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Equibles

10-Q

Covenant Logistics Group, Inc. (CVLG)

10-Q 2026-05-07 For: 2026-03-31
View Original
Added on May 07, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ****to

Commission File Number: 001-42192

logonew.jpg ****

COVENANT LOGISTICS GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada 88-0320154
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
400 Birmingham Hwy.
Chattanooga, TN 37419
(Address of principal executive offices) (Zip Code)

423-821-1212

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
$0.01 Par Value Class A common stock CVLG The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☐ Accelerated filer ☒
Non-accelerated filer   ☐ Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date (May 5, 2026).

Class A Common Stock, $.01 par value: 20,470,989 shares

Class B Common Stock, $.01 par value: 4,700,000 shares

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TABLE OF CONTENTS

PART I<br> <br>FINANCIAL INFORMATION
Page<br> <br>Number
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025 (unaudited) 3
Condensed Consolidated Statements of Operations for the three months ended March 31, 2026 and 2025 (unaudited) 4
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2026 and 2025 (unaudited) 5
Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2026 and 2025 (unaudited) 6
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2026 and 2025 (unaudited) 7
Notes to Condensed Consolidated Financial Statements (unaudited) 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 21
Item 3. Quantitative and Qualitative Disclosures about Market Risk 35
Item 4. Controls and Procedures 36
PART II<br> <br>OTHER INFORMATION
Page<br> <br>Number
Item 1. Legal Proceedings 37
Item 1A. Risk Factors 38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 39
Item 3. Defaults Upon Senior Securities 39
Item 4. Mine Safety Disclosures 39
Item 5. Other Information 39
Item 6. Exhibits 40

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PART I **** FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--- ---
COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 2025
--- --- --- --- --- ---
ASSETS
Current assets:
Cash and cash equivalents 11,245 $ 4,946
Accounts receivable, net of allowance of 2,518 in 2026 and 2,780 in 2025 155,720 151,803
Drivers' advances and other receivables, net of allowance of 582 in 2026 and 584 in 2025 6,734 10,214
Inventory and supplies 7,170 6,342
Prepaid expenses 17,683 21,658
Assets held for sale 1,548 26,070
Income taxes receivable 10,840 11,548
Other short-term assets 193 240
Total current assets 211,133 232,821
Property and equipment, at cost 705,832 718,204
Less: accumulated depreciation and amortization (249,166 ) (241,033 )
Net property and equipment 456,666 477,171
Goodwill 80,440 80,477
Other intangibles, net 102,608 105,609
Operating lease right-of-use assets 33,332 35,513
Other receivables 30,703 16,531
Other assets, net 101,946 97,426
Total assets 1,016,828 $ 1,045,548
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 50,352 $ 45,479
Accrued expenses 52,034 56,001
Accrued purchased transportation 8,502 6,009
Current maturities of long-term debt 52,153 64,005
Current portion of finance lease obligations 865 840
Current portion of operating lease obligations 12,554 12,182
Current portion of insurance and claims accrual 25,714 25,462
Total current liabilities 202,174 209,978
Long-term debt 201,389 234,046
Long-term portion of finance lease obligations 2,095 2,353
Long-term portion of operating lease obligations 22,693 25,272
Insurance and claims accrual 50,579 36,361
Deferred income taxes 120,803 119,725
Other long-term liabilities 9,490 13,817
Total liabilities 609,223 641,552
Stockholders' equity:
Class A common stock, .01 par value; 40,000,000 shares authorized; 21,855,878 shares issued and 20,392,177 outstanding as of March 31, 2026; and 21,855,878 shares issued and 20,370,361 outstanding as of December 31, 2025 219 219
Class B common stock, .01 par value; 5,000,000 shares authorized; 4,700,000 shares issued and outstanding 47 47
Additional paid-in-capital 159,975 159,492
Treasury stock at cost; 1,463,701 and 1,485,517 shares as of March 31, 2026 and December 31, 2025, respectively (34,159 ) (34,584 )
Accumulated other comprehensive income 649 612
Retained earnings 280,874 278,210
Total stockholders' equity 407,605 403,996
Total liabilities and stockholders' equity 1,016,828 $ 1,045,548

All values are in US Dollars.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE three months ended March 31, 2026 and 2025

(In thousands, except per share data)

Three Months Ended March 31,
(unaudited)
2026 2025
Revenues
Freight revenue $ 281,925 $ 243,219
Fuel surcharge revenue 25,236 26,136
Total revenue $ 307,161 $ 269,355
Operating expenses:
Salaries, wages, and related expenses $ 109,268 $ 104,952
Fuel expense 28,297 28,168
Operations and maintenance 17,914 15,750
Revenue equipment rentals and purchased transportation 89,218 56,805
Operating taxes and licenses 2,989 3,586
Insurance and claims 12,646 15,283
Communications and utilities 2,034 1,468
General supplies and expenses 14,199 13,595
Depreciation and amortization 23,976 21,795
Loss on disposition of property and equipment, net 338 326
Total operating expenses 300,879 261,728
Operating income 6,282 7,627
Interest expense, net 3,886 2,857
Income from equity method investment (3,687 ) (3,776 )
Income before income taxes 6,083 8,546
Income tax expense 1,663 1,983
Net income $ 4,420 $ 6,563
Basic income per share:
Net income per share $ 0.18 $ 0.25
Diluted income per share:
Net income per share $ 0.17 $ 0.24
Basic weighted average shares outstanding 25,082 26,538
Diluted weighted average shares outstanding 26,434 27,877

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE three months ended March 31, 2026 and 2025

(Unaudited and in thousands )
2025
Net income 4,420 $ 6,563
Other comprehensive income:
Unrealized gain (loss) on effective portion of cash flow hedges, net of tax of (25) in 2026 and 67 in 2025, respectively 73 (193 )
Reclassification of cash flow hedge gains into statement of operations, net of tax of 13 in 2026 and 21 in 2025, respectively (36 ) (60 )
Total other comprehensive gain (loss)(1) 37 (253 )
Comprehensive income 4,457 $ 6,310

All values are in US Dollars.

^(1)^ It is the Company’s policy to release income tax effects from accumulated other comprehensive income at such time as the earnings or loss of the related activity are recognized in earnings.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE three months ended March 31, 2026 and 2025

(Unaudited and in thousands)
Accumulated
Additional Other Total
Paid-In Treasury Comprehensive Retained Stockholders'
Class B Capital Stock Income Earnings Equity
Balances at December 31, 2025 219 $ 47 $ 159,492 $ (34,584 ) $ 612 $ 278,210 $ 403,996
Net income - - - - - 4,420 4,420
Cash dividend (0.07 per common share) - - - - - (1,756 ) (1,756 )
Other comprehensive loss - - - - 37 - 37
Stock-based employee compensation expense - - 934 - - - 934
Exercise of stock options - - (169 ) 269 - - 100
Issuance of restricted shares, net - - (282 ) 156 - - (126 )
Balances at March 31, 2026 219 $ 47 $ 159,975 $ (34,159 ) $ 649 $ 280,874 $ 407,605

All values are in US Dollars.
Accumulated
Additional Other Total
Paid-In Comprehensive Retained Stockholders'
Class B Capital Income Earnings Equity
Balances at December 31, 2024 218 $ 47 $ 158,907 $ 1,035 $ 278,133 $ 438,340
Net income - - - - 6,563 6,563
Cash dividend (0.07 per common share) - - - - (1,858 ) (1,858 )
Other comprehensive income - - - (253 ) - (253 )
Exercise of stock options 1 - 399 - - 400
Stock-based employee compensation expense - - 1,011 - - 1,011
Issuance of restricted shares, net - - (559 ) - - (559 )
Balances at March 31, 2025 219 $ 47 $ 159,758 $ 782 $ 282,838 $ 443,644

All values are in US Dollars.

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE three months ended March 31, 2026 and 2025

(Unaudited and in thousands)

Three Months Ended March 31,
2026 2025
Cash flows from operating activities:
Net income $ 4,420 $ 6,563
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for losses on accounts receivable (130 ) -
Reversal of gain on sales to equity method investee (28 ) -
Depreciation and amortization 23,976 21,795
Deferred income tax benefit (expense) 1,181 (2,652 )
Income tax expense arising from restricted share vesting and stock options exercised (116 ) (288 )
Stock-based compensation expense 934 1,011
Income from equity method investment (3,687 ) (3,776 )
Loss on disposition of property and equipment 338 526
Changes in operating assets and liabilities:
Receivables and advances (1,292 ) (470 )
Prepaid expenses and other assets 3,286 4,832
Inventory and supplies (828 ) 152
Insurance and claims accrual 1,991 9,243
Accounts payable and accrued expenses (1,082 ) (12,106 )
Net cash flows provided by operating activities 28,963 24,830
Cash flows from investing activities:
Other investments (18 ) (137 )
Purchase of property and equipment (11,370 ) (33,425 )
Proceeds from disposition of property and equipment 35,613 9,482
Net cash flows provided by (used by) investing activities 24,225 (24,080 )
Cash flows from financing activities:
Cash dividend (1,756 ) (1,858 )
Proceeds from notes payable 7,641 23,588
Repayments of notes payable (51,186 ) (41,991 )
Repayments of finance lease obligations (233 ) (180 )
Proceeds under revolving credit facility 52,227 124
Repayments under revolving credit facility (53,227 ) (124 )
Payment of contingent consideration liability (329 ) (4,530 )
Proceeds from exercise of stock options 100 400
Payment of minimum tax withholdings on stock compensation (126 ) (559 )
Net cash flows used by financing activities (46,889 ) (25,130 )
Net change in cash and cash equivalents 6,299 (24,380 )
Cash and cash equivalents at beginning of period 4,946 35,619
Cash and cash equivalents at end of period $ 11,245 $ 11,239
Supplemental disclosure of cash flow information:
Cash paid (received) during the year for:
Interest, net of capitalized interest 3,154 2,635
Income taxes (112 ) (1,988 )
Non-cash transactions during the year for:
Equipment acquired under operating leases 818 2,876
Non-cash capital asset acquisitions 530 1,728
Non-cash debt reduction (36 ) -
Insurance and claims accruals 12,479 7,805

The accompanying notes are an integral part of these condensed consolidated financial statements.

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COVENANT LOGISTICS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements include the accounts of Covenant Logistics Group, Inc., a Nevada holding company, and its wholly owned subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer to Covenant Logistics Group, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated under the Securities Act of 1933. In preparing financial statements, it is necessary for management to make assumptions and estimates affecting the amounts reported in the condensed consolidated financial statements and related notes. These estimates and assumptions are developed based upon all information available. Actual results could differ from estimated amounts. In the opinion of management, the accompanying financial statements include all adjustments that are necessary for a fair presentation of the results for the interim periods presented, such adjustments being of a normal recurring nature.

Certain information and footnote disclosures have been condensed or omitted pursuant to such rules and regulations. The December 31, 2025, condensed consolidated balance sheet was derived from our audited balance sheet as of that date. Our operating results are subject to seasonal trends when measured on a quarterly basis; therefore, operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026. These condensed consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2025. Results of operations in interim periods are not necessarily indicative of results to be expected for a full year.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation for book purposes is determined using the straight-line method over the estimated useful lives of the assets. Depreciation of revenue equipment is our largest item of depreciation. We generally depreciate new tractors over five years to salvage values ranging from approximately 0% to 35% of their cost, depending on the reportable segment profile of the equipment. We generally depreciate new trailers over seven years for refrigerated trailers and ten years for dry van trailers to salvage values of approximately 20% and 25% of their cost, respectively. We annually, or whenever events or changes in circumstances indicate that a review is warranted, review the reasonableness of our estimates regarding useful lives and salvage values of our revenue equipment and other long-lived assets, based upon, among other things, our experience with similar assets, conditions in the used revenue equipment market, and prevailing industry practice.

