Daseke, Inc.

Q3 2023 consolidated revenue was $402 million, down 13% year over year; net revenue was $355 million, down 11%. Adjusted EBITDA was $50 million, down $15 million year over year, and adjusted EBITDA margin was 14.1% versus 14.5% last year. Adjusted operating ratio was 93% versus 89% a year ago. Cash flow from operations was $34 million in the quarter, bringing year-to-date CFO to $93 million. Specialized Solutions revenue was $239 million, adjusted EBITDA was $31 million, and adjusted EBITDA margin was 15%. Flatbed Solutions revenue was $164 million, adjusted EBITDA was $19 million, and adjusted EBITDA margin was 14%. For 2023, management lowered adjusted EBITDA guidance to $185 million to $190 million and now expects Q4 adjusted EBITDA of $35 million to $40 million. Net capex guidance was raised to $155 million to $160 million from $135 million to $145 million, while management said 2024 net capex should be lower than 2023.

Jonathan Shepko framed the quarter as evidence that Daseke is improving at the cycle trough, citing better productivity, stronger fleet utilization, and successful integrations. He said the company has already achieved the $10 million adjusted EBITDA contribution goal for 2023 from its integration efforts and expects more benefit in stronger markets. His tone was cautiously optimistic but still clearly tied to a weak freight backdrop, with 2024 described as likely a transition year and recovery not expected until next year.

Aaron Coley focused on capital allocation and the financial impact of deleveraging. He said Daseke made a $20 million discretionary term-loan payment in Q3 and has reduced term-loan balance by $73 million in 2023, while also redeeming all Series B-1 preferred shares for $20 million; together, those actions were funded with cash on hand and improved annual cash costs by more than $5 million if done at the start of the year. He also noted liquidity of $189 million, including $77 million of cash and $112 million available on the revolver, and reiterated that the company will keep evaluating additional term-loan repayments and may earmark cash for share repurchases, while prioritizing deleveraging.

Analysts pressed on why capex is rising while earnings guidance is falling, and management said the company is catching up on delayed equipment deliveries and wants to enter the next cycle with a younger, more reliable fleet. On 2024, management said net capex should be lower and growth capex should also be lower, while 2024 is expected to be a transition year with rates likely stable to improving later in the year and benefits from capacity leaving the market. Questions also covered buybacks, and management said repurchases are on the table at current stock levels, though debt reduction remains the priority.