Daseke's aggressive acquisition strategy to consolidate mostly flatbed trucking companies while allowing them to continue to operate as individual units--with their pre-acquisition name intact--has created some inefficiencies.
That was the conclusion of Daseke management, and they moved to fix that Monday with the creation of a new entity, Daseke Fleet Services. The separate operating units will stay that way, continuing as individually named and managed companies. The new group will be managed by three new hires brought in from other companies: Brett Thompson, vice president of purchasing; Erek Starnes, vice president of equipment operations; and Gloria Pliler, who will be director of purchasing. Ken Snyder, who already is Daseke's director of procurement, will also be part of the management team. They will all report to president Scott Wheeler.
Not all purchasing and other financial relationships will go through this new division, Wheeler said in an interview with Freightwaves. Some vendor relationships are local, and they will stay that way. But on broader financial activities, Daseke employees "already have their hands full in their operating divisions, and as we've grown in size and we continue to grow, we need centralized coordination."
Among the types of activities that might fall under the new group, Wheeler rattled off numerous tasks. Some are obvious, like fuel. But others he cited might be considered less obvious, like having a broad national group to keep its fingers on the pulse of resale markets for many products Daseke now disposes of in secondary markets, as well as purchasing new equipment. "We believe that as a high growth company, this will take a great amount of risk out of the acquisition process," Wheeler said, with the side benefit of keeping existing management intact by building a new management team.
The goal is not just in sharing financial activities; sharing knowledge is a goal too. At present, Wheeler said “I could have the best tire guy on the planet in South Carolina but what we need to do is truly leverage that knowledge in Missouri,” he said.
A reiteration of its “buy” rating by Stifel did not refer directly to the new unit, but indicated that such a strategy was needed. “In its earnings call, we most liked management's willingness to listen to critiques of the business model and strategy in light of its poor stock price performance year-to-date,” the Stifel report released Monday morning said. “It sounded as if positive change may be underway at the company with a renewed focus on operational execution - only time will tell.” Since the end of last year, Daseke’s stock has slid from just over $14 to as low as $8.16. It closed Monday at $9.33.
In the prepared statement announcing the change, the company said it was going to focus on "maximization of national purchasing power, enhanced maintenance programs, strategic disposition of assets, and high-level warranty management."
The idea of national company-wide coordination of these sorts of activities is not unique in the industry. But it needed to be implemented at Daseke because of its unique structure, with acquisitions all continuing to operate as individual entities. "Most large trucking companies of Daseke's scale will have this function," Wheeler said. On issues from pricing to maintenance, trying to reach out to Daseke as a single entity was difficult, he said. "It was hard to find somebody to talk to, and now we're going to make it easy," Wheeler said.
The disaggregated nature of dealing with Daseke came up on the company's recent quarterly earnings call. An analyst asked whether a national customer could get "one price and one bill form Daseke, even if Daseke uses a handful of different operating companies to service the business, or is it still that would have to be somehow individually negotiated?"
Wheeler responded by say that even for national customers, on a "very small amount of business...that's a very local type of operation." But he said that the company's freight management system "can deliver those attributes that you discussed." Still, no Daseke executives on the call gave any hint of the creation of a new division to coordinate many of these activities.