Daseke Inc.
08/03/2021 | Press release | Distributed by Public on 08/03/2021 08:47
Q2 Earnings Presentation August 3, 2021 (Form 8-K)
Q2 Earnings Presentation August 3, 2021
Important Disclaimers Forward-Looking Statements This presentation contains 'forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements may be identified by the use of words such as 'may,' 'will,' 'continue,' 'forecast,' 'intend,' 'seek,' 'target,' 'anticipate,' 'believe,' 'expect,' 'estimate,' 'plan,' 'outlook,' 'should,' 'could,' 'would,' 'predict,' 'potential,' and 'project,' the negative of these terms, or other comparable terminology and similar expressions. Forward-looking statements may include projected financial information and results as well as statements about Daseke's goals, including its restructuring plans; Daseke's financial strategy, liquidity and capital required for its business strategy and plans; and general economic conditions. The forward-looking statements contained herein are based on information available as of the date of this news 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 Daseke anticipates, and readers are cautioned not to place undue reliance on the forward-looking statements. A number of factors, many of which are beyond our control, could cause actual results or outcomes to differ materially from those indicated by the forward-looking statements contained herein. These factors include, but are not limited to, general economic and business risks, such as downturns in customers' business cycles and disruptions in capital and credit markets (including as a result of the coronavirus (COVID-19) pandemic or other global and national heath epidemics or concerns); Daseke's ability to adequately address downward pricing and other competitive pressures; driver shortages and increases in driver compensation or owner-operator contracted rates; Daseke's ability to execute and realize all of the expected benefits of its integration, business improvement and comprehensive restructuring plans; loss of key personnel; Daseke's ability to realize all of the intended benefits from recent or future acquisitions; Daseke's ability to complete recent or future divestitures 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; Daseke's ability to generate sufficient cash to service all of its indebtedness and Daseke's ability to finance its capital requirements; restrictions in Daseke's 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 Daseke and its operations; insurance and claims expenses; and litigation and governmental proceedings. 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 (the 'SEC'), available at www.sec.gov, including Daseke's Annual Report on Form 10-K filed with the SEC on March 10, 2020 and subsequent Quarterly Reports on Form 10-Q, particularly the section titled 'Risk Factors.' The effect of the COVID-19 pandemic may remain prevalent for a significant period of time and may continue to adversely affect the Company's business, results of operations and financial condition even after the COVID-19 pandemic has subsided and 'stay at home' mandates have been lifted. The extent to which the COVID-19 pandemic impacts the Company will depend on numerous evolving factors and future developments that we are not able to predict. There are no comparable recent events that provide guidance as to the effect the COVID-19 global pandemic may have, and, as a result, the ultimate impact of the pandemic is highly uncertain and subject to change. Additionally, the Company will regularly evaluate its capital structure and liquidity position. From time to time and as opportunities arise, the Company may access the debt capital markets and modify its debt arrangements to optimize its capital structure and liquidity position. Daseke does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date as of when 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. Non-GAAP Financial Measures This presentation includes non-GAAP financial measures for the Company and its reporting segments. The Company believes its presentation of Non-GAAP financial measures 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. You can find the reconciliations of these measures to the nearest comparable GAAP measure in the Appendix of this presentation. 