Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 10, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | Daseke, Inc. | |
Entity Central Index Key | 1,642,453 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Limited Partners Units | 37,715,960 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 38,549 | $ 3,695 |
Accounts receivable, net of allowance of $254 and $321 at March 31, 2017 and December 31, 2016, respectively | 67,342 | 54,177 |
Drivers' advances and other receivables | 2,446 | 2,632 |
Current portion of net investment in sales-type leases | 4,015 | 3,516 |
Parts supplies | 1,687 | 1,467 |
Income tax receivable | 418 | 719 |
Prepaid and other current assets | 11,917 | 13,504 |
Total current assets | 126,374 | 79,710 |
Property and equipment, net | 303,035 | 318,747 |
Intangible Assets, net | 70,211 | 71,653 |
Goodwill | 89,035 | 89,035 |
Other long-term assets | 12,395 | 11,090 |
Total assets | 601,050 | 570,235 |
Current liabilities: | ||
Checks outstanding in excess of bank balances | 1,479 | 1,166 |
Accounts payable | 7,191 | 4,788 |
Accrued expenses and other liabilities | 15,182 | 16,104 |
Accrued payroll, benefits and related taxes | 9,037 | 7,835 |
Accrued insurance and claims | 9,617 | 9,840 |
Current portion of long-term debt | 14,131 | 52,665 |
Total current liabilities | 56,637 | 92,398 |
Line of credit | 6,858 | |
Long-term debt, net of current portion | 266,466 | 208,372 |
Deferred tax liabilities | 89,744 | 92,815 |
Other long-term liabilities | 230 | 286 |
Subordinated debt | 66,443 | |
Total liabilities | 413,077 | 467,172 |
Commitments and contingencies (Note 14) | ||
Stockholders’ equity: | ||
Common stock (par value $0.0001 per share); 250,000,000 shares authorized, 37,715,960 shares issued and outstanding | 4 | 1 |
Additional paid-in-capital | 146,215 | 117,807 |
Accumulated deficit | (23,246) | (14,694) |
Accumulated other comprehensive loss | (52) | |
Total stockholders’ equity | 187,973 | 103,063 |
Total liabilities and stockholders’ equity | 601,050 | 570,235 |
Series B convertible preferred stock | ||
Stockholders’ equity: | ||
Preferred Stock Value | $ 1 | |
Series A convertible preferred stock | ||
Stockholders’ equity: | ||
Preferred Stock Value | $ 65,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Net of allowance | $ 254 | $ 321 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 250,000,000 | 250,000,000 |
Common stock, issued | 37,715,960 | 37,715,960 |
Common stock, outstanding | 37,715,960 | 37,715,960 |
Series B convertible preferred stock | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized | 75,000 | 75,000 |
Preferred stock, issued | 64,500 | 64,500 |
Preferred stock, outstanding | 64,500 | 64,500 |
Series A convertible preferred stock | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 10,000,000 | 10,000,000 |
Preferred stock, issued | 650,000 | 650,000 |
Preferred liquidation preference | $ 65,000 | $ 65,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues: | ||
Freight | $ 125,555 | $ 126,259 |
Brokerage | 20,869 | 20,604 |
Fuel surcharge | 14,010 | 10,018 |
Total revenue | 160,434 | 156,881 |
Operating expenses: | ||
Salaries, wages and employee benefits | 50,121 | 50,355 |
Fuel | 19,223 | 14,497 |
Operations and maintenance | 23,224 | 20,701 |
Communications | 404 | 484 |
Purchased freight | 37,586 | 36,775 |
Administrative expenses | 7,378 | 7,394 |
Sales and marketing | 383 | 363 |
Taxes and licenses | 2,281 | 2,333 |
Insurance and claims | 4,123 | 4,041 |
Acquisition-related transaction expenses | 445 | 15 |
Depreciation and amortization | 16,315 | 16,873 |
(Gain) loss on disposition of revenue property and equipment | (200) | 81 |
Total operating expenses | 161,283 | 153,912 |
Income (loss) from operations | (849) | 2,969 |
Other (income) expense: | ||
Interest income | (4) | (20) |
Interest expense | 5,896 | 5,351 |
Write-off of unamortized deferred financing fees | 3,883 | |
Other | (108) | (73) |
Total other expense | 9,667 | 5,258 |
Loss before provision for income taxes | (10,516) | (2,289) |
Benefit for income taxes | (2,770) | (1,049) |
Net loss | (7,746) | (1,240) |
Other comprehensive loss: | ||
Unrealized income (loss) on interest rate swaps | 52 | (60) |
Comprehensive loss | (7,694) | (1,300) |
Net loss | (7,746) | (1,240) |
Less Series B dividends to preferred stockholders | (806) | (1,243) |
Net loss attributable to common stockholders | $ (8,552) | $ (2,483) |
Net loss per common share: | ||
Basic and Diluted | $ (0.32) | $ (0.12) |
Weighted-average common shares outstanding: | ||
Basic and Diluted | 26,931,186 | 20,980,961 |
Dividends declared per preferred share | $ 12.50 | $ 18.75 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands | Series B Convertible Preferred Stock Member | Series A Convertible Preferred Stock [Member] | Common Stock Member | Additional Paid-In Capital Member | Retained Earnings (Accumulated Deficit) Member | Accumulated Other Comprehensive Loss Member | Total |
Preferred stock, par value | After Effect Of Reverse Acquisition [Member] | $ 1 | ||||||
Common stock, par value | After Effect Of Reverse Acquisition [Member] | $ 2 | ||||||
Common stock, par value | $ 0.0001 | ||||||
Balance (in Value) (Scenario, Previously Reported [Member]) at Dec. 31, 2016 | $ 1 | $ 1 | $ 117,807 | $ (14,694) | $ (52) | $ 103,063 | |
Balance (in Value) (After Effect Of Reverse Acquisition [Member]) at Dec. 31, 2016 | 117,807 | (14,694) | (52) | 103,064 | |||
Balance (in Value) (Restatement Adjustment [Member]) | $ 1 | 1 | |||||
Balance (in Value) at Dec. 31, 2016 | 103,063 | ||||||
Balance (in Shares) (Scenario, Previously Reported [Member]) at Dec. 31, 2016 | 64,500 | 145,495 | |||||
Balance (in Shares) (After Effect Of Reverse Acquisition [Member]) at Dec. 31, 2016 | 64,500 | 20,980,961 | |||||
Balance (in Shares) (Restatement Adjustment [Member]) | 20,835,466 | ||||||
Income on interest rate swaps | $ 52 | 52 | |||||
Repurchase of common shares ( in Value) | 36,168 | 36,168 | |||||
Repurchase of common shares (in shares) | (3,616,781) | ||||||
Conversion of Series B Convertible Preferred Stock to common shares (in shares) | (64,500) | ||||||
Conversion of Series B Convertible Preferred Stock to common shares | $ (1) | ||||||
Conversion of Convertible Stock to common shares (in shares) | 9,301,150 | ||||||
Conversion of Convertible Stock to common shares | $ 1 | ||||||
Issuance of Series A Convertible Preferred Stock ( in shares) | 650,000 | ||||||
Issuance of Series A Convertible Preferred Stock (in value) | $ 65,000 | 65,000 | |||||
Shares assumed by legal acquirer ( in shares) | 11,050,630 | ||||||
Shares assumed by legal acquirer (in value) | $ (1) | (83,639) | (83,640) | ||||
Settlement of legal acquirer transaction costs | 19,063 | 19,063 | |||||
Series B Convertible Preferred Stock dividends | 806 | 806 | |||||
Net loss | (7,746) | (7,746) | |||||
Balance (in Value) at Mar. 31, 2017 | $ 65,000 | $ 4 | $ 146,215 | $ (23,246) | $ 187,973 | ||
Balance (in Shares) at Mar. 31, 2017 | 650,000 | 37,715,960 | |||||
Common stock, par value | $ 0.0001 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (7,746) | $ (1,240) |
Adjustments to reconcile net loss to net cash provided by operating activities | ||
Depreciation | 14,873 | 15,344 |
Amortization of intangible assets | 1,442 | 1,529 |
Amortization of deferred financing fees | 311 | 273 |
Write-off of deferred financing fees | 3,883 | |
Deferred taxes | (3,071) | (1,059) |
Bad debt expense | 45 | 71 |
Non-cash interest expense | 92 | 266 |
(Gain) loss on disposition of property and equipment | (185) | 81 |
Deferred gain recognized on sales-type leases | (156) | (163) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (13,211) | (1,137) |
Drivers' advances and other receivables | 221 | (843) |
Payments received on sales-type leases | 899 | 804 |
Other current assets | 140 | 2,745 |
Accounts payable | 2,403 | 2,442 |
Accrued expenses and other liabilities | 1,454 | (3,034) |
Net cash provided by operating activities | 1,394 | 16,079 |
Cash flows from investing activities | ||
Purchase of property and equipment | (1,494) | (791) |
Proceeds from sale of property and equipment | 1,455 | 2,597 |
Net cash provided by (used in) investing activities | (39) | 1,806 |
Cash flows from financing activities: | ||
Checks outstanding in excess of bank balances | 313 | (881) |
Advances on line of credit | 164,233 | 159,007 |
Repayments on line of credit | (171,091) | (156,607) |
Principal payments on long-term debt | (220,406) | (16,487) |
Proceeds from Term Loan Facility | 250,000 | |
