Daseke Inc (DSKE)

[Enterprising Investor]

Daseke Reports Record Results for Second Quarter of 2021 and Raises 2021 Outlook (8/03/21)

Strong operational execution and improving demand combine to drive record quarterly Operating Ratio and Adjusted EBITDA

ADDISON, Texas, Aug. 03, 2021 (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 quarter ended June 30, 2021.

Second Quarter 2021 Highlights:

- Revenue of $404.0 million

- Net income of $35.3 million, or $0.49 per diluted share attributable to common stockholders, compared to $1.6 million in last year’s second quarter

- Record Adjusted Net Income ex-Aveda of $30.2 million, or $0.42 per diluted share attributable to common stockholders

- Record Adjusted EBITDA of $69.2 million
-- Results up 20% compared to prior quarterly record of $57.6 million in Q3 2020

- Cash flows from operating activities of $28.6 million and Free Cash Flow of $32.3 million

- Delivered record Operating Ratio (“OR”) of 88.8% and record Adjusted Operating Ratio of 88.0%

- Raising Full Year 2021 Outlook
-- Revenue range of $1.5 billion to $1.6 billion, up 6.9% from previous range
-- Adjusted EBITDA range of $200 million to $210 million, up 20.6% from previous range

Management Commentary

"We are pleased to report record results for our second quarter and announce an increase in our revenue and Adjusted EBITDA outlook for 2021. Over the last two years we have worked diligently to integrate and transform our operations. Because of these efforts, we were able to recruit drivers, seat trucks and optimize our network efficiency, while constructively working with our customers to align on the right balance between rates and needed capacity. It is the partnership we have with our customers, the work ethic of our driver community and the relentless focus on execution by our OpCo management teams that underpinned this resounding improvement in our year-over-year, quarterly Adjusted EBITDA of more than 50%. “Our ability to deliver several consecutive quarters of solid financial results, our record outperformance of this second quarter 2021 and the increase in our 2021 financial outlook each demonstrates the momentum and success of our strategy," said Jonathan Shepko, Chief Executive Officer of Daseke.

Second Quarter 2021 Financial Results

Total revenue in the second quarter of 2021 increased 14.9% to $404.0 million, compared to $351.7 million in the year-ago quarter. Excluding the impact of the Aveda Transportation and Energy Services (“Aveda”) business to 2020, second quarter revenue increased by 18.2%. This year-over-year increase in revenue was driven primarily by record freight rates in the Flatbed segment.

Operating income in the second quarter of 2021 was $45.3 million, compared to operating income of $12.4 million in the year-ago quarter. The change in operating income was primarily driven by a rate environment in the Flatbed segment that has returned to pre-pandemic levels, lower salaries stemming from prior fleet rationalization efforts, better than anticipated performance on insurance and claims, additional gains on sales of assets and the divestiture of the Aveda business, which had a greater operating loss in the year-ago quarter. Excluding Aveda, operating income in the second quarter of 2021 was $45.5 million compared to operating income of $18.9 million in the prior-year quarter.

Net income for the second quarter of 2021 was $35.3 million, or $0.49 per diluted share attributable to common stockholders, compared to net income of $1.6 million, or $0.00 per share attributable to common stockholders, in the year-ago quarter. The year-over-year change was due to the increase in operating income discussed above, combined with a $9.4 million increase in other income, primarily related to reduced interest expense but also aided by additional non-cash gains resulting from the change in fair value of warrant liability, partially offset by an increase in income tax expense due to the higher pre-tax income. Adjusted Net Income excluding Aveda was $30.2 million in the second quarter of 2021, compared to $9.8 million in the year-ago quarter. Adjusted EBITDA in the second quarter of 2021 was $69.2 million, compared to $43.7 million in the year-ago quarter. Excluding the impact of the Aveda business, second quarter Adjusted EBITDA increased 51.2% to $69.4 million compared to $45.9 million in the comparable period last year.

