ADDISON, Texas, Nov. 09, 2022 (GLOBE NEWSWIRE) -- 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 third quarter ended September 30, 2022.

Third Quarter 2022 Highlights:

• Revenue of $462.8 million, an increase of 9.0% over third quarter 2021 revenue of $424.6 million
• Net Income of $12.6 million, or $0.17 per diluted share attributable to common stockholders, compared to net income of $20.9 million, or $0.30 per diluted share, in the third quarter of 2021
• Adjusted Net Income of $24.1 million, or $0.34 per diluted share attributable to common stockholders, compared to $30.1 million, or $0.43 per diluted share, in the third quarter of 2021
• Adjusted EBITDA of $64.8 million, compared to $68.4 million in the third quarter of 2021
• Adjusted EBITDA was impacted by $4 million in the third quarter of 2022 and $10 million year-to-date 2022 by an unusually large, single-event insurance claim
• Cash flows from operating activities of $54.8 million and Free Cash Flow of $54.2 million
• Operating ratio of 93.0% and Adjusted Operating Ratio of 90.8%, compared to 90.5% and 88.7%, respectively, in the third quarter of 2021
• Board approved $40 million share repurchase program, and the Company began repurchasing shares under this program on October 10, 2022

Management Commentary

“With year-to-date performance meeting consensus estimates and exceeding those estimates with the add-back of $10 million related to an unusually large, single-event insurance claim, our business continues to deliver on its commitment to performance for our shareholders. While this third quarter’s rate environment experienced some modest inflection in some of our commodity end markets, the broader industrial-facing freight markets remain solid and largely intact relative to historical rate environments. As such, we remain confident in our ability to deliver full-year performance within our range of guidance,” said Jonathan Shepko, Chief Executive Officer of Daseke. Shepko continued, “With no other publicly traded peer quite like Daseke, our differentiated model, focused on diversified, industrial end markets, as well as our continuing transformational initiatives, uniquely positions Daseke for what should be another solid year in 2023, despite macro ambiguity. We will continue to drive shareholder value through disciplined, strategic, tuck-in M&A, our transformational initiatives, further operational optimization and capital allocation strategies each intended to enhance Daseke's value proposition.”

Third Quarter 2022 Financial Results

Total revenue in the third quarter of 2022 increased 9.0% to $462.8 million, compared to $424.6 million in the third quarter of 2021. This year-over-year increase in revenue was primarily attributable to an increase in fuel surcharge revenue and growth in our brokerage and logistics service offerings. Consolidated rates improved slightly compared to the year-ago quarter due to the diversity of end markets, driven by strength within the specialized segment.

Operating income in the third quarter of 2022 was $32.2 million, compared to $40.4 million in the year-ago quarter. The change in operating income was primarily driven by an increase in fuel expense, which was more than offset by the increase in fuel surcharge revenue, driver wages and operations and maintenance, as inflation continues to pressure costs. The impact of a single-event insurance claim also contributed $4 million to the year-over-year decrease.

Net income for the third quarter of 2022 was $12.6 million, or $0.17 per diluted share attributable to common stockholders, compared to a net income of $20.9 million, or $0.30 per diluted share attributable to common stockholders, in the third quarter of 2021. The year-over-year change was primarily due to the decrease in operating income discussed above. Adjusted EBITDA in the third quarter of 2022 was $64.8 million, compared to $68.4 million in third quarter of 2021. Adjusted Net Income was $24.1 million in the third quarter of 2022, compared to $30.1 million in the third quarter of 2021.

Segment Results

Specialized Solutions – During the third quarter of 2022, the Specialized Solutions segment continued to benefit from strength within high security cargo, aerospace and agriculture, which drove a 10.8% year-over-year improvement in revenue and more than offset lower wind energy volumes. This strength in the freight environment supported margins, despite inflationary cost pressures.

Flatbed Solutions – During the third quarter of 2022, the Flatbed Solutions segment benefitted from improvement in construction and manufacturing, which more than offset a decrease in steel. Despite softening in the overall freight market, the flatbed segment continued to capture rates at a premium to the market, contributing to a revenue increase of 5.8% compared to the same quarter last year.