Deferred financing fees | 14,229 | (179) |
Payoff of subordinated debt | (66,715) | |
Issuance of common stock | 64,577 | |
Repurchase of common stock | (36,168) | |
Issuance of Series A Convertible Preferred Stock | 65,000 | |
Series B Convertible Preferred Stock dividends | (2,015) | (1,209) |
Net cash proviced by (used in) financing activities | 33,499 | (15,998) |
Net increase in cash | 34,854 | 1,887 |
Cash – beginning of period | 3,695 | 4,886 |
Cash – end of period | 38,549 | 6,773 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 6,870 | 4,562 |
Cash paid for income taxes | 223 | 47 |
Noncash investing and financing activities | ||
Property and equipment acquired with debt or capital lease obligations | 7,702 | |
Property and equipment sold for notes receivable | 35 | 536 |
Property and equipment transferred to sales-type lease | 1,699 | 1,622 |
Sales-type lease returns to property and equipment | 645 | |
Sales-type lease assets sold for notes receivable | 6,071 | 6,023 |
Sales-type lease returns to sales-type lease assets | $ 3,491 | 3,127 |
Accrued series B convertible preferred dividends | $ (1,311) |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2017 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations The registrant was originally formed in April 2015 as a special purpose acquisition company, or SPAC, under the name Hennessy Capital Acquisition Corp. II (Hennessy). As a SPAC, Hennessy had no operations and its purpose was to go public with the intention of merging with or acquiring a company with the proceeds of the SPAC’s initial public offering (the IPO). On February 27, 2017, Hennessy consummated the Business Combination (as defined and described in Note 2) with Daseke, Inc. Upon consummation of the Business Combination, Daseke, Inc. changed its name to Daseke Companies, Inc. and Hennessy changed its name to Daseke, Inc. Daseke, Inc. was formed in 2008 and began operations on January 1, 2009. Daseke is engaged in full service open-deck trucking that specializes primarily in flatbed truckload and heavy haul transportation of specialized items throughout the United States and Canada and also into Mexico with trailers. The Company also provides logistical planning services to customers. The Company is subject to regulation by the Department of Transportation and various state regulatory authorities. Unless expressly stated otherwise, references to the Company or Daseke refers to Daseke, Inc. and its wholly owned subsidiaries, Hennessy refers to the registrant prior to the closing of the Business Combination, and Private Daseke refers to Daseke, Inc. and its subsidiaries prior to the closing of the Business Combination. Basis of Presentation These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. The consolidated balance sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the year ended December 31, 2016 as set forth in the Company’s Current Report on Form 8-K/A dated March 16, 2017. Principles of Consolidation The consolidated financial statements include the accounts of Daseke, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Deferred Financing Fees In conjunction with obtaining long-term debt, the Company incurred financing costs which are being amortized using the straight-line method, which approximates the effective interest rate method, over the terms of the obligations. As of March 31, 2017 and December 31, 2016, the balance of deferred financing fees was $14.2 million and $4.1 million, respectively, which is included as a reduction of long-term debt, net of current portion in the consolidated balance sheets. Amortization expense for each of the three months ended March 31, 2017 and 2016 totaled $0.3 million, which is included in interest expense. In February 2017, in conjunction with new term loan financing discussed in Note 8, the Company incurred deferred financing costs of $14.2 million and expensed unamortized deferred financing fees totaling $3.9 million. NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued) Fair Value Measurements The Company follows the accounting guidance for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The three levels of the fair value framework are as follows: Level 1 - Quoted market prices in active markets for identical assets or liabilities. Level 2 - Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3 - Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets. A financial asset or liability’s classification within the framework is determined based on the lowest level of input that is significant to the fair value measurement. The fair value of the Company’s interest rate swaps is determined using cash flow computer models with unobservable inputs, therefore the liability for interest rate swaps is classified within Level 3 of the fair value framework. In conjunction with the Business Combination discussed in Note 2, the Company’s lone interest rate swap was terminated. At December 31, 2016, the fair value liability was $51,871 and is classified in accrued expenses and other liabilities on the consolidated balance sheets. The tables below are a summary of the changes in the fair value of this liability for the three months ended March 31, 2017 and 2016 (in thousands): 2016 Balance at January 1, 2016 $ (124) Change in fair value (62) Balance at March 31, 2016 $ (186) 2017 Balance at January 1, 2017 $ (52) Change in fair value 52 Balance at March 31, 2017 $ — Segment Reporting The Company determines its operating segments based on the information utilized by the chief operating decision maker to allocate resources and assess performance. Based on this information, the Company has determined it has eight operating segments that are aggregated into two reportable segments, Flatbed Solutions, which delivers its services using primarily flatbed transportation equipment to meet the needs of high-volume, time-sensitive shippers, and Specialized Solutions, which delivers transportation and logistics solutions for super heavy haul, high-value customized and over-dimensional loads, many of which require engineering and customized equipment. Earnings Per Share Basic earnings per common share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. For the three months ended March 31, 2017, shares of the Company’s 7.625% Series A Convertible Cumulative Preferred Stock (Series A Preferred Stock) were not included in the computation of diluted loss per share as their effects were anti-dilutive. For the three months ended March 31, 2017 and 2016, shares of Private Daseke’s Series B Convertible Preferred Stock (Series B Preferred Stock) were not included in the computation of diluted earnings per share as their effects were anti-dilutive. For the three months ended March 31, 2017, there was no dilutive effect from the Merger Agreement earn-out provision (see Note 2) or the outstanding warrants to purchase shares of the Company’s common stock (the common stock purchase warrants). NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued) Common Stock Purchase Warrants The Company accounts for the issuance of common stock purchase warrants in connection with equity offerings in accordance with the provisions of the Accounting Standards Codification (ASC) 815, Derivatives and Hedging (ASC 815). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). See Note 10 for additional details on the common stock purchase warrants. The Company assessed the classification of its common stock purchase warrants and determined that such instruments meet the criteria for equity classification at the time of issuance. New Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles – Goodwill and Other (Topic 350). ASU 2017-04 removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for fiscal years beginning December 15, 2019, with early adoption permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017, and applied prospectively. The Company does not expect ASU 2017-04 to have a material impact on its consolidated results of operations, financial condition, cash flows, or financial statement disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 provides new guidance intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. ASU 2016-05 will become effective for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 31, 2019. Early adoption is permitted. ASU 2016-15 requires application using a retrospective transition method. The Company is currently evaluating the impact of adopting this guidance. In June 2016, the FASB issued ASU No. 2016-13, Accounting for Credit Losses (Topic 326). ASU 2016-13 requires the use of