ADDISON, Texas, Jan. 29, 2021 (GLOBE NEWSWIRE) -- Daseke, Inc. (NASDAQ: DSKE), the largest flatbed, specialized transportation and logistics solutions company in North America, today reported financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter Highlights:

• Revenue of $335.6 million
• Net Income of $7.3 million, or $0.09 earnings per common share (“EPS”)
• Adjusted Net Income of $9.2 million, after excluding Aveda Transportation and Energy Services (“Aveda”) which was divested during the year, up 74% year-over-year
• Adjusted EPS excluding Aveda of $0.12, up 100% year-over-year
• Adjusted EBITDA of $39.4 million excluding Aveda, up 6% year-over-year
• Cash flows from operating activities of $14.9 million and Free Cash Flow of $12.5 million

Full year 2020 Highlights:

• Revenue of $1.5 billion, or $1.4 billion excluding Aveda
• Net Income of $6.2 million, or $0.02 per share attributable to common stockholders
• Adjusted Net Income excluding Aveda of $39.6 million, up over 321% year-over-year
• Adjusted diluted EPS excluding Aveda of $0.52, up 643% year-over-year
• Adjusted EBITDA of $178.7 million excluding Aveda, up 15% year-over-year
• Cash flows from operating activities of $137.3 million and Free Cash Flow of $168.9 million
• Operating Ratio and Adjusted Operating Ratio excluding Aveda of 97.6% and 93.6%, respectively
• Cash and cash equivalents increased by $80.5 million year-over-year to $176.2 million

Management Commentary

“2020 was a highly successful and transformational year for Daseke,” said Jonathan Shepko, Interim Chief Executive Officer of Daseke. “We streamlined the business, built a high performing executive team and supporting organization, and demonstrated the resilience and diversity of our business by delivering strong profitability and free cash flow despite the challenging economic backdrop. We also executed and completed two operational integrations and business improvement plans, which contributed meaningfully to our operational and financial performance in 2020. This not only supported the organization through the pandemic shock in the first half of 2020 but has also positioned Daseke for profitable growth as we look to the future.”

Shepko continued, “As we enter 2021, we remain focused on leveraging the improved platform that we have built. This includes execution against the operational and tactical initiatives driven by our newly formed leadership team, which have become a core part of our culture. We will also look to leverage new leaders in areas like finance, human resources, IT, safety and risk management, all of whom will be looking to implement best practices and drive further efficiencies across the business. Lastly, we will remain focused on refining the Daseke vision, with a clear focus on supporting long-term sustainable growth. We look forward to building on the strong foundation that was established in 2020.”

Fourth Quarter 2020 Financial Results

Total revenue in the fourth quarter of 2020 decreased 17% to $335.6 million, compared to $403.0 million in the year-ago quarter. Excluding Aveda, fourth quarter revenue decreased by 7%. These year-over-year decreases in revenue were driven by the timing of the completion of certain renewable and wind-related projects, and the economic impact of the COVID-19 pandemic, which led to lower freight volumes in both the flatbed and specialized segments.

Operating income in the fourth quarter of 2020 was $3.1 million, compared to operating loss of $0.9 million in the year-ago quarter. This year-over-year improvement in operating income was primarily a result of cost reductions through operational integrations and business improvement plans executed over the trailing year, as well as decreases in purchased freight, salaries, wages and employee benefits. Excluding Aveda, operating income in the fourth quarter of 2020 was $1.7 million compared to an operating income of $2.2 million in the prior-year quarter. This year-over-year decline was driven by an increase in insurance and claims, which was partially offset by cost reductions through operational integrations and business improvement plans executed over the trailing year, as well as decreases in salaries, wages and employee benefits.

Net income for the fourth quarter of 2020 was $7.3 million, or $0.09 EPS, compared to net loss of $18.4 million, or $0.31 loss per common share, in the year-ago quarter. Adjusted Net Income excluding Aveda in the fourth quarter of 2020 was $9.2 million, or $0.12 EPS, compared to Adjusted Net Income excluding Aveda of $5.3 million, or $0.06 EPS, in the fourth quarter of 2019. Adjusted EBITDA excluding Aveda in the fourth quarter of 2020 was $39.4 million compared to $37.2 million in the year-ago quarter. The year-over-year improvements in Net Income, Adjusted Net Income and Adjusted EBITDA excluding Aveda were driven primarily by cost reductions through operational integrations and business improvement plans and the improvement in freight rates, partially offset by lower freight volumes and increased insurance costs.