Segment Results

Specialized Solutions – During the second quarter, the Specialized Solutions segment (all measures presented Ex-Aveda to reflect the exit of that business in 2020) benefitted from continued strong demand and freight rates, primarily serving construction, high security cargo and glass, which largely offset reduced activity in the wind energy market versus last year’s second quarter. Overall, this business mix shift led to a 2.3% increase in average freight rate per mile, while revenue per truck increased by 12.3% versus last year’s second quarter due primarily to an improvement in miles per truck per day. Operations improved versus last year driven by the Company’s end market portfolio approach, offsetting the mix shift away from wind energy project revenues.

Flatbed Solutions – The Flatbed Solutions segment experienced a rate environment that has returned to pre-pandemic levels, as rates increased 38.9% compared to last year’s second quarter and offset the impact of shifting to asset light and fleet downsizing. Freight volumes declined due to fleet-rightsizing efforts over the course of prior year and into 2021. Despite the lower fleet size, load volume increased as excess capacity was directed to the brokerage business. Recovery in various industrial end markets to pre-pandemic levels, particularly in construction and steel and other metals, contributed to the strong rate environment.

Capital Summary and Updated 2021 Outlook

At June 30, 2021, Daseke had cash and cash equivalents of $111.7 million and $119.3 million available under its revolving credit facility, for total available liquidity of $231.0 million. Total debt was $594.4 million and net debt was $482.7 million. This compares to cash and cash equivalents of $176.2 million and $83.2 million available on the revolving credit facility, total available liquidity of $259.4 million, total debt of $679.7 million, and net debt of $503.5 million on December 31, 2020.

For the quarter, net cash provided by operating activities was $28.6 million, cash capital expenditures were $12.8 million, and cash proceeds from the sale of excess property and equipment were $16.5 million, resulting in Free Cash Flow of $32.3 million. Additionally, capital expenditures financed with debt and finance leases were $14.8 million. This compares to net cash provided by operating activities of $53.2 million, cash capital expenditures of $10.4 million, and cash proceeds from the sale of excess property and equipment of $30.6 million, resulting in Free Cash Flow of $73.4 million in the second quarter of 2020. Capital expenditures financed with debt and finance leases were $30.0 million in the second quarter of 2020.

“We are pleased with the significant operational and financial progress the entire Daseke team delivered in the second quarter, as we continue to execute on profitability improvement, most notably our Adjusted Operating Ratio of 88.0%,” said Jason Bates, Executive Vice President and Chief Financial Officer of Daseke. “While the industrial end-market recovery in various verticals to near pre-pandemic levels certainly played a part in this quarter’s numbers, this impressive performance is a testament to the breadth and capabilities of our OpCo teams, who efficiently executed in this unprecedented environment. Although we do anticipate continued industry-wide cost pressures in the form of driver recruitment and retention, equipment acquisition, as well as insurance and other general expenses into the foreseeable future, with our team’s strong year-to-date execution and the expectation that we will continue to see momentum from our business improvement initiatives, we are increasing our full year 2021 Outlook at this time. We currently anticipate a range of revenue of $1.5 billion to $1.6 billion, with a range for Adjusted EBITDA of $200 million to $210 million. Our CAPEX estimates remain unchanged at this time. Utilizing the midpoints, these outlook increases represent a 6.9% and 20.6% increase in revenue and Adjusted EBITDA, respectively, from our previous guidance. With this significant increase to Adjusted EBITDA and no corresponding increase to CAPEX, we also anticipate a commensurate improvement to the Free Cash Flow generation in 2021 beyond previous expectations.”

Conference Call

Daseke will hold a conference call today at 11:00 a.m. Eastern time to discuss its second quarter 2021 results and 2021 outlook. 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 [phone] and entering the passcode 1980152. 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 4,500 tractors and 11,000 flatbed and specialized trailers. For more information, please visit www.daseke.com.

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https://www.globenewswire.com/news-release/2021/08/03/2273604/0/en/Daseke-Reports-Record-Results-for-Second-Quarter-of-2021-and-Raises-2021-Outlook.html