Daseke, Inc. Announces Third Quarter 2017 Earnings

November 9, 2017 6:30 AM EST

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ADDISON, Texas, Nov. 09, 2017 (GLOBE NEWSWIRE) -- Daseke, Inc. (NASDAQ: DSKE) (NASDAQ: DSKEW), the largest owner and a leading consolidator of flat bed and specialized transportation solutions in North America, today announced earnings results for the 2017 third quarter.

Highlights

  • Improved third quarter 2017 revenue by 32.8 percent year over year, and 17.2 percent over second quarter 2017 revenue.
  • Completed an underwritten public offering of 5.7 million shares of common stock, generating net proceeds of approximately $63.6 million.
  • Acquired two operating companies during the quarter to advance the company’s consolidation strategy and expand its end markets with the ability to ship high security cargo, and the Department of Defense has become a top ten customer.
  • Acquisition pipeline remains robust for continued execution of consolidation growth strategy.
  • Daseke expects to achieve its 2017 pro forma Adjusted EBITDA target of $140 million.1

Revenue for the quarter was $231.3 million compared with $174.1 million for the same period in 2016. Revenue for the third quarter of 2017 increased 32.8 percent year over year and improved 17.2 percent sequentially over 2017 second quarter revenue of $197.3 million.

Net income was $50,000 for the third quarter of 2017, compared with net loss of $1.3 million for the prior year and a net loss of $4.1 million for the second quarter of 2017. Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), a non-GAAP financial measure, was $27.0 million for the third quarter of 2017, compared with $25.0 million for the year-ago period. Adjusted EBITDA increased 8 percent year over year, and improved 11 percent sequentially over the Adjusted EBITDA totals from $24.3 million in the 2017 second quarter.

Acquisitions

During the quarter, Daseke completed the acquisition of two companies.  The Steelman Companies, which was discussed in the second quarter 2017 earnings announcement, and R&R Trucking, a leading specialized transporter of defense and commercial high security cargo.

The addition of R&R Trucking expands the company’s product offerings to include transporting the nation's most sensitive cargo for the Department of Defense and the Department of Energy.  This marks Daseke’s fourth acquisition since May 1, 2017.  Based on the 2016 financial results, the combined 2016 estimated revenue and Adjusted EBITDA of the four companies acquired in 2017 totals $218 million and $26 million, respectively.23

Approximately 61 percent of the combined revenue of the companies acquired this quarter is estimated to be asset-light or logistics related.

Management Comments

“Revenues and adjusted EBITDA for the 2017 third quarter increased year over year, and the company posted positive net income for the quarter,” said Scott Wheeler, executive vice president and CFO.  “We believe these results present an accurate snapshot of our performance trend and growth.”

“Our third quarter adjusted EBITDA of $27.0 million included a $5.7 million negative impact related primarily to costs associated with Hurricanes Irma and Harvey and, to a lesser extent, lower tractor utilization from an increase in unseated trucks,” Wheeler said.

Don Daseke, chairman, president and CEO, added, “While the hurricane impact was a one-time event, we are proactively addressing the competitive driver recruiting market by offering enhanced driver incentives, including a pay increase and stock incentives.  In our industry, professional truck drivers truly are the heart and soul of everything we do.  We intend to be the employer of choice for drivers, just as we are the carrier of choice for our blue-chip customers.

“This quarter R&R Trucking joined the Daseke family. The addition of R&R increases our footprint with additional terminals and adds another transportation capability within our company,” he said.  “R&R is one of the very few companies in the United States approved to provide transportation services for the Department of Defense and the Department of Energy.  They are also approved by the Department of Defense to own and operate high security terminals. 

“We also added The Steelman Companies during the quarter.  The Steelman Companies boast 26 years of operating history in the flatbed and heavy haul freight segments and provide an excellent complement to our existing family of Daseke companies, enhancing our geographic service areas, providing large-scale industrial warehousing operations and giving Daseke a stronger presence in the powersports and heavy haul markets.

“Our opportunity pipeline continues to offer significant prospects to enable our push to consolidate this highly fragmented $133 billion industry,” Daseke said. “Even though we have had significant challenges, including lower utilization from unseated trucks, a choppy specialized market and the short-term but significant impact of the two hurricanes, we are reiterating our 2017 pro forma Adjusted EBITDA target of $140 million, after giving effect to acquisitions made during 2017.”

