COVENANT LOGISTICS GROUP INC
For the period ended Mar 31, 2025. Filed May 7, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 7, 2025
CVLG$31.55-2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0001437749-24-032908
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0001437749-25-015059
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 107 previous paragraphs and 104 current paragraphs.
54 unchanged; 38 reworded; 11 added; 15 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 23 previous and 23 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Our first quarter earnings were $0.24 per diluted share or $0.32 per diluted share on a non-GAAP adjusted basis. The decrease in adjusted earnings per share compared with the first quarter of 2024 resulted primarily from sub-par equipment utilization due to prolonged inclement weather conditions and avian influenza outbreaks, which were especially severe this year. Overall, we remain confident in our strategy, direction, and market position and our team’s ability to execute on the factors within our control. We enter the second quarter with modest rate increases secured in Expedited, higher margins in Managed Freight, and the expectation of revenue growth in our Dedicated, Managed Freight, and Warehousing divisions compared with the second quarter of 2024. We also recently completed a small tuck-in acquisition of a multi-stop distribution carrier that is expected to be immediately accretive to equipment utilization and earnings in our Dedicated division. In the current environment of uncertain demand, slow capacity exits, and escalating uncertainty regarding global trade policies, we continue to allocate capital to defensible niches, focus on cost control, and deliver superior service and value to customers.
Current report
Currently, the general freight market appears to be incrementally improving as capacity and demand are better balanced than they have been for approximately two years, and customers are acknowledging this during rate and volume allocation discussions. However, uncertainty around global trade policy may cause a temporary disruption to improvement, delaying the path to a 2025 recovery of the freight economy. Beyond the first quarter, we are focusing on positioning the Company to execute quickly and gain operating leverage as conditions improve, continuing to capture new dedicated contracts to expand the fleet organically, and evaluating multiple acquisition and investment opportunities. Our goal remains to grow profitably and generate meaningful returns for our stockholders while providing world-class career opportunities for our team members.
Current report
The increase in operations and maintenance for the three months ended March 31, 2025 was primarily the result of high demands on equipment as we grow our fleet into niche service areas, including worse equipment damage than typically experienced during the first quarter.
Current report
On a cents per mile basis, insurance and claims increased to 23.8 cents per mile for the three months ended March 31, 2025 compared to 22.8 cents per mile the 2024 period, primarily due to relatively flat insurance and claims expense being spread over decreased miles compared to the same 2024 period. Miles decreased primarily due to the combination of weather and avian influenza.
Current report
The decrease in general supplies and expenses for the three months ended March 31, 2025 was primarily the result of the $0.7 million increase in the fair value of the contingent consideration recognized during the 2025 period compared to an increase of $8.1 million recognized during the 2024 period.
Current report
Depreciation expense increased $0.6 million to $19.4 million for thethree months ended March 31, 2025 compared to $18.7 million in the same 2024 period. Amortization of intangible assets was $2.4 million for each of thethree months ended March 31, 2025 and 2024. Depreciation and amortization increased as a percentage of total revenue and freight revenue due to a decrease in total revenue and freight revenue compared to the 2024 period.
Current report
For the three months ended March 31, 2025, Warehousing total revenue remained relatively even compared to the 2024 quarter.
Current report
The decrease in Expedited operating income for thethree months ended March 31, 2025 was primarily the result of the aforementioned decrease in revenue partially offset by a decrease in Expedited operating expenses. The decrease in Expedited operating expenses for the three months ended March 31, 2025 was primarily the result of decreases in fuel expense, purchased transportation expenses, and salaries, wages, and benefits for our professional drivers as a compared to the same 2024 period as a result of fewer average miles per unit and a decrease in the average number of Expedited team-driven tractors. Going forward, our focus in Expedited will be on improving margins through rate increases exiting less profitable business, and adding more profitable business.
Current report
The increase in Dedicated operating income for thethree months ended March 31, 2025 was primarily the result of the aforementioned increase in revenue, partially offset by an increase in Dedicated operating expenses. The increase in Dedicated operating expenses for thethree months ended March 31, 2025, was primarily the result of increased salaries, wages, and benefits for our professional drivers and increased depreciation expense as a result of growth and increased equipment costs since the 2024 period, partially offset by the increase in the fair value of the contingent consideration recognized during the 2025 period of $0.7 million compared to $8.1 million recognized in the same 2024 period. Going forward, we remain focused on our strategy of growing our dedicated fleet, specifically in areas that provide value-added services for customers. We believe that if we are successful in providing best in class service and controlling our costs, growth and improved profitability will result.
Current report
The decrease in operating income for Warehousing for thethree months ended March 31, 2025 is the combination of facility related cost increases for which we have not yet negotiated rate increases with our customers and startup-related costs and inefficiencies related to new business. Going forward, we intend to improve upon the margin within this segment through a combination of rate increases and cost reductions.
Current report
On April 23, 2025, the Board approved a stock repurchase program authorizing the purchase of up to $50 million of the Company's Class A common stock from time-to-time based upon market conditions and other factors. The stock may be repurchased on the open market, in privately negotiated transactions, or other legally permissible means, including pursuant to Rule 10b5-1 trading plans. The Company did not place a limit on the duration of the repurchase program. The stock repurchase program does not obligate the Company to repurchase any specific number of shares, and the Company may suspend or terminate the program at any time without prior notice
Removed paragraphs (15)
Previous report
We are pleased to report third quarter earnings of $0.94 per diluted share. Our third quarter’s results include year over year freight revenue growth of 2.1%, operating income growth of 7.2%, and a $36.6 million sequential reduction of our net indebtedness, composed of total debt and finance lease obligations, net of cash, while improving the average age of our fleet by one month. Our core business continues to perform well despite the prolonged general freight market down cycle, as a result of capitalizing on new value-added commercial opportunities where available, allocating equipment investments toward more profitable operations, and controlling costs.
