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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 September 30, 2023

 

OR

 

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

 

For the transition period from ________ to _________

 

Commission File Number: 001-37509

 

img166804169_0.jpg 

DASEKE, INC.

(Exact name of registrant as specified in its charter)

 

Delaware
(State or other jurisdiction of incorporation or organization)

 

 

 

47-3913221
(IRS Employer Identification No.)

 

15455 Dallas Parkway, Suite 550
Addison, Texas

 

75001

(Address of principal executive offices)

 

(Zip Code)

 

(972) 248-0412

(Registrant’s telephone number, including area code)

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

 

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, a 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 October 31, 2023 were 46,501,658.

 


Table of Contents

DASEKE, INC.

FORM 10-Q

For the Quarterly Period Ended September 30, 2023

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

 

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

 

33

Item 4. Controls and Procedures

 

33

Part II. Other Information

 

33

Item 1. Legal Proceedings

 

33

Item 1A. Risk Factors

 

33

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

 

33

Item 5. Other Information

 

33

Item 6. Exhibits

 

34

Signatures

 

35

 

 


Table of Contents

Cautionary Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10-Q (this Report) of Daseke, Inc. (Daseke) 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 the “Company,” “we,” “us” and “our” are to Daseke together with its consolidated subsidiaries. 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, 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 our control) that could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, general economic and business risks, such as downturns in customers’ business cycles and recessionary economic cycles, changes in customers’ inventory levels and in the availability of funding for their working capital, disruptions in capital and credit markets, inflationary cost pressures and rising interest rates; 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; supply chain disruptions and constraints generally; 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 or 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; the Company’s ability to finance its capital requirements; 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 for the year ended December 31, 2022, filed with the SEC on February 23, 2023. 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)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

77.2

 

 

$

153.4

 

Accounts receivable, net of allowance of $1.9 and $2.3 at September 30, 2023 and December 31, 2022, respectively

 

 

185.6

 

 

 

179.0

 

Drivers’ advances and other receivables

 

 

10.3

 

 

 

7.9

 

Other current assets

 

 

38.8

 

 

 

37.9

 

Total current assets

 

 

311.9

 

 

 

378.2

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

557.6

 

 

 

488.3

 

Intangible assets, net

 

 

75.2

 

 

 

80.6

 

Goodwill

 

 

137.3

 

 

 

137.3

 

Right-of-use assets

 

 

101.2

 

 

 

107.6

 

Other non-current assets

 

 

3.4

 

 

 

3.4

 

Total assets

 

$

1,186.6

 

 

$

1,195.4

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

19.2

 

 

$

14.7

 

Accrued expenses and other liabilities

 

 

53.4

 

 

 

44.9

 

Accrued payroll, benefits and related taxes

 

 

28.4

 

 

 

30.8

 

Accrued insurance and claims

 

 

47.4

 

 

 

40.6

 

Current portion of long-term debt

 

 

95.2

 

 

 

78.4

 

Current operating lease liabilities

 

 

33.1

 

 

 

34.4

 

Total current liabilities

 

 

276.7

 

 

 

243.8

 

 

 

 

 

 

 

 

Line of credit

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

558.2

 

 

 

582.3

 

Deferred tax liabilities

 

 

96.4

 

 

 

95.0

 

Non-current operating lease liabilities

 

 

74.3

 

 

 

79.6

 

Other non-current liabilities

 

 

1.7

 

 

 

1.7

 

Total liabilities

 

 

1,007.3

 

 

 

1,002.4

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, 10,000,000 total preferred shares authorized:

 

 

 

 

 

 

Series A convertible preferred stock, $0.0001 par value; 650,000 shares issued and outstanding with liquidation preference of $65.0 at September 30, 2023 and December 31, 2022

 

 

65.0

 

 

 

65.0

 

Series B perpetual preferred stock, $0.0001 par value; 47,597 shares issued and outstanding with liquidation preference of $47.6 at September 30, 2023 and 67,597 shares issued and outstanding with liquidation preference of $67.6 at December 31, 2022

 

 

47.6

 

 

 

67.6

 

Common stock, par value $0.0001 per share; 250,000,000 shares authorized, 46,323,242 and 45,028,041 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

 

 

 

 

Additional paid-in-capital

 

 

297.3

 

 

 

293.1

 

Accumulated deficit

 

 

(230.2

)

 

 

(232.3

)

Accumulated other comprehensive loss

 

 

(0.4

)

 

 

(0.4

)

Total stockholders’ equity

 

 

179.3

 

 

 

193.0

 

Total liabilities and stockholders’ equity

 

$

1,186.6

 

 

$

1,195.4

 

 

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

(Unaudited)

(Dollars in millions, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Company freight

 

$

168.7

 

 

$

168.6

 

 

$

499.9

 

 

$

492.4

 

Owner operator freight

 

 

108.2

 

 

 

130.0

 

 

 

333.2

 

 

 

397.7

 

Brokerage

 

 

63.1

 

 

 

85.3

 

 

 

186.9

 

 

 

255.4

 

Logistics

 

 

15.0

 

 

 

13.8

 

 

 

45.2

 

 

 

39.2

 

Fuel surcharge

 

 

47.3

 

 

 

65.1

 

 

 

144.2

 

 

 

180.4

 

Total revenue

 

 

402.3

 

 

 

462.8

 

 

 

1,209.4

 

 

 

1,365.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and employee benefits

 

 

97.3

 

 

 

104.6

 

 

 

308.6

 

 

 

299.3

 

Fuel

 

 

37.3

 

 

 

40.0

 

 

 

105.3

 

 

 

120.4

 

