Daseke Inc. DSKE, the nation's largest flatbed carrier, reported second-quarter adjusted net income of $0.10 per share, significantly better than the consensus estimate calling for a $0.09 loss. The result excludes costs associated with the restructuring and transformation of the business, which is expected to improve operating income by $45 million annually.
In its August 6 earnings release, the carrier noted conditions improved throughout the quarter. "On a consolidated basis, our freight volumes incrementally improved week-to-week through both May and June, albeit off a low base, after troughing in April," stated CEO Chris Easter.
Daseke reported second-quarter consolidated revenue declined 22% year-over-year to $352 million. However, the aforementioned cost management program drove a record operating ratio (OR) of 96.5%, or 94.3% on an adjusted basis.
"While softer market conditions impeded our top-line results, the impacts of our improved operational and cost improvement plans helped Daseke more than double its quarterly operating income performance year-over-year. As a result, we delivered an OR of 96.5%, the best quarterly performance in our history as a public company," stated Easter.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 13% year-over-year to $46 million, excluding results from its oil rig transportation unit Aveda Transportation and Energy Services, which the company is actively divesting. Daseke reported $48 million in net proceeds from winding down the unit during the quarter. The proceeds were generated from the sale of property and equipment as well as a reduction in working capital at Aveda.
Daseke reduced tractors by approximately 10% year-over-year in the asset-based division, which includes specialized and flatbed. The asset reductions are part of the carrier's efforts to improve its capital structure and equipment utilization.
Specialized freight revenue fell 22% year-over-year with revenue per tractor declining 13%. Total miles declined 12% and freight revenue per mile moved 11% lower. Excluding Aveda, specialized revenue was only off 6% with rate per mile up 5% and revenue per tractor up 1%. The division reported a 91.2% adjusted OR, 200 basis points better year-over-year.
Flatbed freight revenue declined 15% year-over-year with total miles down 9% and rate per mile down 7%.
Daseke's key performance indicators
On the outlook for the company, "Daseke serves a diverse customer base and various end markets within the industrial economy, and we anticipate that each end market will continue to display recovery curves specific to each individual market," said Easter. "We anticipate that we will see consolidated freight volumes incrementally improve over the coming months, in line with the overall economy's pace of recovery."
The company will host a conference call today at 11 a.m. to discuss second-quarter results with analysts.
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