Covenant Logistics Group, Inc. recently released its 10-Q report. The Chattanooga-based company, founded in 1986 and formerly known as Covenant Transportation Group, provides transportation and logistics services in the United States through four segments: Expedited, Dedicated, Managed Freight, and Warehousing. Its operations include truckload transportation, brokerage and transport management, warehouse management, shuttle and switching services, and used equipment sales and leasing.
In Item 2, management said second-quarter 2026 earnings were $0.32 per diluted share, with “constructive changes” on the revenue side but higher costs weighing on results. Total revenue rose 9.9% year over year to $332.9 million, while freight revenue, excluding fuel surcharges, increased 6.6% to $294.7 million. Operating income fell to $8.8 million from $11.6 million a year earlier, and net income declined to $8.5 million from $9.8 million.
The company’s operating ratio worsened to 97.3% from 96.2% in the prior-year quarter. On a non-GAAP basis, adjusted operating income was $12.2 million, down from $15.0 million, and adjusted operating ratio was 95.9% versus 94.6%.
Covenant’s equity investment in TEL contributed $5.3 million of pre-tax earnings in the quarter, up from $4.3 million a year earlier. The company distributed $1.8 million to stockholders through cash dividends.
Since December 31, 2025, total indebtedness, net of cash, fell $6.6 million to $289.7 million, helped by fleet downsizing and sales of excess equipment. At June 30, 2026, the company reported $59.1 million of available borrowing capacity under its credit facility, stockholders’ equity of $412.9 million, and tangible book value of $232.7 million.
Management said most of the Expedited and Dedicated fleets are under dedicated or similar committed capacity contracts, and it wants substantially all asset-based business under long-term dedicated or other committed contracts by the end of the freight market upcycle. In the near term, about 40% of the Expedited fleet and 25% of the Dedicated fleet renew over the next 12 months, with many of those contracts described as the least profitable. The company also said insurance and claims expense is expected to remain volatile, and it flagged possible higher costs and expanded liability in Managed Freight after a recent Supreme Court decision.
For the third quarter of 2026, Covenant expects a modest sequential increase in earnings per share, with operating margin improvement partly offset by the absence of higher TEL equipment sales, a lower income tax rate, and interest income that helped the second quarter. Following these announcements, the company's shares moved -0.14%, and are now trading at a price of $34.89. For more information, read the company's full 10-Q submission here.