Previous report
Our asset-based segments, consisting of Expedited and Dedicated, contributed approximately 69% of total revenue and 66% of total freight revenue in the quarter. Our combined truckload operations experienced improved year over year margins primarily related to operating 8.0% more average tractors combined with improved freight revenue per total mile, partially offset by a reduction in utilization and higher costs compared to the prior year quarter.
Previous report
Our asset-light segments, consisting of Managed Freight and Warehousing, contributed approximately 31% of total revenue and 34% of total freight revenue in the quarter. Year over year freight revenue and operating income each declined 6.5%, due to the combination of softer volumes of available profitable freight and a large cargo related claim incurred during the third quarter in our Managed Freight reportable segment, which was partially offset by improved cost efficiencies and rate increases in our Warehousing reportable segment.
Previous report
Although we are pleased with our results for the period, our belief is that the overall general freight market will take time to meaningfully improve. The combination of lingering excess carrier capacity and the lack of an immediate catalyst to improve volumes, feeds our thesis that improvements will be slow and steady. While we are seeing some green shoots in the form of new dedicated business awards and a small number of customer rate increases, these wins have somewhat been offset with softer than anticipated volumes, particularly in our Expedited reportable segment. Additionally, we remind investors that our less volatile operating model, consisting of a large percentage of multi-year contractual agreements, will likely take time to execute and recognize the benefits of operational leverage than our historical model if and when freight demand and pricing improve materially. Regardless of the operating environment, our focus and commitment remains unchanged as we execute our strategic plan through tactical step by step execution that will continue to allow us to capitalize on opportunities that drive us deeper into the supply chain, add value for our customers, and create efficiencies across our enterprise, which we believe will allow us to become a stronger, more profitable, and more predictable business.
Previous report
The increase in operations and maintenance for the three months ended September 30, 2024 was insignificant both as a percentage of total revenue and freight revenue. The decrease in operations and maintenance for thenine months ended September 30, 2024 was primarily related to a decrease in the average age of our fleet and the improvement in both availability and cost of tires and maintenance related parts compared to the prior year period.
Previous report
Insurance and claims per mile cost decreased to 17.4 cents per mile for the three months ended September 30, 2024, and increased to 21.3 cents per mile for the nine months ended September 30, 2024, respectively, compared to 19.2 cents per mile and 18.7 cents per mile, respectively, for the same 2023 periods. The decrease on a cents per mile basis for the three months ended September 30, 2024 is primarily the result of increased miles compared to the same 2023 period. The increase for the nine months ended September 30, 2024 is primarily the result of current period claims expense and the development of prior period claims compared to the same 2023 period.
Previous report
The change in general supplies and expenses for the three months ended September 30, 2024 was insignificant both as a percentage of total revenue and freight revenue. The increase in general supplies and expenses for thenine months ended September 30, 2024 was primarily the result of the increase in the contingent consideration liability since the 2023 period partially offset by acquisition costs recognized during the 2023 period with no similar costs during the same 2024 period.
Previous report
Depreciation expense increased $2.8 million and $10.7 million to $18.8 million and $57.3 million for thethree and nine months ended September 30, 2024, respectively, compared to $16.0 million and $46.6 million in the same 2023 periods, as a result of increased costs on new equipment and an increase in our average total tractor count. Amortization of intangible assets was $2.4 million and $7.1 million forthree and nine months ended September 30, 2024, respectively, compared to $2.2 million and $5.1 million for the same 2023 periods. The increase for thethree months ended September 30, 2024 is due to the amortization of the intangible assets related to the Sims acquisitions and the increase for thenine months ended September 30, 2024 is due to the amortization of intangible assets related to the LTST and Sims acquisitions.
Previous report
Loss (gain) on disposition of property and equipment, net
Previous report
For thenine months ended September 30, 2024, the decrease in Expedited revenue relates to a decrease in average freight revenue per tractor per week of 2.8%, and a $4.2 million decrease in fuel surcharge revenue partially offset by a 34 (or 3.9%) average tractor increase compared to the same 2023 period. The decrease in average freight revenue per tractor per week for thenine months ended September 30, 2024 is the result of a 6.0 cents per mile (or 2.8%) decrease in average rate per total mile partially offset by a 0.3% increase in average miles per unit compared to the same 2023 period. Expedited team-driven tractors averaged 837 and 801 for the nine months ended September 30, 2024 and 2023, respectively.
Previous report
For thenine months ended September 30, 2024, the increase in Dedicated revenue relates to a 110 (or 8.9%) average tractor increase and an increase in average freight revenue per tractor per week of 7.1% compared to the same 2023 period. The increase in average freight revenue per tractor per week for thenine months ended September 30, 2024 is the result of a 16.9 cents per mile (or 6.3%) increase in average rate per total mile and a 1.1% increase in average miles per unit compared to the same 2023 period.
Previous report
For the three and nine months ended September 30, 2024, Warehousing total revenue increased as a result of customer rate increases since the same 2023 periods.
Previous report
The decrease in Expedited operating income for thethree and nine months ended September 30, 2024 was primarily the result of the aforementioned decreases in revenue and changes to the Expedited operating expenses. The decrease in Expedited operating expenses for thethree months ended September 30, 2024 was primarily the result of a decrease in fuel expense and a decrease in operations and maintenance expenses as a compared to the same 2023 period, partially offset by a large workers' compensation claim during the 2024 period. The increase in Expedited operating expenses for the nine months ended September 30, 2024, primarily related to increases in insurance and claims expense, depreciation expense as a result of increased equipment cost, and losses on the sale of equipment since the 2023 period, partially offset by reductions in fuel expense and operations and maintenance expense. The increase in Dedicated operating income for the three months ended September 30, 2024 was primarily the result of the aforementioned increase in revenue, partially offset by an increase in Dedicated operating expenses. The decrease in Dedicated operating income for thenine months ended September 30, 2024 was primarily the result of an increase in Dedicated operating expenses partially offset by the aforementioned increase in revenue. The increase in Dedicated operating expenses for thethree and nine months ended September 30, 2024, was primarily the result of increased salaries, wages, and benefits for our professional drivers of $6.6 million and $13.9 million, respectively, as the result of growth, the increase in the contingent consideration liability of $0.7 million and $9.5 million, respectively, increased depreciation expense as a result of growth and increased equipment costs, and losses on the sale of equipment since the 2023 period. Additionally, during the nine months ended September 30, 2023*,* we sold a Tennessee terminal resulting in a $7.6 million gain which is included in gain on disposition of property and equipment, net in the condensed consolidated statements of operations with no similar gain in the same 2024 period.