Recent Accounting Pronouncements

Accounting standards not yet adopted

In September 2025, the Financial Accounting Standards Board ("FASB") issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software, which clarifies and modernizes the accounting for costs related to internal-use software. The amendments in the standard remove all previous references to project stages and clarify the threshold entities apply to begin capitalizing costs. The standard becomes effective for us on January 1, 2028, for annual and interim periods and may be adopted on a prospective basis, a modified basis for in-process projects, or a retrospective basis. The Company is currently evaluating the effects adoption of this guidance will have on our consolidated financial statements.

In  November 2024,the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses which was later clarified by ASU 2025-01. This guidance requires disclosure of disaggregated information about certain income statement expense line items in the notes to the financial statements. The guidance in this ASU is effective for all public entities for fiscal years beginning after  *December 15, 2026,*and interim periods within fiscal years beginning after  *December 15, 2027.*The update  maybe applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the effects adoption of this guidance will have on our consolidated financial statements.

Accounting standards adopted

In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. In developing reasonable and supportable forecasts as part of estimating expected credit losses, all entities may elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. This guidance became effective for us for our annual reporting period beginning January 1, 2026, and related interim reporting periods. We made the election to adopt the practical expedient as of January 1, 2026. The adoption of this standard had an immaterial effect on our consolidated financial statements.

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Note 2. Income Per Share

Basic income per share excludes dilution and is computed by dividing earnings available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted income per share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. Income per share is the same for both Class A and Class B shares.

The following table sets forth, for the periods indicated, the calculation of net income per share included in the condensed consolidated statements of operations:

(in thousands except per share data) Three Months Ended
March 31,
2026 2025
Numerator:
Net income $ 4,420 $ 6,563
Denominator:
Denominator for basic income per share – weighted-average shares 25,082 26,538
Effect of dilutive securities:
Equivalent shares issuable upon conversion of unvested restricted shares 128 129
Equivalent shares issuable upon conversion of unvested employee stock options 1,224 1,210
Denominator for diluted income per share adjusted weighted-average shares and assumed conversions 26,434 27,877
Basic income per share $ 0.18 $ 0.25
Diluted income per share $ 0.17 $ 0.24

There were no unvested shares excluded from the calculation of diluted earnings per share as anti-dilutive for the three months ended March 31, 2026 and 2025. There were no unvested employee stock options excluded from the calculation of diluted earnings per share as anti-dilutive for the three months ended March 31, 2026 and 2025.

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Note 3. Fair Value of Financial Instruments

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Accordingly, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability.

The fair value of our interest rate swap agreements is determined using the market-standard methodology of netting the discounted future fixed-cash payments and the discounted expected variable-cash receipts. The variable-cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. These analyses reflect the contractual terms of the swap, including the period to maturity, and use observable market-based inputs, including interest rate curves and implied volatilities. The fair value calculation also includes an amount for risk of non-performance of our counterparties using "significant unobservable inputs" such as estimates of current credit spreads to evaluate the likelihood of default, which we have determined to be insignificant to the overall fair value of our interest rate swap agreements.

The fair value of the contingent consideration arrangement is based on inputs that are not observable in the market and is estimated using a probability-weighted method. The significant unobservable inputs used in the fair value of the contingent consideration liability include the financial projections over the earn-out period, the volatility of the underlying financial metrics, and estimated discount rates.

The fair value of the life insurance policies was determined by the underwriting insurance company’s valuation models and represents the guaranteed value we would receive upon surrender of these policies as of the reporting date.

A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

● Level 1. Observable inputs such as quoted prices in active markets;
● Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
● Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial Instruments Measured at Fair Value on a Recurring Basis

(in thousands)
March 31, 2026 December 31, 2025 Input Level
Interest rate swaps 875 826 2
Contingent consideration (22,488 ) (22,489 ) 3
Cash surrender value life insurance policies 5,059 5,041 2

The carrying amount of cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, and current debt approximates their fair value because of the short-term maturity of these instruments.

Interest rates that are currently available to us for issuance of long-term debt with similar terms and remaining maturities are used to estimate the fair value of our long-term debt, which primarily consists of revenue equipment installment notes. The fair value of our revenue equipment installment notes approximated the carrying value as of  March 31, 2026, as the weighted average interest rate on these notes approximates the market rate for similar debt. Borrowings under our revolving Credit Facility (as defined herein) approximate fair value due to the variable interest rate on that facility.

Contingent consideration arrangements require us to pay up to $30.0 million of additional consideration to Lew Thompson & Son Trucking, LLC's ("LTST's") former owners based on LTST's results during the first three calendar years following closing, up to $12.0 million of additional consideration to Sims Transport Services, LLC's ("Sims") former owners based on Sims' results during the first four calendar years following closing, and up to $5.0 million of additional consideration to the seller of the assets of a small, multi-stop distribution carrier we acquired in *February 2025 (*the "Asset Acquisition"). Additionally, the acquisition of assets that are now operating as Star (the "Star Acquisition") requires us to pay additional consideration to the sellers as described in Note 13 "Acquisition of Assets of a Brokerage Business Operating as Star Logistics Solutions".

The fair value of the contingent consideration is adjusted at each reporting period based on changes to the expected cash flows and related assumptions. During the three months ended March 31, 2026 and 2025, there were contingent payments made of $0.3 million as a result of the Asset Acquisition and $12.5 million based on LTST's results for the first calendar year following closing, respectively. The $0.3 million paid for the contingent consideration liability during 2026 was classified as financing cash flows within the condensed consolidated statements of cash flows. Of the $12.5 million paid for the contingent consideration liability during 2025, $4.5 million was classified as financing cash flows and $8.0 million was classified as operating cash flows within the condensed consolidated statements of cash flows. The fair value of the contingent consideration increased $0.3 million and $0.7 million due to a change in the fair value for the LTST contingent consideration for the three months ended March 31, 2026 and 2025, respectively. Additionally, contingent consideration increased $5.0 million for the three months ended March 31, 2025 as a result of the Asset Acquisition. The adjustment to the fair value of the contingent consideration liability was recorded as a component of general supplies and expenses within the condensed consolidated statements of operations. The contingent consideration liability is included in accounts payable and other long-term liabilities in our condensed consolidated balance sheets.

The following table provides a summary (in thousands) of the activity for the contingent consideration liability for 2026:

December 31, 2025 Additions Adjustments to fair market value Payments March 31, 2026
Contingent consideration $ (22,489 ) $ - $ (328 ) $ 329 $ (22,488 )

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Note 4. Segment Information

We have four reportable segments:

● Expedited: The Expedited reportable segment primarily provides truckload services to customers with high service freight and delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows. Expedited services generally require two-person driver teams on equipment either owned or leased by the Company.
● Dedicated: The Dedicated reportable segment provides customers with committed truckload capacity over contracted periods with the goal of three to five years in length. Equipment is either owned or leased by the Company. The Dedicated reportable segment also provides shuttle and switching services related to shuttling containers and trailers in or around freight yards and to/from warehouses for Dedicated customers.
--- ---
● Managed Freight: The Managed Freight reportable segment includes our brokerage and transport management services (“TMS”). Brokerage services provide logistics capacity by outsourcing the carriage of customers’ freight to third parties. TMS provides comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.
--- ---
● Warehousing: The Warehousing reportable segment provides day-to-day warehouse management services to customers who have chosen to outsource this function. The Warehousing reportable segment also provides shuttle and switching services related to shuttling containers and trailers in or around freight yards and to/from warehouses for Warehousing customers.
--- ---

The Company's chief operating decision maker ("CODM"), the Chief Executive Officer, evaluates the operating results through reportable segment operating income, which includes certain corporate overhead allocations directly attributable to each of the segments. We do not report our intersegment revenues by segment to our CODM and do not believe they are a meaningful metric for evaluating the performance of our reportable segments.

Each segment uses certain shared infrastructure and each segment is presented with its direct costs and an allocation of certain shared overhead costs. Insurance and claims expense is charged to the segments based on their historic claims experience and an allocation of current insurance premiums.

The CODM uses operating income for each segment in the annual budget and strategic planning process. The CODM considers budget-to-actual variances on a quarterly basis as well as month-over-month variances when making decisions about the allocation of operating and capital resources to each segment. The CODM also uses segment operating income for evaluating pricing strategy, to assess the performance of each segment by comparing the results of each segment with one another, and in determining the compensation of certain employees.

The following table summarizes our total revenue by our four reportable segments, as used by our CODM in making decisions regarding allocation of resources etc., for the three months ended March 31, 2026 and 2025:

(in thousands)
Three Months Ended March 31, 2026 Expedited Dedicated Managed Freight Warehousing Total
Revenues
Freight revenue $ 71,949 $ 91,064 $ 90,731 $ 27,552 $ 281,296
Fuel surcharge revenue^(1)^ 12,722 12,359 - 155 25,236
Subtotal operating revenues $ 84,671 $ 103,423 $ 90,731 $ 27,707 $ 306,532
Other revenues 629
Total revenue $ 307,161
Operating expenses:
Salaries, wages, and related expenses 28,027 44,243 3,173 14,740
Fuel expense 14,509 14,162 - 217
Operations and maintenance 9,301 11,110 501 1,854
Revenue equipment rentals and purchased transportation 15,082 7,198 79,369 1,197
Operating taxes and licenses 288 720 31 439
Insurance and claims 6,651 5,610 468 243
Communications and utilities - 222 34 378
General supplies and expenses 355 393 1,229 3,948
Depreciation and amortization 1 4,875 99 424
Loss on disposition of property and equipment, net - - - -
Total allocated overhead 7,636 9,303 2,124 2,489
Segment operating expenses 81,850 97,836 87,028 25,929 292,643
Subtotal operating income $ 2,821 $ 5,587 $ 3,703 $ 1,778 $ 14,518
Other ^(2)^ (8,236 )
Total consolidated operating income 6,282
Interest expense, net (3,886 )
Income from equity method investment 3,687
Income before income taxes $ 6,083
(in thousands)
--- --- --- --- --- --- --- --- --- --- --- --- ---
Three Months Ended March 31, 2025 Expedited Dedicated Managed Freight Warehousing Total
Revenues
Freight revenue $ 80,249 $ 82,080 $ 56,850 $ 24,040 $ 243,219
Fuel surcharge revenue^(1)^ 14,444 11,529 - 163 26,136
Subtotal operating revenues $ 94,693 $ 93,609 $ 56,850 $ 24,203 $ 269,355
Other revenues -
Total revenue $ 269,355
Operating expenses:
Salaries, wages, and related expenses 31,489 39,359 2,277 11,428
Fuel expense 14,934 13,086 - 175
Operations and maintenance 10,843 10,614 (57 ) 1,150
Revenue equipment rentals and purchased transportation 16,561 8,343 47,631 1,077
Operating taxes and licenses 336 608 57 790
Insurance and claims 6,574 4,993 132 207
Communications and utilities - 163 10 241
General supplies and expenses 244 503 790 4,404
Depreciation and amortization 3 4,067 22 481
Gain on disposition of property and equipment, net - 82 - -
Total allocated overhead 8,118 9,706 2,447 2,408
Segment operating expenses 89,102 91,524 53,309 22,361 256,296
Segment operating income $ 5,591 $ 2,085 $ 3,541 $ 1,842 $ 13,059
Other ^(2)^ (5,432 )
Total consolidated operating income 7,627
Interest expense, net (2,857 )
Income from equity method investment 3,776
Income before income taxes $ 8,546
(1) The CODM does not receive fuel surcharge revenue and fuel expense individually, but is provided with fuel expense less fuel surcharge revenue (other than the fuel surcharge revenue we reimburse to independent contractors and other third parties which is included in purchased transportation), which we refer to as net fuel expense. The CODM uses net fuel expense to measure the effectiveness of our fuel surcharge program.
--- ---
(2) Other represents indirect costs not directly attributable to any one reportable segment, amortization of intangible assets, and contingent consideration liability adjustments to match the information our CODM uses to evaluate the operating results of our reportable segments.

