Covenant Logistics Group Inc. (NASDAQ: CVLG) reported a fourth-quarter income improve on Thursday, January 29, 2026, although bottom-line outcomes had been closely pressured by non-cash impairment expenses. The corporate posted whole income of $295.4 million for the quarter ended Dec. 31, 2025, a 6.5% improve in comparison with $277.3 million within the prior-year interval. Regardless of the top-line progress, the corporate reported a GAAP web lack of $18.3 million, or $0.73 per diluted share, as operational headwinds and one-time expenses weighed on efficiency.
Impairment Costs and Adjusted Efficiency
The reported GAAP web loss was primarily pushed by $35.1 million in whole pre-tax changes. These expenses included:
Goodwill Impairment: $10.7 million associated to the analysis of unprofitable accounts.
Auto Legal responsibility Settlement: $11.6 million for a big claims settlement in insurance coverage layers with shared retention.
Gear Impairment: $8.7 million for income tools and associated expenses for models pulled from service.
Intangibles and Transactions: $3.7 million in non-cash amortization and $0.4 million in acquisition-related transaction prices.
Excluding these things, non-GAAP adjusted web revenue was $8.0 million, or $0.31 per diluted share, in comparison with $13.7 million, or $0.49 per diluted share, within the fourth quarter of 2024. Chairman and CEO, David R. Parker, famous that these adjusted outcomes aligned with inside expectations, as seasonal quantity good points had been offset by the “longest U.S. authorities shut down in historical past,” which hindered specialised group operations.
Quarterly Section Operational Knowledge
The corporate’s efficiency diversified considerably throughout its asset-based and asset-light divisions:
| Section | Freight Income (This fall ’25) | YOY Change | Adjusted Working Ratio |
| Devoted | $90.8 million | +12.6% | 92.2% |
| Managed Freight | $80.2 million | +28.8% | 98.7% |
| Expedited | $73.6 million | -12.2% | 97.2% |
| Warehousing | $25.5 million | +4.6% | 97.2% |
Key Section Drivers:
Devoted: Income progress was supported by a 6.3% improve in common tractors and a ten.3% rise in freight income per whole mile, pushed by a shift towards specialised agriculture capability.
Managed Freight: Income surged following the combination of Star Logistics Options, an roughly $130 million income brokerage enterprise. Nevertheless, adjusted working revenue fell to $1.0 million from $5.2 million on account of greater prices for securing third-party capability.
Expedited: Efficiency was hindered by a 4.8% discount in tractor rely and a 7.8% drop in common freight income per tractor per week, largely because of the authorities shutdown.
Warehousing: Income elevated barely, however section working revenue declined by $1.4 million on account of startup bills for a major new buyer onboarded in November.
Stability Sheet and Capital Technique
Web indebtedness rose by $76.7 million throughout 2025 to $296.3 million. CFO, Tripp Grant, attributed this improve to $46.3 million in acquisition funds and $36.2 million in inventory repurchases. Consequently, the online indebtedness to whole capitalization ratio climbed to 42.3% from 33.4% a 12 months earlier.
“Our fast precedence in 2026 is to make use of proceeds from the sale of extra tools to paydown debt,” Grant acknowledged. The corporate plans to scale back web capital expenditures to a spread of $40 million to $50 million in 2026, a pointy decline from 2025 ranges, by buying fewer new tractors than it intends to promote.
Market Outlook
Administration expressed cautious optimism for a restoration in freight fundamentals throughout 2026. The corporate intends to exit unprofitable enterprise relationships and reasonably cut back its whole truckload fleet whereas specializing in high-value, high-service freight. CEO Parker concluded that the corporate is ready to “function extra effectively, refine our capital allocation, [and] de-lever” because it navigates the approaching 12 months.
Causes to Move on CVLG
- GAAP loss regardless of income progress: This fall income rose 6.5%, however the firm posted a $18.3 million web loss.
- Heavy impairment expenses: $35.1 million in goodwill, tools and legal-related expenses spotlight earnings volatility and previous missteps.
- Weaker underlying earnings: Adjusted web revenue declined 12 months over 12 months, signaling strain on core profitability.
- Skinny section margins: Most divisions reported working ratios within the high-90s, leaving little margin buffer.
- Managed Freight margin erosion: Sturdy income progress from acquisitions was offset by sharply decrease working revenue.
- Expedited section decline: Income fell 12.2% on account of decrease fleet measurement and weaker utilization.
- Greater leverage: Web debt elevated materially, pushing leverage to 42.3% of whole capitalization.
- Deleveraging is determined by asset gross sales: Debt discount plans depend on tools gross sales and decrease capex, probably limiting progress.
Commercial
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