Previous report
The increase in operating income for Warehousing for thethree and nine months ended September 30, 2024 was primarily the result of the aforementioned increase in revenue and a decrease in Warehousing operating expenses. The decrease in Warehousing operating expenses for thethree and nine months ended September 30, 2024, was a result of a reduction in outsourced labor since the 2023 periods. In our asset-light reportable segments, we are prioritizing long-term growth, focusing on talent acquisition and technology enhancements.
Previous report
On May 18, 2022 our Board approved a stock repurchase authorization of up to $75.0 million of our Class A common stock, with any remaining amount available under prior authorizations being excluded and no longer available. Under such authorization, we repurchased 2.0 million shares of our Class A common stock for $54.7 million during 2022. On January 30, 2023, the Board approved an amendment to the Company's stock repurchase program authorizing the purchase of up to an aggregate $55.0 million of our Class A common stock. The amendment added an incremental approximately $37.5 million to the approximately $17.5 million that was then-remaining under the program. Between May 2022 and April 2023, we repurchased a total of 2.7 million shares of our Class A common stock. The program expired on January 31, 2024.
Reworded paragraphs (38)
Previous wording
This report contains certain statements that may be considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation: any projections of earnings, revenues, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; and any statements of belief and any statements of assumptions underlying any of the foregoing. In this Form 10-Q, statements relating to future impact of accounting standards, future third-party transportation provider expenses, future tax rates, expenses, and deductions, expected freight demand, capacity, and volumes and trucking industry conditions, potential results of a default and testing of our fixed charge covenant under the Credit Facility or other debt agreements, expected sources, as well as adequacy, of working capital and liquidity (including our mix of debt, finance leases, and operating leases as means of financing revenue equipment), future inflation, future stock repurchases (including any taxes imposed on such repurchases) and dividends, if any, expected capital expenditures, allocations, and requirements, future customer relationships, including the length of contracted periods with our Dedicated segment, future interest expense, future driver market conditions, including driver satisfaction, future use of independent contractors, expected cash flows, future investments in and growth of our reportable segments and services, future margins of our reportable segments, future rates and prices, future depreciation and amortization, future salaries, wages, and related expenses, including driver compensation, expected net fuel costs, strategies for managing fuel costs, the effectiveness and impact of, and cash flows relating to, our fuel surcharge programs, future fluctuations in operations and maintenance expenses, expected effects and mix of our solo and team operations, future fleet size, management, utilization, upgrades, and age, availability and usage of tractors and trailers, the market value of used equipment, the anticipated impact of our investment in TEL, the future impact of our business model, service standards, strategic plan and other strategic initiatives, changes to and deviations from our business model, strategic plan, and other strategic initiatives, anticipated levels of and fluctuations relating to insurance and claims expenses, including the erosion of a…
Excerpt shortened here; the source contains the full paragraph.
Current wording
This report contains certain statements that may be considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation: any projections of earnings, revenues, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; and any statements of belief and any statements of assumptions underlying any of the foregoing. In this Form 10-Q, statements relating to future impact of accounting standards, future third-party transportation provider expenses, future tax rates, expenses, and deductions, expected freight demand, capacity, and volumes and trucking industry conditions, potential results of a default and testing of our fixed charge covenant under the Credit Facility or other debt agreements, expected sources, as well as adequacy, of working capital and liquidity (including our mix of debt, finance leases, and operating leases as means of financing revenue equipment), future inflation, future stock repurchases (including any taxes imposed on such repurchases) and dividends, if any, expected capital expenditures, allocations, and requirements, future customer relationships, including the length of contracted periods with our Dedicated segment, future interest expense, future driver market conditions, including driver satisfaction, future use of independent contractors, expected cash flows, future investments in and growth of our reportable segments and services, future margins of our reportable segments, future rates and prices, future depreciation and amortization, future salaries, wages, and related expenses, including driver compensation, expected net fuel costs, strategies for managing fuel costs, the effectiveness and impact of, and cash flows relating to, our fuel surcharge programs, future fluctuations in operations and maintenance expenses, expected effects and mix of our solo and team operations, future fleet size, management, utilization, upgrades, and age, availability and usage of tractors and trailers, the market value of used equipment, the anticipated impact of our investment in TEL, the future impact of our business model, service standards, strategic plan and other strategic initiatives, changes to and deviations from our business model, strategic plan, and other strategic initiatives, anticipated levels of and fluctuations relating to insurance and claims expenses, including the erosion of a…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Additional items of note for the third quarter of 2024 include the following:
Current wording
Additional items of note for the first quarter of 2025 include the following:
Previous wording
We focus on targeted markets throughout the United States where we believe our service standards can provide a competitive advantage. We are a major carrier for transportation companies such as parcel freight forwarders, less-than-truckload carriers, and third-party logistics providers that require a high level of service to support their businesses, as well as for traditional truckload customers such as manufacturers, retailers, and food and beverage shippers.
Current wording
We focus on targeted markets throughout the United States where we believe our service standards can provide a competitive advantage. We are a major carrier for transportation companies such as parcel freight forwarders, less-than-truckload carriers, and third-party logistics providers that require a high level of service to support their businesses, as well as for traditional truckload customers such as manufacturers, retailers, and food and beverage shippers. Additionally, we provide poultry feed and live haul transportation, as well as highly regulated, time sensitive loads for the U.S. government.
