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Daseke Reports Record Results for Third Quarter of

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Daseke Reports Record Results for Third Quarter of 2020 (10/30/20)

Strong execution drives record quarterly Operating Income, Net Income of $15.7 million, and record Adjusted Net Income

ADDISON, Texas, (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 third quarter ended September 30, 2020.

Third Quarter Highlights:

- Revenue of $375.8 million

- Net Income of $15.7 million, or $0.22 per share attributable to common stockholders

- Record Adjusted Net Income of $21.9 million

- Record Adjusted EBITDA of $57.6 million, up 33% year-over-year

- Cash flows from operating activities of $39.5 million and Free Cash Flow of $52.0 million

- Record Operating Ratio and Adjusted Operating Ratio of 92.5% and 90.9%, respectively

- Cash and cash equivalents increased by $110.2 million year-over-year to $189.8 million

Management Commentary

“We are pleased to report another very strong quarter of financial and operational results, as Daseke effectively leveraged its niche leadership position and improved operations to deliver record quarterly performance in our Operating Income, Operating Ratio, Adjusted Net income, and Adjusted EBITDA,” said Chris Easter, Chief Executive Officer of Daseke. “While we continue to face demand headwinds that have negatively impacted the Company’s freight volumes and revenues, the significant work we have undertaken to improve our operational performance and our financial returns helped to more than overcome those top-line challenges. Notably, we delivered significant improvement in our quarterly net income and Adjusted EBITDA results in the face of a 17% decline in revenues as compared to the prior year period, demonstrating the much-improved earnings power of our business and operations, and our team’s ability to deliver meaningful results.”

Easter continued, “The ongoing commitment to our key focus areas, including cost discipline and best-in-class operations, has helped solidify our foundation and established improved consistency to our results. In turn, this more resilient foundation has better positioned Daseke to execute upon unique market opportunities, specifically in the Wind Energy and High Security Cargo verticals, which helped lead the growth in our Specialized segment results this quarter. This dynamic helped drive record profitability and positions the Company to eventually capture a broader-based reflation in demand across industrial freight markets.”

Easter concluded, “While the last few months have been challenging for the industrial economy, I am very proud of how our team has stepped up to deliver outstanding performance amid continued softness in the demand environment. Our commitment to Daseke’s strategic priorities has put us in a position to succeed and capitalize on market leadership opportunities, which in turn are now translating into record operating income, positive net earnings, and much improved cash flows. As the results from our transformational efforts are becoming increasingly evident to our bottom line, we have been able to organically strengthen our balance sheet and financial flexibility through leverage reduction and expanding liquidity. While there are still pockets of weakness in certain end markets, we are encouraged by the recent stabilization and sequential improvements across much of our business. We are prepared to leverage our niche market leadership position, which will help us continue to capture strong returns for our shareholders, irrespective of the external environment.”

Third Quarter 2020 Financial Results

Total revenue in the third quarter of 2020 decreased 17% to $375.8 million, compared to $450.4 million in the year-ago quarter. Excluding the impact of the Aveda business to both 2020 and 2019, third quarter revenue decreased by 6%. This year-over-year decrease in revenue was driven primarily by the economic impact of the COVID-19 pandemic, which led to lower freight volumes and lower freight rates in both the flatbed and specialized segments, which were partially offset by increased project business.

Operating income in the third quarter of 2020 was $28.1 million, compared to operating loss of $316.6 million in the year-ago quarter, which included non-cash impairment charges and other restructuring costs. Adjusted operating income in the quarter was $34.3 million, which increased 152% from $13.6 million in the third quarter of 2019. This year over year increase was driven by operational integrations and business improvement plans executed over the trailing year, partially offset by weaker freight volumes. Operating income results also benefited from decreases in salaries, wages and employee benefits, fuel expense, maintenance expense, purchased freight, depreciation and amortization, and non-cash impairment charges.

Net income for the third quarter of 2020 was $15.7 million, or $0.22 per share attributable to common stockholders, compared to net loss of ($273.3) million, or ($4.25) per share attributable to common stockholders, in the year-ago quarter. Adjusted Net Income in the third quarter of 2020 was $21.9 million compared to Adjusted Net Income of $4.7 million in the third quarter of 2019. Adjusted EBITDA in the third quarter of 2020 was $57.6 million compared to $43.2 million in the year-ago quarter. Excluding the impact of the Aveda business, third quarter Adjusted EBITDA increased 37% to $56.2 million compared to $40.9 million in the comparable period last year. The year-over-year improvement in Adjusted EBITDA was driven primarily by growth in specific Specialized segment end markets, and contributions from the Company’s operational improvement plans, partially offset by lower freight volumes.