Balance sheet data by reportable segment is not maintained by the Company.

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Note 5. Income Taxes

Income tax expense in both 2026 and 2025 varies from the amount computed by applying the federal corporate income tax rates of 21% to income before income taxes, primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences the most significant of which is the effect of the per diem pay structure for drivers, executive compensation disallowance, and excess tax benefits on share-based compensation. Drivers who meet the requirements to receive per diem receive non-taxable per-diem pay in lieu of a portion of their taxable wages. This per diem program increases our drivers' net pay per mile, after taxes, while decreasing gross pay, before taxes. As a result, salaries, wages, and related expenses are slightly lower and our effective income tax rate is higher than the statutory rate. Generally, as pre-tax income increases, the impact of the driver per diem program on our effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pre-tax income, while in periods where earnings are at or near breakeven the impact of the per diem program on our effective tax rate is significant. Due to the partially nondeductible effect of per diem pay, our tax rate will fluctuate in future periods based on fluctuations in earnings.

Our liability recorded for uncertain tax positions as of  March 31, 2026 is unchanged since  December 31, 2025.

The net deferred tax liability of $120.8 million primarily relates to differences in cumulative book versus tax depreciation of property and equipment, partially off-set by net operating loss carryovers and insurance claims that have been reserved but not paid. The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis, we assess the need for adjustment of the valuation allowance. There was no material change to the valuation allowance as  March 31, 2026. The Company continues to have a significant amount of reversing temporary differences that can be considered as future sources of taxable income. If these estimates and related assumptions change in the future, we may be required to modify our valuation allowance against the carrying value of the deferred tax assets.

The American Rescue Plan extended the reach of IRC Section 162(m) to include compensation paid to the eight highest-paid individuals other than the chief executive officer and the chief financial officers (rather than the three highest), however, this change is not effective until 2027. There is no material impact to the financial statements at this time.

We do not anticipate the Inflation Reduction Act (the "IRA") will have a significant impact on income tax expense or on other taxes. One of the most impactful provisions of the IRA includes the establishment of a Corporate Alternative Minimum Tax ("CAMT"). However, this tax only applies to corporations with three-year average earnings in excess of $1.0 billion. We will continue to monitor the CAMT each year to determine if we will become an applicable corporation. Additionally, the IRA enacted an excise tax on stock buybacks, which imposes a 1% tax on stock buybacks, subject to netting provisions regarding stock awarded to employees as part of their compensation. We do not believe this will have a material impact on our active repurchase program.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act ("OBBBA") into law. The OBBBA, among other things, includes provisions for accelerated tax depreciation, modifications to the net interest deduction limitations, and the rollback of certain alternative energy provisions. We considered the effects of the OBBBA in our provision for income taxes with no other adjustments expected as of March 31, 2026.

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Note 6. Debt

Current and long-term debt and lease obligations consisted of the following as of  March 31, 2026 and December 31, 2025:

(in thousands) March 31, 2026 December 31, 2025
Current Long-Term Current Long-Term
Borrowings under Credit Facility $ - $ 29,000 $ - $ 30,000
Revenue equipment installment notes; weighted average interest rate of 5.1% at March 31, 2026, and 5.1% at December 31, 2025, due in monthly installments with final maturities at various dates ranging from April 2026 to February 2032, secured by related revenue equipment 50,735 157,702 62,602 189,115
Real estate notes; interest rate of 5.4% at March 31, 2026 and 5.6% at December 31, 2025 due in monthly installments with a fixed maturity at August 2035, secured by related real estate 1,418 14,687 1,403 14,931
Total debt 52,153 201,389 64,005 234,046
Principal portion of finance lease obligations, secured by related revenue equipment 865 2,095 840 2,353
Principal portion of operating lease obligations, secured by related real estate and revenue equipment 12,554 22,693 12,182 25,272
Total debt and lease obligations $ 65,572 $ 226,177 $ 77,027 $ 261,671

We and substantially all of our subsidiaries are parties to the Third Amended and Restated Credit Agreement (the "Credit Facility") with Bank of America, N.A., as agent (the "Agent") and JPMorgan Chase Bank, N.A. (together with the Agent, the "Lenders"). The Credit Facility is a $110.0 million revolving credit facility, with an uncommitted accordion feature that, so long as no event of default exists, allows us to request an increase in the revolving credit facility of up to $75.0 million subject to Lender acceptance of the additional funding commitment. The Credit Facility includes a letter of credit sub facility in an aggregate amount of $105.0 million and a swing line sub facility in an aggregate amount equal to the greater of $10.0 million or 10% of the Lenders' aggregate commitments under the Credit Facility from time-to-time. The Credit Facility matures in May 2027.

Borrowings under the Credit Facility are classified as either "base rate loans" or "SOFR loans." Base rate loans accrue interest at a base rate equal to the greater of the Agent’s prime rate, the federal funds rate plus 0.5%, or SOFR for a one month period as of such day, plus an applicable margin ranging from 0.25% to 0.75%; while SOFR loans accrued interest at SOFR, plus an applicable margin ranging from 1.25% to 1.75%. The applicable rates are adjusted quarterly based on average pricing availability. The unused line fee is the product of 0.25% times the average daily amount by which the Lenders' aggregate revolving commitments under the Credit Facility exceed the outstanding principal amount of revolver loans and the aggregate undrawn amount of all outstanding letters of credit issued under the Credit Facility. The obligations under the Credit Facility are guaranteed by us and secured by a pledge of substantially all of our assets, with the notable exclusion of any real estate, revenue equipment pledged under other financing agreements, including revenue equipment installment notes and finance leases, and revenue equipment that we do not designate as being included in the borrowing base.

Borrowings under the Credit Facility are subject to a borrowing base limited to the lesser of (A) $110.0 million, minus the sum of the stated amount of all outstanding letters of credit; or (B) the sum of (i) 87.5% of eligible accounts receivable, plus (ii) the least of (a) 85% of the appraised net orderly liquidation value of eligible revenue equipment, (b) 100% of the net book value of eligible revenue equipment, (c) 60.0% of the Lenders' aggregate revolving commitments under the Credit Facility, or (d) $65.0 million.

We had $29.0 million borrowings outstanding under the Credit Facility as of March 31, 2026, undrawn letters of credit outstanding of approximately $19.9 million, and available borrowing capacity of $57.5 million. As of March 31, 2026, there were no base rate and $29.0 million of SOFR loans. Based on availability as of March 31, 2026 and 2025, there was no fixed charge coverage requirement.

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The Credit Facility includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the Credit Facility may be accelerated, and the Lenders' commitments may be terminated. If an event of default occurs under the Credit Facility and the Lenders cause, or have the ability to cause, all of the outstanding debt obligations under the Credit Facility to become due and payable, this could result in a default under other debt instruments that contain acceleration or cross-default provisions. The Credit Facility contains certain restrictions and covenants relating to, among other things, debt, dividends, liens, acquisitions and dispositions outside of the ordinary course of business, and affiliate transactions. Failure to comply with the covenants and restrictions set forth in the Credit Facility could result in an event of default.

Pricing for the revenue equipment installment notes is quoted by the respective financial affiliates of our primary revenue equipment suppliers and other lenders at the funding of each group of equipment acquired and include fixed annual rates for new equipment under retail installment contracts. The notes included in the funding are due in monthly installments with final maturities at various dates ranging from  April 2026 to February 2032. The notes contain certain requirements regarding payment, insuring of collateral, and other matters, but do not have any financial or other material covenants or events of default. Additional borrowings from the financial affiliates of our primary revenue equipment suppliers and other lenders are expected to be available to fund new tractors expected to be delivered in 2026, while any other property and equipment purchases, including trailers, are expected to be funded with a combination of available cash, notes, operating leases, finance leases, and/or from the Credit Facility.

In August 2015, we financed a portion of the purchase of our corporate headquarters, a maintenance facility, and certain surrounding property in Chattanooga, Tennessee by entering into a $28.0 million variable rate note with a third-party lender. The note contains certain restrictions and covenants that are usual and customary for a note of this nature. Failure to comply with the covenants and restrictions set forth in the note could result in an event of default. Concurrently with entering into the note, we entered into an interest rate swap to effectively fix the related interest rate to 4.2%. We expect to be in compliance with our required debt covenants for the next 12 months.

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Note 7. Lease Obligations

The finance leases in effect at  March 31, 2026 terminate from  June 2028 through  November 2033 and contain guarantees of the residual value of the related equipment by us.

A summary of our lease obligations at March 31, 2026 and 2025 are as follows:

(dollars in thousands) Three Months Ended Three Months Ended
March 31, 2026 March 31, 2025
Finance lease cost:
Amortization of right-of-use assets $ 218 $ 219
Interest on lease liabilities 105 124
Operating lease cost 3,689 3,841
Variable lease cost 16 (84 )
Short-term lease cost 2,279 1,205
Total lease cost 6,307 5,305
Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases 105 124
Operating cash flows from operating leases 3,075 3,019
Financing cash flows from finance leases 233 180
Right-of-use assets obtained in exchange for new finance lease liabilities - -
Right-of-use assets obtained in exchange for new operating lease liabilities 818 2,876
Weighted-average remaining lease term—finance leases (in years) 4.2 4.5
Weighted-average remaining lease term—operating leases (in years) 3.4 4.2
Weighted-average discount rate—finance leases 12.5 % 12.8 %
Weighted-average discount rate—operating leases 8.7 % 8.4 %

As of  March 31, 2026 and December 31, 2025, right-of-use assets of $33.3 million and $35.5 million for operating leases and $2.6 million and $2.8 million for finance leases, respectively. Finance leases are included in net property and equipment in our condensed consolidated balance sheets. Operating lease right-of-use asset amortization is included in revenue equipment rentals and purchased transportation, communications and utilities, and general supplies and expenses, depending on the underlying asset, in the condensed consolidated statement of operations. Amortization of finance leased assets is included in depreciation and amortization expense in the condensed consolidated statement of operations.

Our future minimum lease payments as of March 31, 2026, are summarized as follows by lease category:

(in thousands) Operating Finance
2026 ^(1)^ 11,110 $ 909
2027 13,216 1,212
2028 7,046 930
2029 4,074 340
2030 2,602 214
Thereafter 2,101 285
Total minimum lease payments $ 40,149 $ 3,890
Less: amount representing interest (4,902 ) (930 )
Present value of minimum lease payments $ 35,247 $ 2,960
Less: current portion (12,554 ) (865 )
Lease obligations, long-term $ 22,693 $ 2,095

^(1)^ Excludes the three months ended March 31, 2026.

