Daseke Reports Q4 Revenue Growth, Earnings Decline
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Daseke Inc. experienced an increase in revenue but a decline in earnings year-over-year during the fourth quarter of 2022, the company reported Feb. 6.
The Addison, Texas-based flatbed and specialized transportation carrier posted net income of $6.9 million, or 9 cents per diluted share, for the three months ending Dec. 31. That compared with $7.1 million, 9 cents, during the same time in 2021.
Total revenue increased 3.5% to $408.2 million from $394.3 million.
The results topped Wall Street’s expectations of 2 cents per share and quarterly revenue of $399.85 million, according to Zacks Consensus Estimate.
Daseke reported that total revenue reached a new record for full-year 2022. The report cited earnings of $50.2 million, 70 cents, on revenue of $1.77 billion, compared with $56 million, 77 cents, on revenue of $1.56 billion in 2021. Earnings before interest, taxes, depreciation and amortization (EBITDA) also hit a record at $234.9 million.
Shepko
“We delivered solid revenue growth and posted our third consecutive year of record adjusted EBITDA,” Daseke CEO Jonathan Shepko said in a statement, “We have been vocal about the resiliency of our operating model, one that is unquestionably different from any other publicly traded transportation and logistics peer.”
Daseke on Sept. 30 had announced a $40 million share repurchase plan. The company ultimately purchased more than 803,000 shares at a weighted average price of $6.05. Founder Don Daseke started the process of retiring by selling his holdings shortly after. The company ended up purchasing nearly 30% of its issued and outstanding common shares in fourth quarter.
“These transactions were immediately and significantly accretive,” Shepko said. “This repurchase will provide one of the most profound uplifts for our shareholders in the coming years, providing exponential growth opportunity as our consistent performance and strategic execution gives rise to a more aptly valued share price.”
Shepko noted that the performance is noteworthy because it shows the progress the company has made as well as its continued earnings potential. He believes the company is well positioned to outperform when the freight cycle changes.
“As 2023 unfolds we expect an improvement in operational productivity and improvements in driver availability, which should allow for the seeding of additional higher margin company tractors, and ultimately improvements in demand for freight haul services by midyear when our business is seasonally on trend,” Shepko said. “We believe in the cross cycle strength of more than a dozen industrial facing end markets we serve.”
Shepko expects those trends to translate into flat to low single-digit revenue growth in 2023. He sees full-year adjusted EBITDA approximately in line with 2022 given the current macro environment, specific end market exposure, the available levers in each operating model and transformation initiatives.
Daseke Announces Record Results, Reports Fourth-Quarter and Full-Year 2022, and Provides Full-Year 2023 Outlook $DSKE https://t.co/UNgnmZkqJC — Investor News (@newsfilterio) February 6, 2023
“Though in the near term, we do readily acknowledge the ongoing rate environment challenges that began in the second half of 2022 and inflationary cost pressures that continue to work their way through the markets,” Shepko said. “We continue to feel conviction in the ability of our ongoing transformation initiatives to largely offset these collective headwinds.”
Specialized solutions revenue in the quarter increased 10.9% to $242.9 million from $219 million year-over-year. The report noted that successful deployment of the asset-right fleet optimization strategy captured additional brokerage volumes and drove revenue growth. It added that strong demand in the high-security cargo, agriculture and aerospace end markets more than offset moderating demand in the construction end market and renewable energy vertical.
Income from operations in the specialized solutions segment increased 62.3% to $12.5 million from $7.7 million. This was driven by revenue growth outpacing expense inflation. That includes compensation associated with revenue growth, such as driver compensation, as well as operations and maintenance expense.
Flatbed solutions revenue decreased 5.7% to $165.3 million from $175.3 million. The year-over-year decline was driven by a reduction in miles along with a 2% degradation in rate per mile. The strength in the manufacturing, construction and agriculture end markets was more than offset by a decline in the steel end market. Income from operations in the flatbed solutions segment decreased 75.6% to $2.7 million from $11.1 million the prior year. The results were driven by lower revenue combined with ongoing expense inflation in items such as operations, maintenance and market-rate driver compensation.
Cowen and Co. noted in a report that fourth-quarter adjusted EBITDA was modestly short of its estimates. The investment bank and financial services company also said accretive acquisitions in resilient specialized operations and debt pay down in 2023 should support results through a challenged market.
“Accretion from a large founder’s buyback in Q4 led to a bottom line beat,” Cowen analyst Jason Seidl wrote in the report. “Top line growth of 3.5% [year-over-year] also beat our estimates as strength in the specialized segment offset softness in the flatbed segment.”
Daseke ranks No. 31 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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