September 5, 2017 10:30 AM, EDT

Daseke Adds 13th Operating Company, R&R Trucking of Missouri

Don DasekeJohn Sommers II for Transport Topics

Flatbed group Daseke Inc. for the fourth time this year has added a motor carrier to its operations, bringing R&R Trucking into the fold and, in doing so, adding defense transportation to its capabilities.

Founded in 1988 and based in Duenweg, Mo., R&R is now Daseke’s 13th operating company. Terms of the transaction were not released.

A Sept. 5 statement from Daseke said R&R has two subsidiaries: AATCO and NEI Transport. The companies’ main services include Department of Defense transportation services, commercial explosives, hazardous materials shipping, dromedary shipping of ammunition, radioactive materials and material handling and storage.

This work is sometimes abbreviated as AAE, for arms, ammunition and explosives.

“I knew this was going to be one of the best opportunities the company would ever have. We are going to continue to do what we do best, but now we will have all the support and benefits of being a Daseke company, like consolidated purchasing power and collaboration with our top-quality sister companies,” R&R CEO Phil Nelson said in Daseke’s statement.

Daseke’s most recent merger was the Steelman Cos. on July 1. Earlier this year the company acquired the Schilli Cos. and Big Freight Systems.

Based in Addision, Texas, Daseke ranks No. 42 on the Transport Topics list of the top 100 for-hire carriers in North America. It is the second-largest flatbed/heavy haul/specialized carrier on the list, behind Landstar System.

Daseke Inc.

“We took Daseke public in February of this year to accelerate our vision of building North America’s premier flatbed and specialized transportation company. We continue to attract top-tier companies to join us as we build upon our national scale and further enhance the synergies throughout our unique transportation network,” said Don Daseke, chairman and CEO of his namesake company.

Combining all of the Daseke operating companies, the corporation has more than 3,800 tractors, 8,200 flatbed and specialized trailers and 1 million square feet of industrial warehousing space.

Don Daseke refers to the company’s deals as “mergers” and has often said his strategy is to obtain well-managed carriers and blend their management talents into the larger corporation.

Daseke Inc. hosted a conference call on Sept. 5 to discuss the deal and published a supporting document that said the addition of R&R makes the Pentagon a top 10 shipper for Daseke.

Chief Financial Officer Scott Wheeler said during the call that Daseke paid for the deal with stock and cash and that the cash portion was funded by the company’s delayed-draw term loan. In 2016, R&R generated adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — of $7 million.

The company still has more than $110 million of available capital for further mergers: $70 million from a line of credit, $20 million in cash or cash equivalents and $23.7 million from the term loan.

Wheeler said Phil Nelson and the rest of R&R’s top management will be kept in place with long-term employment contracts.

Asked about the nature of doing AAE work, Wheeler said it is extremely demanding in terms of driver qualifications and Pentagon standards for security at terminals. This creates high barriers to entry for new competitors, Wheeler said, adding that the work is very steady and does not fluctuate much either with economic cycles or seasonality.

Wheeler also said R&R often uses team drivers and that turnover at R&R is much lower than the industry average, although he did not offer a specific rate.