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“It was a busy quarter internally as we continued to invest in the future," Covenant CEO David Parker said. (Covenant Logistics)

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focused on investing in the business and managing cost while navigating low demand , the company reported Oct. 22.

The Chattanooga, Tenn.-based truckload and expedited carrier posted net income of $9.09 million, or 35 cents a diluted share, for the three months ending Sept. 30. That compared with $13 million, 47 cents, in the 2024 period. Total revenue increased 3.1% to $296.9 million from $287.9 million.

“It was a busy quarter internally as we continued to invest in the future while managing costs during a prolonged period of overcapacity and muted demand,” CEO David Parker said. “We continue to evaluate contracts in the rest of our truckload business for improvement or exit.

“Overall, we expect modest contraction in our combined truckload fleet and growth in our asset-light segments as we allocate capital toward better-returning business units.”

Parker added that this process may impact quarterly financial results as the company grows and shrinks certain segments, adjusts staffing needs and sends equipment to the volatile used market. He also noted that a 49% equity method investment in Transport Enterprise Leasing contributed to a pre-tax net income of $3.6 million, compared with $4 million last year.

“The decline in TEL’s earnings is a result of customer bankruptcies that have accelerated over the past 12 months,” Parker said. “While TEL’s overall business model remains healthy, we expect this headwind to continue for the foreseeable short term.”

Segment Breakdown

• Truckload: Revenue increased 0.3% to $199.7 million from $199 million. The gain consisted of $1.7 million more freight revenue and $1.1 million less from fuel surcharges. Freight revenue grew 1% as a result of a 4.6% increase in the average tractor fleet. This was partially offset by lower equipment utilization. Operating income, however, dropped 60.2% to $9.18 million from $23.1 million. The segment includes expedited and dedicated truckload operations.

• Expedited: Revenue dropped 8.2% to $94.6 million from $104.3 million. The average total tractors decreased by 3.4%, while the average freight revenue per tractor per week decreased 5% due to a decline in utilization. This was partially offset by a small increase in freight revenue per total mile.

• Dedicated: Revenue rose 10.8% to $105 million from $94.7 million. The average total tractors increased by 9.7%, while the average freight revenue per tractor per week increased 1% due to an increase in freight revenue per total mile. This also was partially offset by a decrease in utilization.

• Managed freight: Revenue rose 14% to $72.2 million from $63.4 million the prior year, but operating income improved 0.4% to $2.96 million from $2.95 million. The growth is attributable to new business awarded in the year by a large customer. The report noted, though, that same customer will no longer continue in the fourth quarter.

• Warehousing: Revenue decreased 1.5% to $24.8 million from $25.2 million. Operating income decreased 9.2% to $2.5 million from $2.75 million. The report noted that the results were fairly comparable to the prior year with reduced revenue, operating income and adjusted operating income compared with the 2024 period. Company leadership anticipates growth in this segment from a large new facility startup this year.

Covenant Logistics ranks No. 35 on the Transport Topics Top 100 list of the largest for-hire companies in North America as well as No. 2 on the air/expedited list and No. 22 on the truckload/dedicated list. Covenant is No. 76 on the TT Top 100 list of the largest logistics companies in North America.

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