Financing Developments

During the quarter, the company announced the completion of an underwritten offering of shares of Daseke common stock at $12.00 per share.  The sale was comprised of 5,675,967 shares on behalf of the company and 409,833 shares on behalf of certain stockholders. Total net proceeds (after underwriting discounts and commissions but before estimated offering expenses) was approximately $63.6 million to the Company and approximately $4.6 million to the selling stockholders. The proceeds from the offering are expected to be used for general corporate purposes, which may include, among other things, working capital, capital expenditures, debt repayment or refinancing or the financing of possible future acquisitions. The Company did not receive any of the proceeds from the sale of the shares of common stock by the selling stockholders.

Daseke also finalized an amendment to its Term Loan Agreement during the quarter.  The successful completion of this temporary amendment allows the company to capitalize on growth initiatives by providing the company with the financial flexibility to act quickly and decisively as acquisition opportunities become actionable. 

Segment Results

Third quarter 2017 revenue for the Flatbed Segment improved 8.4 percent to $85.6 million compared with $79.0 million for the 2016 period.  Operating income for the third quarter of 2017 was $4.8 million, a 25.3 percent increase from operating income of $3.8 million for the same period last year. Total miles for Flatbed Solutions during the 2017 third quarter were 36.6 million, compared with 37.8 million miles reported for the same period last year.

The Company’s Specialized Segment posted revenue of $147.6 million for the 2017 third quarter, and $96.5 million for the year-ago period, an increase of 53 percent. Third quarter operating income for the segment was $7.2 million compared with $5.7 million for the 2016 third quarter, an increase of 24.7 percent.  Total miles for the Specialized Solutions segment were 38.9 million for the third quarter of 2017, an increase of 60.5 percent over the third quarter 2016 total of 24.3 million miles.

Conference Call

Daseke will host a conference call and webcast today at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) to review third quarter fiscal 2017 earnings results. The call will be hosted by Don Daseke, chairman, president and CEO, and Scott Wheeler, director, executive vice president and CFO.

Interested individuals may join the teleconference by dialing (855) 242-9918 and providing the conference ID 88305217. International callers may join the call by dialing (414) 238-9803. The live audio webcast can be accessed through the Investors section of Daseke's website: investor.daseke.com. The information to be discussed during the teleconference (including the investor presentation) may be found on the Investors section of the company’s website in advance of the call.

A telephonic replay of the conference call will be available through 1:00 p.m. Central time (2:00 p.m. Eastern) on November 23, 2017. To access the replay, please dial (855) 859-2056 or (404) 537-3406 and reference the conference ID 88305217. An archived webcast of the conference call can be accessed through the company's website approximately two hours after the end of the call.

About Daseke, Inc.

Daseke, Inc. is a leading consolidator and the largest owner of flatbed and specialized transportation solutions in North America.  Daseke offers comprehensive, best-in-class services to some of the world’s most respected industrial shippers through their experienced people, over 3,800 tractors, over 8,200 flatbed and specialized trailers and more than a million square feet of industrial warehousing space.

Use of Non-GAAP Financial Measures

This news release includes non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDAR, free cash flow and adjusted operating ratio. 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. Daseke’s management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP and instead relies primarily on Daseke’s GAAP results and uses non-GAAP measures supplementally.

Daseke defines Adjusted EBITDA as net income (loss) plus (i) depreciation and amortization, (ii) interest expense, including other fees and charges associated with indebtedness, net of interest income, (iii) income taxes, (iv) acquisition-related transaction expenses (including due diligence costs, legal, accounting and other advisory fees and costs, retention and severance payments and financing fees and expenses), (v) stock-based compensation, (vi) non-cash impairments, (vii) losses (gains) on sales of defective revenue equipment out of the normal replacement cycle, (viii) impairments related to defective revenue equipment sold out of the normal replacement cycle, (ix) withdrawn initial public offering-related expenses, and (x) expenses related to the business combination that was consummated in February 2017 and related transactions. Daseke defines Adjusted EBITDAR as Adjusted EBITDA plus tractor operating lease charges and free cash flow as Adjusted EBITDA less net capital expenditures (capital expenditures less proceeds from equipment sales).

