Covenant Logistics Group, Inc. (NYSE: CVLG)

Covenant Logistics Group Inc is a provider of transportation and logistics services operating primarily in the United States truckload market. The company offers expedited dedicated brokerage and warehousing solutions to a diverse set of customers.

The company generates revenue by charging customers for transportation services based on mileage plus additional fees for detention loading unloading and specialized services. It also earns fees from brokerage arranging third party carriers and from technology based transportation management and warehouse management contracts. Fuel surcharges are applied to offset fuel price changes.

The company operates through the following segments: Expedited Dedicated Managed Freight and Warehousing.

• The Expedited segment transports freight over non routine routes using two person driver teams and aims to meet high service delivery standards such as 1000 miles in 22 hours or 15 minute delivery windows. It maintains approximately 800 tractors and earns revenue primarily from a set rate per mile plus accessorial charges.

• The Dedicated segment provides truckload capacity under contract to specific customers for shipments over set routes at specified times using solo drivers and operates about 1500 tractors. It also offers shuttle and switching services for containers and trailers in and around freight yards and warehouses.

• The Managed Freight segment includes brokerage services that arrange transportation through third parties and transportation management services that provide comprehensive logistics planning and execution on a contractual basis. It relies on technology to give customers visibility into inbound and outbound freight movements.

• The Warehousing segment offers day to day warehouse management services including the coordination of inbound and outbound freight movement within customer facilities or leased space. It also provides shuttle and switching services for containers and trailers related to warehousing activities.

Covenant Logistics Group Inc competes in a highly fragmented truckload industry where many carriers vie for business primarily on service and price. The company differentiates itself through a modern low age fleet advanced technology for routing and tracking and a focus on customer experience and driver retention. These capabilities help it maintain stable margins despite industry cyclicality.

The customer base includes parcel freight forwarders less than truckload carriers third party logistics providers manufacturers retailers food and beverage shippers as well as providers of poultry feed and live haul transportation and users of highly regulated time sensitive loads for the U S government. No individual customer name is disclosed but the top ten customers represent roughly 44 percent of total revenue.