10-Q 1 dske-20220331.htm 10-Q 10-Q
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Table of Contents

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2022

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ________ to _________

 

img165874883_0.jpg 

DASEKE, INC.

(Exact name of registrant as specified in its charter)

 

Delaware
(State or other jurisdiction of incorporation or organization)

 

001-37509
(Commission
File Number)

 

47-3913221
(IRS Employer
Identification No.)

 

15455 Dallas Parkway, Suite 550
Addison, Texas

 

75001

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (972) 248-0412

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

DSKE

The NASDAQ Stock Market LLC

Warrants, each exercisable for one half of a share of Common Stock at an exercise price of $5.75 per half share

*

*

 

* On February 23, 2022, NASDAQ Stock Market LLC filed a Form 25 with the Securities and Exchange Commission (the SEC) to delist Daseke, Inc.’s warrants from NASDAQ due to the expiration of the warrants on February 27, 2022; each warrant not exercised on or before the expiration date became void. The deregistration of the warrants under Section 12(b) of the Securities Exchange Act of 1934, as amended, will be effective for 90 days, or such shorter period as the SEC may determine, after the filing of the Form 25.

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

☐ Large accelerated filer

 

 

 

Accelerated filer

☐ Non-accelerated filer

 

 

 

Smaller reporting company

 

 

 

 

 Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

Common shares of the registrant outstanding at April 22, 2022 were 63,454,264.

 

 

 


Table of Contents

DASEKE, INC.

FORM 10-Q

For the Quarterly Period Ended March 31, 2022

INDEX

 

 

 

 

 

 

Page No.

Part I. Financial Information

 

1

Item 1. Financial Statements (Unaudited)

 

1

Consolidated Balance Sheets

 

1

Consolidated Statements of Operations and Comprehensive Income (Loss)

 

2

Consolidated Statements of Changes in Stockholders' Equity

 

3

Consolidated Statements of Cash Flows

 

5

Notes to Consolidated Financial Statements

 

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

26

Item 4. Controls and Procedures

 

26

Part II. Other Information

 

26

Item 1. Legal Proceedings

 

26

Item 1A. Risk Factors

 

26

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

26

Item 6. Exhibits

 

27

Signatures

 

28

 

 


Table of Contents

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q (this Report) of Daseke, Inc. (Daseke or the Company) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except as otherwise indicated by the context, references in this Report to “we,” “us” and “our” are to the consolidated business of the Company. All statements in this Report, other than statements of historical fact, are forward-looking statements. Forward-looking statements may be identified by the use of words such as “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan,” “should,” “could,” “would,” “forecast,” “seek,” “target,” “predict,” and “potential,” the negative of these terms, or other comparable terminology. Forward-looking statements may include statements about the Company’s goals; the Company’s business strategy and plans; the Company’s financial strategy, liquidity and capital required for its business strategy and plans; the Company’s competition and government regulations; general economic conditions; and the Company’s future operating results.

 

These forward-looking statements are based on information available as of the date of this Report, and current expectations, forecasts and assumptions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that the Company anticipates. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Readers are cautioned not to place undue reliance on the forward-looking statements.

 

