• ITVI.USA
    13,683.230
    2,931.500
    27.3%
  • OTLT.USA
    2.949
    -0.056
    -1.9%
  • OTRI.USA
    19.680
    -0.650
    -3.2%
  • OTVI.USA
    13,646.340
    2,945.470
    27.5%
  • TSTOPVRPM.ATLPHL
    2.960
    0.380
    14.7%
  • TSTOPVRPM.CHIATL
    3.710
    0.160
    4.5%
  • TSTOPVRPM.DALLAX
    1.290
    -0.010
    -0.8%
  • TSTOPVRPM.LAXDAL
    3.720
    0.010
    0.3%
  • TSTOPVRPM.PHLCHI
    2.240
    0.100
    4.7%
  • TSTOPVRPM.LAXSEA
    4.160
    0.060
    1.5%
  • WAIT.USA
    132.000
    -5.000
    -3.6%
  • ITVI.USA
    13,683.230
    2,931.500
    27.3%
  • OTLT.USA
    2.949
    -0.056
    -1.9%
  • OTRI.USA
    19.680
    -0.650
    -3.2%
  • OTVI.USA
    13,646.340
    2,945.470
    27.5%
  • TSTOPVRPM.ATLPHL
    2.960
    0.380
    14.7%
  • TSTOPVRPM.CHIATL
    3.710
    0.160
    4.5%
  • TSTOPVRPM.DALLAX
    1.290
    -0.010
    -0.8%
  • TSTOPVRPM.LAXDAL
    3.720
    0.010
    0.3%
  • TSTOPVRPM.PHLCHI
    2.240
    0.100
    4.7%
  • TSTOPVRPM.LAXSEA
    4.160
    0.060
    1.5%
  • WAIT.USA
    132.000
    -5.000
    -3.6%
Company earningsNewsTop StoriesTruckingTruckloadTruckload Carriers

Flatbed operator Daseke posts Q3 beat, eyes M&A

Company working on a couple of acquisitions

Flatbed truckload provider Daseke said on a call with analysts Friday it was working on a couple of potential acquisitions. The nation’s largest flatbed carrier reported third-quarter adjusted earnings per share of 43 cents, 11 cents ahead of the consensus estimate and 19 cents better than the year-ago quarter.

Getting back to M&A

Management said it’s working on a couple of potential deals. It is targeting fleets with fewer than 100 trucks (roughly 50,000 fleets, according to its estimates) in the $150 billion specialized and flatbed truck market.

“I’d be shocked if over the next 12 months, we don’t get at least one or two acquisitions done,” said Daseke (NASDAQ: DSKE) CEO Jonathan Shepko.

He said the strategy is different this time and that the company isn’t just focused on getting bigger.

Daseke acquired nearly 20 flatbed carriers in its first decade in existence, allowing the fleets to maintain autonomy on different transportation management systems and operating platforms. Part of its restructuring has been focused on rolling previously acquired fleets into its better-performing operating companies in efforts to improve efficiency and economies of scale.

“We’re thinking about full-cycle economics, we’re thinking about accretion with respect to earnings, with respect to free cash flow,” Shepko said. “We’re making sure we’re not inheriting any deferred capex, and if we are it needs to be reflected in the purchase price.”

Daseke is also using M&A to select the industrial verticals, points of origin and end markets where it can best compete.

“We want to be strategic in terms of making sure that we’re going after defensible, niche end-market segments where we can, for a lack of a better term, be kind of a price maker, not a price taker,” commented CFO Jason Bates.

Outperformance in Q3, but management suspends guidance

Up against a tough comp from the 2020 third quarter, higher TL rates allowed Daseke to offset driver and equipment utilization headwinds. The company generated consolidated revenue of $425 million, 13% higher year-over-year in the period.

CHART: (SONAR: TSTOPFRPM.USA). To learn more about FreightWaves SONAR, click here.

The company’s specialized delivery segment, which moves large, heavy, project-type freight, recorded a year-over-year revenue increase of 4% to $244 million. The improvement was due to a similar increase in freight revenue per mile, which was $3.41.

Daseke had the benefit of project-related wind energy contracts last year that created a tough comp. However, those projects were replaced by better demand for construction-related freight and glass as well as high-security cargo. The segment’s adjusted operating ratio was off 110 basis points at 86.9% in the quarter.

Daseke’s general flatbed freight unit recorded a 27% year-over-year increase in revenue, to $184 million. A 32% increase in freight revenue per mile at $2.57, a new high, drove the revenue jump.

“Sustained recovery across various industrial end markets to pre-pandemic levels, particularly in steel and construction, contributed to the strong rate environment,” the press release stated.

Revenue growth in the division was seen even as average tractors in service during the period were down 10% (total miles down 11%).

As part of Daseke’s turnaround, the company downsized its fleet in efforts to better utilize capital. Even with the reduced fleet size, the segment saw load counts increase as backhaul loads were plentiful in a capacity-constrained market. Any excess capacity the carrier had in the quarter was placed through its brokerage unit to meet increased demand.

Chart: (SONAR: FOTRI.USA). One out of every four flatbed loads tendered under contract are being rejected.

The company’s cash balance was $144 million and total liquidity was $265 million, up $5 million from the end of 2020. Net debt was down $47 million to $456 million.

Free cash flow after financed capital expenditures is $74 million year-to-date. Of note, capex has been delayed due to headwinds obtaining equipment as well as production delays at the original equipment manufacturers. Gains on the disposal of equipment have been elevated, which also provided a tailwind.

Daseke’s net capex budget is $65 million for 2021, down from the initial full-year guide of $105 million. An additional $20 million in proceeds from the sale of equipment and $20 million in capex delays are the changes.

Table: Daseke’s key performance indicators

Management hit the pause button on guidance.

Third-quarter results were slightly better than expected, but there is some uncertainty whether or not the momentum carries through the fourth quarter at the same magnitude.

“We’re cautiously optimistic that if things continue to be tight that we could see a similar positive trend in the fourth quarter, but we do want to make sure that people still take into consideration and account for the seasonal nature of our business, with the fourth quarter typically looking more like the first quarter,” Bates said.  

Daseke plans to resume guidance in the future.

Click for more FreightWaves articles by Todd Maiden.

Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.

Leave a Reply

Your email address will not be published. Required fields are marked *

We are glad you’re enjoying the content

Sign up for a free FreightWaves account today for unlimited access to all of our latest content

By signing in for the first time, I give consent for FreightWaves to send me event updates and news. I can unsubscribe from these emails at any time. For more information please see our Privacy Policy.