Daseke’s board of directors and executive management team use Adjusted EBITDA and Adjusted EBITDAR as key measures of its performance and for business planning. Adjusted EBITDA and Adjusted EBITDAR assist them in comparing Daseke’s operating performance over various reporting periods on a consistent basis because they remove from Daseke’s operating results the impact of items that, in their opinion, do not reflect Daseke’s core operating performance. Adjusted EBITDA and Adjusted EBITDAR also allows Daseke to more effectively evaluate its operating performance by allowing it to compare the results of operations against its peers without regard to its or its peers’ financing method or capital structure.

Adjusted EBITDAR is used to view operating results before lease charges as these charges can vary widely among trucking companies due to differences in the way that trucking companies finance their fleet acquisitions. Daseke’s method of computing Adjusted EBITDA is substantially consistent with that used in its debt covenants and also is routinely reviewed by its management for that purpose.

Daseke believes its presentation of Adjusted EBITDA and Adjusted EBITDAR is useful because they provide investors and industry analysts the same information that Daseke uses internally for purposes of assessing its core operating performance. However, Adjusted EBITDA and Adjusted EBITDAR are not substitutes for, or more meaningful than, net income (loss), cash flows from operating activities, operating income or any other measure prescribed by GAAP, and there are limitations to using non-GAAP measures such as Adjusted EBITDA and Adjusted EBITDAR. Certain items excluded from Adjusted EBITDA and Adjusted EBITDAR 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. Adjusted EBITDA, Adjusted EBITDAR should not be considered measures of the income generated by Daseke’s business or discretionary cash available to it to invest in the growth of its business.

Daseke’s board of directors and executive management team use free cash flow to assess the Company’s performance and ability to fund operations and make additional investments. Free cash flow represents the cash that its business generates from operations, before taking into account cash movements that are non- operational. Daseke believes its presentation of free cash flow is useful because it is one of several indicators of Daseke’s ability to service debt, make investments and/or return capital to its stockholders. Daseke also believes that free cash flow is one of several benchmarks used by investors and industry analysts for comparison of performance in its industry, although Daseke’s measure of free cash flow may not be directly comparable to similar measures reported by other companies. Furthermore, free cash flow is not a substitute for, or more meaningful than, net income (loss), cash flows from operating activities, operating income or any other measure prescribed by GAAP, and there are limitations to using non-GAAP measures such as free cash flow. Accordingly, free cash flow 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 defines adjusted operating ratio as (a) total operating expenses (i) less fuel surcharges, acquisition- related transaction expenses, non-cash impairment charges and withdrawn initial public offering-related expenses and (ii) further adjusted for the net impact of the step-up in basis resulting from acquisitions (such as increased depreciation and amortization expense), as a percentage of (b) total revenue excluding fuel surcharge revenue.

Daseke’s board of directors and executive management team view adjusted operating ratio, and its key drivers of revenue quality, growth, expense control and operating efficiency, as a very important measure of Daseke’s performance. Daseke believes fuel surcharge is often volatile and eliminating the impact of this source of revenue (by eliminating fuel surcharge from revenue and by netting fuel surcharge against fuel expense) affords a more consistent basis for comparing its results of operations between periods. Daseke also believes excluding acquisition-related transaction expenses, additional depreciation and amortization expenses as a result of acquisitions, non-cash impairments and withdrawn initial public offering-related expenses enhances the comparability of its performance between periods.

Daseke believes its presentation of adjusted operating ratio is useful because it provides investors and industry analysts the same information that Daseke uses internally for purposes of assessing its core operating profitability. However, adjusted operating ratio is not a substitute for, or more meaningful than, operating ratio, operating margin or any other measure derived solely from GAAP measures, and there are limitations to using non-GAAP measures such as adjusted operating ratio. You can find the reconciliation of these non-GAAP measures to the nearest comparable GAAP measures in the Reconciliation of Non-GAAP Measures tables below. 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.