Full Year 2020 Financial Results

Total revenue in 2020 decreased 16% to $1.45 billion, compared to $1.74 billion in 2019. Excluding Aveda, total revenue in 2020 decreased by 8%. This year-over-year reduction in revenue was driven primarily by the decrease in freight volumes due to the impact of the COVID-19 pandemic on various industrial end markets, and the strategic reduction of business related to the consolidations.

Operating income in 2020 was $35.4 million, compared to operating loss of $312.1 million in 2019. Operating ratio was 97.6% in 2020 compared to 118.0% in 2019. Adjusted operating ratio excluding Aveda was 93.6% in 2020 compared to 96.4% in 2019. These year-over-year improvements were primarily due to the contributions from the Company’s operational integrations and business improvement plans and increased profitability from revenues in specific market verticals.

Net income for 2020 was $6.2 million, or $0.02 EPS, compared to net loss of $307.4 million, or $(4.86) loss per common share, in 2019. Adjusted Net Income excluding Aveda was $39.6 million, or $0.52 diluted EPS, compared to Adjusted Net Income excluding Aveda of $9.4 million, or $0.07 diluted EPS, in 2019. Adjusted EBITDA excluding Aveda in 2020 was $178.7 million compared to $155.6 million in 2019. The year-over-year increases were driven by contributions from operational integrations and business improvement plans, and by strong wind energy and high security cargo revenues and margins. This was partially offset by softness in freight rates, weaker freight volumes due to the impact of the COVID-19 pandemic on various industrial end markets, combined with the fleet downsizing efforts in the flatbed segment.

Segment Results

Specialized Solutions - Specialized Solutions revenue in the fourth quarter of 2020 was $196.5 million, a decrease of 24% compared to $257.4 million in the year-ago quarter. Operating income in the fourth quarter of 2020 was $14.2 million, compared to operating income of $10.1 million in the year-ago quarter. Operating Ratio improved by 330 basis points to 92.8%, compared to 96.1% in the year-ago quarter. Adjusted Operating Ratio of 92.8% improved 160 basis points compared to 94.4% in the year-ago quarter. Net income in the fourth quarter of 2020 improved to $10.5 million from a net loss of $25.3 million in the same period in 2019, primarily due to the arbitrated decrease in contingent consideration and reduction in corporate expense allocation. Adjusted EBITDA in the fourth quarter of 2020 decreased 4% to $30.0 million compared to $31.4 million in the year-ago quarter, driven primarily by the allocation of increased insurance costs to the segment, partially offset by contributions from operational integrations and improvement plans. Rate per mile in the fourth quarter of 2020 was $2.96, down compared to $3.43 last year, and revenue per tractor was $59,100, versus $59,800 a year ago.

Specialized Solutions revenue excluding Aveda in the fourth quarter of 2020 was $196.5 million, a decrease of 9% compared to $215.3 million in the year-ago quarter. Operating income excluding Aveda in the fourth quarter of 2020 was $12.8 million, compared to $13.2 million in the year-ago quarter. Adjusted Operating Ratio excluding Aveda of 92.8% increased 90 basis points compared to 91.9% in the year-ago quarter. Adjusted EBITDA excluding Aveda in the fourth quarter of 2020 decreased 3% to $29.9 million compared to $30.7 million in the year-ago quarter, driven primarily by the allocation of increased insurance costs to the segment, partially offset by contributions from operational integrations and improvement plans. Excluding Aveda, Specialized rate per mile was flat at $2.96, and revenue per tractor increased 4.4% to $59,100.

In 2020, Specialized Solutions revenue decreased 18% to $893.7 million compared to $1,095.7 million in 2019. Operating income in 2020 was $53.3 million, compared to operating loss of $158.7 million in 2019. Net income in 2020 improved to $26.9 million from a net loss of $177.4 million in 2019, primarily due to $196.1 million of impairments in 2019 compared to only $13.4 million of impairments in 2020. Adjusted EBITDA in 2020 decreased 3% to $134.6 million compared to $138.8 million in 2019, driven by lower freight rates after exiting the Aveda business, lower brokerage revenues, and higher insurance costs allocated to the operating segments beginning in 2020. These were partially offset by contributions from the operational integrations and business improvement plans, and reduced salary compensation.