Previous wording
Within our Warehousing reportable segment, we empower customers to outsource warehousing management, including moving containers and trailers in or around freight yards. The main factors that impact profitability in terms of expenses are fixed costs, including salaries, facility warehousing costs, and selling, general, and administrative expenses.
Current wording
Within our Warehousing reportable segment, we empower customers to outsource warehousing management, including moving containers and trailers in or around freight yards. The main factors that impact profitability in terms of expenses are managing fixed costs, including salaries, facility warehousing costs, and selling, general, and administrative expenses.
Previous wording
Our main measures of profitability are operating ratio and adjusted operating ratio. We define adjusted operating ratio as operating expenses, net of fuel surcharge revenue, excluding amortization of intangibles, and significant unusual items, divided by total revenue, less fuel surcharge revenue. Seepage 25 for the uses and limitations associated with adjusted operating ratio.
Current wording
Our main measures of profitability are operating ratio and adjusted operating ratio. We define adjusted operating ratio as operating expenses, net of fuel surcharge revenue, excluding amortization of intangibles, and significant unusual items, divided by total revenue, less fuel surcharge revenue. Seepage 23 for the uses and limitations associated with adjusted operating ratio.
Previous wording
At September 30, 2024, we operated 2,306 tractors and 6,484 trailers. Of such tractors, 2,169 were owned, 22 were financed under finance or operating leases, and 115 tractors were provided by independent contractors, who own and drive their own tractors. Of such trailers, 5,842 were owned and 642 were held under finance or operating leases. At September 30, 2024, our fleet had an average tractor age of 1.6 years and an average trailer age of 5.6 years.
Current wording
At March 31, 2025, we operated 2,393 tractors and 6,516 trailers. Of such tractors, 2,285 were owned, 2 were financed under finance or operating leases, and 106 tractors were provided by independent contractors, who own and drive their own tractors. Of such trailers, 5,807 were owned and 709 were held under finance or operating leases. At March 31, 2025, our fleet had an average tractor age of 1.7 years and an average trailer age of 5.8 years.
Previous wording
COMPARISON OF three and nine months ended September 30, 2024** TO three and nine months ended September 30, 2023**
Current wording
COMPARISON OF three months ended March 31, 2025** TO three months ended March 31, 2024**
Previous wording
The decrease in total revenue for the three months ended September 30, 2024 primarily resulted from a $6.3 million and $4.3 million decrease in Managed Freight and Expedited freight revenue, respectively, and a $6.1 million decrease in fuel surcharge revenue partially offset by a $15.7 million and $0.1 million increase in Dedicated and Warehousing freight revenue, respectively. The increase in total revenue for the nine months ended September 30, 2024 primarily resulted from a $34.6 million, $3.6 million, and $1.4 million increase in Dedicated, Expedited, and Warehousing freight revenue, respectively, and a $7.7 million decrease in fuel surcharge revenue partially offset by a $7.2 million decrease in Managed Freight revenue.
Current wording
The decrease in total revenue for the three months ended March 31, 2025 compared to 2025 primarily resulted from a $4.9 million decrease in fuel surcharge revenue and a $6.4 million, $6.0 million, and $1.5 million decrease in Expedited and Managed Freight, and Warehousing freight revenue, respectively, partially offset by a $9.5 million increase in Dedicated freight revenue.
Previous wording
Salaries, wages, and related expenses for the three and nine months ended September 30, 2024, increased primarily as a result ofaveraging more drivers and tractors due to growth in our Dedicated reportable segment, resulting in higher driver salaries, wages, and benefits, as well as an increase in workers' compensation expense due to a large current period claim.
Current wording
Salaries, wages, and related expenses for the three months ended March 31, 2025, increased primarily as a result of an increase workers' compensation expense and increased salaries, wages, and benefits due to pay increases since the prior period as well as averaging more drivers and tractors due to growth in our Dedicated reportable segment, resulting in higher driver salaries, wages, and benefits.
Previous wording
We believe salaries, wages, and related expenses will continue to increase as the result of wage inflation, higher healthcare costs, and, in certain periods, increased incentive compensation due to better performance. Driver pay may also fluctuate based on the number of miles driven. While driver pay remains stable at the present time, we have historically put driver pay increases in place as necessary to address driver market pressure and will continue to do so in the future as necessary. If freight market rates increase, we would expect to, as we have historically, pass a portion of those rate increases on to our professional drivers. Salaries, wages, and related expenses will fluctuate to some extent based on the percentage of revenue generated by independent contractors and our Managed Freight reportable segment, for which payments are reflected in the purchased transportation line item.
Current wording
We believe driver and non-driver, including shop technicians, pay and benefits will continue to increase as the result of wage inflation, higher healthcare costs, and, in certain periods, increased incentive compensation due to better performance. Driver pay may also fluctuate based on the number of miles driven. While driver pay remains stable at the present time, we have historically put driver pay increases in place as necessary to address driver market pressure and will continue to do so in the future as necessary. If freight market rates increase, we would expect to, as we have historically, pass a portion of those rate increases on to our professional drivers. Salaries, wages, and related expenses will fluctuate to some extent based on the percentage of revenue generated by independent contractors and our Managed Freight reportable segment, for which payments are reflected in the purchased transportation line item.
Previous wording
The decreases in total fuel expense are primarily related to lower fuel prices in the 2024 periods partially offset by a 3.4% and 6.5% increase in total miles compared to the same 2023 periods, respectively.
Current wording
The decreases in total fuel expense are primarily related to lower fuel prices in the 2025 period and a 5.1% decrease in total miles compared to the 2024 period.