Forward‐Looking Statements

This news release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target,” “will” or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements are based on current information and expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do 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. You should not place undue reliance on these forward-looking statements. As a result of a number of known and unknown risks and uncertainties, actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include, but are not limited to, general economic risks (such as downturns in customers’ business cycles and disruptions in capital and credit markets), driver shortages and increases in driver compensation or owner-operator contracted rates, loss of senior management or key operating personnel, our ability to recognize the anticipated benefits of recent acquisitions, our ability to identify and execute future acquisitions successfully, seasonality and the impact of weather and other catastrophic events, 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, our ability to generate sufficient cash to service all of our indebtedness, restrictions in our existing and future debt agreements, increases in interest rates, the impact of governmental regulations and other governmental actions related to the Company and its operations, litigation and governmental proceedings, and insurance and claims expenses. For additional information regarding known material factors that could cause our actual results to differ from those expressed in forward-looking statements, please see our filings with the Securities and Exchange Commission (the “SEC”), available at www.sec.gov, including Hennessy Capital Acquisition Corp. II’s definitive proxy statement dated February 6, 2017, particularly the section “Risk Factors—Risk Factors Relating to Daseke’s Business and Industry,” and Daseke’s Current Report on Form 8-K/A, filed with the SEC on March 16, 2017, and amended on May 4, 2017.

 
Daseke, Inc. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)
     
  September 30, December 31,
   2017   2016 
ASSETS   
Current assets:   
 Cash$  112,510  $  3,695 
 Accounts receivable, net of allowance of $382 and $321 at   September 30, 2017 and December 31, 2016, respectively   106,081     54,177 
 Drivers' advances and other receivables   2,809     2,632 
 Current portion of net investment in sales-type leases   6,022     3,516 
 Parts supplies   4,365     1,467 
 Income tax receivable   111     719 
 Prepaid and other current assets   20,321     13,504 
   Total current assets   252,219     79,710 
     
Property and equipment, net   369,199     318,747 
Intangible assets, net   77,541     71,653 
Goodwill   139,889     89,035 
Other long-term assets   18,573     11,090 
   Total assets   857,421     570,235 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Checks outstanding in excess of bank balances   1,479     1,166 
Accounts payable   12,493     4,788 
Accrued expenses and other liabilities   24,660     16,104 
Accrued payroll, benefits and related taxes   12,027     7,835 
Accrued insurance and claims   10,248     9,840 
Current portion of long-term debt   26,514     52,665 
   Total current liabilities   87,421     92,398 
     
Line of credit   -     6,858 
Long-term debt, net of current portion   395,841     208,372 
Deferred tax liabilities   114,900     92,815 
Other long-term liabilities   1,342     286 
Subordinated debt   -     66,443 
   Total liabilities   599,504     467,172 
     
Commitments and contingencies (Note 15)   
     
Stockholders’ equity:   
 Series A convertible preferred stock, $0.0001 par value; 10,000,000 shares authorized; 650,000 shares issued and liquidation preference $65,000   65,000     -  
 Series B convertible preferred stock, $0.01 par value; 75,000 shares authorized; 0 and 64,500 shares issued and outstanding at September 30, 2017 and December 31, 2016   -      1 
 Common stock (par value $0.0001 per share); 250,000,000 shares authorized, 44,480,232 and 20,980,961 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively   4     1 
Additional paid-in-capital   222,102     117,807 
Accumulated deficit   (30,221)    (14,694)
Accumulated other comprehensive income (loss)   1,032     (52)
   Total stockholders’ equity   257,917     103,063 
   Total liabilities and stockholders’ equity   857,421     570,235 
         

 
Daseke, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited, In thousands, except share and per share data)
 
  Three Months Ended Nine Months Ended
  September 30, September 30,
   2017   2016   2017   2016 
Revenues:                           
 Freight$  171,245  $  135,415  $  446,454  $  398,466 
 Brokerage   34,198     25,977     83,723     68,358 
 Logistics   7,871     -     10,571     - 
 Fuel surcharge   18,008     12,756     48,331     34,562 
   Total revenue   231,322     174,148     589,079     501,386 
                             
Operating expenses:                           
 Salaries, wages and employee benefits   64,955     49,298     174,253     149,861 
 Fuel   24,734     17,296     64,423     49,076 
 Operations and maintenance   35,132     27,874     86,332     72,933 
 Communications   539     370     1,491     1,208 
 Purchased freight   61,598     42,541     148,945     120,501 
 Administrative expenses   8,619     5,221     24,019     17,711 
 Sales and marketing   488     435     1,425     1,280 
 Taxes and licenses   2,963     2,268     7,855     6,946 
 Insurance and claims   6,351     5,065     15,516     13,648 
 Acquisition-related transaction expenses   773   -     2,255     18 
 Depreciation and amortization   19,805     16,998     53,758     50,515 
 (Gain) loss on disposition of revenue   property and equipment   (339)    (495)    (513)    158 
 Impairment -   1,195   -   1,195 
   Total operating expenses   225,618     168,066     579,759     485,050 
   Income from operations   5,704     6,082     9,320     16,336 
         
