Transportation Firm Daseke Beats Q3 Revenues, Cites Challenging Market Condition

Daseke Inc DSKE reported third-quarter (Q3) revenue of $402.3 million, beating the consensus of $398.9 million.

Q3 revenue declined from $462.8 million prior year due to lower owner-operator freight, brokerage, and fuel surcharge.

Specialized Solutions segment revenue fell to $238.7 million from $268.6 million a year ago, and Flatbed Solutions segment revenues declined to $163.6 million from $194.2 million the prior year. 

Adjusted EBITDA stood at $50.2 million vs. $64.8 million a year ago owing to freight rate declines, higher diesel prices, and a weakened secondary market for revenue equipment sales.

Adjusted EPS of $0.12 in line with the consensus.

Operational efficiency improved by 0.6% in each consolidated productivity and company fleet utilization in the quarter.

Operating cash flow stood at $33.6 million, and cash capital expenditures were $8.1 million in Q3.

As of Sep. 30, cash and cash equivalents stood at $77.2 million, and DSKE had $112.2 million available under its revolving credit facility.

FY23 Outlook: The company lowered adjusted EBITDA guidance to $185 million to $190 million from $200 million to $210 million a year ago due to the seasonal softening of a challenged rate environment, inflationary headwinds, sluggish secondary market for equipment sales, and owner operator drivers seeking higher rates.

This implies Q4 adjusted EBITDA of $35 million to $40 million.

DSKE raised capital expenditures outlook to $155 million to $160 million from $135 million to $145 million earlier. 

CEO Jonathan Shepko anticipates that "many of the thematic pressures on financial performance" will persist.

That includes inflationary headwinds, an oversupplied used equipment market, a restless owner operator and lease purchase driver pool, and typical seasonal rate softening in an already challenged environment."

"We do believe in the adage, ‘the cure for low prices is low prices,' and this cycle will eventually correct in a meaningful way, even without an external catalyst. We will likely not be beneficiaries of this recovery until 2024, and as such we are adjusting our 2023 full-year adjusted EBITDA outlook." 

Price Action: DSKE shares are trading lower by 4.02% at $4.30 on the last check Thursday.