Forward-looking statements are subject to risks and uncertainties (many of which are beyond the Company’s control) that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, general economic and business risks, such as downturns in customers’ business cycles and disruptions in capital and credit markets; the Company’s ability to adequately address downward pricing and other competitive pressures; the Company’s insurance or claims expense; driver shortages and increases in driver compensation or owner operator contracted rates; fluctuations in the price or availability of diesel fuel; increased prices for, or decreases in the availability of, new revenue equipment and decreases in the value of used revenue equipment; impact to the Company’s business and operations resulting from the COVID-19 pandemic; seasonality and the impact of weather and other catastrophic events; the Company’s ability to secure the services of third-party capacity providers on competitive terms; loss of key personnel; a failure of the Company’s information systems, including disruptions or failures of services essential to our operations or upon which our information technology platforms rely, data or other security breach, or cybersecurity incidents; the Company’s ability to execute and realize all of the expected benefits of its integration, business improvement and comprehensive restructuring plans; the Company’s ability to realize all of the intended benefits from acquisitions and investments; the Company’s ability to complete divestitures successfully; the Company’s ability to generate sufficient cash to service all of the Company’s indebtedness and the Company’s ability to finance its capital requirements; restrictions in its existing and future debt agreements; increases in interest rates; changes in existing laws or regulations, including environmental and worker health safety laws and regulations and those relating to tax rates or taxes in general; the impact of governmental regulations and other governmental actions related to the Company and its operations; and litigation and governmental proceedings. For additional information regarding known material factors that could cause the Company’s actual results to differ from its projected results, please see the Company’s filings with the Securities and Exchange Commission (the SEC), particularly the section titled “Part I. Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K, filed with the SEC on February 23, 2022. Additional risks or uncertainties that are not currently known to us, that we currently deem to be immaterial, or that could apply to any company could also materially adversely affect our business, financial condition, or future results.

 

All forward-looking statements, expressed or implied, attributed to the Company or persons acting on its behalf are expressly qualified in their entirety by this cautionary statement.

 


Table of Contents

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

DASEKE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in millions, except per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

153.5

 

 

$

147.5

 

Accounts receivable, net of allowance of $2.1 at March 31, 2022 and December 31, 2021

 

 

202.2

 

 

 

172.3

 

Drivers’ advances and other receivables

 

 

9.9

 

 

 

7.7

 

Other current assets

 

 

19.8

 

 

 

22.6

 

Total current assets

 

 

385.4

 

 

 

350.1

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

397.7

 

 

 

397.7

 

Intangible assets, net

 

 

85.2

 

 

 

86.9

 

Goodwill

 

 

148.0

 

 

 

140.1

 

Right-of-use assets

 

 

109.1

 

 

 

108.3

 

Other non-current assets

 

 

4.2

 

 

 

4.3

 

Total assets

 

$

1,129.6

 

 

$

1,087.4

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

20.2

 

 

$

14.7

 

Accrued expenses and other liabilities

 

 

59.8

 

 

 

43.9

 

Accrued payroll, benefits and related taxes

 

 

28.5

 

 

 

32.9

 

Accrued insurance and claims

 

 

36.8

 

 

 

26.8

 

Current portion of long-term debt

 

 

55.2

 

 

 

55.5

 

Warrant liability

 

 

 

 

 

4.7

 

Current operating lease liabilities

 

 

34.1

 

 

 

33.7

 

Total current liabilities

 

 

234.6

 

 

 

212.2

 

 

 

 

 

 

 

 

Line of credit

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

524.3

 

 

 

531.4

 

Deferred tax liabilities

 

 

85.5

 

 

 

85.1

 

Non-current operating lease liabilities

 

 

81.5

 

 

 

81.1

 

Other non-current liabilities

 

 

3.5

 

 

 

1.6

 

Total liabilities

 

 

929.4

 

 

 

911.4

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Series A convertible preferred stock, $0.0001 par value; 10,000,000 shares authorized; 650,000 shares issued with liquidation preference of $65.0 at March 31, 2022 and December 31, 2021

 

 

65.0

 

 

 

65.0

 

Common stock, par value $0.0001 per share; 250,000,000 shares authorized, 63,441,801 and 62,489,278 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Additional paid-in-capital

 

 

400.2

 

 

 

387.8

 

Accumulated deficit

 

 

(265.0

)

 

 

(276.8

)

Accumulated other comprehensive income

 

 

 

 

 

 

Total stockholders’ equity

 

 

200.2

 

 

 

176.0

 

Total liabilities and stockholders’ equity

 

$

1,129.6

 

 

$

1,087.4

 

 

The accompanying notes are an integral part of the consolidated financial statements.