Other (income) expense:       
 Interest income (76)  (4)  (130)  (40)
 Interest expense   8,624     6,724     21,064     17,521 
 Write-off of unamortized deferred   financing fees   -     -     3,883     - 
 Other   (32)    (64)    (247)    (266)
   Total other expense   8,516     6,656     24,570     17,215 
         
Income (loss) before provision (benefit) for   income taxes   (2,812)    (574)    (15,250)    (879)
Provision (benefit) for income taxes   (2,862)    683     (3,448)    607 
 Net income (loss)   50     (1,257)    (11,802)    (1,486)
         
Other comprehensive income:       
 Unrealized income (loss) on interest rate swaps   -     61     52     (1)
 Foreign currency translation adjustments   526     -     1,032     - 
   Comprehensive income (loss)    576     (1,196)    (10,718)    (1,487)
         
Net income (loss)   50     (1,257)    (11,802)    (1,486)
 Less dividends to Series A convertible   preferred stockholders   (1,225)    -     (2,919)    - 
 Less dividends to Series B convertible    preferred stockholders   -     (1,243)    (806)    (3,729)
 Net loss attributable to common   stockholders$  (1,175) $  (2,500) $  (15,527) $  (5,215)
         
Net loss per common share:       
 Basic and Diluted$  (0.03) $  (0.12) $  (0.45) $  (0.25)
Weighted-average common shares   outstanding:       
 Basic and Diluted   39,359,523    20,980,961    34,790,861     20,980,961 
         
Dividends declared per Series A convertible    preferred share$    1.91  $  -  $  2.59  $  - 
Dividends declared per Series B convertible   preferred share$    -  $  18.75  $  12.50  $  18.75 
  

  
Daseke, Inc. and Subsidiaries  
Supplemental Information: Flatbed Solutions 
(Unaudited) 
             
   Three Months Ended September 30,   
    2017  2016 Increase (Decrease) 
 (Dollars in thousands) $ % $ % $%
             
 REVENUE (1) :           
 Freight $   67,807  79.2 $   64,281  81.4 $   3,526 5.5 
 Brokerage     9,385  11.0     7,410  9.4    1,975 26.7 
 Logistics     -     -     -    -     -   *
 Fuel surcharge     8,400  9.8     7,284  9.2    1,116 15.3 
   Total revenue     85,592  100.0     78,975  100.0     6,617 8.4 
             
 OPERATING EXPENSES (1) :           
   Total operating expenses     80,837  94.4     75,181  95.2    5,656 7.5 
 Operating ratio  94.4%    95.2%     
 Adjusted operating ratio (2):  93.5%    93.9%     
 INCOME FROM OPERATIONS $  4,755  5.6 $  3,794  4.8 $  961 25.3 
             
 OPERATING STATISTICS:           
 Total miles    36,646,345       37,767,726       (1,121,381)(3.0)
 Company-operated tractors    1,144       1,162       (18)(1.5)
 Owner-operated tractors    469       441        28 6.3 
 Number of trailers    2,881       2,842        39 1.4 
             
 * Indicates not meaningful           
 (1) Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company's consolidated results. 
 (2) Adjusted operating ratio is not a recognized measure under GAAP. For a definition of adjusted operating ratio and reconciliation of adjusted operating ratio to operating ratio, see "Non-GAAP Financial Measures."
       

