ADDISON, Texas, Nov. 12, 2019 (GLOBE NEWSWIRE) — Daseke, Inc. (NASDAQ: DSKE) (“Daseke” or the “Company”), the largest flatbed, specialized transportation and logistics solutions company in North America, today reported financial results for the third quarter ended September 30, 2019.Third Quarter 2019 HighlightsRevenue of $450.4 millionNet loss was $273.3 million, or $4.25 per share, which included non-cash impairment charges to goodwill, intangibles, property and equipment, right of use assets and other long-term assets of $306.8 million, triggered by restructuring effortsAdjusted EBITDA¹ was $43.2 millionNet cash flows from operating activities of $89.4 million and Free Cash Flow¹ of $95.8 million for the first nine months of fiscal 2019Debt, net of cash, reduced by $16.5 million during the quarterRightsized board and executive management teamAccelerated and increased operational and cost improvement goal during the quarter and remain on target for $30 million improvement in operating income on a run rate basis by end of the first quarter of 2020 (based off the Company’s first six months revenues and operating cost run rate, on an annualized basis)Created an internal Leadership Council of business unit leadersAppointed new heads of Flatbed and Specialized segments, as well as new Transformation OfficeReaffirmed 2019 outlook, including Adjusted EBITDA¹ target of $165 – $175 millionManagement Commentary“We took decisive actions to drive immediate operational changes across the Company during the third quarter,” said Chris Easter, Interim Chief Executive Officer. “We believe our accelerated operational integrations, business improvement plans and corporate rightsizing will drive positive impacts in the business. We believe we have an opportunity to better leverage our strengthened leadership position as the largest flatbed, specialized transportation and logistics solutions company in North America, as well as the best talent in our industry across our operating companies, remains clearly in front of us.”Easter concluded, “Our performance during the third quarter reflects our ability to drive positive operational changes across the organization despite a weaker than normal macro environment. While our Flatbed Solutions segment continued to be impacted by softer end markets and lower rates during the period, our Specialized Solutions segment proved resilient and grew its top line by 1.5 percent year-over-year. We remain on target to deliver a $30 million improvement in operating income on a run rate basis by the end of the first quarter in 2020, which represents the first phase of our operational improvement initiatives. We expect the continued implementation of our operational improvement initiatives to drive an improved operating ratio and stronger profitability results in the future.” ¹ See Non-GAAP Measures for more information regarding Adjusted EBITDA and Free Cash Flow.Third Quarter 2019 Financial ResultsTotal revenue in the third quarter of 2019 decreased 2.4% to $450.4 million, compared to $461.6 million in the year-ago quarter. This year-over-year decline in revenue was driven primarily by the softer rate environment in the Flatbed Solutions segment; consolidated freight rates declined 4.6%.Operating loss in the third quarter of 2019 was $316.6 million, compared to Operating income of $13.9 million in the year-ago quarter. The year-over-year decline was primarily due to non-cash impairment charges to goodwill, intangibles, property and equipment, right of use assets and other long-term assets of $306.8 million and restructuring costs of $6.9 million in the quarter.Net loss for the third quarter of 2019 was $273.3 million, or $4.25 per share, compared to net income of $2.2 million, or $0.01 per share, in the year-ago quarter. Adjusted EBITDA¹ in the third quarter of 2019 was $43.2 million compared to $52.9 million in the year-ago quarter. The year-over-year decline in Adjusted EBITDA was driven by softness in freight rates and higher driver pay. Segment ResultsSpecialized Solutions – Specialized Solutions revenue² in the third quarter of 2019 increased 1.4% to $288.0 million compared to $283.9 million in the year-ago quarter. Operating loss in the third quarter of 2019 was $187.6 million compared to operating income $11.8 million in the year-ago quarter. Adjusted EBITDA¹ in the third quarter of 2019 decreased 15.3% to $34.3 million compared to $40.5 million in the year-ago quarter, driven by strong wind-energy related end markets, which partially offset softer oil & gas and related end markets. Rate per mile in the third quarter of 2019 of $3.54 was flat to the prior-year quarter and revenue per tractor increased 1% to $64,500. Flatbed Solutions – Flatbed Solutions revenue² in the third quarter of 2019 decreased 6.4% to $169.8 million compared to $181.5 million in the year-ago quarter. Operating loss in the third quarter of 2019 was $107.9 million compared to operating income of $12.2 million in the year-ago quarter. Adjusted EBITDA¹ in the third quarter of 2019 decreased 4.0% to $20.8 million compared to $21.7 million in the year-ago quarter, primarily due softness in manufacturing and construction related end markets. Rate per mile in the third quarter of 2019 of $1.90 was down 7.4% from the prior-year quarter and revenue per tractor decreased 7.0% to $42,600.¹ See Non-GAAP Measures for more information regarding Adjusted EBITDA and Free Cash Flow.
