Covenant Logistics Group (CVLG) investor relations material

Executive summary

• Strategic shift toward specialized, value-added, multi-year committed contracts has reduced business volatility and improved margin stability, with a focus on expanding dedicated/committed capacity and increasing durable margins.

• Most asset-based business is targeted to be under long-term contracts by the end of the current freight upcycle, aiming to raise both the floor and ceiling of earnings through steady improvements.

• Q2 2026 diluted EPS was $0.32, or $0.42 on an adjusted basis, reflecting revenue growth but higher-than-expected costs, especially in maintenance and insurance claims.

• Freight market strengthened sequentially, with a 5.9% increase in Combined Truckload average freight revenue per tractor per week, driven by a 15.1% rise in revenue per mile and a shift to more committed contracts.

• Managed Freight segment saw margin compression due to rising capacity costs and the absence of a prior-year surge contract.

Financial highlights

• Total revenue for Q2 2026 was $332.9 million, up 9.9% year-over-year; freight revenue rose 6.6% to $294.7 million, driven by brokerage asset acquisitions.

• Adjusted operating income was $12.2 million (95.9% adjusted operating ratio), down from $15.0 million (94.6%) in Q2 2025, mainly due to lower Managed Freight gross margin.

• Net income was $8.5 million ($0.32 per diluted share), with adjusted net income at $11.2 million; adjusted EPS was $0.42, down from $0.45 year-over-year.

• Net indebtedness decreased by $6.6 million to $289.7 million since year-end, with an adjusted leverage ratio of 2.2x and debt to capital ratio of 41.2%.

• Cash flows from operations for the first half of 2026 were $18.1 million, down from $46.7 million in 2025.

Outlook and guidance

• Expectation for modest sequential EPS growth in Q3 2026, with margin improvement partially offset by lower TEL equipment sales and normalized tax/interest benefits.

• Fleet count anticipated to stabilize, with a higher percentage under dedicated and committed contracts.

• Net capital equipment investment for the second half is projected at $50–$60 million, with modest further reduction in net indebtedness expected.

• Sequential and year-over-year earnings improvements are expected in Q3 and Q4, with normalization of insurance and maintenance costs.

• Management expects a multi-year industry upcycle, with gradual margin and earnings expansion continuing into 2027 and beyond.