Covenant Logistics Group reported annual revenue above $1 billion and outlined a strategy centered on niche freight segments during the 17th Annual Midwest IDEAS Conference on Aug. 27. The company, which operates four main business lines, said it is prioritizing non-commoditized freight to improve margins amid an improving freight market.
CFO Tripp Grant highlighted the company’s focus on the 1% of freight that is not commoditized, emphasizing Covenant’s shift toward asset-light services that generate consistent earnings regardless of market conditions. Covenant’s normalized EBITDA typically ranges around $150 million in a typical cycle, with recent trailing 12-month EBITDA near $125 million during the freight downturn that persisted from late 2022 through 2025. Peak-cycle EBITDA potential is estimated between $175 million and $185 million.
The company’s debt stood at approximately $280 million, representing roughly 2.0 times normalized EBITDA, while capital expenditures are projected at $60 million for 2026 and $80 million to $90 million for 2027. Covenant has repurchased more than 25% of its shares over five years at an average price near $20 per share pre-split, or about $10 post-split, and initiated a dividend program two to three years ago.
Covenant’s operations include expedited truckload, dedicated truckload, managed freight, and warehousing, with about 65% of revenue derived from asset-based services and 35% from asset-light operations. The company operates roughly 2,200 tractors in expedited and dedicated segments, down from prior peaks, and expects the fleet to stabilize and grow to 2,400 to 2,500 units. Total employment stands at about 5,000, including drivers, with driver turnover varying widely across segments.
The company has pursued acquisitions in specialized niches, including a 2022 purchase of an ammunition and explosives transport business that has expanded from 20 trucks to 60, with a path to 200. Covenant also acquired a live poultry transportation provider in 2023, growing its fleet from 200 trucks to more than 800 in less than three years, targeting 1,000 trucks within 12 months. These segments benefit from regulatory and operational barriers that limit competition.
Covenant owns 49% of Transportation Equity Leasing after a $4.9 million investment in 2016; TEL’s shares have delivered a 61.91% year-to-date return, trading at $35.40 with a dividend yield of about 0.79%. TEL’s EBITDA now exceeds Covenant’s, reflecting the value of niche freight investments during a prolonged freight recession.