an “expected loss” model on certain types of financial instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 amends various aspects of existing guidance for leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The main difference between previous GAAP and the amended standard is the recognition of lease assets and lease liabilities of lessees on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this ASU will have on the consolidated financial position and results of operations. NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued) In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued updated guidance with ASU 2015-14 and deferred the effective date of ASU 2014-09 by one year. The guidance in ASU 2014-09 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. In March 2016, the FASB issued an accounting standards update that further clarifies guidance under ASU 2014-09 with respect to principal versus agent considerations in revenue from contracts with customers. In the second quarter of 2016, the FASB issued two accounting standard updates that provide additional guidance when identifying performance obligations and licenses as well as allowing for certain narrow scope improvements and practical expedients. The Company is in the process of evaluating ASU 2014-09, including the expected impact on business processes, systems and controls, and potential differences in the timing and/or method of revenue recognition for contracts. The Company has not determined if adoption of ASU 2014-09 will have a material impact on results of operations or cash flows in the periods after adoption and expects to complete its assessment of the cumulative effect of adopting ASU 2014-09 during the third quarter of 2017. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 3 Months Ended |
Mar. 31, 2017 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | NOTE 2 – BUSINESS COMBINATION On February 27, 2017, Hennessy consummated the merger of Hennessy’s wholly-owned subsidiary with and into Daseke, Inc., with Daseke, Inc. surviving as a direct wholly-owned subsidiary of Hennessy (the Business Combination) pursuant to the Agreement and Plan of Merger, dated December 22, 2016 (the Merger Agreement). The aggregate consideration received by Private Daseke stockholders upon closing was $266.7 million, consisting of newly issued shares of common stock at a value of $10.00 per share. The Merger Agreement contains an earn-out provision through which Private Daseke stockholders could receive up to 15 million additional shares of common stock (with up to 5 million shares payable annually with respect to 2017, 2018 and 2019 performance). The full 15 million shares is only payable if (i) the annualized Adjusted EBITDA (giving effect to acquisitions and as defined in the Merger Agreement) for 2017, 2018 and 2019 is at least $140.0 million, $170.0 million and $200.0 million, respectively, and (ii) the closing share price of the Company’s common stock is at least $12.00, $14.00 and $16.00 for any 20 trading days in a consecutive 30 trading day period in 2017, 2018 and 2019, respectively. For each year, the 5 million earn-out shares will be prorated to the extent the annualized Adjusted EBITDA (giving effect to acquisitions and as defined in the Merger Agreement) exceeds 90% but represents less than 100%, of the applicable earn-out target. Following the consummation of the Business Combination on February 27, 2017 (the Closing), there were 37,715,960 shares of common stock issued and outstanding, consisting of (i) 26,665,330 shares issued to Private Daseke stockholders pursuant to the Merger Agreement, (ii) 419,669 shares issued in a private placement that closed in conjunction with the Business Combination, (iii) 2,288,043 shares originally issued to Hennessy Capital Partners II LLC (the Sponsor) in a private placement that closed simultaneously with the consummation of the IPO, and (iv) 8,342,918 shares, following redemptions, which shares were originally issued in the IPO. In connection with the Business Combination, $65.0 million of Series A Preferred Stock (650,000 shares) were issued in a private placement. In conjunction with the Closing, the Company entered into (i) a $350.0 million term loan credit facility (the Term Loan Facility), which consists of a $250.0 million term loan funded on the closing date of the Term Loan Facility and up to $100.0 million of term loans to be funded from time to time under a delayed draw term loan facility, and (ii) an asset-based revolving credit facility (the ABL Facility), in an aggregate maximum credit amount equal to $70.0 million (subject to availability under a borrowing base). See Note 8 for more information regarding the Term Loan Facility and the ABL Facility. Prior to the Closing, the Company had a credit facility consisting of a term loan (Senior Term Loan) and a revolving line of credit (Line of Credit). NOTE 2 – BUSINESS COMBINATION – (Continued) The following table is a summary of cash proceeds and utilization of proceeds in the Business Combination (in thousands): Proceeds Public share proceeds (1) $ 83,429 Issuance of Series A Preferred Stock 65,000 Term Loan Facility 250,000 Cash (2) 3,209 Total proceeds 401,638 Use of Proceeds Repayment of Line of Credit (3) 16,717 Repayment of Senior Term Loan (4) 122,724 Repayment of equipment loans (5) 89,488 Repayment of subordinated debt (6) 67,460 Payment of deferred financing fees (7) 14,148 Repurchase Main Street and Prudential shares (8) 36,168 Hennessy transaction costs 19,063 Daseke transaction costs (9) 1,204 Total use of proceeds 366,972 Net cash received $ 34,666 (1) - 8,342,918 public shares outstanding valued at $10.00 per share (2) - Daseke cash utilized for payment of deferred financing fees and transaction costs (3) - includes payment of $59 accrued interest recognized in interest expense (4) - includes payment of $422 accrued interest recognized in interest expense (5) - includes payment of $731 accrued interest recognized in interest expense (6) - includes payment of $745 accrued interest recognized in interest expense (7) - excludes $81 paid subsequent to the Closing (8) - Hennessy repurchased Private Daseke shares held by Main Street Capital II, LP, Main Street Mezzanine Fund, LP, Main Street Capital Corporation, Prudential Capital Partners IV, L.P., Prudential Capital Partners (Parallel Fund) IV, L.P. and Prudential Capital Partners Management Fund IV, L.P. (9) - $0.8 million and $0.4 million expensed in fourth quarter 2016 and first quarter 2017, respectively The Business Combination was accounted for as a reverse merger in accordance with GAAP. Under this method of accounting, Hennessy is treated as the “acquired” company. This determination was primarily based on Private Daseke comprising the ongoing operations of the combined company, Private Daseke’s senior management comprising the senior management of the combined company, and Private Daseke stockholders having a majority of the voting power of the combined company. For accounting purposes, Private Daseke is deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of Private Daseke (i.e., a capital transaction involving the issuance of stock by Hennessy for the stock of Private Daseke). Accordingly, the consolidated assets, liabilities and results of operations of Private Daseke are the historical financial statements of the combined company, and Hennessy’s assets, liabilities and results of operations are consolidated with Private Daseke beginning on the acquisition date. In connection with the Closing, Daseke, Inc. changed its name to Daseke Companies, Inc. and Hennessy Capital Acquisition Corp. II changed its name to Daseke, Inc. Daseke, Inc.’s common stock and warrants began trading under the ticker symbols DSKE and DSKEW, respectively, on February 28, 2017. |
PREPAID AND OTHER CURRENT ASSET
PREPAID AND OTHER CURRENT ASSETS | 3 Months Ended |
Mar. 31, 2017 | |
PREPAID AND OTHER CURRENT ASSETS | |
