On November 9, 2023, Daseke Inc (DSKE, Financial), a leading North American transportation solutions specialist, released its financial results for the third quarter of 2023, revealing a challenging period marked by revenue declines and a drop in net income. The company reported a revenue of $402 million, a 13% decrease compared to the third quarter of 2022, and a net income of $3 million, down from $13 million in the same period last year. Adjusted net income also saw a decrease to $8 million, or $0.12 Adjusted EPS, from $24 million, or $0.34 in Q3 2022.
Financial Performance and Capital Allocation
Daseke's financial performance in Q3 2023 was impacted by a $0.28 rate per mile decline, contributing to the revenue drop. Despite these challenges, the company continued its strategic capital allocation, reducing its term-loan balance by $20 million during the quarter and maintaining significant liquidity with $189 million available. The company's operational efficiency improvements were highlighted, with a 0.6% increase in both consolidated productivity and company fleet utilization.
Management Commentary
Jonathan Shepko, CEO of Daseke, commented on the results, emphasizing the company's focus on operational performance and the deployment of technology to further the One Daseke transformation. Despite the softer performance suggested by the headline figures, Shepko noted that, adjusted for fuel and equipment gain on sale, the company delivered adjusted EBITDA margins and operating ratios virtually identical to those posted in the third quarter of 2022. He acknowledged the impact of diesel price volatility and a waning used equipment market on the quarter's results.
In this tumultuous freight environment, we are focusing on what we can control and prioritizing our commitment to strengthen our balance sheet while also reducing our high-cost debt," said Shepko.
Shepko also discussed the company's scrutiny of the cross-cycle durability of the industry verticals, lanes, and customers served, as well as the operating companies through which services are provided. The company is optimizing efficiency and is open to trading size for profitability and resiliency.
Updated 2023 Outlook
With nine months of the year completed, Daseke's forecast for the remaining months anticipates the persistence of thematic pressures on financial performance, including inflationary headwinds and a soft secondary market for equipment sales. The company has adjusted its 2023 full-year adjusted EBITDA outlook to $185 to $190 million and updated its net capital expenditure guidance to $155 to $160 million.
Segment Performance and Liquidity
The Specialized Solutions and Flatbed Solutions segments both experienced revenue declines, with net income decreases in the Specialized Solutions segment and a net loss in the Flatbed Solutions segment. Daseke ended the quarter with $77.2 million in cash and cash equivalents and $112.2 million available under its revolving credit facility.
Conference Call and Company Information
Daseke held a conference call to discuss the Q3 2023 results and provide an update on its 2023 outlook. Further details can be found on the Investors section of the company's website, www.daseke.com.
For value investors and potential GuruFocus.com members, Daseke's commitment to operational efficiency and strategic capital allocation in the face of market headwinds may present a case for long-term value creation. The company's proactive measures to strengthen its balance sheet and reduce debt, coupled with its operational improvements, suggest a focus on resilience and preparedness for future market upturns.
Explore the complete 8-K earnings release (here) from Daseke Inc for further details.