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Note 8. Stock -Based Compensation

Our Third Amended and Restated 2006 Omnibus Incentive Plan, as amended (the "Incentive Plan") governs the issuance of equity awards and other incentive compensation to management and members of the Board of Directors (the "Board"). The Incentive Plan includes (i) a fungible share reserve feature, under which shares subject to stock options and stock appreciation rights will be counted as one share for every share granted and shares subject to all other awards will be counted as 1.80 shares for every share granted, (ii) a double-trigger vesting requirement upon a change in control, and (iii) a maximum award granted or payable to any one participant under the Incentive Plan for a calendar year of 1,000,000 shares of Class A common stock or $4,000,000, in the event the award is paid in cash.

The Incentive Plan permits annual awards of shares of our Class A common stock to executives, other key employees, consultants, non-employee directors, and eligible participants under various types of options, restricted stock, or other equity instruments. As of  March 31, 2026, there were 1,852,982 shares available for award under the Incentive Plan. No awards may be made under the Incentive Plan after May 1, 2033. To the extent available, we have issued treasury stock to satisfy all share-based incentive plans.

Included in salaries, wages, and related expenses within the condensed consolidated statements of operations is stock-based compensation expense of $0.7 million and $0.8 million for the three months ended March 31, 2026 and 2025, respectively. Included in general supplies and expenses within the condensed consolidated statements of operations is stock-based compensation expense for non-employee directors of $0.2 million for each of the three months ended March 31, 2026 and 2025. The stock compensation expense recorded for the three months ended March 31, 2026 and 2025, of $0.7 million and $0.8 million relates to restricted shares, respectively. There were no unvested employee stock options or related stock compensation expense for the three months ended March 31, 2026 or 2025.

The Incentive Plan allows participants to pay the federal and state minimum statutory tax withholding requirements related to awards that vest or allows participants to deliver to us shares of Class A common stock having a fair market value equal to the minimum amount of such required withholding taxes. To satisfy withholding requirements for shares that vested through March 31, 2026, certain participants elected to forfeit receipt of an aggregate of 4,200 shares of Class A common stock at a weighted average per share price of $29.44 based on the closing price of our Class A common stock on the dates the shares vested in 2026, in lieu of the federal and state minimum statutory tax withholding requirements. We remitted $0.1 million to the proper taxing authorities in satisfaction of the employees' minimum statutory withholding requirements.

Note 9. Commitments and Contingencies

Legal Proceedings

From time-to-time, we are a party to litigation arising in the ordinary course of business, most of which involves claims for personal injury, workers’ compensation, and/or property damage incurred in connection with the transportation of freight. We record a liability for the estimated cost of the uninsured portion of pending claims and the estimated allocated loss adjustment expenses, including legal and other direct costs associated with a claim, when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated.

There are inherent uncertainties in these legal matters, some of which are beyond management’s control, making the ultimate outcomes difficult to predict. Moreover, management's views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop. The Company’s business, results of operations, financial condition, or liquidity could be materially and adversely affected by the resolution of one or more of these contingencies.

In 2025, a third-party trucking company hauling a load brokered by Covenant Transport Solutions, LLC, and using a trailer owned by CTG Leasing Company was involved in an accident that resulted in five fatalities and injuries to at least one other person. There are several possible defendants in the case, facts are still being developed, alleged damages have not been specified, and there are significant factual and legal issues to be resolved. The Company has concluded that a loss is probable in the case, but given the preliminary nature of the proceedings, the Company cannot reasonably estimate a range of possible losses at this time in excess of the amount accrued for legal costs. As of March 31, 2026, the Company accrued $0.7 million for legal costs associated with the accident, but it has not recorded any other liability related to the accident. To the extent Covenant Transport Solutions, LLC, is found to have liability related to the accident, and the damages awarded against the Company exceed the Company’s coverage limits, involve significant aggregate use of the Company’s self-insured retention amounts, or cause increases in the Company’s insurance premiums, the Company’s insurance and claims expense would be volatile and increase.  Any resulting increases in such expenses could have a materially adverse effect on the Company’s business, results of operations, financial condition, or liquidity.

Other Commitments and Contingencies

We had $19.9 million of outstanding and undrawn letters of credit as of March 31, 2026 and December 31, 2025. The letters of credit are maintained primarily to support our insurance programs.

Note 10. Equity Method Investment

We own a 49.0% interest in Transport Enterprise Leasing, LLC ("TEL"), a tractor and trailer equipment leasing company and used equipment reseller. There is no loss limitation on our 49.0% interest in TEL. We have not guaranteed any of TEL's debt and have no obligation to provide funding, services, or assets. There are no current put rights to purchase or sell with any owners. TEL’s majority owners are generally restricted from transferring their interests in TEL, other than to certain permitted transferees, without our consent. Similarly, we are generally restricted from transferring our interest in TEL, other than to certain permitted transferees, without their consent. There are no third-party liquidity arrangements, guarantees, and/or other commitments that may affect the fair value or risk of our interest in TEL.

As of March 31, 2026, we had a revenue equipment operating lease liability to TEL of $7.3 million with final maturities at various dates ranging from April 2029 to August 2029. No other transactions with TEL were material for the three months ended March 31, 2026 and 2025.

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We have accounted for our investment in TEL using the equity method of accounting, and thus our financial results include our proportionate share of TEL's 2026 net income through March 31, 2026, or $3.7 million.

Our accounts receivable from TEL, accounts payable to TEL, and investment in TEL as of  March 31, 2026 and December 31, 2025 are as follows (in thousands):

Description: Balance Sheet Line Item: March 31, 2026 December 31, 2025
Accounts receivable from TEL Driver advances and other receivables $ 6 $ 13
Accounts payable to TEL Accrued expenses $ 443 $ 460
Investment in TEL Other assets $ 89,227 $ 85,512
Operating lease obligations Current and long-term portion of operating lease obligations $ 7,269 $ 7,800

Our accounts receivable from TEL related to cash disbursements made pursuant to our performance of certain back-office and maintenance functions on TEL’s behalf and our accounts payable to TEL primarily related to leased revenue equipment payment accruals.

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Note 11. Goodwill, Intangibles, and Other Assets

The Landair Holdings, Inc. ("Landair") trade name has a residual value of $0.5 million.

Amortization expense of $3.0 million and $2.4 million for the three months ended March 31, 2026 and 2025, respectively, was included in depreciation and amortization in the condensed consolidated statements of operations.

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A summary of other intangible assets as of  March 31, 2026 and  December 31, 2025 is as follows:

(in thousands) March 31, 2026
Gross intangible assets Accumulated amortization Net intangible assets Remaining life (months)
Trade name:
Dedicated $ 4,502 $ (2,742 ) $ 1,760
Managed Freight 1,089 (932 ) 157
Warehousing 999 (885 ) 114
Total trade name 6,590 (4,559 ) 2,031 83
Non-compete agreement:
Dedicated 4,670 (3,405 ) 1,265
Managed Freight 630 (278 ) 352
Total non-compete agreement 5,300 (3,683 ) 1,617 17
Customer relationships:
Dedicated 71,374 (18,210 ) 53,164
Managed Freight 22,112 (3,832 ) 18,280
Warehousing 12,436 (8,031 ) 4,405
Total customer relationships: 105,922 (30,073 ) 75,849 133
Credentialing:
Expedited 32,000 (8,889 ) 23,111
Total credentialing 32,000 (8,889 ) 23,111 130
Total other intangible assets $ 149,812 $ (47,204 ) $ 102,608 129
(in thousands) December 31, 2025
--- --- --- --- --- --- --- --- --- ---
Gross intangible assets Accumulated amortization Net intangible assets Remaining life (months)
Trade name:
Dedicated $ 4,502 $ (2,689 ) $ 1,813
Managed Freight 1,089 (927 ) 162
Warehousing 999 (885 ) 114
Total trade name 6,590 (4,501 ) 2,089 86
Non-compete agreement:
Dedicated 4,670 (3,113 ) 1,557
Managed Freight 630 (238 ) 392
Total non-compete agreement 5,300 (3,351 ) 1,949 15
Customer relationships:
Dedicated 71,374 (16,959 ) 54,415
Managed Freight 22,112 (3,264 ) 18,848
Warehousing 12,436 (7,772 ) 4,664
Total customer relationships: 105,922 (27,995 ) 77,927 131
Credentialing:
Expedited 32,000 (8,356 ) 23,644
Total credentialing 32,000 (8,356 ) 23,644 133
Total other intangible assets $ 149,812 $ (44,203 ) $ 105,609 128

The expected amortization of these assets for the next five successive years is as follows:

(in thousands)
2026 ^(1)^ 9,000
2027 11,191
2028 10,732
2029 10,705
2030 9,215
Thereafter 51,265

^(1)^ Excludes the three months ended March 31, 2026.

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The assignment of goodwill and intangible assets to our reportable segments was not complete as of March 31, 2026 due to the October 2025 Star Acquisition. The carrying amount of goodwill was $80.4 million at  March 31, 2026 and $80.5 million at  December 31, 2025. A summary of the changes in the carrying amount of goodwill by reportable segment is as follows:

(in thousands)
Expedited Dedicated Managed Freight Warehousing Total
Balance at December 31, 2025 $ 15,699 $ 21,877 $ 21,151 $ 21,750 $ 80,477
Post-acquisition goodwill adjustments - - (37 ) - (37 )
Balance at March 31, 2026 $ 15,699 $ 21,877 $ 21,114 $ 21,750 $ 80,440

At March 31, 2026, our insurance program involves self-insurance to certain risk retention levels. We accrue claims above our self-insured retention and record a corresponding receivable for the amounts we expect to collect from insurers upon settlement of such claims. We have $29.1 million and $14.6 million at March 31, 2026 and December 31, 2025, respectively, included in other long-term receivables and as a corresponding accrual in the long-term portion of insurance and claims accruals on our condensed consolidated balance sheet for claims above our self-insured retention for which we believe it is reasonably assured that the insurers will pay their portion of such claims.

Note 12. Equity

Other Equity

On  *April 23, 2025,*our Board approved a stock repurchase authorization of up to $50.0 million of our Class A common stock. Under such authorization, we repurchased approximately 1.6 million shares of our Class A common stock for $36.2 million during the twelve months ended December 31, 2025 with no such repurchases during the three months ended March 31, 2026 .

Dividends

On  *February 5, 2026,*our Board declared a cash dividend of $0.07 per share which was paid on  *March 27, 2026,*to stockholders of record on  March 6, 2026.

On  *February 10, 2025,*our Board declared a cash dividend of $0.07 per share which was paid on  *March 28, 2025,*to stockholders of record on  *March 7, 2025.*On  *May 14, 2025,*our Board declared a cash dividend of $0.07 per share which was paid on  *June 27, 2025,*to stockholders of record on  *June 6, 2025.*On  *August 12, 2025,*our Board declared a cash dividend of $0.07 per share which was paid on  *September 26, 2025,*to stockholders of record on  September 5, 2025. On November 20, 2025, our board declared a cash dividend of $0.07 per share which was paid on December 26, 2025, to stockholders of record on December 5, 2025.