PREPAID AND OTHER CURRENT ASSETS | NOTE 3 – PREPAID AND OTHER CURRENT ASSETS The components of prepaid expenses and other current assets are as follows as of March 31, 2017 and December 31, 2016 (in thousands). 2017 2016 Other assets $ 4,267 $ 6,358 Insurance 2,329 2,246 Other prepaids 1,971 1,104 Licensing, permits and tolls 2,636 2,772 Highway and fuel taxes 714 1,024 $ 11,917 $ 13,504 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2017 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | NOTE 4 – GOODWILL AND INTANGIBLE ASSETS Goodwill represents the excess of the purchase price of all acquisitions over the estimated fair value of the net assets acquired. The Company performs an impairment test of goodwill annually as of October 31 or when impairment indicators arise. There was no goodwill impairment identified for the three months ended March 31, 2017. Intangible assets consisted of the following at March 31, 2017 and December 31, 2016 (in thousands): As of March 31, 2017 As of December 31, 2016 Intangible Accumulated Intangible Intangible Accumulated Intangible Assets Amortization Assets, net Assets Amortization Assets, net Non-competition agreements $ 8,350 $ (4,274) $ 4,076 $ 8,350 $ (3,929) $ 4,421 Customer relationships 56,210 (20,175) 36,035 56,210 (19,078) 37,132 Trade names 30,100 — 30,100 30,100 — 30,100 Total intangible assets $ 94,660 $ (24,449) $ 70,211 $ 94,660 $ (23,007) $ 71,653 As of March 31, 2017, non-competition agreements and customer relationships had weighted average remaining useful lives of 2.44 and 8.27 years, respectively. Amortization expense for intangible assets with definite lives was $1.4 million and $1.5 million for the three months ended March 31, 2017 and 2016, respectively. Projected amortization expense for the next five fiscal years ending December 31, 2017, 2018, 2019, 2020 and 2021 will be $5.8 million, $5.8 million, $5.6 million, $4.8 million and $4.4 million, respectively. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2017 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 5 – PROPERTY AND EQUIPMENT The components of property and equipment are as follows at March 31, 2017 and December 31, 2016 (in thousands): 2017 2016 Revenue equipment $ 394,174 $ 398,394 Buildings and improvements 42,970 43,000 Furniture and fixtures, office and computer equipment and vehicles 15,274 14,421 452,418 455,815 Accumulated depreciation (149,383) (137,068) $ 303,035 $ 318,747 Depreciation expense on property and equipment was $14.9 million and $15.3 million for the three months ended March 31, 2017, and 2016, respectively. |
SALES-TYPE LEASES
SALES-TYPE LEASES | 3 Months Ended |
Mar. 31, 2017 | |
SALES-TYPE LEASES | |
SALES-TYPE LEASES | NOTE 6 – SALES-TYPE LEASES The Company leases revenue equipment to certain of its owner-operators and accounts for these transactions as sales-type leases. These leases have terms of 30 to 72 months and are collateralized by a security interest in the related revenue equipment. A minimum lease receivable is recorded, net of unearned interest income and deferred gain on sale of the equipment. The gain is recognized as payments are collected, rather than in the period the lease is recorded due to the uncertainty of collection. The components of the net investment in sales-type leases are as follows at March 31, 2017 and December 31, 2016 (in thousands): 2017 2016 Minimum lease receivable $ 23,049 $ 21,055 Deferred gain (3,128) (3,049) Net minimum lease receivable 19,921 18,006 Unearned interest income (3,755) (3,671) Net investment in sales-type leases 16,166 14,335 Current portion (4,015) (3,516) $ 12,151 $ 10,819 The long-term portion of sales-type leases is classified in other long-term assets on the consolidated balance sheets at March 31, 2017 and December 31, 2016. Gain or loss on disposition of revenue equipment leased to owner-operators is included as a component of purchased freight in the consolidated statements of operations and comprehensive loss. The gain totaled approximately $0.2 million and $0.1 million for the three months ended March 31, 2017 and 2016, respectively. |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 3 Months Ended |
Mar. 31, 2017 | |
ACCRUED EXPENSES AND OTHER LIABILITIES | |
ACCRUED EXPENSES AND OTHER LIABILITIES | NOTE 7 – ACCRUED EXPENSES AND OTHER LIABILITIES The components of accrued expenses and other liabilities are as follows at March 31, 2017 and December 31, 2016 (in thousands): 2017 2016 Brokerage and escorts $ 4,461 $ 3,559 Unvouchered payables 2,629 2,587 Other accrued expenses 4,355 3,956 Owner operator deposits 2,620 2,032 Interest 152 1,705 Dividends — 1,209 Fuel 607 711 Fuel taxes 358 345 $ 15,182 $ 16,104 |
LONG-TERM DEBT
LONG-TERM DEBT | 3 Months Ended |
Mar. 31, 2017 | |
LONG-TERM DEBT. | |
LONG-TERM DEBT | NOTE 8 – LONG-TERM DEBT Long-term debt consists of the following at March 31, 2017 and December 31, 2016 (in thousands): 2017 2016 Senior debt Revolving line of credit $ — $ 6,858 Term loan facility 250,000 — Senior term loan — 125,682 Equipment term loans 39,433 111,882 Real estate term loan — 13,772 Capital leases 5,317 13,818 294,750 272,012 Less current portion (14,131) (52,665) Less unamortized debt issuance costs (14,153) (4,117) Long-term portion 266,466 215,230 Subordinated debt Main Street Capital Corporation — 21,660 Prudential Capital Partners — 21,492 LST Seller notes — 22,000 DTR Seller notes — 1,000 BHE Seller notes — 291 Total subordinated debt — 66,443 Total long-term debt $ 266,466 $ 281,673 Term Loan Facility In conjunction with the close of the Business Combination on February 27, 2017, the Company entered into the $350.0 million Term Loan Facility under a loan agreement with Credit Suisse AG, Cayman Islands Branch, as administrative agent, and the lenders party thereto. The Term Loan Facility consists of (i) a $250.0 million term loan funded on the closing date of the Term Loan Facility (the Closing Date Term Loan) and up to $100.0 million of term loans to be funded from time to time under a delayed draw feature available until February 27, 2018. The size of the Term Loan Facility could increase from time to time pursuant to an uncommitted incremental facility in an aggregate amount for all such incremental loans and commitments up to the sum of (a) $65.0 million and (b) an uncapped amount based on the maximum first lien, secured and total leverage ratio-based formulas depending upon the security and ranking of the relevant incremental facility. The proceeds from the Closing Date Term Loan were used to partially refinance certain of the Company’s capital leases, purchase money debt, equipment and real estate financings and to pay transaction costs associated with the Business Combination and refinance the Line of Credit and the Senior Term Loan. The Term Loan Facility has a scheduled maturity date of February 27, 2024. Term loans under the Term Loan Facility are, at the Company’s election from time to time, comprised of alternate base rate loans (an ABR Borrowing) or adjusted LIBOR loans (a Eurodollar Rate Borrowing), with the applicable margins of interest being an alternate base rate (subject to a 2.00% floor) plus 4.50% per annum for ABR Borrowings and LIBOR (subject to a 1.00% floor) plus 5.50% per annum for Eurodollar Rate Borrowings. At March 31, 2017, the average interest rate on the Term Loan Facility was 6.5%. The Term Loan Facility is secured by all assets of the Company, except those assets collateralizing equipment and certain real estate lenders debt and subject to certain customary exceptions. NOTE 8 – LONG-TERM DEBT – (Continued) The Term Loan Facility contains a financial covenant requiring the Company to maintain a consolidated total leverage ratio as of the last day of any fiscal quarter of less than or equal to 4.25 to 1.00 commencing on June 30, 2017, stepping down to 4.00 to 1.00 on March 31, 2019 and stepping down to 3.75 to 1.00 on March 31, 2021. The consolidated total leverage ratio is defined as the ratio of (i) consolidated total debt minus unrestricted cash and cash equivalents and cash and cash equivalents restricted in favor of the administrative agent and the lenders not to exceed $5 million, to (ii) consolidated adjusted EBITDA for the trailing 12 month period (with customary add-backs permitted to consolidated adjusted EBITDA, including in respect of synergies and cost-savings reasonably identifiable and factually supportable that are anticipated to be realized in an aggregate amount not to exceed 25% of consolidated adjusted EBITDA and subject to other customary limitations). The Term Loan Facility will permit the Term Loan Borrower to voluntarily prepay its borrowings, subject, under certain circumstances in connection with any repricing transaction that occurs in the six months after the closing of the Term Loan Facility, to the payment of a prepayment premium of 1.00% (except in connection with certain transformative acquisitions or similar investments, change in control transactions and initial public offerings). In certain circumstances (subject to exceptions, exclusions and, in the case of excess cash flow, step-downs described below), the Company may also be required