Covenant Logistics Group Reports Q2 2025 Financial Results with Revenue Growth but Declining Net Income

Covenant Logistics Group, Inc. reported its financial results for the second quarter of 2025, revealing total revenues of $302.9 million, a 5.3% increase from $287.5 million in the same period last year. Freight revenue, which excludes fuel surcharges, reached $276.5 million, marking a 7.8% rise compared to $256.5 million in the prior year. However, net income for the quarter was $9.8 million, or $0.36 per diluted share, down from $12.2 million, or $0.44 per diluted share, in the second quarter of 2024. The decline in profitability was attributed to increased operating expenses, which totaled $291.3 million, compared to $271.9 million in the previous year.

The company experienced notable changes in its operational metrics, with a significant increase in Dedicated and Managed Freight revenues, which rose by $8.3 million and $17.2 million, respectively. Conversely, the Expedited segment saw a revenue decline of $10.7 million, primarily due to a decrease in average freight revenue per tractor and a reduction in fuel surcharge revenue. The overall operating income for the quarter was $11.6 million, down from $15.6 million in the same quarter last year, reflecting the competitive market conditions affecting margins.

Covenant Logistics has also made strategic moves, including the repurchase of approximately 1.6 million shares of its common stock for $35.2 million as part of a $50 million stock repurchase authorization approved in April 2025. The company continues to focus on expanding its Dedicated and Managed Freight segments, which are expected to drive future growth. Additionally, the company acquired an $11.2 million customer relationship asset during the quarter, further enhancing its service capabilities.

Operationally, Covenant Logistics reported a total of 2,401 tractors and 6,639 trailers in its fleet as of June 30, 2025, with an average tractor age of 1.8 years. The company’s working capital decreased to $16.7 million from $32.6 million at the end of 2024, primarily due to increased debt levels associated with stock repurchases and acquisition-related payments. The company’s total debt and lease obligations rose to $308.8 million, up from $296.9 million at the end of the previous year.

Looking ahead, Covenant Logistics remains optimistic about improving freight market fundamentals, despite ongoing fluctuations in inventory levels and supply chain patterns. The company plans to capitalize on opportunities for margin improvement and return on capital as market conditions stabilize. Management is focused on growing its Dedicated fleet and exploring acquisition opportunities to enhance its service offerings and operational efficiency.