Note 13. Acquisition of Assets of Brokerage Business Operating as Star Logistics Solutions

On October 10, 2025, we acquired the assets of a truckload brokerage business, which we are operating as Star. Star operates in the consumer retail and disaster relief sectors where we historically have lacked exposure. Additionally, the disaster recovery market is highly specialized and synergistic with our Expedited business and offers occasional, high volume and high margin opportunities. The acquisition date fair value of the consideration transferred was $27.1 million. The Asset Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions. The Asset Purchase Agreement includes an earnout component based on Star's average adjusted earnings before interest, taxes, depreciation, and amortization reported for the three years ended December 31, 2028 with potential advance payments based on Star's adjusted earnings before interest, taxes, depreciation, and amortization reported for each of the years ended December 31, 2026 and 2027. The total purchase price, including any earnout achieved, is expected to be approximately $27.2 million depending on the results achieved by Star.

The acquisition date fair value of the consideration transferred consisted of the following:

October 10, 2025
(in thousands)
Cash paid pursuant to Asset Purchase Agreement $ 27,053
Contingent consideration 159
Net purchase price $ 27,212

We estimated the fair value of the contingent consideration using a probability-weighted model. This fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. Refer to Note 3, "Fair Value of Financial Instruments" for information regarding changes in the contingent consideration arrangement.

All goodwill related to the acquisition is deductible for tax purposes, and there are no deferred income taxes arising from the acquisition.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date.

October 10, 2025
Accounts receivable $ 10,466
Driver advances and other receivables 707
Inventory and supplies 16
Prepaid expenses 438
Other short-term assets 250
Net property and equipment 2,169
Other intangibles, net 15,050
Total identifiable assets acquired 29,096
Accounts payable (10,149 )
Accrued expenses (2,235 )
Current maturities of long-term debt (168 )
Current portion of operating lease obligations (584 )
Current portion of insurance and claims accrual (258 )
Long-term portion of operating lease obligations (560 )
Total liabilities assumed (13,954 )
Net identifiable assets acquired 15,142
Goodwill 12,070
Net assets acquired $ 27,212

Goodwill and other intangible assets  maychange upon the finalization of the valuation of the contingent consideration liability and intangible assets as part of the purchase accounting for the acquisition. The goodwill recognized is attributable primarily to expected cost synergies as a result of overhead support. Refer to Note 11, "Goodwill, Intangibles, and Other Assets" for a summary of changes to goodwill during the period as well as information related to the identifiable intangible asset acquired.

Star’s results have been included in the consolidated financial statements since the date of acquisition and are reported within our Managed Freight reportable segment.

The following unaudited pro forma consolidated results of operations assume that the acquisition of Star occurred as of January 1, 2025:

(in thousands)
Three months ended Three months ended
March 31, 2026 March 31, 2025
Total revenue $ 307,161 $ 301,793
Net income $ 4,420 $ 6,964
Basic net income per share $ 0.18 $ 0.26
Diluted net income per share $ 0.17 $ 0.25

The pro forma financial information for all periods presented above has been calculated after adjusting the results of Star to reflect the business combination accounting effects resulting from this acquisition, including the amortization expense from acquired intangible assets as though the acquisition occurred as of the beginning of the Company’s fiscal year 2025. As noted above, the allocation is preliminary and changes to the value of the contingent consideration and finalization of our valuation could result in changes to the amount of amortization expense from acquired intangible assets included in the pro forma financial information presented above. The Company's historical consolidated financial statements have been adjusted in the pro forma combined financial statements to give effect to pro forma events that are directly attributable to the business combination and factually supportable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2025.

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ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The condensed consolidated financial statements include the accounts of Covenant Logistics Group, Inc., a Nevada holding company, and its wholly owned subsidiaries. References in this report to "we," "us," "our," the "Company," and similar expressions refer to Covenant Logistics Group, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

This report contains certain statements that may be considered forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation: any projections of earnings, revenues, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; and any statements of belief and any statements of assumptions underlying any of the foregoing. In this Form 10-Q, statements relating to future impact of accounting standards, future third-party transportation provider expenses, future tax rates, expenses, and deductions, expected freight demand, capacity, and volumes and trucking industry conditions, potential defaults and results of a default and testing of our fixed charge covenant under the Credit Facility or other debt agreements, expected sources, as well as adequacy, of working capital and liquidity (including our mix of debt, finance leases, and operating leases as means of financing revenue equipment), future inflation, future stock repurchases and dividends, if any, expected capital expenditures, allocations, and requirements, future customer relationships, future interest expense, future driver market conditions, including driver satisfaction, future use of independent contractors, expected cash flows, future investments in and growth of our reportable segments and services, future margins of our reportable segments, future rates and prices, future depreciation and amortization, future salaries, wages, and related expenses, including driver compensation, expected net fuel costs, strategies for managing fuel costs, the effectiveness and impact of, and cash flows relating to, our fuel surcharge programs, future fluctuations in operations and maintenance expenses, expected effects and mix of our solo and team operations, future fleet size, management, utilization, upgrades, and age, availability and usage of tractors and trailers, the market value of used equipment, the anticipated impact of our investment in TEL, the future impact of our business model, service standards, strategic plan and other strategic initiatives, changes to and deviations from our business model, strategic plan, and other strategic initiatives, claims and litigation, anticipated levels of and fluctuations relating to insurance and claims expenses, including the erosion of available limits in our aggregate insurance policies and insurance and claims accruals, contingent consideration related to our prior acquisitions, and the future impact of our prior acquisitions, among others, are forward-looking statements. Forward-looking statements may be identified by the use of terms or phrases such as "believe," "may," "could," "would," "will," "expects," "estimates," "projects," "appears," "mission," "anticipates," "plans," " outlook," "focus," "seek," "potential," "continue," "goal," "target," "objective," "optimistic," "intends," "improve," "remain," derivations thereof, and similar terms and phrases. Such statements are based on currently available operating, financial, and competitive information. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sections entitled "Item 1A. Risk Factors," set forth in our Form 10-K for the year ended December 31, 2025. Readers should review and consider the factors discussed in "Item 1A. Risk Factors," set forth in our Form 10-K for the year ended December 31, 2025, along with various disclosures in our press releases, stockholder reports, and other filings with the Securities and Exchange Commission.

All such forward-looking statements speak only as of the date of this Form 10-Q. You are cautioned not to place undue reliance on such forward-looking statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in the events, conditions, or circumstances on which any such statement is based.

Executive Overview

Our first quarter earnings were $0.17 per diluted share, falling short of our expectations, largely as a result of severe weather shutdowns and fuel cost headwinds in January and February. However, freight volumes and rates improved in March, and we are encouraged by our positive operating performance and the momentum we are carrying into the second quarter, such as an expanding pipeline of new customers seeking committed capacity, rate increases with select existing customers, and the traditional seasonal improvement in freight volumes.

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Additional items of note for the first quarter of 2026 include the following:

● Total revenue of $307.2 million, an increase of 14.0% compared with the first quarter of 2025, and freight revenue (which excludes revenue from fuel surcharges) of $281.9 million, an increase of 15.9% compared with the first quarter of 2025;
● Operating income of $6.3 million, compared with $7.6 million in the first quarter of 2025;
● Net income of $4.4 million, or $0.17 per diluted share, compared with $6.6 million, or $0.24 per diluted share, in the first quarter of 2025;
● Our equity investment in TEL provided $3.7 million of pre-tax earnings in the first quarter of 2026 compared to $3.8 million in the first quarter of 2025;
● We distributed a total of $1.8 million to stockholders through cash dividends;
● Since December 31, 2025, total indebtedness, comprised of total debt and finance leases, net of cash, decreased by $51.0 million to $245.3 million, primarily due to selling a large amount of unproductive used equipment and buying very little new equipment. With available borrowing capacity of $57.5 million under our Credit Facility at March 31, 2026 we do not expect to be required to test our fixed charge covenant in the foreseeable future;
● Leverage ratio (ending total indebtedness, comprised of debt and finance leases, net of cash, divided by the sum of operating income, depreciation and amortization, gain on disposition of property and equipment, net, and impairment of long lived property and equipment) as of March 31, 2026 was 2.37;
● Stockholders' equity at March 31, 2026, was $407.6 million; and
● Tangible book value at March 31, 2026, was $224.6 million.

Outlook

Solid economic demand and shrinking industry-wide driver capacity are creating a favorable environment for building project pipelines and improving yield and revenue per tractor. With most of our revenue under contracts ranging from one to three years in duration, we expect to see gradual improvement beginning with the second quarter of 2026 and extending for several quarters to come. As contracts become available, we intend to be nimble in allocating our equipment and people toward the relationships that produce long-term value through adequate margin and returns. Our momentum continues to build this year, and our team who are running the business have palpable energy and enthusiasm.

Our plan for the remainder of 2026 is to improve yields and reallocate assets to operations that improve our margins and returns. Based on a rapidly growing pipeline of customer demand, we expect to make significant progress assuming the current market momentum continues.

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Non-GAAP Reconciliation

In addition to operating ratio, we use "adjusted operating ratio" as a key measure of profitability. Adjusted operating ratio is not a substitute for operating ratio measured in accordance with GAAP. There are limitations to using non-GAAP financial measures. Adjusted operating ratio means operating expenses, net of fuel surcharge revenue, excluding amortization of intangibles, and significant unusual items, divided by total revenue, less fuel surcharge revenue. We believe the use of adjusted operating ratio allows us to more effectively compare periods, while excluding the potentially volatile effect of changes in fuel prices, amortization of intangibles, and significant unusual items. Our Board and management focus on our adjusted operating ratio as an indicator of our performance from period to period. We believe our presentation of adjusted operating ratio is useful because it provides investors and securities analysts the same information that we use internally to assess our core operating performance. Although we believe that adjusted operating ratio improves comparability in analyzing our period-to-period performance, it could limit comparability to other companies in our industry, if those companies define adjusted operating ratio differently. Because of these limitations, adjusted operating ratio should not be considered a measure of income generated by our business or discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.

Operating Ratio

Three Months Ended March 31,
GAAP Operating Ratio: 2026 OR % 2025 OR %
Total revenue $ 307,161 $ 269,355
Total operating expenses 300,879 98.0 % 261,728 97.2 %
Operating income $ 6,282 $ 7,627
Adjusted Operating Ratio: 2026 Adj. OR % 2025 Adj. OR %
Total revenue $ 307,161 $ 269,355
Fuel surcharge revenue (25,236 ) (26,136 )
Freight revenue (total revenue, excluding fuel surcharge) 281,925 243,219
Total operating income 6,282 7,627
Adjusted for:
Amortization of intangibles 3,000 2,371
Contingent consideration liability adjustment 328 710
Transaction costs - 149
Adjusted operating income $ 9,610 96.6 % $ 10,857 95.5 %

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Revenue and Expenses

We focus on targeted markets throughout the United States where we believe our service standards can provide a competitive advantage. We are a major carrier for transportation companies such as parcel freight forwarders, less-than-truckload carriers, and third-party logistics providers that require a high level of service to support their businesses, as well as for traditional truckload customers such as manufacturers, retailers, and food and beverage shippers. Additionally, we provide poultry feed and live haul transportation, as well as highly regulated, time sensitive loads for the U.S. government.

