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- **Q3 Results**: Revenue +4% to $268.9M, but adjusted operating income -22.5% to $15M due to Truckload cost pressures.
- **Regulatory Impact**: 100,000+ driver exits expected over 2-3 years from non-domiciled CDL crackdowns.
- **Rate Momentum**: 2.5%-4% rate increases secured in Q3; 2026 bids showing 17% volume growth.
- **Q4 Challenges**: DoD business down 50%, used truck market paralysis, but 2026+ recovery optimism.
- **Valuation Play**: Shares at 9x earnings; buyback program active with $268M net debt (2.1x leverage).

**【CFO Opening Remarks】**
- Q3 2025 revenue increased 4% to $268.9 million, driven by growth in Managed Freight and Warehouse segments.
- Adjusted operating income shrank 22.5% to $15 million due to higher costs in Truckload segments.
- Net indebtedness rose to $268.3 million, with an adjusted leverage ratio of 2.1x.
- Return on average invested capital (ROAIC) was 6.9%, down from 8.1% YoY.
- Expedited segment operating ratio (OR) was 93.6%, up 160bps YoY; Dedicated OR was 94.7%, under long-term targets.
- TEL minority investment contributed $3.6 million, down from $4 million YoY due to higher bad debt.

**【CEO Strategic Outlook】**
- Regulatory changes (non-domiciled CDLs, ELD cheating) expected to accelerate driver exits, reducing supply by 100,000+ over 2-3 years.
- Brokerage margins under pressure but asset-based carriers poised to benefit from rate increases (2.5%-4% recently achieved).
- Used truck prices set to rise as buyers wait for clarity on tariffs and OEM pricing.
- Q4 2025 outlook: "unseasonably soft" with DoD business down 50%, but optimistic on 2026+ recovery driven by Fed easing and trade policy.

**【Q&A Highlights】**
- **Capacity Constraints**: 400+ weekly MC number cancellations, 17% volume decline vs. 2% rejection increase indicate tightening market.
- **Government Shutdown Impact**: DoD freight down 50%, half may be permanently lost; partial recovery possible post-shutdown but limited by holiday season closures.
- **Pricing Trends**: Bids up 17% YoY, 2.5%-4% rate increases secured in Q3; 2026 bid season expected to see low-single-digit hikes.
- **Share Buybacks**: Shares undervalued at 9x earnings; repurchase program active but cautious on timing.
- **Used Truck Market**: No purchases planned for Q4; 2026 pricing uncertainty could drive up used truck prices.


Covenant Logistics Group, Inc. (CVLG) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

CVLG

CVLG fundamentals

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