Capital Summary

At September 30, 2022, Daseke had cash and cash equivalents of $188.3 million, as well as $123.4 million available under its revolving credit facility, for total available liquidity of $311.7 million. Total debt was $638.1 million and net debt was $449.8 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 third quarter of 2022, net cash provided by operating activities was $54.8 million, cash capital expenditures were $8.2 million, and cash proceeds from the sale of property and equipment were $7.6 million, resulting in Free Cash Flow of $54.2 million. Additionally, capital expenditures financed with debt and finance leases were $52.4 million in the third quarter of 2022. This compares to net cash provided by operating activities of $57.6 million, cash capital expenditures of $16.2 million, and cash proceeds from the sale of property and equipment of $21.3 million, resulting in Free Cash Flow of $62.7 million in the third quarter of 2021. Capital expenditures financed with debt and finance leases were $25.8 million in the third quarter of 2021. Net cash provided by operating activities and Free Cash Flow were each negatively impacted in the third quarter of 2022 by $4.5 million in incremental cash taxes, when compared to the third quarter of 2021. In addition, Free Cash Flow was negatively impacted in the third quarter of 2022 by $5.7 million in incremental net cash capital expenditures, when compared to the third quarter of 2021.

2022 Outlook

Based on strong year-to-date performance and sustained fundamentals, we are reaffirming Revenue, Adjusted EBITDA and Net Capital Expenditures guidance for the full year.

Conference Call

Daseke will hold a conference call today at 11:00 a.m. Eastern time to discuss its third quarter 2022 results and outlook for the remainder of 2022. 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. Interested parties may also participate in the call using the following registration link: https://register.vevent.com/register/BI512b251f6d7b42b6ae5017a5f56eb301. Once registered, participants will receive a dial-in number as well as a PIN to enter the event. A participant may re-register for the conference call in the event of a lost dial-in number or PIN. 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. Presentation materials will also be posted at the time of the call at investor.daseke.com.

About Daseke, Inc.

Daseke, Inc. is the premier North American transportation solutions specialist dedicated to servicing challenging industrial end-markets. Daseke offers comprehensive, best-in-class services to a diversified portfolio of many of North America’s most respected industrial shippers. For more information, please visit www.daseke.com.

Use of Non-GAAP Measures

This news release includes non-GAAP financial measures for the Company and its reporting segments, including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Operating Income, Adjusted Net Income (Loss), Adjusted Earnings Per Share, Adjusted Operating Ratio, Free Cash Flow and Net Debt.

Please note that the non-GAAP measures described below are not a substitute for, or more meaningful than, net income (loss), cash flows from operating activities, operating income, revenue or any other measure prescribed by GAAP, and there are limitations to using non-GAAP measures. Certain items excluded from these non-GAAP measures are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital, tax structure and the historic costs of depreciable assets. Also, other companies in Daseke’s industry may define these non‐GAAP measures differently than Daseke does, and as a result, it may be difficult to use these non‐GAAP measures to compare the performance of those companies to Daseke’s performance. Because of these limitations, these non-GAAP measures should not be considered a measure of the income generated by Daseke’s business or discretionary cash available to it to invest in the growth of its business. Daseke’s management compensates for these limitations by relying primarily on Daseke’s GAAP results and using these non-GAAP measures supplementally.

You can find the reconciliation of these non‐GAAP measures to the nearest comparable GAAP measures in the tables below.

Adjusted EBITDA

Daseke defines Adjusted EBITDA as net income (loss) plus (i) depreciation and amortization, (ii) interest, (iii) income taxes, and (iv) other material items that management believes do not reflect our core operating performance. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by total revenue.

