Daseke, Inc. (NASDAQ: DSKE), the largest flatbed, specialized transportation and logistics solutions company in North America, lowered its full-year 2019 outlook specifically citing worse than expected results in its flatbed division.
In its second quarter 2019 earnings report, the carrier reported adjusted net income of $3.4 million in the period, or $0.05 per share, which was considerably better than the consensus estimate that called for a $0.06 loss.
However, weakness in the flatbed market led the company to lower its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) forecast by approximately 17 percent on both ends of the range. The company now expects total revenue of $1.7 to $1.75 billion (prior guidance had been $1.8 billion to $1.9 billion) and adjusted EBITDA of $165 to $175 million (prior guidance had been $200 million to $210 million).
"While our Specialized segment continues to deliver strong performance amid loosening economic conditions, the market for our Flatbed solutions came in lower than we originally projected in the first half of fiscal 2019. As a result, we have adjusted our outlook to reflect today's market conditions. We remain committed to capturing synergies throughout our operating companies, while seeking to lower our cost structure and de-lever the business," said Daseke's Chief Financial Officer Bharat Mahajan.
In the second quarter, total revenue increased 20 percent year-over-year to $451 million, up 1 percent on an adjusted acquisition basis. Adjusted EBITDA was basically flat year-over-year at $46 million, down 16 percent when adjusted for acquisitions.
"Our unique and leading Specialized Solutions transportation segment delivered another quarter of consistent performance, which helped us overcome a softer environment in the Flatbed Solutions market and deliver 20 percent top-line revenue growth or nearly 1 percent on an organic, acquisition-adjusted basis," said Daseke's chairman and Chief Executive Officer Don Daseke.
Specialized Solutions revenue increased 29 percent year-over-year to $281 million. Revenue per tractor increased 13 percent to $64,600 as rate per mile was up 23 percent to $3.54. Adjusted operating ratio (OR) was 93.2 percent for the division, 150 basis points worse year-over-year.
Key Performance Indicators – Specialized Solutions
Flatbed Solutions revenue increased 8 percent year-over-year to $175 million with revenue per tractor declining 7 percent to $42,400 and rate per mile moving 4 percent lower at $1.94. Adjusted OR was 95.5 percent for the division, 320 basis points worse year-over-year.
Key Performance Indicators – Flatbed Solutions
The company also announced operational changes designed to provide "intelligent integration and efficiency." Specifically, Daseke will consolidate some of its acquired operating companies, lowering its number of separately operated business units from 16 to 13. Also, the company will implement a variety of strategic initiatives throughout the organization. In total, these actions are expected to generate $20 to $25 million in operating income by fiscal 2021.
Shares of DSKE are off more than 25 percent in early trading.
DSKE will hold a call to discuss these results with analysts and media at 11:00 a.m. EDT.
DSKE Stock Chart – SONAR
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