Daseke Reports Results for First Quarter 2022
May 03 2022 - 07:50AM
Daseke, Inc. (NASDAQ: DSKE) (“Daseke” or the “Company”), the premier North American transportation solutions specialist dedicated to servicing challenging industrial end-markets, today reported financial results for the first quarter ended March 31, 2022.
First Quarter 2022 Highlights:
Revenue of $421.0 million, up 26.1% year-over-year
Net Income of $13.0 million, or $0.18 per diluted share attributable to common stockholders, compared to a net loss of $7.3 million, or $(0.13), in the first quarter of 2021
Adjusted Net Income of $17.1 million, or $0.24 per diluted share attributable to common stockholders, compared to $4.1 million, or $0.04, in the first quarter of 2021
Adjusted EBITDA of $49.6 million, up 38.5% year-over-year
Cash flows from operating activities of $29.2 million and Free Cash Flow of $31.9 million
Operating ratio of 95.7% and Adjusted Operating Ratio of 93.0%, compared to 97.6% and 95.5% in the first quarter of 2021
Management Commentary
"We are pleased to report another strong quarter of operational and financial performance, as Daseke delivers another quarter of year-over-year earnings improvement," said Jonathan Shepko, Chief Executive Officer of Daseke. "During the quarter, we continued to leverage our 'Asset-Right' business model, deploying our Company assets against higher margin freight, while supplementing our capacity with asset light offerings to increase our overall freight capture. Strong end-market demand in each of our flatbed and specialized reporting segments continued to outweigh available capacity, with both of these operating segments realizing higher rates, which contributed to the meaningful year-over-year revenue growth we experienced this quarter. And, once again, Daseke’s realized rates outperformed those of our reference benchmarks, as we were able to achieve a premium within the marketplace because of our capabilities, differentiated scale and service. Even with the backdrop of what we believe will continue to be a healthy rate environment for the foreseeable future, particularly as we enter the seasonally strong quarters of the year for our Company, we remain diligently focused on evaluating opportunities to further improve the earnings and free cash flow profiles of our business, in support of creating long-term value for our shareholders."
First Quarter 2022 Financial Results
Total revenue in the first quarter of 2022 increased 26.1% to $421.0 million, compared to $333.9 million in the first quarter of 2021. This year-over-year increase in revenue was primarily attributed to our operational execution in healthy rate environments in both the Flatbed Solutions and Specialized Solutions segments and continued growth within our brokerage service offering.
Operating income in the first quarter of 2022 was $18.2 million, compared to $8.1 million in the year-ago quarter. The change in operating income was primarily driven by the strong rate environment, leveraging the “Asset Right” business model to capture elevated rates. Rate increases were partially offset by inflationary cost headwinds in driver pay, operations and maintenance.
Net income for the first quarter of 2022 was $13.0 million, or $0.18 per diluted share attributable to common stockholders, compared to a net loss of $7.3 million, or $(0.13) per diluted share attributable to common stockholders, in the first quarter of 2021. The year-over-year change was primarily due to the increase in operating income discussed above, partially offset by an increase in income tax expense due to higher pre-tax income. Adjusted EBITDA in the first quarter of 2022 was $49.6 million, compared to $35.8 million in first quarter of 2021. Adjusted Net Income was $17.1 million in the first quarter of 2022, compared to $4.1 million in the first quarter of 2021.
Segment Results
Specialized Solutions – During the first quarter of 2022, the Specialized Solutions segment benefitted from sustained demand and improving freight rates primarily in the construction, high security cargo and commercial glass end markets. Freight rates increased 22% year-over-year, even as wind energy volumes remain muted. Revenue growth was driven by our diverse end market portfolio approach and deploying assets into the most advantageous markets, which more than offset the slight decrease in volumes.
Flatbed Solutions – The Flatbed Solutions segment benefitted from continued strength and year-over-year improvement in the freight rate environment, as rates increased 21% compared to last year’s first quarter and more than offset the impact of prior fleet downsizing and the mix shift towards asset-light, reflecting capacity constraints due to asset availability. The supply chain for new equipment remains challenged, contributing to a decrease in volumes year-over-year. The segment benefitted from the flexibility of the “asset-right” business model which positioned the Company to leverage our owner operator and brokerage network to further capitalize on the strong freight rate environment.
Capital Summary and Outlook
At March 31, 2022, Daseke had cash and cash equivalents of $153.5 million as well as $123.1 million available under its revolving credit facility, for total available liquidity of $276.6 million, before considering delayed Q1 2022 cash capital expenditures of approximately $18.8 million. Total debt was $586.8 million and net debt was $433.3 million. This compares to cash and cash equivalents of $147.5 million and $107.8 million available under the revolving credit facility, total available liquidity of $255.3 million, total debt of $594.5 million, and net debt of $447.0 million on December 31, 2021.
For the first quarter of 2022, net cash provided by operating activities was $29.2 million, cash capital expenditures were $8.8 million, and cash proceeds from the sale of property and equipment were $11.5 million, resulting in Free Cash Flow of $31.9 million. Additionally, capital expenditures financed with debt and finance leases were $7.3 million. This compares to net cash provided by operating activities of $29.5 million, cash capital expenditures of $5.2 million, and cash proceeds from the sale of property and equipment of $10.1 million, resulting in Free Cash Flow of $34.4 million in the first quarter of 2021. Capital expenditures financed with debt and finance leases were $14.4 million in the first quarter of 2021.
"We are pleased with the continued operational execution and the financial results delivered by our team," said Jason Bates, Chief Financial Officer of Daseke. "As a reminder, Daseke is unique in that we don't have the same spot rate or dry van retail exposure of many of our public peers. We are a contractually-based, industrial-oriented business, focusing on niche, defensible end markets - which are all continuing to exhibit strength as well as an ongoing supply / demand imbalance. These factors have enabled us to capture strong rates, drive double-digit revenue growth and expand profitability. While we are facing inflationary cost pressures in various areas, including driver recruitment and retention, operations and maintenance and insurance expenses, we have been able to maintain our margins through a combination of rate strength and contributions from our ongoing transformation initiatives. As we look further ahead, we are re-affirming our full year 2022 financial outlook provided last quarter. Although we are mindful of the various macroeconomic events and factors facing our industry, we remain confident that through our transformation initiatives, our disproportionately high contract versus spot market exposure, combined with our unique end-market alignment, which carries higher barriers to entry, we are uniquely positioned to generate improved revenue and profitability performance in 2022."
Bates continued, "We have observed ongoing delays in receiving new equipment as the supply chain disruptions persisted throughout the first quarter of 2022. Given these challenges in sourcing new equipment from our OEM's we are reducing our full year net capital expenditures outlook, now anticipating a range of $145 to $155 million."
