What Covenant Logistics Group, Inc. told the SEC could break it.

Covenant's results are exposed to diesel fuel prices: fuel expense was $112.3 million (9.6% of revenue) in 2025, it expects to purchase approximately 37.5 million gallons of diesel annually, and a one-dollar increase in diesel per gallon would decrease net income by approximately $1.8 million given an assumed fuel-surcharge recovery rate of only 93.7% of cost; with no remaining fuel hedge contracts, rising diesel prices (or surcharge-recovery lags) directly pressure margins.

“A one dollar increase in the price of diesel per gallon would decrease our net income by approximately $1.8 million. This sensitivity analysis considers that we expect to purchase approximately 37.5 million gallons of diesel annually, with an assumed fuel surcharge recovery rate of 93.7% of the cost”

Covenant is subject to extensive transportation regulation that raises equipment and operating costs: the EPA's 2022 NOx Rule imposes nitrogen-oxide standards for heavy-duty vehicles from model year 2027 that are more than 80% stronger than current standards (part of the multi-phase Clean Trucks Plan), it must keep the majority of its fleet compliant with California emissions standards, and the DOT/FMCSA imposes safety and hours-of-service rules (with all tractors ELD-equipped); new or more restrictive emissions, hours-of-service or safety regulations could materially increase its capital and compliance costs.

“In 2022, the EPA adopted a final rule regarding emissions standards of nitrogen oxides for heavy-duty motor vehicles beginning with model year 2027 being more than 80% stronger than current emission standards, with the intent to reduce heavy duty emissions by almost 50% from 2022 levels by 2045 (the “2022 NOx Rule”).”

Covenant Logistics has meaningful customer concentration: in 2025, 2024 and 2023 one (undisclosed) customer each year accounted for more than 10% of consolidated revenue (serviced across its Expedited, Managed Freight and Warehousing segments), and its top ten customers generated approximately 44% of total revenue in 2025; the loss of, or a significant reduction in volume from, this large customer or several top customers could materially reduce its revenue and earnings.

“There was one customer in 2025 , 2024 , and 2023 that accounted for more than 10% of our consolidated revenue.”

Covenant depends on third parties to deliver service: in its Managed Freight segment it relies on third-party providers for brokerage and other logistics services (service instability from whom could raise operating costs and reduce its ability to offer those services), and it depends on tractor and trailer manufacturers that have experienced periodic shortages of certain component parts and supplies, amid sharply higher new-tractor prices and volatile used-equipment values that increase its cost of operations and can impair equipment values.

“We depend on third-party providers, particularly in our Managed Freight reportable segment where we offer brokerage and other logistics services, and service instability from these providers could increase our operating costs and reduce our ability to offer such services, which could adversely affect o”