² Segment revenues are prior to eliminations.Balance Sheet and Free Cash FlowAt September 30, 2019, Daseke had cash and cash equivalents of $79.6 million and $84.6 million available under its revolving credit facility, for total available liquidity of $164.2 million. Net debt was $633.6 million. This compares to cash and cash equivalents of $63.7 million, $85.2 million available on the revolving credit facility, total available liquidity of $148.9 million, and net debt of $650.1 million at June 30, 2019.Year to date, net cash provided by operating activities was $89.4 million, cash capital expenditures were $17.4 million, and cash proceeds from the sale of excess property and equipment were $23.8 million, resulting in Free Cash Flow of $95.8 million. This compares to net cash provided by operating activities of $46.8 million, cash capital expenditures of $58.8 million, and cash proceeds from the sale of excess property and equipment of $15.5 million, resulting in Free Cash Flow of $3.5 million in the first nine months of fiscal 2018.2019 Outlook
Daseke reaffirmed its expected fiscal 2019 outlook as follows:Strategic Integration and Efficiency ProgramDuring the quarter, Daseke announced three strategic actions as part of its efforts to drive strategic integration and improve efficiencies. Operational Integrations: Daseke announced a plan to integrate three operating segments with three other operating segments, which will reduce the number of operating segments from 16 to 13. This initiative is being implemented to streamline and reduce the Company’s cost structure, improve asset utilization and capitalize on operational synergies.Business Improvement Plans: Additionally, the Company announced the planned implementation of Business Improvement Plans, which are expected to increase profitability by yield management capacity allocations, right-sizing trailer-to-tractor ratios, and improving maintenance execution.Corporate Restructuring: The Company has also executed a management restructuring and substantial corporate cost reduction plan, which included the elimination of several positions within the Daseke’s corporate office.Transformation Office: The Transformation Office will be responsible for ensuring the successful completion of the operational integrations and business improvement plans across the Daseke organization by tracking execution and ensuring accountability.The Company recorded $6.8 million of business transformation costs and $6.9 million restructuring expenses (not related to any impairments) in connection with these three strategic actions in the three months ended September 30, 2019 and expects to incur the majority of the estimated remaining $3.0 million of business transformation costs and $1.5 million of restructuring expenses through the end of fiscal 2019. Any changes to these actions will be reflected the Company’s future results of operations.Conference CallDaseke will hold a conference call today at 11:00 a.m. Eastern time to discuss its third quarter 2019 results. Investors, analysts, and members of the media interested in listening to the live presentation are encouraged to join a webcast of the call with accompanying presentation slides, available on the Company’s website at https://www.daseke.com. Interested parties may also participate in the call by dialing (855) 242-9918 and entering the passcode 9999284. A replay of the conference call will be available a few hours after the event on the investor relations section of the Company’s website, under the events section.The conference call will be broadcast live and available for replay via the investor relations section of the company’s website at investor.daseke.com. Presentation materials will be posted at the time of the call at investor.daseke.com as well.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 approximately 6,000 tractors and 13,000 flatbed and specialized trailers, and a million-plus square feet of industrial warehousing space. For more information, please visit www.daseke.com.Use of Non-GAAP MeasuresThis news release includes non-GAAP financial measures for Daseke and its operating segments, including Adjusted EBITDA and Free Cash Flow.Please note that the non-GAAP measures described below are 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. Certain items excluded from these non-GAAP measures 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. Also, 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. Because of these limitations, these non-GAAP measures 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’s management compensates for these limitations by relying primarily on Daseke’s GAAP results and using these non-GAAP measures on a supplemental basis.Adjusted EBITDAThe Company defines Adjusted EBITDA as net income (loss) plus (i) depreciation and amortization, (ii) interest expense, and other fees and charges associated with financings, 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) business transformation costs, (vi) non-cash impairment, (vii) restructuring charges, and (viii) non-cash stock and equity-compensation expense. The Company’s board of directors and executive management team use Adjusted EBITDA as a key measure of its performance and for business planning. Adjusted EBITDA assists them in comparing the Company’s operating performance over various reporting periods on a consistent basis because it removes from the Company’s operating results the impact