to make an offer to prepay the Term Loan Facility if it receives proceeds as a result of certain asset sales, debt issuances, casualty or similar events of loss, or if it has excess cash flow (defined as an annual amount calculated using a customary formula based on consolidated adjusted EBITDA, including, among other things, deductions for (i) the amount of certain voluntary prepayments of the Term Loan Facility and (ii) the amount of certain capital expenditures, acquisitions, investments and restricted payments). The percentage of excess cash flow that must be applied as a mandatory prepayment is 50% with respect to the initial excess cash flow period (the fiscal year ending on December 31, 2018) and will be 50%, 25% or 0% for future excess cash flow periods depending upon the first lien leverage ratio. The Term Loan Facility contains (i) certain customary affirmative covenants that, among other things, require compliance with applicable laws, periodic financial reporting and notices of material events, payment of taxes and other obligations, maintenance of property and insurance, and provision of additional guarantees and collateral, and (ii) certain customary negative covenants that, among other things, restrict the incurrence of additional indebtedness, liens on property, sale and leaseback transactions, investments, mergers, consolidations, liquidations and dissolutions, asset sales, acquisitions, the payment of distributions, dividends, redemptions and repurchases of equity interests, transactions with affiliates, prepayments and redemptions of certain other indebtedness, burdensome agreements, holding company limitations, changes in fiscal year and modifications of organizational documents. ABL Facility Also, in conjunction with the Closing on February 27, 2017, the Company entered into a five-year, senior secured asset-based revolving line of credit with an aggregate maximum credit amount equal to $70.0 million (subject to availability under a borrowing base equal to 85% of the Company’s eligible accounts receivable, 80% of the Company’s eligible unbilled accounts receivable and 50% of parts supplies) under a credit agreement with PNC Bank, National Association, as administrative agent and the lenders party thereto. The size of the ABL Facility could increase from time to time pursuant to an uncommitted accordion by an aggregate amount for all such increases of up to $30 million. The ABL Facility matures on February 27, 2022. The ABL Facility also provides for the issuance of letters of credit subject to certain restrictions as defined in the credit agreement. As of March 31, 2017, the Company had no borrowings and $4.6 million in letters of credit outstanding under the ABL Facility and was able to incur approximately $51.6 million of additional indebtedness under the ABL Facility. Borrowings under the ABL Facility bear interest at rates based upon the Company’s fixed charge coverage ratio and, at the Company’s election from time to time, either a base rate plus an applicable margin or an adjusted LIBOR rate plus an applicable margin. Margins on the ABL Facility are adjusted, if necessary to the applicable rates set forth in the following table corresponding to the fixed charge coverage ratio for the trailing 12 month period on the last day of the most recently completed fiscal quarter. Fixed Charge Coverage Ratio Base Rate Margins LIBOR Rate Margins Less than 1.25 to 1.00 2.25 % 3.25 % Greater than or equal to 1.25 to 1.00, but less than 1.50 to 1.00 1.75 % 2.75 % Greater than or equal to 1.50 to 1.00, but less than 1.75 1.25 % 2.25 % Greater than or equal to 1.75 to 1.00 0.75 % 1.75 % The ABL Facility is secured by all of the Company’s accounts receivable, parts inventory, cash and cash equivalents excluding proceeds of Term Loan Facility, securities and deposit accounts and other general assets not included in the Term Loan Facility collateral. NOTE 8 – LONG-TERM DEBT – (Continued) The ABL Facility contains (i) a financial covenant similar to the consolidated total leverage ratio required under the Term Loan Facility (but in any event requiring a leverage ratio of less than or equal to 4.25:1:00) and (ii) during any period after a default or event of default or after excess availability falling below the greater of (x) $15.0 million and (y) 20% of the maximum credit amount, continuing until such time as no default or event of default has existed and excess availability has exceeded such amounts for a period of 60 consecutive days, a financial covenant requiring the Company to maintain a minimum consolidated fixed charge coverage ratio of 1.00x, tested on a quarterly basis. The Company’s fixed charge coverage ratio is defined as the ratio of (1) consolidated adjusted EBITDA minus unfinanced capital expenditures, cash taxes and cash dividends or distributions, to (2) the sum of all funded debt payments for the four quarter period then ending (with customary add-backs permitted to consolidated adjusted EBITDA). The ABL Facility contains affirmative and negative covenants similar to those in the Term Loan Facility, together with such additional terms as are customary for a senior secured asset-based revolving credit facility. Line of Credit and Senior Term Loan Prior to the Closing, the Company had a credit facility under a credit agreement with PNC, as agent, and other lenders party thereto (the PNC Credit Agreement), which included a revolving line of credit and a term loan. In August 2016, the PNC Credit Agreement was amended, increasing the borrowing capacity to an aggregate $212.1 million from $150.0 million, consisting of a $75.0 million revolving line of credit and a $137.1 million senior term loan. In conjunction with the amendment, the Company refinanced $73.0 million of equipment notes with various lenders under the PNC Credit Agreement. The line of credit was subject to a borrowing base equal to 85% of the Company’s eligible accounts receivable, 80% of the Company’s eligible unbilled accounts receivable and 50% of parts supplies. As of December 31, 2016, borrowings on the line of credit bore interest at either (a) the Libor Rate (as defined in the credit agreement), plus a margin of 3.25%, or (b) the Base Rate (as defined in the credit agreement), plus a margin of 2.25%. The PNC revolving credit facility also provided for the issuance of up to $10 million in letters of credit. As of December 31, 2016, the Company had outstanding letters of credit thereunder totaling $4.1 million. Total availability under the line of credit was $33.0 million as of December 31, 2016. At December 31, 2016, the average interest rate on the line of credit was 4.5%. As of December 31, 2016, the Senior Term Loan was due in monthly installments of $1,690,154, plus applicable interest at either (a) the Libor Rate (as defined in the credit agreement), plus a margin of 4.00%, or (b) the Base Rate (as defined in the PNC Credit Agreement), plus a margin of 3.00%. At December 31, 2016, the average interest rate on the Senior Term Loan was 4.4%. Prior to the amendment in August 2016, debt on the Senior Term Loan had interest rates of either (a) the Libor Rate (as defined in the credit agreement), plus a margin of 3.75%, or (b) the Base Rate (as defined in the credit agreement), plus a margin of 2.75%. Margins on the line of credit and Senior Term Loan were adjusted, if necessary to the applicable rates set forth in the following table corresponding to the fixed charge coverage ratio for the trailing twelve month period on the last day of the most recently completed fiscal quarter. Base Rate Margins LIBOR Rate Margins Fixed Charge Coverage Ratio Line of Credit Senior Term Loan Line of Credit Senior Term Loan Less than 1.25 to 1.00 2.25 % 3.00 % 3.25 % 4.00 % Greater than or equal to 1.25 to 1.00, but less than 1.50 to 1.00 1.75 % 2.50 % 2.75 % 3.50 % Greater than or equal to 1.50 to 1.00, but less than 1.75 1.25 % 2.00 % 2.25 % 3.00 % Greater than or equal to 1.75 to 1.00 0.75 % 1.50 % 1.75 % 2.50 % The PNC Credit Agreement also contained a subjective acceleration clause, which permitted the lender to demand payment in the event of a material adverse change. Only the scheduled principal payments are being presented in the current portion of long-term obligations as the lender did not exercise the acceleration clause. Borrowings under the PNC Credit Agreement were secured by all assets of the Company, except those assets collateralizing equipment and certain real estate lenders debt. The PNC Credit Agreement contained certain financial covenants, including a minimum