares decreased as a result of our share repurchase program.