1


Table of Contents

DASEKE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Dollars in millions, except per share data)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

Company freight

 

$

156.0

 

 

$

145.1

 

Owner operator freight

 

 

129.8

 

 

 

105.1

 

Brokerage

 

 

78.2

 

 

 

48.5

 

Logistics

 

 

11.4

 

 

 

8.5

 

Fuel surcharge

 

 

45.6

 

 

 

26.7

 

Total revenue

 

 

421.0

 

 

 

333.9

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Salaries, wages and employee benefits

 

 

97.5

 

 

 

90.7

 

Fuel

 

 

35.1

 

 

 

25.4

 

Operations and maintenance

 

 

34.4

 

 

 

30.3

 

Communications

 

 

0.9

 

 

 

1.1

 

Purchased freight

 

 

171.6

 

 

 

121.4

 

Administrative

 

 

16.9

 

 

 

16.5

 

Sales and marketing

 

 

0.4

 

 

 

0.6

 

Taxes and licenses

 

 

3.6

 

 

 

3.9

 

Insurance and claims

 

 

23.4

 

 

 

16.8

 

Acquisition-related transaction expenses

 

 

1.4

 

 

 

 

Depreciation and amortization

 

 

21.6

 

 

 

22.2

 

Gain on disposition of property and equipment

 

 

(4.6

)

 

 

(3.1

)

Restructuring charges

 

 

0.6

 

 

 

 

Total operating expenses

 

 

402.8

 

 

 

325.8

 

Income from operations

 

 

18.2

 

 

 

8.1

 

 

 

 

 

 

 

 

Other expense (income):

 

 

 

 

 

 

Interest income

 

 

(0.1

)

 

 

(0.1

)

Interest expense

 

 

7.1

 

 

 

11.1

 

Change in fair value of warrant liability

 

 

(4.7

)

 

 

5.6

 

Other

 

 

(0.5

)

 

 

(0.4

)

Total other expense

 

 

1.8

 

 

 

16.2

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

16.4

 

 

 

(8.1

)

Income tax expense (benefit)

 

 

3.4

 

 

 

(0.8

)

Net income (loss)

 

 

13.0

 

 

 

(7.3

)

Other comprehensive income (loss):

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

1.1

 

 

 

0.2

 

Comprehensive income (loss)

 

$

14.1

 

 

$

(7.1

)

 

 

 

 

 

 

 

Net income (loss)

 

$

13.0

 

 

$

(7.3

)

Less dividends to Series A convertible preferred stockholders

 

 

(1.2

)

 

 

(1.2

)

Net income (loss) attributable to common stockholders

 

$

11.8

 

 

$

(8.5

)

Earnings (loss) per common share:

 

 

 

 

 

 

Basic

 

$

0.19

 

 

$

(0.13

)

Diluted

 

$

0.18

 

 

$

(0.13

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

Basic

 

 

62,891,317

 

 

 

65,080,364

 

Diluted

 

 

65,433,575

 

 

 

65,080,364

 

Dividends declared per Series A convertible preferred share

 

$

1.91

 

 

$

1.91

 

 

The accompanying notes are an integral part of the consolidated financial statements.

2


Table of Contents

DASEKE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2022

(Unaudited)

(Dollars in millions)

 

 

Series A Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Par

 

 

Additional

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Value

 

 

Paid-In Capital

 

 

Deficit

 

 

Income

 

 

Total

 

Balance at January 1, 2022

 

 

650,000

 

 

$

65.0

 

 

 

62,489,278

 

 

$

 

 

$

387.8

 

 

$

(276.8

)

 

$

 

 

$

176.0

 

Exercise of options

 

 

 

 

 

 

 

 

91,425

 

 

 

 

 

 

0.8

 

 

 

 

 

 

 

 

 

0.8

 

Exercise of warrants

 

 

 

 

 

 

 

 

817,648

 

 

 

 

 

 

9.4

 

 

 

 

 

 

 

 

 

9.4

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

43,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A convertible preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.2

)

 

 

 

 

 

(1.2

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.2

 

 

 

 

 

 

 

 

 

2.2

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13.0

 

 

 

 

 

 

13.0

 

Balance at March 31, 2022

 

 

650,000

 

 

$

65.0

 

 

 

63,441,801

 

 

$

 

 

$

400.2

 

 

$

(265.0

)

 

$

 

 

$

200.2

 

The accompanying notes are an integral part of the consolidated financial statements.