fixed charge coverage ratio, a senior secured debt to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) ratio and a funded debt to consolidated EBITDA ratio. NOTE 8 – LONG-TERM DEBT – (Continued) Additionally, the PNC Credit Agreement contained negative covenants limiting, among other things, additional indebtedness, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions, and other matters customarily restricted in such agreements. As of December 31, 2016, the Company was in compliance with all covenants contained in the PNC Credit Agreement. The PNC Credit Agreement contained a required principal payment based on excess cash flow (as defined) beginning in fiscal 2016 and due 15 days following the delivery of the audited financial statements to PNC. No excess cash flow payment was required prior to refinancing in conjunction with the Business Combination. Equipment Term Loans and Mortgages As of March 31, 2017, the Company had term loans collateralized by equipment in the aggregate amount of $36.7 million with eighteen (18) lenders (Equipment Term Loans). The Equipment Term Loans bear interest at rates ranging from 1.5% to 6.8%, require monthly payments of principal and interest and mature at various dates through June 2023. Certain of the Equipment Term Loans contain conditions, covenants, representations and warranties, events of default, and indemnification provisions applicable to the Company and certain of its subsidiaries that are customary for equipment financings, including, but not limited to, limitations on the incurrence of additional debt and the prepayment of existing indebtedness, certain payments (including dividends and other distributions to persons not party to its credit facility) and transfers of assets. The Company had a construction loan with a balance of $8.8 million incurred to finance the construction of a new headquarters and terminal in Arlington, Washington which was repaid in February 2017 in conjunction with the Business Combination. See Note 2 for additional details on the Business Combination. The construction loan was collateralized by such property and buildings. The initial principal amount on February 19, 2015 of $7.8 million was increased on April 26, 2016 to $8.8 million. The construction loan bore interest at 3.25% payable monthly. The Company has a bank mortgage loan with a balance of $2.7 million incurred to finance the construction of the headquarters and terminal in Redmond, Oregon. The mortgage loan is collateralized by such property and buildings. The mortgage is payable in monthly installments of $15,776, including interest at 3.7% through November 2017. The interest rate and monthly payments will be adjusted on November 1, 2017 and 2020 to a rate of 2.5%, plus the three-year advance rate published by the Federal Home Loan Bank of Seattle in effect 45 days prior to November 2017 and 2020 (which will not be less than 3.7%). The bank mortgage loan matures November 1, 2023. Real Estate Term Loan In April 2016, the Company refinanced $14.2 million of its Line of Credit with bank debt (Real Estate Term Loan) utilizing nine wholly-owned real estate assets which previously served as collateral on the PNC Term Loan. The Real Estate Term Loan was subordinate to the PNC Credit Agreement and Equipment Term Loans and was due in monthly installments of $59,109 (based on 20 year amortization schedule), plus applicable interest at either (a) the Libor Rate (as defined in the loan agreement), plus a margin of 2.75%, or (b) the Default Rate (as defined in the loan agreement). The Company incurred debt issuance costs of $0.4 million, which were being amortized to interest expense over five years using the straight line method. In conjunction with the Business Combination, the Real Estate Term Loan was repaid and all unamortized debt issuance costs written off to interest expense. See Note 2 for additional details on the Business Combination. Capital Leases The Company leases certain equipment under long-term capital lease agreements that expire on various dates through October 2021. As of March 31, 2017 and December 31, 2016, the book value of the property and equipment recorded under capital leases was $22.4 million and $24.1 million, net of accumulated depreciation of $18.3 million and $17.0 million, respectively. Depreciation expense related to leased equipment was $1.5 million and $1.7 million for the three months ended March 31, 2017 and 2016, respectively. NOTE 8 – LONG-TERM DEBT – (Continued) Main Street Capital Corporation In 2013, Main Street Capital Corporation (Main Street) loaned the Company $20.0 million under a senior subordinated secured term loan (the Main Street Loan). The Main Street Loan was subordinate to the PNC Credit Agreement and Equipment Term Loans. Interest payments were due monthly through maturity at the rate of 12% per annum. Paid-in kind (PIK) interest, at a rate of 2.5% per annum, could have been paid monthly or accrued and added to the principal balance quarterly, at the option of the Company. For the three months ended March 31, 2017 and year ended December 31, 2016, $0.1 million and $0.5 million, respectively, of accrued PIK interest was added to the principal balance and accrued PIK interest of $0.1 million was recorded in accrued expenses as of December 31, 2016. In conjunction with Business Combination, the Main Street Loan was repaid in February 2017. See Note 2 for additional details on the Business Combination. Prudential Capital Partners In 2013, the Company issued senior secured subordinated promissory notes in the initial aggregate principal amount of $20.0 million (PCP Subordinated Notes) to Prudential Capital Partners IV, L.P., Prudential Capital Partners (Parallel Fund) IV, L.P. and Prudential Capital Partners Management Fund IV, L.P. (collectively, the PCP Investors) pursuant to the Securities Purchase Agreement, dated as of November 12, 2013, by and among the Company, certain of its subsidiaries and the PCP Investors. The PCP Subordinated Notes were subordinate to the PNC Credit Agreement and Equipment Term Loans. Interest payments were due monthly through maturity at the rate of 12% per annum. PIK interest, at a rate of 2.5% per annum, could have been paid monthly or accrued and added to the principal balance quarterly, at the option of the Company. For the three months ended March 31, 2017 and year ended December 31, 2016, $0.1 million and $0.5 million of accrued PIK interest was added to the principal balance and $0.1 million accrued PIK interest was recorded in accrued expenses as of December 31, 2016. In conjunction with Business Combination, the PCP Subordinated Notes were repaid in February 2017. See Note 2 for additional details on the Business Combination. The Main Street Loan and the PCP Subordinated Notes (Subordinated Debt) were collateralized by all assets of the Company, except those assets collateralizing the Equipment Term Loans. The Main Street Loan and the PCP Subordinated Notes contained certain financial covenants, including a minimum fixed charge coverage ratio, a senior secured debt to consolidated EBITDA ratio and a funded debt to consolidated EBITDA ratio. Additionally, they contained negative covenants limiting, among other things, additional indebtedness, capital expenditures, transactions with affiliates, additional liens, sales of assets, dividends, investments and advances, prepayments of debt, mergers and acquisitions, and other matters customarily restricted in such agreements. The Main Street Loan and the PCP Subordinated Notes were subject to a make-whole payment of 5.0% of the prepayment amount if such prepayment was made before the third anniversary of the agreements. LST Seller As part of the consideration paid to the seller of Lone Star Transportation, LLC and affiliates (LST), Daseke Lone Star, Inc. (a subsidiary of the Company) issued $22.0 million of subordinated notes (the LST Seller Notes). The LST Seller Notes bore interest at 10% payable monthly and were subordinate to the PNC Credit Agreement, Main Street Loan and PCP Subordinated Notes. In conjunction with the Business Combination, the LST Seller Notes were repaid in February 2017. See Note 2 for additional details on the Business Combination. DTR Sellers As part of the consideration paid to the sellers of Davenport Transport & Rigging, LLC, LST issued $1.0 million of subordinated notes (the DTR Seller Notes). The DTR Seller Notes bore interest at 5% payable monthly and were subordinate to the PNC Credit Agreement, Main Street Loan and PCP Subordinated Notes. In conjunction