Daseke Reports Results for Second Quarter of 2020 (8/06/20)
Operational execution and self-help actions offset market weakness to drive Operating Income growth
Company delivers strongest quarterly Operating Ratio performance as a public company
ADDISON, Texas, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Daseke, Inc. (NASDAQ: DSKE) (“Daseke” or the “Company”), the largest flatbed, specialized transportation and logistics solutions company in North America, today reported financial results for the second quarter ended June 30, 2020.
Second Quarter Highlights:
- Revenue of $351.7 million
- Net Income of $0.5 million, or ($0.01) per share attributable to common stockholders
- Adjusted Net Income was $8.0 million, or $0.10 per share attributable to common stockholders
- Adjusted EBITDA was $43.7 million, or $45.9 million, after excluding the results from Aveda Transportation and Energy Services (“Aveda”) which is in the process of being divested
- Cash flows from operating activities of $53.2 million and Free Cash Flow of $73.4 million
- Substantial progress made during the quarter regarding the strategic divestiture of the Aveda assets held for sale, including collection of approximately $48 million in proceeds from the sale of property and equipment, and reduction in net working capital
- Delivered Operating Ratio (“OR”) of 96.5%, which improved by 250 basis points year-over-year and was the best performance in the Company’s history as a public company
- Cash and cash equivalents increased by $93.6 million year-over-year to $157.3 million and Company maintains $82.6 million available under the revolving credit facility, for total available liquidity of $239.9 million
“While the last few months have been challenging for our industry and our people, I am very proud of how our entire team has stepped up in the face of significant change to safely deliver both value for our customers and strong results for our stakeholders,” said Chris Easter, Chief Executive Officer of Daseke. “The earnings power of our organization is starting to show through despite the challenging environment brought on by the pandemic, driven by the significant transformational work we have done over the last year to improve our operations and financial returns. While softer market conditions impeded our top-line results, the impacts of our improved operational and cost improvement plans helped Daseke more than double its quarterly operating income performance year-over-year. As a result, we delivered an OR of 96.5%, the best quarterly performance in our history as a public company.”
Easter continued, “We took swift action at the onset of the pandemic to drive out cost and best optimize our assets for the changing environment. These actions, on top of the extensive operational improvements and integrations we’ve executed, have created further resilience in our business model. The year-over-year improvement in both operating income and net earnings is translating into stronger cash flow performance, as evidenced by the $73.4 million of Free Cash Flow generated during the second quarter. This growth in cash flows is further serving our strategic priorities, enabling Daseke to consistently improve our balance sheet and financial flexibility through leverage reduction and enhanced liquidity provisions. Moving forward, we remain committed to driving positive Free Cash Flow generation and strengthening our balance sheet. We will also continue to invest prudently in our business to optimize our assets, lower the average age of our fleet, and prepare to fully leverage our niche leadership position as we exit the pandemic.”
Second Quarter 2020 Financial Results
Total revenue in the second quarter of 2020 decreased 22% to $351.7 million, compared to $450.6 million in the year-ago quarter. Excluding the impact of the Aveda business to both 2020 and 2019, second quarter revenue decreased by 13.5%. This year-over-year decrease in revenue was driven primarily by the economic impact of COVID-19, which led to lower freight volumes and lower freight rates in both the flatbed and specialized segments.
Operating income in the second quarter of 2020 was $12.4 million, compared to operating income of $4.7 million in the year-ago quarter. The increase in operating income year-over-year was driven by decreases in salaries, wages and employee benefits, fuel expense, maintenance expense, purchased freight and depreciation and amortization.
Net income for the second quarter of 2020 was $0.5 million, or ($0.01) per share attributable to common stockholders, compared to net loss of ($6.4) million, or ($0.12) per share attributable to common stockholders, in the year-ago quarter. Adjusted Net Income was $8.0 million, which excludes, among other things, business transformation and restructuring costs of $5.7 million, compared to Adjusted Net Income of $3.4 million in the second quarter of 2019. Adjusted EBITDA in the second quarter of 2020 was $43.7 million compared to $46.0 million in the year-ago quarter. Excluding the impact of the Aveda business, second quarter Adjusted EBITDA increased 13.3% to $45.9 compared to $40.5 in the comparable period last year. The year-over-year decline in Adjusted EBITDA was driven primarily by the divestiture of the Aveda business and lower freight volumes due to COVID-19, partially offset by contributions from the Company’s operational improvement plans.