Previous wording
The rate of fuel price changes also can have an impact on results. Most fuel surcharges are based on the average fuel price as published by the Department of Energy ("DOE") for the week prior to the shipment, meaning we typically bill customers in the current week based on the previous week's applicable index. Therefore, in times of increasing fuel prices, we do not recover as much as we are currently paying for fuel. In periods of declining prices, the opposite is true. Fuel prices as measured by the DOE were $0.62 per gallon, or 14.5%, lower for the quarter ended September 30, 2024 compared with the same quarter in 2023.
Current wording
The rate of fuel price changes also can have an impact on results. Most fuel surcharges are based on the average fuel price as published by the Department of Energy ("DOE") for the week prior to the shipment, meaning we typically bill customers in the current week based on the previous week's applicable index. Therefore, in times of increasing fuel prices, we do not recover as much as we are currently paying for fuel. In periods of declining prices, the opposite is true. Fuel prices as measured by the DOE were $0.35 per gallon, or 8.7%, lower for the quarter ended March 31, 2025 compared with the same quarter in 2024.
Previous wording
For the periods presented, net fuel expense decreased as a percentage of freight revenue primarily due to lower fuel prices and higher fuel surcharge recovery.
Current wording
For the periods presented, net fuel expense increased as a percentage of freight revenue primarily due to lower fuel surcharge recovery.
Previous wording
The decreases in revenue equipment rentals and purchased transportation for thethree and nine months ended September 30, 2024 were primarily the result of a decrease in purchased transportation costs due to the decline in the spot market primarily affecting the Managed Freight reportable segment. The decrease for thenine months ended September 30, 2024 was partially offset as total miles run by independent contractors increased from 7.4% for the nine months ended September 30, 2023 to 8.2% for the same 2024 period.
Current wording
The decreases in revenue equipment rentals and purchased transportation for thethree months ended March 31, 2025 were primarily the result of a decrease in purchased transportation costs due to the decline in the spot market primarily affecting the Managed Freight reportable segment. Additionally, total miles run by independent contractors decreased from 8.4% for the three months ended March 31, 2024 to 7.0% for the same 2025 period.
Previous wording
Our insurance program includes multi-year policies with specific insurance limits that may be eroded over the course of the policy term. If that occurs, we will be operating with less liability coverage insurance at various levels of our insurance tower. For the policy period that ran from April 1, 2018 to March 31, 2021, the aggregate limits available in the coverage layer $9.0 million in excess of $1.0 million were fully eroded. We replaced our $9.0 million in excess of $1.0 million layer with a new $7.0 million in excess of $3.0 million policy that we continue to maintain. Due to the erosion of the $9.0 million in excess of $1.0 million layer, any adverse developments in claims filed between April 1, 2018 and March 31, 2021, could result in additional expense accruals. We have maintained our retention and limits set in place during the prior renewal cycle. Due to these developments, we may experience additional expense accruals, increased insurance and claims expenses, and greater volatility in our insurance and claims expenses, which could have a material adverse effect on our business, financial condition, and results of operations.
Current wording
Our insurance program includes multi-year policies with specific insurance limits that may be eroded over the course of the policy term. If that occurs, we will be operating with less liability insurance coverage at various levels of our insurance tower. For the policy period that ran from April 1, 2018 to March 31, 2021, the aggregate limits available in the coverage layer $9.0 million in excess of $1.0 million were fully eroded based on claims expense. We replaced our $9.0 million in excess of $1.0 million layer with a new $7.0 million in excess of $3.0 million policy that we continue to maintain. Due to the erosion of the $9.0 million in excess of $1.0 million layer, any adverse developments in claims filed between April 1, 2018 and March 31, 2021, could result in additional expense accruals. We have maintained our retention and limits set in place during the prior renewal cycle. Due to these developments, we may experience additional expense accruals, increased insurance and claims expenses, and greater volatility in our insurance and claims expenses, which could have a material adverse effect on our business, financial condition, and results of operations.
Previous wording
We expect depreciation and amortization to increase going forward as the cost of new equipment increases and we see the full year effect of our 2023 equipment replacement plan. Additionally, changes in the used tractor market have caused us to adjust residual values and increase depreciation, and further adjustments may be necessary in the future. These changes may also cause us to hold assets longer than planned, or experience increased losses on sale. Successfully executing our plan to grow the Dedicated reportable segment could also increase depreciation and amortization going forward.
Current wording
We expect depreciation and amortization to remain relatively similar to that of the first quarter of 2025, however, changes in the used tractor market have caused us to adjust residual values and increase depreciation, and further adjustments may be necessary in the future. These changes may also cause us to hold assets longer than planned, or experience increased losses on sale. Additionally, growth in our Expedited or Dedicated reportable segments could also increase depreciation and amortization going forward.
Previous wording
The loss on disposition of property and equipment, net for the three and nine months ended September 30, 2024, compared to a gain on disposition of property and equipment, net for the prior periods, was primarily the result of reductions in the gain on disposition of equipment due to the soft used equipment market. Additionally, the nine months ended 2023 includes the $7.6 million gain on sale of a Tennessee terminal in the first quarter of 2023, with no such sales in the same 2024 period.
Current wording
Loss on disposition of property and equipment, net
Previous wording
The change in interest expense for the three months ended September 30, 2024 was insignificant both as a percentage of total revenue and freight revenue. Fornine months ended September 30, 2024, the increase in interest expense was primarily the result of an increase in revenue equipment installment notes as a result of additional equipment added during 2023 and 2024 as a result of our revenue equipment replacement plan, as well as increased interest rates since the 2023 periods.
Current wording
The change in interest expense for the three months ended March 31, 2025 was insignificant both as a percentage of total revenue and freight revenue.
Previous wording
We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income or loss. The decreases in TEL's contribution to our results for thethree and nine months ended September 30, 2024 were primarily the result of a deterioration in the equipment market, suppressing gains on sale of used equipment, and increased interest expense associated with higher interest rates on equipment related debt compared to the 2023 periods. Due to TEL's business model, gains and losses on sale of equipment is a normal part of the business and can cause earnings to fluctuate from period to period and therefore our income from investment to similarly fluctuate. We expect TEL's net income for the remainder of 2024 to decline compared that of the third quarter of 2024, resulting in a lower full year 2024 net income from TEL compared to full year 2023.
