Covenant Logistics Group (NASDAQ:CVLG) Q4 2022 Earnings Conference Call January 26, 2022 10:00 AM ET

Company Participants

Tripp Grant - Executive Vice President & Chief Financial Officer

Paul Bunn - Senior Executive Vice President & Chief Operating Officer

David Parker - Chief Executive Officer

Joey Hogan - President

Conference Call Participants

Jason Seidl - Cowen

Jack Atkins - Stephens

Bert Subin - Stifel

Operator

Welcome to today's Covenant Logistics Group Fourth Quarter Earnings Release Conference Call. Our host for today's call is Tripp Grant. [Operator Instructions] I would now like to turn the call over to your host. Tripp, you may begin.

Tripp Grant

Thank you, Ross. Good morning, everyone, and welcome to the Covenant Logistics Group's fourth quarter 2022 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 prepared 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, Joey Hogan, Paul Bunn.

Before jumping into the quarter, I'd like to first take a moment to reflect on 22 as a whole. As it's a remarkable year for us in many ways, it marked the second consecutive year of record earnings, record revenue, capital returns and safety results. We repurchased approximately 20% of the outstanding stock of the company and acquired a small but highly profitable specialized truckload carrier, all while maintaining moderately low debt leverage. We also made progress on our operating model through improved contracts in our Dedicated segment and grew the core business in our asset-light segments comprised of managed freight and warehousing. Although the tailwinds of a strong freight cycle may well be behind us, we believe the combination of our improved operating model and our strong balance sheet has us well positioned for the future. Our company today is much improved, and we are grateful to all of our team members whose dedication and commitment made this possible.

Focusing now on the fourth quarter. On an adjusted basis, we believe our team performed well during a market of transition. Consolidated revenue was essentially flat compared with the fourth quarter of 2021, while improved revenue per tractor and brokerage margin more than overcame the significant inflationary cost to generate a better adjusted operating ratio and higher adjusted net income. Through acquiring and successfully growing AAT, working with long-term customers to improve the stability of contracted capacity in our expedited fleet and selectively downsizing our least efficient dedicated operations, we did more with less.