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. In particular, we have not reconciled our expectations as to forward-looking Adjusted EBITDA to net income due to the difficulty in making an accurate projection as to the change in fair value of warrant liability, which will have a significant impact on our GAAP net income; accordingly, a reconciliation of forward-looking Adjusted EBITDA to net income is not available without unreasonable efforts. Please note that non-GAAP measures 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 supplementally. In the non-GAAP measures discussed below, management refers to certain material items that management believes do not reflect the Company's core operating performance, which management believes represent its performance in the ordinary, ongoing and customary course of its operations. Management views the Company's core operating performance as its operating results excluding the impact of items including, but not limited to, stock-based compensation, impairments, amortization of intangible assets, restructuring, business transformation costs, and severance. Management believes excluding these items enables investors to evaluate more clearly and consistently the Company's core operational performance in the same manner that management evaluates its core operational performance. Daseke defines: Adjusted EBITDA as net income (loss) plus (i) depreciation and amortization, (ii) interest, (iii) income taxes, and (iv) other material items that management believes do not reflect our core operating performance. Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenue. Adjusted Net Income (Loss) as net income (loss) tax-adjusted using an adjusted effective tax rate for material items that management believes do not reflect our core operating performance. Adjusted Net Income (Loss) per share as Adjusted Net Income (Loss) divided by the weighted average number of shares of common stock outstanding during the period under the two-class method. 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. Adjusted Operating Income (Loss) as total revenue less Adjusted Operating Expenses. Adjusted Operating Expenses as total operating expenses less: material items that management believes do not reflect our core operating performance. Adjusted Operating Ratio as Adjusted Operating Expenses, as a percentage of total revenue. Revenue excluding fuel surcharge as revenue less fuel surcharges. Net Debt as total debt less cash and cash equivalents. Rate per mile is the period's revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner-operator miles driven in the period. Revenue per Tractor is the period's revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner-operator tractors. The Company uses certain metrics and ratios as a supplement to its GAAP results in evaluating certain aspects of its business, as described below. The Company defines previously defined terms appended with 'ex-Aveda' as their previously defined term excluding the impact of the Aveda business, which was disposed of in 2020. See the Appendix for directly comparable GAAP measures. Industry and Market Data This presentation includes market data and other statistical information from third party sources, including independent industry publications, government publications and other published independent sources. Although Daseke believes these third-party sources are reliable as of their respective dates, Daseke has not independently verified the accuracy or completeness of this information.
Chairman Comments on CEO Announcement Chuck Serianni Chairman Background: Daseke Board Chairman Elected Independent Chairman in 2021 Director since May 2019 EVP and CFO of Republic Services (NYSE: RSG) from 2014 - 2020 Special Advisor to the CEO from 2020 - 2021 Jonathan Shepko CEO Background: Chief Executive Officer since August 2021 Interim CEO since January 2021 Director since February 2017 Chaired special operating committee that designed the tactical pivot and resetting of strategic priorities that Daseke successfully executed against through 2020 Jonathan brings a valuable combination of legacy insight, M&A and capital markets experience, and strategic execution - all aligned with Daseke's near-term priorities
Q2 2021: Key Highlights 88.0% Adj. Operating Ratio 88.8% Operating Ratio Delivered quarterly records for Adj. EBITDA, Adj. Net Income, Operating Ratio, and Adj. Operating Ratio Free cash flow benefitting from strong EBITDA generation and lower cash interest Balance sheet to be utilized strategically for growth Revenue growth reflects superior operational execution and strong industrial end market fundamentals Cash From Operations $28.6m Revenue $404.0m Up 14.9% year-over-year Adj. EBITDA $69.2m Up 58.4% year-over-year Net Leverage 2.4x Adj. Net Income $30.2m Up 208.2% year-over-year Adj. EPS $0.42 (diluted) Free Cash Flow $32.3m Operating Income $45.3m 88.8% Operating Ratio 88.0% Adj. Operating Ratio