We have four reportable segments, which include:

● Expedited: The Expedited reportable segment primarily provides truckload services to customers with high service freight and delivery standards, such as 1,000 miles in 22 hours, or 15-minute delivery windows. Expedited services generally require two-person driver teams on equipment either owned or leased by the Company.
● Dedicated: The Dedicated reportable segment provides customers with committed truckload capacity over contracted periods with the goal of three to five years in length. Equipment is either owned or leased by the Company. The Dedicated reportable segment also provides shuttle and switching services related to shuttling containers and trailers in or around freight yards and to/from warehouses for Dedicated customers.
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● Managed Freight: The Managed Freight reportable segment includes our brokerage and transport management services (“TMS”). Brokerage services provide logistics capacity by outsourcing the carriage of customers’ freight to third parties. TMS provides comprehensive logistics services on a contractual basis to customers who prefer to outsource their logistics needs.
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● Warehousing: The Warehousing reportable segment provides day-to-day warehouse management services to customers who have chosen to outsource this function. The Warehousing reportable segment also provides shuttle and switching services related to shuttling containers and trailers in or around freight yards and to/from warehouses for Warehousing customers.
--- ---

In our Expedited and Dedicated reportable segments, we primarily generate revenue by transporting freight for our customers. Generally, we are paid a predetermined rate per mile for our truckload services. We enhance our truckload revenue by charging for tractor and trailer detention, loading and unloading activities, and other specialized services, as well as through the collection of fuel surcharges to mitigate the impact of increases in the cost of fuel. The main factors that could affect our Expedited and Dedicated revenue are the revenue per mile we receive from our customers, the percentage of miles for which we are compensated, and the number of shipments and miles we generate. These factors relate, among other things, to the general level of economic activity in the United States, inventory levels, specific customer demand, the level of capacity in the trucking industry, and driver availability.

The main expenses that impact the profitability of our Expedited and Dedicated reportable segments are the variable costs of transporting freight for our customers. These costs include fuel expenses, driver-related expenses, such as wages, benefits, training, and recruitment, and purchased transportation expenses, which primarily include compensating independent contractors. Expenses that have both fixed and variable components include maintenance and tire expense and our total cost of insurance and claims. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, self-insured retention versus insurance premiums, fleet age, efficiency, and other factors. Historically, our main fixed costs include rentals and depreciation of long-term assets, such as revenue equipment and terminal facilities, and the compensation of non-driver personnel.

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Within our Expedited and Dedicated reportable segments, we operate tractors driven by a single driver and also tractors assigned to two-person driver teams. Our single driver tractors generally operate in shorter lengths of haul, generate fewer miles per tractor, and experience more non-revenue miles, but the lower productive miles are expected to be offset by generally higher revenue per loaded mile and the reduced employee expense of compensating only one driver. In contrast, our two-person driver tractors generally operate in longer lengths of haul, generate greater miles per tractor, and experience fewer non-revenue miles, but we typically receive lower revenue per loaded mile and incur higher employee expenses of compensating both drivers. We expect operating statistics and expenses to shift with the mix of single and team operations.

Within our Managed Freight reportable segment, we derive revenue from Brokerage and TMS services, particularly, for arranging transportation services for customers, directly and through relationships with third-party providers and integration with our Expedited reportable segment. Additionally, utilizing technology and process management, we provide detailed visibility into a customer’s movement of freight – inbound and outbound – throughout the customer’s network and focused customer support through multiyear contracts. The main factors that impact profitability in terms of expenses are the variable costs of outsourcing the transportation freight for our customers and managing fixed costs, including purchased transportation, facility warehousing costs, salaries, and selling, general, and administrative expenses.

Within our Warehousing reportable segment, we empower customers to outsource warehousing management, including moving containers and trailers in or around freight yards. The main factors that impact profitability in terms of expenses are managing fixed costs, including salaries, facility warehousing costs, insurance, and selling, general, and administrative expenses.

In May 2011, we acquired a 49.0% interest in TEL. TEL is a tractor and trailer equipment leasing company and used equipment reseller. We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income since May 2011.

Our main measures of profitability are operating ratio and adjusted operating ratio. We define adjusted operating ratio as operating expenses, net of fuel surcharge revenue, excluding amortization of intangibles, and significant unusual items, divided by total revenue, less fuel surcharge revenue. See page 23 for the uses and limitations associated with adjusted operating ratio.

Revenue Equipment

At March 31, 2026, we operated 2,234 tractors and 7,265 trailers. Of such tractors, 2,140 were owned, 14 were financed under finance or operating leases, and 80 tractors were provided by independent contractors, who own and drive their own tractors. Of such trailers, 6,406 were owned and 859 were held under finance or operating leases. At March 31, 2026, our fleet had an average tractor age of 2.2 years and an average trailer age of 5.9 years.

Independent contractors provide a tractor and a driver and are responsible for all operating expenses in exchange for a fixed payment per mile, such that we do not have the capital outlay of purchasing or leasing the tractor. The payments to independent contractors and the financing of equipment under operating leases are recorded in revenue equipment rentals and purchased transportation. Expenses associated with company owned equipment, such as interest and depreciation, and expenses associated with employee drivers, including driver compensation, fuel, and other expenses, are not incurred with respect to independent contractors. Obtaining equipment from independent contractors and under operating leases effectively shifts financing expenses from interest to "above the line" operating expenses.

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RESULTS OF CONSOLIDATED OPERATIONS

COMPARISON OF three months ended March 31, 2026 TO three months ended March 31, 2025

The following tables set forth the percentage relationship of certain items to total revenue and freight revenue (total revenue less fuel surcharge revenue) for the periods indicated, where applicable (dollars in thousands):

Revenue

Three Months Ended
March 31,
2026 2025
Revenue:
Freight revenue $ 281,925 $ 243,219
Fuel surcharge revenue 25,236 26,136
Total revenue $ 307,161 $ 269,355

The increase in total revenue for the three months ended March 31, 2026 compared to 2025 primarily resulted from a $33.9 million, $9.0 million, and $3.5 million increase in freight revenue for Managed Freight, Dedicated, and Warehousing, respectively, partially offset by an $8.3 million decrease in freight revenue for Expedited, as well as a $0.9 million decrease in fuel surcharge revenue.

See results of reportable segment operations section for discussion of fluctuations.

For comparison purposes in the discussion below, we use total revenue and freight revenue (total revenue less fuel surcharge revenue) when discussing changes as a percentage of revenue.

For each expense item discussed below, we have provided a table setting forth the relevant expense first as a percentage of total revenue, and then as a percentage of freight revenue.

Salaries, wages, and related expenses

Three Months Ended
March 31,
2026 2025
Salaries, wages, and related expenses $ 109,268 $ 104,952
% of total revenue 35.6 % 39.0 %
% of freight revenue 38.8 % 43.2 %

Salaries, wages, and related expenses increased on a dollars basis for the three months ended March 31, 2026 compared to the same 2025 period primarily as a result of growth in our Dedicated and Warehousing reportable segments, pay increases since the prior period, and group health expenses. As a percentage of freight revenue for the three months ended March 31, 2026, salaries, wages, and related expenses decreased as the foregoing factors increasing these expenses were offset by a lower percentage of revenue from Expedited, where we incur driver pay for team-driven tractors, and a higher percentage of revenue from Managed Freight, where we don't incur driver pay.

We believe driver and non-driver, including shop technicians, pay and benefits will continue to increase as the result of wage inflation, higher healthcare costs, and, in certain periods, increased incentive compensation due to better performance. Driver pay may also fluctuate based on the number of miles driven. While driver pay remains stable at the present time, we have historically put driver pay increases in place as necessary to address driver market pressure and will continue to do so in the future as necessary. If freight market rates increase, we would expect to, as we have historically, pass a portion of those rate increases on to our professional drivers. Salaries, wages, and related expenses will fluctuate to some extent based on the percentage of revenue generated by independent contractors and our Managed Freight reportable segment, for which payments are reflected in the purchased transportation line item, as well as the mix of specialized freight (which requires higher driver pay) and commoditized freight.

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Fuel expense

Three Months Ended
March 31,
2026 2025
Fuel expense $ 28,297 $ 28,168
% of total revenue 9.2 % 10.5 %
% of freight revenue 10.0 % 11.6 %

Total fuel expense the three months ended March 31, 2026 remained relatively even on a dollars basis primarily due to an 8.0% decrease in total miles offset by higher fuel prices compared to the 2025 period. As a percentage of freight revenue for the three months ended March 31, 2026, total fuel expense decreased as the foregoing factors were offset by a lower percentage of revenue from Expedited, where we incur fuel expense, and a higher percentage of revenue from Managed Freight, where we don't incur fuel expense.

We receive a fuel surcharge on our loaded miles from most shippers; however, this does not cover the entire cost of fuel for several reasons, including the following: surcharges cover only loaded miles we operate; surcharges do not cover miles driven out-of-route by our drivers; and surcharges typically do not cover refrigeration unit fuel usage or fuel burned by tractors while idling. Moreover, most of our business relating to shipments obtained from freight brokers does not carry a fuel surcharge. Finally, fuel surcharges vary in the percentage of reimbursement offered, and not all surcharges fully compensate for fuel price increases even on loaded miles.

The rate of fuel price changes also can have an impact on results. Most fuel surcharges are based on the average fuel price as published by the Department of Energy ("DOE") for the week prior to the shipment, meaning we typically bill customers in the current week based on the previous week's applicable index. Therefore, in times of increasing fuel prices, we do not recover as much as we are currently paying for fuel. In periods of declining prices, the opposite is true. Fuel prices as measured by the DOE were $1.34 per gallon, or 37.3%, higher for the quarter ended March 31, 2026 compared with the same quarter in 2025.

To measure the effectiveness of our fuel surcharge program, we subtract fuel surcharge revenue (other than the fuel surcharge revenue we reimburse to independent contractors and other third parties which is included in purchased transportation) from our fuel expense. The result is referred to as net fuel expense. Our net fuel expense as a percentage of freight revenue is affected by the cost of diesel fuel net of fuel surcharge revenue, the percentage of miles driven by company tractors, our fuel economy, and our percentage of deadhead miles, for which we do not receive material fuel surcharge revenues.

Net fuel expense is shown below:

Three Months Ended
March 31,
2026 2025
Total fuel surcharge $ 25,236 $ 26,136
Less: Fuel surcharge revenue reimbursed to independent contractors and other third parties 1,507 1,659
Company fuel surcharge revenue $ 23,729 $ 24,477
Total fuel expense $ 28,297 $ 28,168
Less: Company fuel surcharge revenue 23,729 24,477
Net fuel expense $ 4,568 $ 3,691
% of freight revenue 1.6 % 1.5 %

For the periods presented, net fuel expense remained relatively even as a percentage of freight revenue.

We expect to continue managing our idle time and tractor speeds, investing in more fuel-efficient tractors and auxiliary power units to improve our miles per gallon, partnering with customers to adjust fuel surcharge programs that are inadequate to recover a fair portion of fuel costs, and testing the latest technologies that reduce fuel consumption. Going forward, our net fuel expense is expected to fluctuate as a percentage of revenue based on factors such as diesel fuel prices, percentage recovered from fuel surcharge programs, percentage of uncompensated miles, percentage of revenue generated by team-driven tractors (which tend to generate higher miles and lower revenue per mile, thus proportionately more fuel cost as a percentage of revenue), percentage of revenue generated from independent contractors, and the success of fuel efficiency initiatives.

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Operations and maintenance

Three Months Ended
March 31,
2026 2025
Operations and maintenance $ 17,914 $ 15,750
% of total revenue 5.8 % 5.8 %
% of freight revenue 6.4 % 6.5 %

The increase in operations and maintenance for the three months ended March 31, 2026 was primarily the result of the increased average age of tractors, high demands on equipment as we grow our fleet in niche service areas, and increased recruiting costs.

Going forward, we believe this category will fluctuate based on several factors, including the condition of the driver market and our ability to hire and retain drivers, the average age of our tractor fleet, accident severity and frequency, weather, the reliability of new and untested revenue equipment models, our mix of specialty and commoditized freight, and any disruption of the supply chain. Additionally, operations and maintenance costs may increase if we experience wage and parts inflation.

