Daseke Inc. reported a much-improved fourth quarter 2017 over the same period the year before, driven in part by seven acquisitions it made in 2017.
The company reported fourth-quarter net income of $38.8 million, or 82 cents per share, compared with a net loss of $10.8 million, or 57 cent loss, in the same period in 2016. Net income for the fourth quarter and full year, ended Dec. 31, included a $46 million tax benefit as a result of the Tax Cuts and Jobs Act, the tax reform law that took effect in December.
Revenue in the quarter increased 71% to $257.2 million, primarily due to seven acquisitions made during 2017, the company reported. Without the acquisitions, revenues rose 14% due to an increase in rates.
CEO Don Daseke said the Addison, Texas-based company successfully completed the acquisitions in 2017 with the goal of becoming the leading flatbed and specialized logistics provider in the nation.
The company will continue to acquire firms with a three-part strategy, according to Daseke.
“First, we will look at specific market niches where we would expect to generate higher margins, such as our entrance into the high-security cargo market in 2017. Second, we will seek small, highly accretive tuck-in acquisitions that benefit from our scalable platform. Finally, we will continue our general stated strategy of flatbed and specialized transactions but with a sharper focus on organic growth once integrated.”
The company’s flatbed solutions unit reported operating income in the fourth quarter of $3.5 million, up 119% from $1.6 million in the fourth quarter of 2016. Revenue increased 37% to $100.3 million compared with $73.3 million in the year-ago quarter. Daseke attributed the rise to an 11% increase in flatbed rate per mile and a 7% growth in revenue per truck.
Daseke in December completed its acquisition of TSH & Co., its only purchase in the flatbed solutions segment during 2017. The specialized solutions division reported operating income of $2.6 million in the quarter, up 63% from $1.6 million. Revenue jumped 102% to $158.8 million compared with $78.3 million driven by 5% growth in revenue per truck and a small increase in specialized rate per mile.
We will look at specific market niches where we would expect to generate higher margins, such as our entrance into the high-security cargo market in 2017.
CEO Don Daseke
The division also completed the acquisition of Moore Freight Services and Roadmaster Group in the quarter. Those firms joined four others purchased earlier in the year: R&R Trucking Holdings, The Steelman Cos., Schilli Transportation Services and Big Freight Systems.
Daseke is ranked No. 42 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
For full-year 2017 Daseke had net income of $27 million, or 59 cents a share, compared with a net loss of $12.3 million, or 81 cent loss. Revenue rose 30% to $846.3 million.
The flatbed unit saw operating income grow 18% to $18.5 million compared with $15.6 million in 2016. Revenue increased 14% to $354.1 million compared to $310.4 million in 2016. The increase was driven by an 11.3% rise in flatbed rate per mile and 4.9% growth in revenue per truck.
At year-end the flatbed solutions unit had 1,155 company-operated and 1,392 owner-operated tractors and 4,573 trailers.
Specialized Solutions’ operating income in 2017 decreased 6% to $15.3 million compared with $16.3 million in 2016. The unit’s revenue increased 44% to $499.1 million compared with $346 million in 2016, spurred by the revenues of the six firms acquired during the year.
At year-end, the specialized solutions unit had 2,063 company-operated and 663 owner-operated tractors, and 6,664 trailers.
The company’s capital expenditures this year are expected to range between $85 million and $105 million, which includes $20 million to $40 million in growth capital expenditures, compared with $19.8 million in total capital expenditures last year.