Operations and maintenance

 

 

44.0

 

 

 

43.8

 

 

 

129.4

 

 

 

120.2

 

Purchased freight

 

 

137.3

 

 

 

180.3

 

 

 

425.3

 

 

 

548.9

 

Administrative

 

 

20.4

 

 

 

17.8

 

 

 

55.4

 

 

 

52.8

 

Taxes and licenses

 

 

4.0

 

 

 

3.9

 

 

 

11.9

 

 

 

11.6

 

Insurance and claims

 

 

16.2

 

 

 

20.0

 

 

 

49.1

 

 

 

61.0

 

Acquisition-related transaction expenses

 

 

 

 

 

0.4

 

 

 

1.2

 

 

 

3.7

 

Depreciation and amortization

 

 

28.3

 

 

 

23.9

 

 

 

79.3

 

 

 

68.2

 

Gain on disposition of property and equipment

 

 

(2.6

)

 

 

(4.9

)

 

 

(11.0

)

 

 

(14.0

)

Impairment

 

 

 

 

 

 

 

 

1.5

 

 

 

7.8

 

Restructuring

 

 

0.1

 

 

 

0.8

 

 

 

0.4

 

 

 

2.0

 

Total operating expenses

 

 

382.3

 

 

 

430.6

 

 

 

1,156.4

 

 

 

1,281.9

 

Income from operations

 

 

20.0

 

 

 

32.2

 

 

 

53.0

 

 

 

83.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(1.1

)

 

 

(0.7

)

 

 

(3.7

)

 

 

(1.5

)

Interest expense

 

 

13.4

 

 

 

9.2

 

 

 

39.1

 

 

 

23.8

 

Change in fair value of warrant liability

 

 

 

 

 

 

 

 

 

 

 

(4.7

)

Other

 

 

(0.1

)

 

 

1.2

 

 

 

(0.6

)

 

 

1.3

 

Total other expense

 

 

12.2

 

 

 

9.7

 

 

 

34.8

 

 

 

18.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

7.8

 

 

 

22.5

 

 

 

18.2

 

 

 

64.3

 

Income tax expense

 

 

4.6

 

 

 

9.9

 

 

 

8.8

 

 

 

21.0

 

Net income

 

 

3.2

 

 

 

12.6

 

 

 

9.4

 

 

 

43.3

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(0.5

)

 

 

(0.4

)

 

 

 

 

 

(0.5

)

Comprehensive income

 

$

2.7

 

 

$

12.2

 

 

$

9.4

 

 

$

42.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3.2

 

 

$

12.6

 

 

$

9.4

 

 

$

43.3

 

Less dividends to Series A convertible preferred stockholders

 

 

(1.3

)

 

 

(1.3

)

 

 

(3.7

)

 

 

(3.7

)

Less dividends to Series B perpetual preferred stockholders

 

 

(0.8

)

 

 

 

 

 

(3.6

)

 

 

 

Net income attributable to common stockholders

 

$

1.1

 

 

$

11.3

 

 

$

2.1

 

 

$

39.6

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

0.18

 

 

$

0.05

 

 

$

0.62

 

Diluted

 

$

0.02

 

 

$

0.17

 

 

$

0.04

 

 

$

0.60

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

46,089,770

 

 

 

63,535,897

 

 

 

45,588,585

 

 

 

63,301,446

 

Diluted

 

 

47,608,158

 

 

 

66,270,641

 

 

 

47,613,017

 

 

 

66,266,666

 

Dividends declared per Series A convertible preferred share

 

$

1.91

 

 

$

1.91

 

 

$

5.72

 

 

$

5.72

 

Dividends declared per Series B perpetual preferred share

 

$

17.50

 

 

$

 

 

$

57.44

 

 

$

 

 

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 and Nine Months Ended September 30, 2023

(Unaudited)

(Dollars in millions)

 

 

Series A Convertible

 

 

Series B Perpetual

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Preferred Stock

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Par

 

 

Additional

 

 

Accumulated

 

 

Comprehensive

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Value

 

 

Paid-In Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Total

 

Balance at January 1, 2023

 

 

650,000

 

 

$

65.0

 

 

 

67,597

 

 

$

67.6

 

 

 

45,028,041

 

 

$

 

 

$

293.1

 

 

$

(232.3

)

 

$

(0.4

)

 

$

193.0

 

Vesting of stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

158,359

 

 

 

 

 

 

(0.2

)

 

 

 

 

 

 

 

 

(0.2

)

Series A convertible preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.2

)

 

 

 

 

 

(1.2

)

Series B perpetual preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.5

)

 

 

 

 

 

(1.5

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2.9

 

 

 

 

 

 

 

 

 

2.9

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.1

)

 

 

(0.1

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.5

 

 

 

 

 

 

0.5

 

Balance at March 31, 2023

 

 

650,000

 

 

$

65.0

 

 

 

67,597

 

 

$

67.6

 

 

 

45,186,400

 

 

$

 

 

$

295.8

 

 

$

(234.5

)

 

$

(0.5

)

 

$

193.4

 

Exercise of options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of stock awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

460,541

 

 

 

 

 

 

(2.3

)

 

 

 

 

 

 

 

 

(2.3

)

Series A convertible preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.2

)

 

 

 

 

 

(1.2

)

Series B perpetual preferred stock dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.3

)

 

 

 

 

 

(1.3

)

Series B perpetual preferred stock redemption

 

 

 

 

 

 

 

 

(20,000

)

 

 

(20.0

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20.0

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.6

 

 

 

 

 

 

 

 

 

1.6

 

Foreign currency translation adjustments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.6