with Business Combination, the DTR Seller Notes were repaid in February 2017. See Note 2 for additional details on the Business Combination. NOTE 8 – LONG-TERM DEBT – (Continued) BHE Sellers As part of the consideration paid to the sellers of Bulldog Hiway Express (BHE), the Company issued $2.0 million of subordinated notes (the BHE Seller Notes). The BHE Seller Notes bore interest at 7% payable monthly. On December 19, 2016, a portion of the outstanding principal amount under the BHE Seller Notes was forgiven in exchange for the payment by the Company of certain pension liabilities of BHE. The BHE Seller Notes were subordinate to the PNC Credit Agreement and the Main Street Loan and the PCP Subordinated Notes. In conjunction with Business Combination, the BHE Seller Notes were repaid in February 2017. See Note 2 for additional details on the Business Combination. Future principal payments on long-term debt as of March 31, 2017 are as follows (in thousands): Senior Equipment Debt Capital Total 2017 $ 2,500 $ 9,359 $ 2,450 $ 14,309 2018 2,500 9,696 1,845 14,041 2019 2,500 9,365 1,097 12,962 2020 2,500 5,138 306 7,944 2021 2,500 1,825 53 4,378 Thereafter 237,500 4,050 — 241,550 Total minimum lease payments 5,751 Loan amount attributable to interest (434) (434) Total (Present value of minimum lease payments on capital leases) $ 250,000 $ 39,433 5,317 $ 294,750 Less current portion (2,272) Long-term capital leases $ 3,045 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2017 | |
INCOME TAXES | |
INCOME TAXES | NOTE 9 – INCOME TAXES The Company’s statutory federal tax rate is 35%. State tax rates vary among states and range from approximately 1% to 6%, although some state rates are higher and a small number of states do not impose an income tax. Because of the magnitude of permanent book-tax differences compared to forecasted, annual pre-tax income, the annual effective tax rate approach does not provide a reliable estimate of income tax benefit. As a result, the Company has computed its income tax benefit for the three months ended March 31, 2017 using its actual effective tax rate. The effective tax rates for the three months ended March 31, 2017 and 2016 were 26.3% and 45.8%, respectively. The difference between the Company’s effective tax rate and the federal statutory rate primarily results from state income taxes and nondeductible expenses, including the effect of the per diem pay structure for drivers. There were no changes in uncertain tax positions during the three months ended March 31, 2017. As a result of the Business Combination, the Company had an IRS Code 1986 section 382 ownership change, which will not impair the Company’s ability to utilize the net operating losses. |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 3 Months Ended |
Mar. 31, 2017 | |
STOCKHOLDERS’ EQUITY | |
STOCKHOLDERS’ EQUITY | NOTE 10 – STOCKHOLDERS’ EQUITY Preferred Stock At the Closing, the Company issued 650,000 shares of Series A Preferred Stock for cash of $65.0 million. Proceeds from the sales were part of the consideration received as part of a recapitalization and reverse acquisition completed in the Business Combination. See Note 2 for additional details about the Business Combination. The par value of Series A Preferred Stock is $0.0001 per share. Additional features of this preferred stock are as follows: Under the Certificate of Designations, Preferences, Rights and Limitations of the Series A Preferred Stock (the Certificate of Designations), each share of Series A Preferred Stock will be convertible, at the holder’s option at any time, initially into approximately 8.6957 shares of the Company’s common stock (assuming a conversion price of approximately $11.50 per share), subject to specified adjustments as set forth in the Certificate of Designations. If any holder elects to convert its Series A Preferred Stock after the seven-year anniversary of the issue date, if the then-current Conversion Price (as defined in the Certificate of Designations) exceeds the Weighted Average Price (as defined in the Certificate of Designations) for the Common Stock during any ten consecutive Trading Days (as defined in the Certificate of Designations), at its option by delivery of a Notice of Conversion in accordance with Section 8(b) of the Certificate of Designations no later than five business days following such tenth consecutive Trading Day, to convert any or all of such holder’s shares of Series A Preferred Stock into, at the Company’s sole discretion, either common stock, cash or a combination of common stock and cash; provided, that the Company shall provide such converting holder notice of its election within two Trading Days of receipt of the Notice of Conversion; provided further, that in the event the Company elects to issue common stock for all or a portion of such conversion, the Conversion Rate for such conversion (subject to the limitations set forth in Section 11 of the Certificate of Designations) shall mean the quotient of the Liquidation Preference (as defined in the Certificate of Designations) divided by the average Weighted Average Price for the Common Stock during the 20 consecutive Trading Days commencing on the Trading Day immediately following the Trading Day on which the Company provided such notice. If the Company does not elect a settlement method prior to the deadline set forth in the Certificate of Designations, the Company shall be deemed to have elected to settle the conversion entirely in common stock. Based on the assumed conversion rate, a total of 5,652,171 shares of Series A Preferred Stock would be issuable upon conversion of all of the currently outstanding shares of Series A Preferred Stock. On or after the third anniversary of the initial issuance date but prior to the fifth anniversary of the initial issuance date, the Company will have the right, at its option, to give notice of its election to cause all outstanding shares of the Series A Preferred Stock to be automatically converted into shares of the Company’s common stock at the then-effective conversion rate, if the Weighted Average Price of Company’s common stock equals or exceeds 140% of the then-current conversion price for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days. On or after the fifth anniversary of the initial issuance date but prior to the seventh anniversary of the initial issuance date, the Company will have the right, at its option, to give notice of its election to cause all outstanding shares of the Series A Preferred Stock to be automatically converted into shares of Company’s common stock at the then-effective conversion rate, if the Weighted Average Price of Company’s common stock equals or exceeds 115% of the then-current conversion price for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days. On or after the seventh anniversary of the initial issuance date, the Company will have the right, at its option, to give notice of its election to cause all outstanding shares of the Series A Preferred Stock to be automatically converted into shares of Company’s common stock at the then-effective conversion rate, if the Weighted Average Price of Company’s common stock equals or exceeds the then-current conversion price for at least 10 consecutive trading days. If the Company undergoes certain fundamental changes (as more fully described in the Certificate of Designations but including, among other things, certain change-in-control transactions, recapitalizations, asset sales and liquidation events), each outstanding share of Series A Preferred Stock may, within 15 days following the effective date of such fundamental change and at the election of the holder, be converted into Company’s common stock at a conversion rate (subject to certain adjustments) equal to (i) the greater of (A) the sum of the conversion rate on the effective date of such fundamental change plus the additional shares received by holders of Series A Preferred Stock following such fundamental change (as set forth in the Certificate of Designations) and (B) the quotient of (x) $100.00, divided by (y) the greater of (1) the applicable holder stock price and (2) 66 2/3% of the closing sale price of the Company’s common stock on the issue date plus (ii) the number of shares of Company’s common stock that would be issued if any and all accumulated and unpaid dividends were paid in shares of Company’s common stock. The Series A Preferred Stock contains limitations that prevent the holders thereof from acquiring shares of the Company’s common stock upon conversion that would result