We have not reconciled non‐GAAP forward-looking measures to their corresponding GAAP measures because certain items that impact these measures are unavailable or cannot be reasonably predicted without unreasonable efforts. In particular, we have not reconciled our expectations as to forward-looking Adjusted EBITDA to net income due to the difficulty in making an accurate projection as to stock-based compensation expense. Stock-based compensation expense is affected by future hiring, turnover, and retention needs, as well as the future fair market value of our common stock and performance stock units. In addition, many of our performance stock units are classified as liabilities which vest upon the achievement of specific performance-based conditions related to the Company’s financial performance over a three-year period, modified based on the Company’s Relative Total Shareholder Return, all of which is difficult to predict and require quarterly adjustments to their fair value performed by outside specialists. The actual amount of the excluded stock-based compensation expense will have a significant impact on our GAAP net income; accordingly, a reconciliation of forward-looking Adjusted EBITDA to net income is not available without unreasonable efforts.

The Company’s board of directors and executive management team use Adjusted EBITDA as a key measure of its performance and for business planning. Adjusted EBITDA assists them in comparing the Company’s operating performance over various reporting periods on a consistent basis because it removes from the Company’s operating results the impact of items that, in their opinion, do not reflect the Company’s core operating performance. Adjusted EBITDA also allows the Company to more effectively evaluate its operating performance by comparing the results of operations against its peers without regard to its or its peers’ financing method or capital structure. The Company’s method of computing Adjusted EBITDA is substantially consistent with that used in its debt covenants and also is routinely reviewed by its executive management for that purpose. The Company believes its presentation of Adjusted EBITDA is useful because it provides investors and industry analysts the same information that the Company uses internally for purposes of assessing its core operating performance.

Adjusted Net Income (Loss) and Adjusted Earnings Per Share

Daseke defines Adjusted Net Income (Loss) as net income (loss) adjusted for material items that management believes do not reflect our core operating performance. Daseke defines Adjusted Net Income (Loss) Per Share as adjusted net income (loss) available to common stockholders divided by the weighted average number of shares of common stock outstanding during the period under the two-class method.

The Company’s board of directors and executive management team use these measures as key measures of its performance and for business planning. These measures assist them in comparing its operating performance over various reporting periods on a consistent basis because it removes from operating results the impact of items that, in its opinion, do not reflect the Company’s core operating performance. The Company believes its presentation of these measures are useful because they provide investors and industry analysts the same information that it uses internally for purposes of assessing its core operating performance.

Adjusted Operating Income (Loss) and Adjusted Operating Ratio

The Company uses Adjusted Operating Income (Loss) and Adjusted Operating Ratio as a supplement to its GAAP results in evaluating certain aspects of its business, as described below. The Company defines Adjusted Operating Income (Loss) as (a) total revenue less (b) Adjusted Operating Expenses. The Company defines Adjusted Operating Expenses as total operating expenses less material items that management believes do not reflect our core operating performance. The Company defines Adjusted Operating Ratio as Adjusted Operating Expenses, as a percentage of total revenue.

The Company’s board of directors and executive management team view these non-GAAP measures and their key drivers of revenue quality, growth, expense control and operating efficiency as very important measures of the Company’s performance. These measures assist them in comparing the Company’s performance over various reporting periods on a consistent basis because they remove from operating results the impact of items that, in its opinion, do not reflect the Company’s core operating performance. The Company believes its presentation of these non-GAAP measures are useful because they provide investors and industry analysts the same information that it uses internally for purposes of assessing its core operating profitability.

Free Cash Flow

Daseke defines Free Cash Flow as net cash provided by operating activities less purchases of property and equipment, plus proceeds from sale of property and equipment, as such amounts are shown on the face of the Statements of Cash Flows.

The Company’s board of directors and executive management team use Free Cash Flow to assess the Company’s liquidity and ability to repay maturing debt, fund operations and make additional investments. The Company believes Free Cash Flow provides useful information to investors because it is an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments and repurchase stock.

Net Debt

Daseke defines net debt as total debt less cash and cash equivalents. The Company’s board of directors and executive management team use net debt to help assess the Company’s liquidity and evaluate and plan for future liquidity needs. The Company believes that the presentation of net debt is useful to investors because it provides additional information regarding the Company’s overall liquidity, financial flexibility, capital structure and leverage.
  