Segment Results

Specialized Solutions - Specialized Solutions revenue in the third quarter of 2020 was $235.2 million, a decrease of 18% compared to $288.0 million in the year-ago quarter. Operating income in the third quarter of 2020 was $31.1 million, compared to operating loss of $187.6 million in the year-ago quarter. Operating Ratio improved by 7,830 basis points to 86.8%, compared to 165.1% in the year-ago quarter. Adjusted Operating Ratio of 85.2% improved 870 basis points compared to Adjusted Operating Ratio of 93.9% in the year-ago quarter. Net income in the third quarter was $20.4 million compared to net loss of $162.0 million in the year ago quarter. Adjusted EBITDA in the third quarter of 2020 increased 39% to $47.4 million compared to $34.2 million in the year-ago quarter, driven primarily by strong Wind Energy and High Security Cargo revenues and margins, which were partially offset by lower freight volumes. Rate per mile in the third quarter of 2020 of $3.28 was down 7% from the prior-year quarter, and revenue per tractor increased 4.7% to $67,500. Excluding Aveda, Specialized rate per mile and revenue per tractor increased 9% and 12%, respectively.

Flatbed Solutions - Flatbed Solutions revenue in the third quarter of 2020 decreased 15% to $144.5 million, compared to $169.8 million in the year-ago quarter. Operating income in the third quarter of 2020 was $9.3 million, compared to an operating loss of $107.9 million in the year-ago quarter. Operating ratio improved by 6,990 basis points to 93.6%, compared to 163.5% in the year-ago quarter. Adjusted Operating Ratio of 92.8% improved 220 basis points compared to 95.0% in the year-ago period. Net income in the third quarter of 2020 was $4.6 million, compared to net loss of $96.3 million in the year ago quarter. Adjusted EBITDA in the third quarter of 2020 decreased 9% to $19.0 million, compared to $20.8 million in the year-ago quarter, driven by lower freight volumes due to the impact of the COVID-19 pandemic on various industrial end markets and fleet downsizing efforts, partially offset by operational integrations and business improvement plans, as well as slightly improved freight rates and brokerage revenues. Rate per mile in the third quarter of 2020 of $1.94 was up 2% from the prior-year quarter, and revenue per tractor increased 1% to $43,000.

Balance Sheet and Free Cash Flow

At September 30, 2020, Daseke had cash and cash equivalents of $189.8 million and $82.4 million available under its revolving credit facility, for total available liquidity of $272.2 million. Total debt was $688.7 million and net debt was $498.9 million. This compares to cash and cash equivalents of $79.6 million and $84.6 million available on the revolving credit facility, total available liquidity of $164.2 million, total debt of $713.2 million, and net debt of $633.6 million on September 30, 2019. Our leverage ratio as defined by our credit agreement as of September 30, 2020 was 2.6x.

Year to date, net cash provided by operating activities was $122.4 million, cash capital expenditures were $18.0 million, and cash proceeds from the sale of excess property and equipment were $52.0 million, resulting in Free Cash Flow of $156.4 million. During the same period, capital expenditures financed with debt and capital leases net of notes receivables was $45.1 million. This compares to net cash provided by operating activities of $89.4 million, cash capital expenditures of $17.4 million, and cash proceeds from the sale of excess property and equipment of $23.8 million, resulting in Free Cash Flow of $95.8 million for the nine months ending September 30, 2019. During the same period, capital expenditures financed with debt and finance leases net of property and equipment sold for notes receivable were $65.2 million.

For the quarter, net cash provided by operating activities was $39.5 million, cash capital expenditures were $3.1 million, and cash proceeds from the sale of excess property and equipment were $15.6 million, resulting in Free Cash Flow of $52.0 million. Additionally, capital expenditures financed with debt and finance leases net of property and equipment sold for notes receivable were $15.2 million.

Outlook

“We are very proud of our team’s ability to execute in the face of a pandemic. These impressive quarterly numbers also highlight our capability to thrive in complex, niche markets,” said Jason Bates, Executive VP and Chief Financial Officer of Daseke. “However, we want to acknowledge that this quarter’s results benefitted from a number of High Security Cargo related projects and an unprecedented backlog of Wind projects executed at high-margins triggered by supply-demand imbalances stemming from COVID-19. It is also important to reiterate the traditional annual trends in the flatbed and specialized markets, with Q2 and Q3 being seasonally strong, and Q4 and Q1 being seasonally slower. As we look forward to 2021, uncertainty lingers with regards to the macro-economic environment and COVID recovery. Having said that, we anticipate consolidated freight volumes to continue to incrementally improve into next year, but given the record contributions from the Wind Energy and High Security Cargo projects, a broader based recovery across our diverse slate of industrial end markets will need to accelerate for us to repeat the 2020 trajectory.”

Conference Call

Daseke will hold a conference call today at 11:00 a.m. Eastern time to discuss its third 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 4193403. 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/2020/10/30/2117736/0/en/Daseke-Reports-Record-Results-for-Third-Quarter-of-2020.html

"Someone said it takes 30 years to be an instant success" - Gabriel Barbier-Mueller, CEO of Harwood International
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