Flatbed and specialized carrier Daseke Inc. reported Nov. 6 that third-quarter revenue increased 99% to $461.6 million, compared with $231.3 million in the same period last year. Daseke said this represents the fourth consecutive quarter that year-over-year revenue growth has exceeded 70%.
The jump in revenue comes, in part, because in 2017 and 2018 the Addison, Texas-based carrier has been one of the busiest trucking companies when it comes to acquiring established, well-run regional carriers, and then keeping the existing leadership of those companies in place to run the business.
Third-quarter net income rose to $2.2 million or 1 cent per share, compared with $50,000 or a loss or 3 cents per share in 2017, when the company’s adjusted earnings before interest, taxes, depreciation and amortization was negatively impacted by hurricanes Irma and Harvey, and a lower tractor utilization from an increase in unseated trucks.
“We reported another record quarter with significant expansion in revenue and profitability. These are fantastic results,” CEO Don Daseke said on a conference call with reporters and financial analysts. “Our operating companies continued to perform in a robust rate and high-demand market environment that we expect to continue based upon strong demand from our blue-chip customer base.”
Daseke’s operating ratio improved to 93.3 from 94.4 in 2017.
Operating ratio is a company’s operating expenses as a percentage of its revenue, and it is used to determine efficiency. The lower the ratio, the greater the company’s ability to generate a profit.
We reported another record quarter with significant expansion in revenue and profitability. These are fantastic results.
Daseke said the third-quarter results show the company’s long-term plans to expand and earn more of the flatbed and specialized transportation market is working.
In the flatbed division, revenue increased 112% to $181.5 million compared with $85.6 million a year ago. Daseke said the acquisition of two flatbed companies since late 2017 played an important role in the increase. The company added it had a 10% increase in the flatbed rate per mile and a 9% jump in revenue per tractor when compared with a year ago.
Operating income for the segment jumped 157% to $12.2 million from $4.8 million in 2017.
Daseke’s specialized segment saw third-quarter revenue up 92% to nearly $284 million compared with $147.6 million in 2017. The improvement was driven by five acquisitions since July 2017 as well as a 31% increase in specialized rate per mile and 24% growth in revenue per tractor. Operating income for the segment rose 65% to $11.8 million from $7.2 million in 2017.
On Aug. 2, Daseke announced its latest acquisition — the purchase of Memphis, Tenn.-based Builders Transportation Co. for $53.8 million, including $3.4 million in Daseke stock. Builders operates primarily in the eastern two-thirds of the United States, hauling coil steel, wire products, structural and sheet steel, aluminum, building materials, cast iron and other products. It has more than 320 trucks and nearly 500 spread-axle trailers. The company generated more than $72 million in business in 2017. Senior leadership and employees remained with the company after the sale.
However, on the conference call, the company said it was pausing its aggressive acquisition efforts for the next several months.
“Although we are committed to an opportunistic M&A strategy and our pipeline remains robust, we do not anticipate any further transactions until at least the second quarter of next year,” Daseke said. “Given our performance to date, as well as our outlook, we believe Daseke is very well positioned to accelerate the organic growth of our operating companies and leverage our scale in 2019 and beyond.”
Officials said they are making substantial progress in driver retention, pointing to a pilot program being operated by one of its subsidiaries in the Pacific Northwest. In six months, 97% of the trucks have been seated. Daseke said this is being accomplished by introducing a more traditional guaranteed salary and bonus pay structure.
“We continue to have a very stable turnover ratio, approximately 62%,” President Scott Wheeler said, “and while quite respectable by industry standards, it is a number we can focus on and improve.”