Management’s View of Core Operating Performance

In the non-GAAP measures discussed above, management refers to certain material items that management believes do not reflect the Company’s core operating performance, which management believes represents its performance in the ordinary, ongoing and customary course of its operations. Management views the Company’s core operating performance as its operating results excluding the impact of items including, but not limited to, stock-based compensation, impairments, amortization of intangible assets, restructuring and business transformation costs, severance, and all income and expenses related to the Aveda Transportation and Energy Services (”Aveda”) business. Management believes excluding these items enables investors to evaluate more clearly and consistently the Company’s core operating performance in the same manner that management evaluates its core operating performance.

Although we ceased generating revenues from our Aveda business and completed the wind-down of our Aveda operations in 2020, we continued to recognize certain income and expenses from our Aveda business in 2021 and 2022. Such income and expenses relate primarily to, but is not limited to, workers compensation claims and insurance proceeds. Previously, to provide investors with information about the Company excluding the impact of the Aveda business, the Company presented certain GAAP and non-GAAP measures appended with ex-Aveda, which represented the measure excluding the impact of the Aveda business. However, beginning in the quarter ended March 31, 2022, the Company no longer provides ex-Aveda measures because the impact of the Aveda business is no longer material or meaningful to a discussion of the Company’s operating results or financial condition (e.g., the comparable period in the prior year is now after the completion of the wind-down of the Aveda business). Instead, the income and expenses from our Aveda business will be considered as items that management believes do not reflect our core operating performance. Such income and expenses can be identified in the non-GAAP reconciliations under the adjustment called “Aveda expenses, net” and “Aveda operating expenses, net”.

Forward‐Looking Statements

This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan,” “should,” “could,” “would,” “forecast,” “seek,” “target,” “predict,” and “potential,” the negative of these terms, or other comparable terminology. Projected financial information, including our guidance outlook, are forward-looking statements. Forward-looking statements may also include statements about the Company’s goals, business strategy and plans; the Company’s financial strategy, liquidity and capital required for its business strategy and plans; the Company’s competition and government regulations; general economic conditions; and the Company’s future operating results.

These forward-looking statements are based on information available as of the date of this release, and current expectations, forecasts and assumptions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that the Company anticipates. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Readers are cautioned not to place undue reliance on the forward-looking statements.

Forward-looking statements are subject to risks and uncertainties (many of which are beyond our control) that could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, general economic and business risks, such as downturns in customers’ business cycles, disruptions in capital and credit markets and inflationary cost pressures, the Company’s ability to adequately address downward pricing and other competitive pressures, the Company’s insurance or claims expense, driver shortages and increases in driver compensation or owner-operator contracted rates, fluctuations in the price or availability of diesel fuel, increased prices for, or decreases in the availability of, new revenue equipment and decreases in the value of used revenue equipment, impact to the Company’s business and operations resulting from the COVID-19 pandemic, seasonality and the impact of weather and other catastrophic events, the Company’s ability to secure the services of third-party capacity providers on competitive terms, loss of key personnel, a failure of the Company’s information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data or other security breach, or cybersecurity incidents, the Company’s ability to execute and realize all of the expected benefits of its integration, business improvement and comprehensive restructuring plans, the Company’s ability to realize all of the intended benefits from acquisitions or investments, the Company’s ability to complete divestitures successfully, the Company’s ability to generate sufficient cash to service all of the Company’s indebtedness and the Company’s ability to finance its capital requirements, restrictions in its existing and future debt agreements, increases in interest rates, changes in existing laws or regulations, including environmental and worker health safety laws and regulations and those relating to tax rates or taxes in general, the impact of governmental regulations and other governmental actions related to the Company and its operations, and litigation and governmental proceedings. Additional risks or uncertainties that are not currently known to us, that we currently deem to be immaterial, or that could apply to any company could also materially adversely affect our business, financial condition, or future results. For additional information regarding known material factors that could cause our actual results to differ from those expressed in forward-looking statements, please see Daseke’s filings with the Securities and Exchange Commission, available at www.sec.gov, including Daseke’s most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, particularly the section titled “Risk Factors”.

Investor Relations:

Alpha IR Group
Joseph Caminiti or Chris Hodges
312-445-2870
DSKE@alpha-ir.com