of items that, in their opinion, do not reflect the Company’s core operating performance. Adjusted EBITDA also allows the Company to more effectively evaluate its operating performance by comparing the results of operations against its peers without regard to its or its peers’ financing method or capital structure. The Company’s method of computing Adjusted EBITDA is substantially consistent with that used in its debt covenants and also is routinely reviewed by its executive management for that purpose. The Company believes its presentation of Adjusted EBITDA is useful because it provides investors and industry analysts the same information that the Company uses internally for purposes of assessing its core operating performance.Free Cash FlowDaseke defines Free Cash Flow as net cash provided by operating activities less purchases of property and equipment, plus proceeds from sale of property and equipment as such amounts are shown on the face of the Statements of Cash Flows.The Company’s board of directors and executive management team use Free Cash Flow to assess the Company’s liquidity and ability to repay maturing debt, fund operations and make additional investments. The Company believes Free Cash Flow provides useful information to investors because it is an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments, pay dividends to common shareholders and repurchase stock.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 StatementsThis news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan,” “should,” “could,” “would,” “forecast,” “seek,” “target,” “predict,” and “potential,” the negative of these terms, or other comparable terminology. Projected financial information, including our guidance outlook, are forward-looking statements. Forward-looking statements may also include statements about the Company’s goals, including its restructuring actions and cost reduction initiatives; the Company’s financial strategy, liquidity and capital required for its business strategy and plans; general economic conditions; and the Company’s future operating results.These forward-looking statements are based on information available as of the date of this release, and current expectations, forecasts and assumptions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that the Company anticipates. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does 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. Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements.Forward-looking statements are subject to risks and uncertainties (many of which are beyond our control) that could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, general economic and business risks, driver shortages and increases in driver compensation or owner-operator contracted rates, loss of senior management or key operating personnel, 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, the failure of any restructuring actions and cost reduction initiatives that the Company undertakes to meet the expected results, the Company’s ability to generate sufficient cash to service all of the Company’s indebtedness, restrictions in its existing and future debt agreements, increases in interest rates, changes in existing laws or regulations, including environmental and worker health safety laws and regulations and those relating to tax rates or taxes in general, 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. You should not place undue reliance on these forward‐looking statements.  For additional information regarding known material factors that could cause our actual results to differ from those expressed in forward‐looking statements, please see Daseke’s filings with the Securities and Exchange Commission, available at www.sec.gov, including Daseke’s most recent annual report on Form 10-K, particularly the section titled “Risk Factors”.Investor Relations:Alpha IR Group
Joseph Caminiti or Chris Hodges
312-445-2870
[email protected]



* indicates not meaningful.Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company’s consolidated results.Total miles includes company and owner operator and excludes brokerage.Miles are estimated based on information received as the date of filing. Miles may change quarter to quarter when final information is received from each operating segment.* indicates not meaningful.Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company’s consolidated results.Total miles includes company and owner operator and excludes brokerage.Miles are estimated based on information received as the date of filing. Miles may change quarter to quarter when final information is received from each operating segment.* indicates not meaningful.Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company’s consolidated results.Total miles includes company and owner operator and excludes brokerage.Miles are estimated based on information received as the date of filing. Miles may change quarter to quarter when final information is received from each operating segment.* indicates not meaningful.Includes intersegment revenues and expenses, as applicable, which are eliminated in the Company’s consolidated results.Total miles includes company and owner operator and excludes brokerage.Miles are estimated based on information received as the date of filing. Miles may change quarter to quarter when final information is received from each operating segment.



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