Revenue equipment rentals and purchased transportation

Three Months Ended
March 31,
2026 2025
Revenue equipment rentals and purchased transportation $ 89,218 $ 56,805
% of total revenue 29.0 % 21.1 %
% of freight revenue 31.6 % 23.4 %

The increases in revenue equipment rentals and purchased transportation for the three months ended March 31, 2026 were primarily the result of the 2025 Star Acquisition within the Managed Freight reportable segment. Additionally, total miles run by independent contractors decreased from 7.0% for the three months ended March 31, 2025, to 6.7% for the same 2026 period, respectively.

We expect purchased transportation to fluctuate as volumes in our Managed Freight reportable segment may be volatile. In addition, if fuel prices increase, it would result in a further increase in what we pay third-party providers and independent contractors. However, this expense category will fluctuate with the number and percentage of loads hauled by independent contractors, loads handled by Managed Freight, and tractors, trailers, and other assets financed with operating leases. In addition, factors such as the cost to obtain third party transportation services and the amount of fuel surcharge revenue passed through to the third-party providers and independent contractors will affect this expense category. If industry-wide trucking capacity tightens in relation to freight demand, we may need to increase the amounts we pay to third-party transportation providers and independent contractors, which could increase this expense category on an absolute basis and as a percentage of freight revenue absent an offsetting increase in revenue. If we were to recruit more independent contractors, we would expect this line item to increase as a percentage of revenue.

Operating taxes and licenses

Three Months Ended
March 31,
2026 2025
Operating taxes and licenses $ 2,989 $ 3,586
% of total revenue 1.0 % 1.3 %
% of freight revenue 1.1 % 1.5 %

For the periods presented, the change in operating taxes and licenses was insignificant both as a percentage of total revenue and freight revenue.

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Insurance and claims

Three Months Ended
March 31,
2026 2025
Insurance and claims $ 12,646 $ 15,283
% of total revenue 4.1 % 5.7 %
% of freight revenue 4.5 % 6.3 %

On a cents per mile basis, insurance and claims decreased to 21.4 cents per mile for the three months ended March 31, 2026 compared to 23.8 cents per mile for the 2025 period primarily due to reduced insurance and claims expense partially offset by decreased miles compared to the same 2025 period. Miles decreased primarily due to weather during the 2026 period.

Our insurance program includes multi-year policies with specific insurance limits that may be eroded over the course of the policy term. If that occurs, we will be operating with less liability insurance coverage at various levels of our insurance tower and may incur additional premiums. For the policy period that ran from April 1, 2018 to March 31, 2021, the aggregate limits available in the coverage layer $9.0 million in excess of $1.0 million were fully eroded based on claims expense. We replaced our $9.0 million in excess of $1.0 million layer with a new $7.0 million in excess of $3.0 million policy that we continue to maintain. Due to the erosion of the $9.0 million in excess of $1.0 million layer, any adverse developments in claims filed between April 1, 2018 and March 31, 2021, could result in additional expense accruals. As of March 31, 2026, there were no outstanding claims in this layer. We have maintained our retention and limits set in place during the prior renewal cycle. Due to these developments, we may experience additional expense accruals, increased insurance and claims expenses, and greater volatility in our insurance and claims expenses, which could have a materially adverse effect on our business, results of operations, financial condition, or liquidity.

We expect insurance and claims expense to continue to be volatile over the long-term. To the extent damages awarded against us for any claims exceed our coverage limits, involve significant aggregate use of our self-insured retention amounts, or cause increases in our insurance premiums, our insurance and claims expense would be volatile and increase. Any resulting increases in such expenses could have a materially adverse effect on our business, results of operations, financial condition, or liquidity. For additional details regarding our claims accruals, see Note 9, "Commitments and Contingencies" of the accompanying condensed consolidated financial statements.

Communications and utilities

Three Months Ended
March 31,
2026 2025
Communications and utilities $ 2,034 $ 1,468
% of total revenue 0.7 % 0.5 %
% of freight revenue 0.7 % 0.6 %

For the periods presented, the change in communications and utilities were insignificant both as a percentage of total revenue and freight revenue.

General supplies and expenses

Three Months Ended
March 31,
2026 2025
General supplies and expenses $ 14,199 $ 13,595
% of total revenue 4.6 % 5.0 %
% of freight revenue 5.0 % 5.6 %

For the three months ended March 31, 2026, general supplies and expenses increased on a dollars basis as a result of increased technology costs partially offset by the $0.3 million increase in the fair value of the contingent consideration recognized during the 2026 period compared to an increase of $0.7 million recognized during the 2025 period.

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Depreciation and amortization

Three Months Ended
March 31,
2026 2025
Depreciation and amortization $ 23,976 $ 21,795
% of total revenue 7.8 % 8.1 %
% of freight revenue 8.5 % 9.0 %

Depreciation and amortization consists primarily of depreciation of tractors, trailers, and other capital assets, as well as amortization of intangible assets.

Depreciation expense increased $1.6 million to $21.0 million for the three months ended March 31, 2026 compared to $19.4 million in the same 2025 period. Amortization of intangible assets was $3.0 million for the three months ended March 31, 2026 compared to $2.4 million for the same 2025 period. The increase for the three months ended March 31, 2026 is due to the amortization of the intangible asset related to the Star Acquisition.

We expect depreciation and amortization to increase going forward as the cost of new equipment increases. Additionally, changes in the used tractor market have caused us to adjust residual values and increase depreciation, and further adjustments may be necessary in the future. These changes may also cause us to hold assets longer than planned, or experience increased losses on sale. If we were to grow our Expedited or Dedicated reportable segments we may face additional increases in depreciation and amortization.

Loss on disposition of property and equipment, net

Three Months Ended
March 31,
2026 2025
Loss on disposition of property and equipment, net $ 338 $ 326
% of total revenue 0.1 % 0.1 %
% of freight revenue 0.1 % 0.1 %

For the period presented, the change in loss on disposition of property and equipment, net was insignificant both as a percentage of total revenue and freight revenue.

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Interest expense, net

Three Months Ended
March 31,
2026 2025
Interest expense, net $ 3,886 $ 2,857
% of total revenue 1.3 % 1.1 %
% of freight revenue 1.4 % 1.2 %

For the period presented, the change in interest expense, net was insignificant both as a percentage of total revenue and freight revenue.

This line item will fluctuate based on our decision with respect to purchasing revenue equipment with balance sheet debt versus operating leases, our revenue equipment replacement plan, and changing interest rates.

Income from equity method investment

Three Months Ended
March 31,
2026 2025
Income from equity method investment $ 3,687 $ 3,776

We have accounted for our investment in TEL using the equity method of accounting and thus our financial results include our proportionate share of TEL's net income or loss. The change in TEL's contribution to our results for the three months ended March 31, 2026 was insignificant for the periods presented. For the remainder of 2026, we expect TEL's earnings to remain relatively similar to those of the current period. However, due to TEL's business model, gains and losses on sale of equipment is a normal part of the business and can cause earnings to fluctuate from period to period and therefore our income from investment to similarly fluctuate.

Income tax expense

Three Months Ended
March 31,
2026 2025
Income tax expense $ 1,663 $ 1,983
% of total revenue 0.5 % 0.7 %
% of freight revenue 0.6 % 0.8 %

The decrease in income tax expense for the three months ended March 31, 2026 was the result of a $2.5 million decrease in pre-tax income compared to the same 2025 period. The changes in pre-tax income resulted from the aforementioned changes in operating income.

The effective tax rate is different from the expected combined tax rate due primarily to state tax expense and permanent differences. The rate impact of items such as executive compensation disallowance and the deductibility of per diem payments will fluctuate in future periods as income fluctuates.

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RESULTS OF SEGMENT OPERATIONS

We have four reportable segments, Expedited, Dedicated, Managed Freight, and Warehousing, each as described above.

COMPARISON OF three months ended March 31, 2026 TO three months ended March 31, 2025

The following table summarizes revenue and segment operating income data by reportable segment:

(in thousands) Three Months Ended
March 31,
2026 2025
Revenues:
Expedited $ 84,671 $ 94,693
Dedicated 103,423 93,609
Managed Freight 90,731 56,850
Warehousing 27,707 24,203
Other 629 -
Total revenues $ 307,161 $ 269,355
Segment Operating Income^(1)^:
Expedited $ 2,821 $ 5,590
Dedicated 5,587 2,149
Managed Freight 3,703 3,540
Warehousing 1,778 1,843
^(1)^ Segment operating income excludes indirect costs not directly attributable to any one reportable segment, amortization of intangible assets, and contingent consideration liability adjustments to match the information our CODM uses to evaluate the operating results of our reportable segments.
--- ---

The decrease in Expedited revenue for the three months ended March 31, 2026 relates to a 10.4% decrease in average total tractors compared to the 2025 quarter and a $1.7 million decrease in fuel surcharge revenue. Average freight revenue per tractor per week was comparable to the 2025 quarter as a result of a 3.4% decrease in average miles per unit largely offset by a 7.0 cents per mile (or 3.3%) increase in average rate per total mile as compared to the 2025 quarter. Expedited team-driven tractors averaged 709 and 796 tractors in the first quarter of 2026 and 2025, respectively.

The increase in Dedicated revenue for the three months ended March 31, 2026 relates to a 31, or 2.1%, average tractor increase and an increase in average freight revenue per tractor per week of 8.7% compared to the 2025 quarter. The increase in average freight revenue per tractor per week was the result of a 35.0 cents per mile (or 11.3%) increase in average rate per total mile partially offset by a 2.3% decrease in average miles per unit compared to the 2025 quarter.

For the three months ended March 31, 2026, Managed Freight total revenue increased primarily as a result of the fourth quarter 2025 Star Acquisition.

For the three months ended March 31, 2026, Warehousing total revenue increased $3.5 million compared to the 2025 period primarily due to onboarding a significant customer in the fourth quarter of 2025.

The decrease in Expedited segment operating income for the three months ended March 31, 2026 was primarily the result of the aforementioned decrease in revenue, partially offset by a decrease in Expedited segment operating expenses. The decrease in Expedited segment operating expenses for the three months ended March 31, 2026 was primarily the result of decreases in salaries, wages, and benefits for our professional drivers, operations and maintenance, and purchased transportation as compared to the same 2025 period as a result of fewer average miles per unit and a decrease in the average number of Expedited team-driven tractors. Going forward, our focus in Expedited will be on improving margins through rate increases, exiting less profitable business, and adding more profitable business.

The increase in Dedicated segment operating income for the three months ended March 31, 2026 was primarily the result of aforementioned increase in revenue, partially offset by an increase in Dedicated segment operating expenses. The increase in Dedicated segment operating expenses for the three months ended March 31, 2026, was primarily the result of increased salaries, wages, and benefits for our professional drivers, fuel expenses, and operations and maintenance costs since the 2025 period as a result of productivity from our agricultural protein related fleet which was negatively impacted by avian influenza during the prior year period. Going forward, we remain focused on our strategy of growing our dedicated fleet, specifically in areas that provide value-added services for customers. We believe that if we are successful in providing best in class service and controlling our costs, growth and improved profitability will result.