Specialized Solutions - Specialized Solutions revenue in the second quarter of 2020 decreased 21% to $221.5 million compared to $280.7 million in the year-ago quarter. Operating income in the second quarter of 2020 was $14.5 million compared to operating income of $11.1 million in the year-ago quarter. Operating ratio improved by 250 basis points to 93.5%, compared to 96.0% in the year-ago quarter. Net income in the second quarter was $8.7 million compared to net income of $6.1 million in the year ago quarter. Adjusted EBITDA in the second quarter of 2020 decreased 13% to $33.0 million compared to $37.8 million in the year-ago quarter, driven primarily by the divestiture of the Aveda business and lower freight volumes, which were partially offset by continued strength in wind energy markets. Rate per mile in the second quarter of 2020 of $3.16 was down 11% from the prior-year quarter, and revenue per tractor decreased 13% to $56,400. Excluding Aveda, Specialized rate per mile and revenue per tractor increased 5% and 1%, respectively, versus the prior year, despite the 6% decline in Specialized revenues excluding Aveda.
Flatbed Solutions - Flatbed Solutions revenue in the second quarter of 2020 decreased 22% to $137.2 million compared to $174.9 million in the year-ago quarter. Operating income in the second quarter of 2020 was $10.7 million compared to $6.1 million in the year-ago quarter. Operating ratio improved by 430 basis points to 92.2%, compared to 96.5% in the year-ago quarter. Net income in the second quarter of 2020 was $6.0 million, compared to net income of $2.3 million in the year ago quarter. Adjusted EBITDA in the second quarter of 2020 increased 3% to $20.4 million, compared to $19.9 million in the year-ago quarter, driven by operator integrations and business improvement plans executed over the trailing year, partially offset by lower freight volumes and weaker freight rates. Rate per mile in the second quarter of 2020 of $1.80 was down 7% from the prior-year quarter, and revenue per tractor decreased 5% to $40,100.
Balance Sheet and Free Cash Flow
At June 30, 2020, Daseke had cash and cash equivalents of $157.3 million and $82.6 million available under its revolving credit facility, for total available liquidity of $239.9 million. Total debt was $689.4 million and net debt was $532.1 million. This compares to cash and cash equivalents of $63.7 million and $85.2 million available on the revolving credit facility, total available liquidity of $148.9 million, total debt of $713.8 million, and net debt of $650.1 million at June 30, 2019. Our leverage ratio as defined by our credit agreement as of June 30, 2020 was 3.0x.
For the quarter, net cash provided by operating activities was $53.2 million, cash capital expenditures were $10.4 million, and cash proceeds from the sale of excess property and equipment were $30.6 million, resulting in Free Cash Flow of $73.4 million. Additionally, capital expenditures financed with debt, capital leases net of notes receivables was $20.1 million. This compares to net cash provided by operating activities of $18.5 million, cash capital expenditures of $8.2 million, and cash proceeds from the sale of excess property and equipment of $11.9 million, resulting in Free Cash Flow of $22.2 million in the second quarter of 2019. Capital expenditures financed with debt and capital leases net of notes receivable were $22.9 million in the second quarter of 2019.
Aveda Transportation and Energy Services Update
During the second quarter of 2020, management made material progress on its plan to strategically divest Aveda’s assets and operations. Total net proceeds through the end of the second quarter associated with the strategic divestiture totaled approximately $48 million from the sale of property and equipment, and a reduction in net working capital. Management believes that the divestiture process will be finalized before the completion of the third quarter of 2020.
Easter concluded, “On a consolidated basis, our freight volumes incrementally improved week-to-week through both May and June, albeit off a low base, after troughing in April. Daseke serves a diverse customer base and various end markets within the industrial economy, and we anticipate that each end market will continue to display recovery curves specific to each individual market. We anticipate that we will see consolidated freight volumes incrementally improve over the coming months, in line with the overall economy’s pace of recovery. As we look to the future, we believe that our organization and culture has transformed significantly, and that we have the tools needed to be a high-performing operator in our industry.”
Daseke will hold a conference call today at 11:00 a.m. Eastern time to discuss its second quarter 2020 results. Investors, analysts, and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call with accompanying presentation slides, available on the Company’s website at https://www.daseke.com
. Presentation materials will be posted at the time of the call at investor.daseke.com as well. Interested parties may also participate in the call by dialing (855) 242-9918 and entering the passcode 1427067. A replay of the conference call will be available a few hours after the event on the investor relations section of the Company’s website, under the events section.
About Daseke, Inc.
Daseke, Inc. is the largest flatbed and specialized transportation and logistics company in North America. Daseke offers comprehensive, best-in-class services to many of the world’s most respected industrial shippers through experienced people, a fleet of more than 5,000 tractors and 11,500 flatbed and specialized trailers. For more information, please visit www.daseke.com. https://www.globenewswire.com/news-release/2020/08/06/2074166/0/en/Daseke-Reports-Results-for-Second-Quarter-of-2020.html