In 2020, Specialized Solutions revenue excluding Aveda decreased 5% to $842.0 million compared to $889.4 million in 2019. Operating income excluding Aveda in 2020 was $79.3 million, compared to operating loss excluding Aveda of $112.8 million in 2019. Adjusted EBITDA excluding Aveda in 2020 increased 11% to $137.5 million compared to $123.5 million in 2019.

Flatbed Solutions - Flatbed Solutions revenue in the fourth quarter of 2020 decreased 5% to $142.1 million, compared to $150.3 million in the year-ago quarter. Operating income in the fourth quarter of 2020 was $4.0 million, compared to operating income of $4.1 million in the year-ago quarter. Operating ratio improved by 10 basis points to 97.2%, compared to 97.3% in the year-ago quarter. Adjusted Operating Ratio of 94.9% increased by 120 basis points compared to 93.7% in the year-ago period. Net loss in the fourth quarter of 2020 improved to $11.0 million versus $12.6 million in the same period in 2019. Adjusted EBITDA in the fourth quarter of 2020 decreased 4% to $17.1 million, compared to $17.8 million in the year-ago quarter. These decreases were driven by a decrease in freight volumes due to the impact of the COVID-19 pandemic on various industrial end markets and fleet downsizing efforts, and increased insurance costs allocated to the operating segments in 2020. These were partially offset by improved freight rates. Rate per mile in the fourth quarter of 2020 of $2.03 was up 9% from the prior-year quarter, and revenue per tractor increased 12% to $43,000.

In 2020, Flatbed Solutions revenue of $578.9 million was down 13% compared to 2019. Operating income in 2020 was $32.6 million, compared to an operating loss of $94.4 million in 2019. Net income in 2020 improved to $3.9 million compared to a net loss of $106.1 million, primarily due to large impairments taken in 2019, and improved profitability through the operational integrations and business improvement plans executed in the year. Adjusted EBITDA in 2020 decreased 3% to $74.6 million compared to $76.9 million in 2019 due to the impact of the COVID-19 pandemic on various industrial end markets, partially offset by contributions from the operational integrations and business improvement plans.

Balance Sheet and Free Cash Flow

At December 31, 2020, Daseke had cash and cash equivalents of $176.2 million and $83.2 million available under its revolving credit facility, for total available liquidity of $259.4 million. Total debt was $679.7 million and net debt was $503.5 million. This compares to cash and cash equivalents of $95.7 million and $86.8 million available on the revolving credit facility, total available liquidity of $182.5 million, total debt of $704.1 million, and net debt of $608.4 million at December 31, 2019. Our leverage ratio as defined by our credit agreement as of December 31, 2020 was 2.6x.

Year to date, net cash provided by operating activities was $137.3 million, cash capital expenditures were $37.2 million, and cash proceeds from the sale of excess property and equipment were $68.8 million, resulting in Free Cash Flow of $168.9 million. During the same period, capital expenditures financed with debt and finance leases was $58.3 million. This compares to net cash provided by operating activities of $114.1 million, cash capital expenditures of $22.0 million, and cash proceeds from the sale of excess property and equipment of $37.8 million, resulting in Free Cash Flow of $129.9 million for the full year 2019. During the same period, capital expenditures financed with debt and finance leases net of property and equipment sold for notes receivable were $72.7 million.

For the quarter, net cash provided by operating activities was $14.9 million, cash capital expenditures were $19.2 million, and cash proceeds from the sale of excess property and equipment were $16.8 million, resulting in Free Cash Flow of $12.5 million. Additionally, capital expenditures financed with debt and finance leases net of property and equipment sold for notes receivable were $12.9 million.

Outlook

Jason Bates, Executive Vice President and Chief Financial Officer of Daseke concluded, “We enter 2021 from a position of financial strength. We drove significant free cash flow in 2020, and dramatically improved our balance sheet. Rates remain strong to start the year, and we are seeing pockets of strength throughout our industrial customer base that were previously pressured by the pandemic. As a result, we will look to optimize our improved platform and prepare the business to pivot to growth as pandemic conditions dissipate. We also expect to continue to generate strong Adjusted EBITDA and cash flows in 2021, which will allow us to further improve the strength of our balance sheet, preserving optionality going forward and enabling us to reposition the business for sustainable long-term growth.”

About Daseke, Inc.

Daseke, Inc. is the largest flatbed and specialized transportation and logistics company in North America. Daseke offers comprehensive, best-in-class services to many of the world’s most respected industrial shippers through experienced people, a fleet of more than 5,000 tractors and 11,500 flatbed and specialized trailers. For more information, please visit www.daseke.com.