Current wording
We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income or loss. The change in TEL's contribution to our results for thethree months ended March 31, 2025 was insignificant for the periods presented.
Previous wording
The decreases in income tax expense for thethree and nine months ended September 30, 2024 were the result of a $0.8 million and $18.1 million decrease in pre-tax income, respectively, compared to the same 2023 periods. The decreases in pre-tax income resulted from the aforementioned changes in operating income and earnings on investment in TEL.
Current wording
The increase in income tax expense for thethree months ended March 31, 2025 was the result of a $3.9 million increase in pre-tax income compared to the 2024 period. The increase in pre-tax income resulted from the aforementioned changes in operating income and earnings on investment in TEL.
Previous wording
COMPARISON OF three and nine months ended September 30, 2024** TO three and nine months ended September 30, 2023**
Current wording
COMPARISON OF three months ended March 31, 2025** TO three months ended March 31, 2024**
Previous wording
The following table summarizes revenue and operating income data by reportable segment:
Current wording
The following table summarizes revenue and operating income (loss) data by reportable segment:
Previous wording
The decrease in Expedited revenue for the three months ended September 30, 2024 relates to a decrease in average freight revenue per tractor per week of 4.8%, and a $4.8 million decrease in fuel surcharge revenue compared to the 2023 quarter. The decrease in average freight revenue per tractor per week for the quarter ended September 30, 2024 is the result of a 3.7% decrease in average miles per unit and a 3.0 cents per mile (or 1.2%) decrease in average rate per total mile as compared to the 2023 quarter. Expedited team-driven tractors averaged 823 and 831 tractors in the third quarter of 2024 and 2023, respectively.
Current wording
The decrease in Expedited revenue for the three months ended March 31, 2025 relates to a decrease in average freight revenue per tractor per week of 1.1%, and a $4.4 million decrease in fuel surcharge revenue compared to the 2024 quarter. The decrease in average freight revenue per tractor per week for the quarter ended March 31, 2025 is the result of a 3.9% decrease in average miles per unit partially offset by a 4.0 cents per mile (or 1.9%) increase in average rate per total mile as compared to the 2024 quarter. Expedited team-driven tractors averaged 796 and 844 tractors in the first quarter of 2025 and 2024, respectively.
Previous wording
The increase in Dedicated revenue for the three months ended September 30, 2024 relates to a 167, or 13.5% average tractor increase and an increase in average freight revenue per tractor per week of 8.7% compared to the 2023 quarter. The increase in average freight revenue per tractor per week was the result of a 18.4 cents per mile (or 6.8%) increase in average rate per total mile and a 1.8% increase in average miles per unit compared to the 2023 quarter.
Current wording
The increase in Dedicated revenue for the three months ended March 31, 2025 relates to a 212, or 16.7% average tractor increase partially offset by a decrease in average freight revenue per tractor per week of 2.1% compared to the 2024 quarter. The decrease in average freight revenue per tractor per week was the result of a 13.5% decrease in average miles per unit partially offset by a 33.1 cents per mile (or 11.9%) increase in average rate per total mile and compared to the 2024 quarter.
Previous wording
For the three and nine months ended September 30, 2024, Managed Freight total revenue decreased primarily as a result of a degraded spot market, partially offset by the third quarter 2023 Sims acquisition.
Current wording
For the three months ended March 31, 2025, Managed Freight total revenue decreased primarily as a result of a degraded spot market, partially offset by the third quarter 2023 Sims acquisition.
Previous wording
The increase in operating income for the three months ended September 30, 2024, was the result of an $8.1 million, $5.0 million, and $0.9 million decrease in Expedited, Managed Freight, and Warehousing operating expenses, respectively, partially offset by a $12.0 million increase in Dedicated operating expenses and the decrease in total revenue described above. The decrease in operating income for thenine months ended September 30, 2024, was the result of a $38.2 million and $6.0 million increase in Dedicated and Expedited operating expenses, respectively, partially offset by an $8.4 million and $2.9 million decrease in Managed Freight and Warehousing operating expenses, as well as the aforementioned changes in total revenue.
Current wording
The increase in operating income for the three months ended March 31, 2025, was the result of a $10.1 million, $6.9 million, and $0.8 million decrease in Expedited, Managed Freight, and Warehousing operating expenses, respectively, partially offset by a $5.1 million increase in Dedicated operating expenses and the decrease in total revenue described above.
Previous wording
The decrease in operating income for Managed Freight for the three months ended September 30, 2024was primarily the result of the aforementioned decreases in revenue partially offset by a decrease in Managed Freight operating expenses. The decrease in Managed Freight operating expenses for the three months ended September 30, 2024 was primarily the result of the changes in revenue driving changes in variable expenses, primarily purchased transportation, partially offset by a large cargo related claim during the 2024 period. The increase in operating income for Managed Freight for thenine months ended September 30, 2024 was primarily the result of a decrease in Managed Freight operating expenses partially offset by the aforementioned decrease in revenue. The decrease in Managed Freight operating expenses for thenine months ended September 30, 2024 was primarily the result of the changes in revenue driving changes in variable expenses, primarily purchased transportation, as well as a small number of prior period claims recognized in the same 2023 period with no similar 2024 activity. Additionally, operating income improved for both periods as a result of the impact of the higher-margin Sims acquisition since the same 2023 periods.