The increase in segment operating income for Managed Freight for the three months ended March 31, 2026 was primarily the result of the aforementioned increase in Managed Freight revenue partially offset by an increase in Managed Freight segment operating expenses. The increase in Managed Freight segment operating expenses for the three months ended March 31, 2026 was primarily the result of the increases in revenue driving increases in variable expenses, primarily purchased transportation. Going forward, we seek to grow Managed Freight with profitable revenue from new customers from organic initiatives and the Star Acquisition, working closely with our asset-based segments to capitalize on overflow opportunities when available, and optimizing costs to yield longer-term margin goals in the mid-single digits, which would generate an acceptable return on capital given the asset light nature of the business.

The decrease in segment operating income for Warehousing for the three months ended March 31, 2026 is primarily due to startup-related costs and inefficiencies for a significant customer onboarded during the fourth quarter of 2025 that more than offset the aforementioned increase in revenue. Going forward, as activities within this startup normalize, our goal is to have operating income margins in the high-single digit range.

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LIQUIDITY AND CAPITAL RESOURCES ****

Our business requires significant capital investments over the short-term and the long-term. Historically, we have financed our capital requirements with borrowings under our Credit Facility, cash flows from operations, long-term operating leases, finance leases, secured installment notes with finance companies, and proceeds from the sale of our used revenue equipment. Going forward, we expect revenue equipment acquisitions to primarily be through purchases and finance leases. Further, we expect to increase our capital allocation toward our Dedicated, Managed Freight, and Warehousing reportable segments to become the go-to partner for our customers’ most critical transportation and logistics needs. We had working capital (total current assets less total current liabilities) of $9.0 million and $22.8 million at March 31, 2026 and December 31, 2025, respectively. Our working capital on any particular day can vary significantly due to the timing of collections and cash disbursements. Based on our expected financial condition, net capital expenditures, results of operations, related net cash flows, installment notes, and other sources of financing, we believe our working capital and sources of liquidity will be adequate to meet our current and projected needs, and we do not expect to experience material liquidity constraints in the foreseeable future.

With an average tractor fleet age of 2.2 years at March 31, 2026, we believe we have flexibility to manage our fleet, and we plan to regularly evaluate our tractor replacement cycle, new tractor purchase requirements, and purchase options. If we were to grow our independent contractor fleet, our capital requirements would be reduced.

As of March 31, 2026 and December 31, 2025 we had $291.8 million and $338.7 million in debt and lease obligations, respectively, consisting of the following:

● $29.0 million and $30.0 million outstanding borrowings under the Credit Facility;
● $208.4 million and $251.7 million in revenue equipment installment notes, respectively;
● $16.1 million and $16.3 million in real estate notes, respectively;
● $3.0 million and $3.2 million of the principal portion of financing lease obligations, respectively; and
● $35.3 million and $37.5 million of the operating lease obligations, respectively.

The decrease in revenue equipment installment notes is primarily due to selling a large amount of unproductive used revenue equipment and buying very little new equipment.

As of March 31, 2026, we had $29.0 million borrowings outstanding, undrawn letters of credit outstanding of approximately $19.9 million, and available borrowing capacity of $57.5 million under the Credit Facility. Fluctuations in the outstanding balance and related availability under our Credit Facility are driven primarily by cash flows from operations and the nature and timing of property and equipment additions that are not funded through notes payable, as well as the nature and timing of collection of accounts receivable, payments of accrued expenses, and receipt of proceeds from disposals of property and equipment.

Our net capital expenditures for the three months ended March 31, 2026 totaled $24.2 million of proceeds, as compared to $23.9 million of expenditures for the three months ended March 31, 2025. During the three months ended March 31, 2026, we took delivery of approximately 53 new tractors and 15 new trailers, while disposing of approximately 422 used tractors and 29 used trailers. Net losses on disposal of equipment and real estate in the three months ended March 31, 2026 and 2025 were $0.3 million, respectively. Our current fleet plan for the remainder of 2026 ranges from $40.0 million to $50.0 million, which is a significant reduction compared to 2025. Our expected capital expenditures are subject to change based on growth opportunities in our Dedicated fleet and the potential impacts of tariffs during the year. Our equipment plan reflects our priorities of maintaining the average age of our fleet in a manner that allows us to optimize operational uptime and related operating costs and offer a fleet of equipment that our professional drivers are proud to operate. We expect the benefits of improved utilization, fuel economy and maintenance costs to produce acceptable returns despite increased prices of new equipment and potentially lower values of used equipment. Given the mix change between our high mileage Expedited fleet and lower mileage Dedicated fleets, going forward, we anticipate the average age of our equipment to range from 25 to 28 months.

We distributed a total of $1.8 million to stockholders in the first three months of 2026 through dividends.

We believe we have sufficient liquidity to satisfy our cash needs, and we will continue to evaluate the nature and extent of potential short-term and long-term impacts to our business.

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Cash Flows

Net cash flows provided by operating activities increased to $29.0 million for the three months ended March 31, 2026, compared to $24.8 million for the same 2025 period. Changes in operating assets and liabilities provided $2.1 million and $1.7 million during the three months ended March 31, 2026 and 2025, respectively, while non-cash expenses such as deferred income tax expense and depreciation and amortization increased during the 2026 period. These increases were partially offset by a decrease in net income to $4.4 million for the three months ended March 31, 2026, compared to $6.6 million for the same 2025 period.

Net cash flows provided by investing activities were $24.2 million for the three months ended March 31, 2026, compared to $24.1 million used in the same 2025 period. The increase in net cash flows provided by investing activities was primarily due to disposing of a large amount of unproductive used revenue equipment and buying very little new equipment, whereby we took delivery of approximately 53 new tractors and 15 new trailers, while disposing of approximately 422 used tractors and 29 used trailers during the 2026 period compared to delivery of 163 new tractors and 201 new trailers, while disposing of approximately 100 used tractors and 76 used trailers in the same 2025 period.

Net cash flows used by financing activities were $46.9 million for the three months ended March 31, 2026, compared to $25.1 million provided in the same 2025 period. The increase in net cash flows used in financing activities was primarily a function of net repayments relating to our notes payable and our Credit Facility of $44.5 million in the 2026 period compared to net repayments of $18.4 million in the 2025 period.

Net cash flows provided by operating activities also included payment of $8.0 million for the 2025 period related to the acquisition of LTST and net cash flows used by financing activities in the 2026 and 2025 periods also included payment of contingent consideration liabilities $0.3 million related to the Asset Acquisition and $4.5 million related to the acquisition of LTST.

On April 23, 2025, the Board approved a stock repurchase program authorizing the purchase of up to $50 million of the Company's Class A common stock from time-to-time based upon market conditions and other factors. The stock may be repurchased on the open market, in privately negotiated transactions, or other legally permissible means, including pursuant to Rule 10b5-1 trading plans. The Company did not place a limit on the duration of the repurchase program. The stock repurchase program does not obligate the Company to repurchase any specific number of shares, and the Company may suspend or terminate the program at any time without prior notice. There were no shares repurchased during three months ended March 31, 2026 or 2025. During the year ended December 31 2025, we repurchased approximately 1.6 million shares of our Class A common stock for $36.2 million (excluding excise tax).

Our cash flows may fluctuate depending on capital expenditures, future stock repurchases, dividends, strategic investments or divestitures, and the extent of future income tax obligations and refunds.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES ****

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires us to make decisions based upon estimates, assumptions, and factors we consider as relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in future economic conditions or other business circumstances may affect the outcomes of our estimates and assumptions. Accordingly, actual results could differ from those anticipated. There have been no material changes to our most critical accounting policies and estimates during the three months ended March 31, 2026, compared to those disclosed in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our Form 10-K for the year ended December 31, 2025.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risks have not changed materially from the market risks reported in our Form 10-K for the year ended December 31, 2025.

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ITEM 4.     CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and the Board.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operations of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2026.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even effective internal control over financial reporting can only provide reasonable assurance of achieving its control objectives.

We have confidence in our internal controls and procedures. Nevertheless, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure procedures and controls or our internal controls will prevent all errors or intentional fraud. An internal control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. As a result of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all our control issues and instances of fraud, if any, have been detected.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II **** OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
--- ---

Information about our legal proceedings is included in Note 9, "Commitments and Contingencies" of the accompanying condensed consolidated financial statements and is incorporated by reference herein.

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ITEM 1A. RISK FACTORS ****

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. Our Form 10-K for the year ended December 31, 2025, in the section entitled "Item 1A. Risk Factors," describe some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our business, financial condition, results of operations, cash flows, projected results, and future prospects.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the quarter ended March 31, 2026, we did not engage in unregistered sales of securities or any other transactions required to be reported under this Item 2 of Part II on Form 10-Q.

The payment of cash dividends is currently limited by our financing arrangements, including certain covenants under our Credit Facility. We distributed a total of $1.8 million to stockholders in the first three months of 2026 through dividends.

ITEM 3 . DEF AU LTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. O THER I NFORMATION

On February 20, 2026, M. Paul Bunn, our President, adopted a Rule 10b5-1 trading plan, that is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act, pursuant to which up to 458,227 shares of our Class A common stock may be sold (including 416,380 shares of our Class A common stock underlying exercisable options). The plan will terminate on November 15, 2028, subject to early termination for certain specified events set forth in the plan.

On February 20, 2026, Joey Ballard, our Executive Vice President and Chief People and Safety Officer, adopted a Rule 10b5-1 trading plan, that is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act, pursuant to which up to 12,000 shares of our Class A common stock may be sold. The plan will terminate on February 28, 2027, subject to early termination for certain specified events set forth in the plan.

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ITEM 6.       EXHIBITS

Exhibit<br> <br>Number Reference Description
3.1 (1) Fourth Amended and Restated Articles of Incorporation
3.2 (2) Sixth Amended and Restated Bylaws
4.1 (1) Fourth Amended and Restated Articles of Incorporation
4.2 (2) Sixth Amended and Restated Bylaws
31.1 # Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Principal Executive Officer
31.2 # Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by James S. Grant, the Company's Principal Financial Officer
32.1 ## Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by David R. Parker, the Company's Chief Executive Officer
32.2 ## Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by James S. Grant, the Company's Principal Financial Officer
101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)
References:
(1) Incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q (File No. 001-42192), filed August 7, 2025.
(2) Incorporated by reference to Exhibit 3.2 to the Company's Report on Form 8-K (File No. 000-24960), filed August 9, 2021.
# Filed herewith.
## Furnished herewith.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

COVENANT LOGISTICS GROUP, INC.
Date: May 7, 2026 By: /s/ James S. Grant
James S. Grant
Chief Financial Officer in his capacity as such and as a duly authorized officer on behalf of the issuer

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ex_910421.htm

Exhibit 31.1

I, David R. Parker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Covenant Logistics Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2026 /s/ David R. Parker
David R. Parker
Principal Executive Officer

ex_910422.htm

Exhibit 31.2

I, James S. Grant, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Covenant Logistics Group, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.     Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2026 /s/ James S. Grant
James S. Grant<br><br> <br>Principal Financial Officer

ex_910423.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Covenant Logistics Group, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David R. Parker, Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify, that to the best of my knowledge:

(1)     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 7, 2026 /s/ David R. Parker
David R. Parker
Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Covenant Logistics Group, Inc. and will be retained by Covenant Logistics Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

ex_910424.htm

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Covenant Logistics Group, Inc. (the "Company") on Form 10-Q for the period ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, James S. Grant, Chief Financial Officer and Principal Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify, that to the best of my knowledge:

(1)     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 7, 2026 /s/ **** James S. Grant
James S. Grant
Chief  Financial Officer

A signed original of this written statement required by Section 906 has been provided to Covenant Logistics Group, Inc. and will be retained by Covenant Logistics Group, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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