        
Daseke, Inc. and SubsidiariesSupplemental Information: Flatbed Solutions(Unaudited)Nine Months Ended September 30,
        
  2017  2016 Increase (Decrease)
 $ % $ % $ %
            
REVENUE (1) :           
Freight$  200,670  79.1 $  194,855  82.2 $   5,815  3.0 
Brokerage   27,979  11.0    22,482  9.5    5,497  24.5 
Logistics   -   -    -   -    -   *
Fuel surcharge   25,145  9.9    19,832  8.4    5,313  26.8 
  Total revenue   253,794  100.0    237,169  100.0    16,625  7.0 
            
OPERATING EXPENSES (1) :           
  Total operating expenses   238,839  94.1    223,128  94.1    15,711  7.0 
Operating ratio 94.1%    94.1%      
Adjusted operating ratio (2): 93.1%    92.2%      
INCOME FROM OPERATIONS$  14,955  5.9 $  14,041  5.9 $  914  6.5 
            
OPERATING STATISTICS:           
Total miles   112,318,418       114,115,490       (1,797,072) (1.6)
Company-operated tractors   1,158       1,173       (15) (1.3)
Owner-operated tractors   454       442       12  2.7 
Number of trailers   2,916       2,877       39  1.4 
            
* Indicates not meaningful
(1) Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company’s consolidated results.
(2) Adjusted operating ratio is not a recognized measure under GAAP. For a definition of adjusted operating ratio and reconciliation of adjusted operating ratio to operating ratio, see “Non-GAAP Financial Measures.”
 

 
Daseke, Inc. and Subsidiaries
Supplemental Information: Specialized Solutions
(Unaudited)
              
   Three Months Ended September 30,  
    2017  2016 Increase (Decrease)
 (Dollars in thousands) $ % $ % $ %
              
 REVENUE (1) :            
 Freight $  105,137  71.2 $  72,367  75.0 $  32,770 45.3
 Brokerage    24,852  16.8    18,579  19.2    6,273 33.8
 Logistics    7,886  5.3    -  -    7,886 *
 Fuel surcharge    9,756  6.6    5,588  5.8    4,168 74.6
   Total revenue    147,631  100.0    96,534  100.0    51,097 52.9
              
 OPERATING EXPENSES (1) :            
   Total operating expenses    140,472  95.2    90,795  94.1    49,677 54.7
 Operating ratio  95.2%    94.1%      
 Adjusted operating ratio (2):  92.6%    91.2%      
 INCOME FROM OPERATIONS $  7,159  4.8 $  5,739  5.9 $  1,420 24.7
              
 OPERATING STATISTICS:            
 Total miles    38,948,331       24,266,511       14,681,820 60.5
 Company-operated tractors    1,638       1,109       529 47.7
 Owner-operated tractors    408       236       172 72.9
 Number of trailers    4,813       3,394        1,419 41.8
              
 * Indicates not meaningful            
 (1) Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company's consolidated results.
 (2) Adjusted operating ratio is not a recognized measure under GAAP. For a definition of adjusted operating ratio and reconciliation of adjusted operating ratio to operating ratio, see "Non-GAAP Financial Measures."
        

 
Daseke, Inc. and Subsidiaries
Supplemental Information: Specialized Solutions
(Unaudited)
 
 Nine Months Ended September 30,   
  2017  2016 Increase (Decrease) 
 $ % $ % $ % 
             
REVENUE (1) :            
Freight$  250,255  73.5 $  206,641  77.2 $  43,614  21.1  
Brokerage   55,820  16.4    45,986  17.2    9,834  21.4  
Logistics   10,594  3.1    -  *    10,594  * 
Fuel surcharge   23,620  6.9    15,024  5.6    8,596  57.2  
  Total revenue   340,289  100.0    267,651  100.0    72,638  27.1  
             
OPERATING EXPENSES (1) :            
  Total operating expenses   327,533  96.3    252,962  94.5    74,571  29.5  
Operating ratio 96.3%    94.5%       
Adjusted operating ratio (2): 94.0%    92.5%       
INCOME FROM OPERATIONS$  12,756  3.7 $  14,689  5.5 $  (1,933) (13.2) 
             
OPERATING STATISTICS:            
Total miles   94,967,882       74,273,172       20,694,710  27.9  
Company-operated tractors   1,382       1,091       291  26.7  
Owner-operated tractors   294       241        53  22.0  
Number of trailers   4,100       3,332       768  23.0  
             
* Indicates not meaningful            
(1) Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company’s consolidated results. 
(2) Adjusted operating ratio is not a recognized measure under GAAP. For a definition of adjusted operating ratio and reconciliation of adjusted operating ratio to operating ratio, see “Non-GAAP Financial Measures.”
    