Current wording
The increase in operating income for Managed Freight for the three months ended March 31, 2025 was primarily the result of the aforementioned decrease in Managed Freight operating expenses partially offset by a decrease in revenue. The decrease in Managed Freight operating expenses for the three months ended March 31, 2025 was primarily the result of the changes in revenue driving changes in variable expenses, primarily purchased transportation, as well as reducing related claims expense as a result of improvements in our cargo control procedures. Going forward, we seek to grow Managed Freight with profitable revenue from new customers, work closely with our asset-based segments to capitalize on overflow opportunities when available, and optimize costs to yield longer-term margin goals in the mid-single digits, which will generate an acceptable return on capital given the asset light nature of the business.
Previous wording
Our business requires significant capital investments over the short-term and the long-term. Historically, we have financed our capital requirements with borrowings under our Credit Facility, cash flows from operations, long-term operating leases, finance leases, secured installment notes with finance companies, and proceeds from the sale of our used revenue equipment. Going forward, we expect revenue equipment acquisitions to primarily be through purchases and finance leases. Further, we expect to increase our capital allocation toward our Dedicated, Managed Freight, and Warehousing reportable segments to become the go-to partner for our customers’ most critical transportation and logistics needs. We had working capital (total current assets less total current liabilities) of $20.1 million and $15.7 million at September 30, 2024 and December 31, 2023, respectively. Our working capital on any particular day can vary significantly due to the timing of collections and cash disbursements. Based on our expected financial condition, net capital expenditures, results of operations, related net cash flows, installment notes, and other sources of financing, we believe our working capital and sources of liquidity will be adequate to meet our current and projected needs, and we do not expect to experience material liquidity constraints in the foreseeable future.
Current wording
Our business requires significant capital investments over the short-term and the long-term. Historically, we have financed our capital requirements with borrowings under our Credit Facility, cash flows from operations, long-term operating leases, finance leases, secured installment notes with finance companies, and proceeds from the sale of our used revenue equipment. Going forward, we expect revenue equipment acquisitions to primarily be through purchases and finance leases. Further, we expect to increase our capital allocation toward our Dedicated, Managed Freight, and Warehousing reportable segments to become the go-to partner for our customers’ most critical transportation and logistics needs. We had working capital (total current assets less total current liabilities) of $15.5 million and $32.6 million at March 31, 2025 and December 31, 2024, respectively. Our working capital on any particular day can vary significantly due to the timing of collections and cash disbursements. Based on our expected financial condition, net capital expenditures, results of operations, related net cash flows, installment notes, and other sources of financing, we believe our working capital and sources of liquidity will be adequate to meet our current and projected needs, and we do not expect to experience material liquidity constraints in the foreseeable future.
Previous wording
With an average tractor fleet age of 1.6 years at September 30, 2024, we believe we have flexibility to manage our fleet, and we plan to regularly evaluate our tractor replacement cycle, new tractor purchase requirements, and purchase options. If we were to grow our independent contractor fleet, our capital requirements would be reduced.
Current wording
With an average tractor fleet age of 1.7 years at March 31, 2025, we believe we have flexibility to manage our fleet, and we plan to regularly evaluate our tractor replacement cycle, new tractor purchase requirements, and purchase options. If we were to grow our independent contractor fleet, our capital requirements would be reduced.
Previous wording
As of September 30, 2024 and December 31, 2023 we had $316.5 million and $293.5 million in debt and lease obligations, respectively, consisting of the following:
Current wording
As of March 31, 2025 and December 31, 2024 we had $278.2 million and $296.9 million in debt and lease obligations, respectively, consisting of the following:
Previous wording
As of September 30, 2024, we had no borrowings outstanding, undrawn letters of credit outstanding of approximately $19.7 million, and available borrowing capacity of $90.3 million under the Credit Facility. Additionally, we had $45.0 million of remaining availability of a $45.0 million Draw Note from Triumph which is available solely to fund any indemnification owed to Triumph in relation to the TFS Settlement. Fluctuations in the outstanding balance and related availability under our Credit Facility are driven primarily by cash flows from operations and the timing and nature of property and equipment additions that are not funded through notes payable, as well as the nature and timing of collection of accounts receivable, payments of accrued expenses, and receipt of proceeds from disposals of property and equipment.
Current wording
As of March 31, 2025, we had no borrowings outstanding, undrawn letters of credit outstanding of approximately $19.9 million, and available borrowing capacity of $90.1 million under the Credit Facility. Additionally, we had $45.0 million of remaining availability of a $45.0 million Draw Note from Triumph which is available solely to fund any indemnification owed to Triumph in relation to the TFS Settlement. Fluctuations in the outstanding balance and related availability under our Credit Facility are driven primarily by cash flows from operations and the timing and nature of property and equipment additions that are not funded through notes payable, as well as the nature and timing of collection of accounts receivable, payments of accrued expenses, and receipt of proceeds from disposals of property and equipment.
Previous wording
Our net capital expenditures for the nine months ended September 30, 2024 totaled $77.5 million of expenditures, as compared to $143.0 million of expenditures for the prior year period. During the nine months ended September 30, 2024, we took delivery of approximately 691 new tractors and 757 new trailers, while disposing of approximately 791 used tractors and 319 used trailers. Our current fleet plan for the remainder of 2024 includes the delivery of an additional 104 new company replacement tractors and 93 additional new trailer deliveries. Net losses on disposal of equipment and real estate in the nine months ended September 30, 2024 were $1.7 million compared to $12.4 million net gains in the same prior year period primarily due to the $7.6 million gain on a Tennessee terminal during the 2023 period and the aforementioned disposal of revenue equipment as part of our trade cycle. For the balance of 2024, our baseline expectation for net capital expenditures is $15.0 million to $20.0 million. Our capital investment plan reflects our priorities of maintaining the average age of our fleet in a manner that allows us to optimize operational uptime and related operating costs, and offering a fleet of equipment that our professional drivers are proud to operate. We expect the benefits of improved utilization, fuel economy and maintenance costs to produce acceptable returns despite increased prices of new equipment and potentially lower values of used equipment.