Consolidated Financial Results Quarter ended Jun. 2021 2Q '21 2Q '20 %▲ Total Revenue $404.0 $351.7 +14.9% Revenue (excl. FSC) $370.1 $329.7 +12.3% Operating Income $45.3 $12.4 +265.3% Net Income $35.3 $1.6 nm Adjusted EBITDA $69.2 $43.7 +58.4% Total Segments Adj. EBITDA $74.6 $53.4 +39.7% Corporate Adj. EBITDA ($5.4) ($9.7) (44.3%) Quarter ended Jun. 2021 2Q '21 2Q '20 %▲ Total Revenue $404.0 $341.9 +18.2% Revenue (excl. FSC) $370.1 $319.9 +15.7% Operating Income $45.5 $18.9 +140.7% Adjusted Net Income $30.2 $9.8 +208.2% Adjusted EBITDA $69.4 $45.9 +51.2% Excluding Aveda ($ in millions)
Specialized Financial Metrics Q2 2021 Q2 2020 %▲ Revenue $226.1 $221.5 +2.1% Operating Ratio 87.2% 93.5% (630) bps Adj. Operating Ratio 86.6% 91.0% (440) bps Adjusted EBITDA $42.6 $33.0 +29.1% Adjusted EBITDA Margin 18.8% 14.9% +390 bps Rate per Mile $3.12 $3.16 (1.3%) Revenue per Tractor $66.7K $56.4K 18.3% (Quarter ended June 30; $ in Millions, except Rate per Mile and Revenue per Tractor) Q2 2021 Results Specialized Segment: Defensible Advantages Embrace Complexity Technical Know-how Highly Specialized Equipment Highly Skilled, Experienced Drivers
Specialized Financial Metrics (Excluding Aveda) Q2 2021 Q2 2020 %▲ Revenue $226.1 $211.7 +6.8% Operating Ratio 87.1% 90.1% (300) bps Adj. Operating Ratio 86.5% 89.4% (290) Bps Adjusted EBITDA $42.8 $35.2 +21.6% Adjusted EBITDA Margin 18.9% 16.6% +230 bps ($ in Millions, Quarter ended June 30) Q2 2021 Results Revenues and margins grow as operational execution offset lower fleet size and rising costs Meaningful Y/Y Adj EBITDA growth with improved operating leverage despite marginal growth in rate per mile Strong industrial demand, especially construction verticals, more than offset lower wind revenues vs. 2Q'20
Flatbed Financial Metrics Q2 2021 Q2 2020 %▲ Revenue $180.9 $137.2 31.9% Operating Ratio 87.3% 92.2% (490) bps Adj. Operating Ratio 86.8% 91.3% (450) bps Adjusted EBITDA $32.0 $20.4 +56.9% Adjusted EBITDA Margin 17.7% 14.9% +280 bps ($ in Millions, Quarter ended March 31) Q2 2021 Results Improved fleet operations into healthy end-market demand driving freight rate per mile and revenues per tractor Adj. EBITDA and margins grow Y/Y driven by execution and fleet optimization, overcoming higher costs Operating Ratio and margins improve through increased operating leverage and fleet optimization efforts
Capital Summary & Updated 2021 Outlook ($ in millions) Free Cash Flow & Financed Capex ------- Successfully flexing Company and Owner/Operator resources into areas of high-margin demand Industry capacity constraints and tight market driving growth in brokerage revenues Stronger market demand fundamentals, as construction-related verticals more than offsetting lower wind energy revenues Rate environment helping revenues keep pace with cost inflation Operating Ratio to continue showing Y/Y improvement towards longer-term 90% goal Updated 2021 Outlook Updated Prior Revenue $1.5B - $1.6B $1.4B - $1.5B Adj. EBITDA $200M - $210M $165M - $175M
Strategic Commentary Execute Decisively Institutionalize the Platform Focus on Growth Accelerate technological integration and improved systems infrastructure to further support improved operational decision-making and execution Continue rationalization of our OpCo stable Foster the adoption of a consolidated network mindset Shift from pure-play, trailer-centric strategy to one focused on becoming the premier transportation solutions specialist for servicing challenging, industrial end-markets Pursue opportunities for strategic growth, including vertical and horizontal targets Prioritize organic growth opportunities with defined 'playbooks' that enable us to better leverage our scale and capabilities for the benefit of our customers Leverage the differentiated depth of our OpCo leadership teams to drive above-market results Rely on diversified end-market and 'asset-right' fleet composition to be opportunistic across market cycles Maintain open and frequent communication with our customers
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Daseke, Inc. 15455 Dallas Parkway, Ste 550Addison, TX 75001 www.Daseke.com Investor Relations Joe Caminiti or Ashley Gruenberg Alpha IR Group 312-445-2870 [email protected] Contact Information