Covenant Logistics Adjusted Earnings Rise Sequentially and Year Over Year

The Tip Desk · November 10, 2026 · 4 min read

Adjusted earnings were $0.50 a share in the third quarter, up from $0.42 in the second, as Managed Freight revenue reached $121.6 million.

Covenant Logistics Group (CVLG) reported adjusted earnings of $0.50 a share for the third quarter ended September 30, 2026, up from $0.42 in the second quarter. GAAP earnings were $0.40 a share. Chairman and Chief Executive Officer David R. Parker said that marked the first time since the second quarter of 2022 that adjusted earnings per diluted share increased both sequentially and year over year.

Total revenue was $353.9 million, up 19.2% from $296.9 million a year earlier. Freight revenue excluding fuel surcharge was $315.1 million. Operating income was $12.5 million, and the operating ratio improved to 96.5% from 97.3%. Adjusted operating income was $15.8 million.

Parker said the quarter reflected coordination between Truckload and Managed Freight as the company re-allocated assets to customers seeking long-term capacity. Exiting the quarter, about 80% of fleet assets were under long-term contracts. He said repositioning hundreds of drivers, tractors and trailers and starting several new systems created disruption to utilization and added cost to Truckload fleets, which was more than countered by higher revenue and operating income in Managed Freight. Margin improvement, he said, reflected customer rate increases implemented in the first half of the year and lower purchased transportation costs as spot rates eased, following three consecutive quarters of margin compression.

Combined Truckload total revenue increased 2.5% to $204.6 million. President Paul Bunn said the increase consisted of $10.8 million more fuel surcharge, offset by $5.8 million less freight revenue after an 8.9% smaller average fleet of 2,186 tractors. Average freight revenue per tractor per week rose 6.1% to $5,778.

Expedited freight revenue fell 12.0% to $70.6 million as average tractors dropped 21.4% to 677. Average freight revenue per tractor per week rose 12.0% to $7,934. Bunn said the Expedited fleet continued to transition to multi-year committed capacity agreements; about 58% of Expedited tractors were under those agreements at quarter-end, compared with about 40% three months earlier.

Dedicated freight revenue increased 4.2% to $95.4 million with average tractors down 1.9% to 1,509. Average freight revenue per tractor per week rose 6.2% to $4,810, which Bunn attributed to expansion of agricultural protein-related business and exiting non-specialized dedicated work that had struggled to meet profitability thresholds. Truckload operating expenses rose about 20.8% on a non-GAAP adjusted basis, which Bunn said reflected inflation and quarter-specific costs including equipment repositioning, driver hiring, start-ups and extreme heat on certain Dedicated operations.

Managed Freight freight revenue grew 68.4% to $121.6 million, primarily from assets acquired in the fourth quarter of 2025. Segment operating income was $7.4 million, and the segment operating ratio improved to 93.9% from 95.9%. The company said the ratio improved due to first-half customer rate increases and sequentially easing capacity costs.

Warehousing freight revenue increased 7.8% to $26.7 million after onboarding a significant new customer in the fourth quarter of 2025. Segment operating income fell to $1.7 million, which the company attributed to operational inefficiencies at new customer locations and labor inflation.

The 49% equity-method investment in Transport Enterprise Leasing contributed pre-tax net income of $5.7 million, or $0.16 a share, exceeding expectations for a second consecutive quarter. Parker said TEL’s results benefited from equipment leasing growth and higher equipment sale gains.

Net indebtedness decreased $12.4 million to about $283.9 million versus December 31, 2025, and net indebtedness to total capitalization improved to 40.2% from 42.3%. Cash was $5.1 million, with $75.2 million of immediate available capacity under the ABL facility.

For the fourth quarter of 2026, the company expects a modest sequential increase in earnings per share, with anticipated operating-margin improvement from asset-based operations partly offset by lower TEL income. Parker said sequential improvement is expected to continue as a higher percentage of the fleet operates under committed arrangements and repositioning costs decline.