Current wording
Our net capital expenditures for the three months ended March 31, 2025 totaled $23.9 million of expenditures, as compared to $43.3 million of expenditures for the prior year period. During the three months ended March 31, 2025, we took delivery of approximately 163 new tractors and 201 new trailers, while disposing of approximately 100 used tractors and 76 used trailers. Our current fleet plan for the remainder of 2025 includes the delivery of an additional 510 new company replacement tractors and 640 additional new trailers. Net losses on disposal of equipment and real estate in the three months ended March 31, 2025 were $0.3 million compared to $0.7 million. For the balance of 2025, our baseline expectation for net capital expenditures is $55.0 million to $65.0 million and is subject to change based on growth opportunities in our dedicated fleet and the potential impacts of tariffs during the year. Our equipment plan reflects our priorities of maintaining the average age of our fleet in a manner that allows us to optimize operational uptime and related operating costs and offer a fleet of equipment that our professional drivers are proud to operate. We expect the benefits of improved utilization, fuel economy and maintenance costs to produce acceptable returns despite increased prices of new equipment and potentially lower values of used equipment.
Previous wording
We distributed a total of $4.3 million to stockholders in the first nine months of 2024 through dividends.
Current wording
We distributed a total of $1.9 million to stockholders in the first three months of 2025 through dividends.
Previous wording
Despite a year over year reduction in net income of $13.2 million, net cash flows provided by operating activities increased to $101.0 million for the nine months ended September 30, 2024, compared to $52.9 million for the same 2023 period, primarily due to increases in non-cash expenses such as depreciation and amortization and reductions to non-cash gains on sale of property and equipment in the current period. Changes in operating assets and liabilities such as receivables and driver advances and insurance and claims accruals provided improved cash flow for the nine months ended September 30, 2024, compared to the 2023 period.
Current wording
Net Cash flows provided by operating activities increased to $24.8 million for the three months ended March 31, 2025, compared to $21.7 million for the same 2024 period primarily due to an increase in net income of $2.6 million.
Previous wording
Net cash flows used by investing activities were $104.2 million for the nine months ended September 30, 2024, compared to $144.6 million used in the same 2023 period. The decrease in net cash flows used by investing activities was primarily due to the April 2023 and the August 2023 acquisitions of LTST and Sims, respectively, for $107.9 million, net of cash acquired, partially offset by the $4.6 million payment related to the acquisition of LTST and our Section 338(h)(10) election during the 2024 period, and the timing of our trade cycle whereby we took delivery of approximately 691 new tractors and 757 new trailers, while disposing of approximately 791 used tractors and 319 used trailers during the 2024 period compared to delivery of 607 new tractors and 367 new trailers, while disposing of approximately 926 used tractors and 518 used trailers in the same 2023 period. Additionally, the 2023 period provided $12.5 million of proceeds related to the sale of a Tennessee terminal.
Current wording
Net cash flows used by investing activities were $24.1 million for the three months ended March 31, 2025, compared to $43.5 million used in the same 2024 period. The decrease in net cash flows used by investing activities was primarily due the timing of our trade cycle whereby we took delivery of approximately 163 new tractors and 201 new trailers, while disposing of approximately 100 used tractors and 76 used trailers during the 2025 period compared to delivery of 244 new tractors and 189 new trailers, while disposing of approximately 356 used tractors and 44 used trailers in the same 2024 period as well as the $4.6 million payment related to the acquisition of LTST and our Section 338(h)(10) election during the 2024 period. These decreases were partially offset by the acquisition of a customer relationship during the 2025 period as part of the Asset Acquisition.
Previous wording
Net cash flows provided by financing activities were approximately $36.1 million for the nine months ended September 30, 2024, compared to $30.4 million provided in the same 2023 period. The increase in net cash flows provided by financing activities was primarily a function of no repurchases of shares of our Class A common stock during the 2024 period compared to $25.4 million during the same 2023 period, partially offset by net proceeds relating to our notes payable and our Credit Facility of $47.3 million in the 2024 period compared to $76.9 million in the 2023 period.
Current wording
Net cash flows used by financing activities were approximately $25.1 million for the three months ended March 31, 2025, compared to $22.4 million provided in the same 2024 period. The increase in net cash flows used by financing activities was primarily a function of net repayments relating to our notes payable and our Credit Facility of $18.4 million in the 2025 period compared to net proceeds of $30.1 million in the 2024 period.
Previous wording
Net cash flows provided by operating activities and provided by financing activities in the 2024 period also included payment of $3.0 million and $7.0 million, respectively, of contingent consideration liabilities related to the acquisition of AAT. Net cash flows provided by operating activities and provided by financing activities in the 2023 period also included payment of $0.8 million and $9.2 million, respectively, of contingent consideration liabilities related to the acquisition of AAT.
Current wording
Net cash flows provided by operating activities and provided by financing activities in the 2025 period also included payment of $8.0 million and $4.5 million, respectively, of contingent consideration liabilities related to the acquisition of LTST. Net cash flows provided by operating activities and provided by financing activities in the 2024 period also included payment of $3.0 million and $7.0 million, respectively, of contingent consideration liabilities related to the acquisition of AAT.
Previous wording
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make decisions based upon estimates, assumptions, and factors we consider as relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of our estimates and assumptions. Accordingly, actual results could differ from those anticipated. There have been no material changes to our most critical accounting policies and estimates during the three and nine months ended September 30, 2024, compared to those disclosed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our Form 10-K for the year ended December 31, 2023.
Current wording
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make decisions based upon estimates, assumptions, and factors we consider as relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of our estimates and assumptions. Accordingly, actual results could differ from those anticipated. There have been no material changes to our most critical accounting policies and estimates during the three months ended March 31, 2025, compared to those disclosed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our Form 10-K for the year ended December 31, 2024.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the periods presented, the decrease in loss on disposition of property and equipment, net for the three months ended March 31, 2025, was insignificant both as a percentage of total revenue and freight revenue.