Daseke, Inc. and Subsidiaries
Reconciliation of Non-GAAP Measures
(Unaudited, In thousands)
 
  Three Months Ended Nine Months Ended
  September 30, September 30,
   2017   2016   2017   2016 
         
Net income (loss)$  50  $  (1,257) $  (11,802) $  (1,486)
 Depreciation and amortization   19,805     16,998     53,758     50,515 
 Interest income   (76)    (4)    (130)    (40)
 Interest expense   8,624     6,724     24,947     17,521 
 Income tax provision (benefit)   (2,862)    683     (3,448)    607 
 Acquisition-related transaction expenses   773     16     2,255     289 
 Impairment  -     1,195    -     1,195 
 Stock based compensation   663     -     1,201     - 
 Merger transaction expenses       
 Withdrawn initial public offering-related expenses   -     259     -     3,050 
 Net losses on sales of defective revenue equipment out of the normal replacement cycle   -      22     -     718 
 Impairment on sales of defective revenue equipment out of the normal replacement cycle   -     -     -     190 
 Expenses related to the Business Combination and related transactions   -     344     2,034     344 
 Tractor operating lease charges   4,448     3,610     12,366     9,324 
Adjusted EBITDAR $  31,425  $  28,590  $  81,181  $  82,227 
 Less tractor operating lease charges   (4,448)    (3,610)    (12,366)    (9,324)
Adjusted EBITDA $  26,977  $  24,980  $  68,815  $  72,903 
 Net capital expenditures   (14,930)    (10,549)    (23,922)    (31,236)
Free cash flow$  12,047  $  14,431  $  44,893  $  41,667 
                

     
Daseke, Inc. and SubsidiariesReconciliation of Operating Ratio to Adjusted Operating Ratio by Segment: Flatbed(Unaudited, In thousands)
     
  Three Months Ended September 30,  Nine Months Ended September 30, 
(Dollars in thousands) 2017  2016  2017  2016 
             
Total revenue(1) $85,592  $78,975  $253,794  $237,169 
Fuel surcharge  8,400   7,284   25,145   19,832 
Operating revenue, net of fuel surcharge $77,192  $71,691  $228,649  $217,337 
             
Total operating expenses $80,837  $75,181  $238,839  $223,128 
Fuel surcharge  8,400   7,284   25,145   19,832 
Net impact of step-up in basis of acquired assets  227   596   888   2,835 
Adjusted operating expenses $72,210  $67,301  $212,806  $200,461 
             
Operating ratio  94.4%  95.2%  94.1%  94.1%
Adjusted operating ratio  93.5%  93.9%  93.1%  92.2%
                 
(1) Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company’s consolidated results.
                 

     
Daseke, Inc. and SubsidiariesReconciliation of Operating Ratio to Adjusted Operating Ratio by Segment: Specialized(Unaudited, In thousands)
     
  Three Months Ended September 30,  Nine Months Ended September 30, 
(Dollars in thousands) 2017  2016  2017  2016 
             
Total revenue(1) $147,631  $96,534  $340,289  $267,651 
Fuel surcharge  9,756   5,588   23,620   15,024 
Operating revenue, net of fuel surcharge$137,875  $90,946  $316,669  $252,627 
             
Total operating expenses $140,472  $90,795  $327,533  $252,962 
Fuel surcharge  9,756   5,588   23,620   15,024 
Impairment  -   1,195   -   1,195 
Net impact of step-up in basis of   acquired assets  3,033   1,040   6,200   3,076 
Adjusted operating expenses $127,683  $82,972  $297,713  $233,667 
             
Operating ratio  95.2%  94.1%  96.3%  94.5%
Adjusted operating ratio  92.6%  91.2%  94.0%  92.5%
                 
(1) Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company’s consolidated results.
                 

Investor Relations Contact: Geralyn DeBusk972-458-8000 Daseke@HalliburtonIR.com

1 2017 pro forma Adjusted EBITDA will be calculated by adding Daseke’s actual 2017 Adjusted EBITDA and the Adjusted EBITDA of any acquired business during 2017 for the period beginning on January 1, 2017 and ending on the acquisition date.

2 Based on the acquired companies’ internally prepared financial statements. Does not give effect to synergies.

3 Net income of $2.2million plus: depreciation and amortization of $20.4 million, interest of $2.2million, taxes of $1.2 million and acquisition-related transaction expenses of $0.3 million results in Adjusted EBITDA of $26.3million.

 

Source: Daseke, Inc.


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