3


Table of Contents

DASEKE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2021

(Unaudited)

(Dollars in millions)

 

 

Series A Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Par

 

 

Additional

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Value

 

 

Paid-In Capital

 

 

Deficit

 

 

Income

 

 

Total

 

Balance at January 1, 2021

 

 

650,000

 

 

$

65.0

 

 

 

65,023,174

 

 

$

 

 

$

401.6

 

 

$

(327.8

)

 

$

 

 

$

138.8

 

Exercise of options

 

 

 

 

 

 

 

 

149,545

 

 

 

 

 

 

0.6

 

 

 

 

 

 

 

 

 

0.6

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

5,737

 

 

 

 

 

 

(0.8

)

 

 

 

 

 

 

 

 

(0.8

)

Series A convertible preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.2

)

 

 

 

 

 

(1.2

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.4

 

 

 

 

 

 

 

 

 

1.4

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.2

 

 

 

0.2

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7.3

)

 

 

 

 

 

(7.3

)

Balance at March 31, 2021

 

 

650,000

 

 

$

65.0

 

 

 

65,178,456

 

 

$

 

 

$

402.8

 

 

$

(336.3

)

 

$

0.2

 

 

$

131.7

 

The accompanying notes are an integral part of the consolidated financial statements.

4


Table of Contents

DASEKE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in millions)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net income (loss)

 

$

13.0

 

 

$

(7.3

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities

 

 

 

 

 

 

Depreciation

 

 

19.9

 

 

 

20.5

 

Amortization of intangible assets

 

 

1.7

 

 

 

1.7

 

Amortization of deferred financing fees

 

 

0.3

 

 

 

0.8

 

Non-cash operating lease expense

 

 

 

 

 

(0.4

)

Change in fair value of warrant liability

 

 

(4.7

)

 

 

5.6

 

Write-off of deferred financing fees

 

 

 

 

 

1.1

 

Stock-based compensation expense

 

 

4.2

 

 

 

2.4

 

Deferred taxes

 

 

0.3

 

 

 

(0.8

)

Bad debt expense

 

 

0.1

 

 

 

0.2

 

Gain on disposition of property and equipment

 

 

(4.6

)

 

 

(3.1

)

Changes in operating assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

 

(26.4

)

 

 

(3.4

)

Drivers’ advances and other receivables

 

 

(4.7

)

 

 

0.4

 

Other current assets

 

 

4.3

 

 

 

5.7

 

Accounts payable

 

 

5.4

 

 

 

(3.8

)

Accrued expenses and other liabilities

 

 

20.4

 

 

 

9.9

 

Net cash provided by operating activities

 

 

29.2

 

 

 

29.5

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(8.8

)

 

 

(5.2

)

Proceeds from sale of property and equipment

 

 

11.5

 

 

 

10.1

 

Cash paid for acquisitions, net of cash received

 

 

(19.3

)

 

 

 

Net cash (used in) provided by investing activities

 

 

(16.6

)

 

 

4.9

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Advances on line of credit

 

 

422.1

 

 

 

337.6

 

Repayments on line of credit

 

 

(422.1

)

 

 

(337.6

)

Principal payments on long-term debt

 

 

(15.3

)

 

 

(196.5

)

Proceeds from long-term debt

 

 

 

 

 

97.5

 

Payments of deferred financing fees

 

 

 

 

 

(2.9

)

Exercise of stock options, net

 

 

0.8

 

 

 

 

Exercise of warrants