in (i) the number of shares beneficially owned by such holder and its affiliates exceeding 9.99% of the total number of shares of the Company’s common stock then outstanding or (ii) the Series A Preferred Stock being converted into more than 19.99% of the shares of the Company’s common stock outstanding on the initial issue date of the Series A Preferred Stock (subject to appropriate adjustment in the event of a stock split, stock dividend, combination or other similar recapitalization) without, in the latter instance, stockholder approval of such issuance. NOTE 10 – STOCKHOLDERS’ EQUITY – (Continued) Additional features of the Series A Preferred Stock are as follows: a. Liquidation – In the event of liquidation, holders of Series A Preferred Stock have preferential rights to liquidation payments over holders of common stock. Holders of Series A Preferred Stock shall be paid out of the assets of the Company at an amount equal to $100 per share plus all accumulated and unpaid dividends. b. Dividends – Dividends on the Series A Preferred Stock are cumulative at the Dividend Rate. The “Dividend Rate” is the rate per annum of 7.625% per share of Series A Preferred Stock on the liquidation preference ($100 per share). Dividends are payable quarterly in arrears in cash or, at the Company’s election and subject to the receipt of the necessary shareholder approval (to the extent necessary), in shares of the Company’s common stock. c. Voting rights – Except as required by Delaware law, holders of the Series A Preferred Stock will have no voting rights except with respect to the approval of any material and adverse amendment to the Company’s certificate of incorporation, and certain significant holders of Series A Preferred Stock may have approval rights with respect to certain key economic terms of the Series A Preferred Stock, as set forth in the Certificate of Designations. As of December 31, 2016, 64,500 shares of Series B Preferred Stock were issued and outstanding. Private Daseke’s board of directors declared quarterly dividends on the Series B Preferred Stock of $18.75 per share on October 13, 2016 and $12.50 per share on February 21, 2017. Both the October 13, 2016 and February 21, 2017 dividends were paid on February 27, 2017. As of December 31, 2016, accrued dividends of $1.2 million are in accrued expenses and other liabilities. In February 2017, in connection with, and immediately prior to, the Closing, the Series B Preferred Stock were converted into 9,301,150 shares of Private Daseke’s common stock. Warrants At March 31, 2017, there were a total of 35,040,664 warrants outstanding to purchase 17,520,332 shares of the Company’s common stock. Hennessy has issued warrants to purchase its common stock which were originally issued as part of units in the IPO (the Public Warrants). As of March 31, 2017, there are 19,959,908 Public Warrants outstanding. Hennessy has also issued 15,080,756 warrants (the Private Placement Warrants) to Sponsor in a private placement that closed simultaneously with the consummation of the IPO. Each warrant entitles the registered holder to purchase one-half of one share of the Company’s common stock at a price of $5.75 per one-half of one share ($11.50 per whole share), subject to adjustment. The warrants may be exercised only for a whole number of shares of the Company’s common stock. No fractional shares will be issued upon exercise of the warrants. The warrants will expire on February 27, 2022, five years after the completion of the Business Combination, or earlier upon redemption or liquidation. The Warrants are listed on the NASDAQ market under the symbol DSKEW. The Company may call the Public Warrants for redemption at a price of $0.01 per warrant if, and only if, the reported last sale price of the Company’s common stock equals or exceeds $24.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the Public Warrant holders. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2017 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 11 – STOCK-BASED COMPENSATION On February 27, 2017, the Company and Hennessy’s common stockholders approved the 2017 Omnibus Incentive Plan (the Plan), whereby the Company may grant awards of stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and performance awards. Under the Plan, the Company is authorized to issue up to 4.5 million shares of common stock. For the three months ended March 31, 2017, the Company did not incur stock-based compensation expense. |
DEFINED CONTRIBUTION PLAN
DEFINED CONTRIBUTION PLAN | 3 Months Ended |
Mar. 31, 2017 | |
DEFINED CONTRIBUTION PLAN | |
DEFINED CONTRIBUTION PLAN | NOTE 12 – DEFINED CONTRIBUTION PLAN On January 1, 2015, the Company established the Daseke, Inc. 401(k) Retirement Plan (the Retirement Plan). The Retirement Plan is a defined contribution plan and intended to qualify under ERISA provisions of 401(k). Under the safe harbor matching requirements, the Company had expenses of $0.6 million in each of the three months ended March 31, 2017 and 2016. |
INTEREST RATE SWAP
INTEREST RATE SWAP | 3 Months Ended |
Mar. 31, 2017 | |
INTEREST RATE SWAP | |
INTEREST RATE SWAP | NOTE 13 – INTEREST RATE SWAP The Company uses interest rate swaps to manage risks related to interest rate movements. These interest rate swaps are reported at fair value on the consolidated balance sheets in Accrued Expenses and Other Liabilities. The Company had an interest rate swap agreement which qualified for hedge accounting and accordingly was designated as a cash flow hedge. For this interest rate swap, the change in fair value on the effective portion of the hedge was recognized as a component of other comprehensive income. In conjunction with the Business Combination discussed in Note 2, this interest rate swap was terminated. At December 31, 2016, the fair value of this interest rate swap was a liability of $51,871. The terms of the interest rate swap designated as a cash flow hedge at December 31, 2016 are as follows: Notional Termination Interest Rate Interest Rate Effective Date Amount Date Received Paid 11/12/2013 $ 12,000,000 4/30/2018 0.6 % 3.63 % |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 14 – COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases certain office building facilities, terminal locations and revenue equipment under non-cancelable operating leases. Building and terminal rent expense under operating leases was $0.8 million and $0.6 million for the three months ended March 31, 2017 and 2016, respectively. Tractor, trailer and other revenue equipment rent expense under operating leases was $3.9 million and $2.6 million for the three months ended March 31, 2017 and 2016, respectively. Letters of Credit The Company had outstanding letters of credit at March 31, 2017 totaling approximately $7.0 million, including those disclosed in Note 8. These letters of credit cover liability insurance claims. Contingencies The Company is involved in certain claims and pending litigation arising in the normal course of business. These proceedings primarily involve claims for personal injury or property damage incurred in the transportation of freight or for personnel matters. The Company maintains liability insurance to cover liabilities arising from these matters but is responsible for deductibles on such matters up to a certain threshold before the insurance is applied. |
REPORTABLE SEGMENTS
REPORTABLE SEGMENTS | 3 Months Ended |
Mar. 31, 2017 | |
REPORTABLE SEGMENTS | |
REPORTABLE SEGMENTS | NOTE 15 – REPORTABLE SEGMENTS The Company evaluates the performance of the segments primarily based on their respective revenues and operating income. Accordingly, interest expense and other non-operating items are not reported in segment results. In addition, the Company has disclosed a corporate segment, which is not an operating segment and includes acquisition transaction expenses, corporate salaries, interest expense and other corporate administrative expenses and intersegment eliminations. The Company’s operating segments also provide transportation and related services for one another. Such services are generally billed at cost, and no profit is earned. Such intersegment revenues and expenses are eliminated in the Company’s consolidated results. Intersegment revenues and expenses for the Flatbed Solutions segment totaled $0.9 million and $0.3 million for the three months ended March 31, 2017 and 2016, respectively. Intersegment revenues and expenses totaled for the Specialized Solutions segment $0.6 million and $0.5 million for the three months ended March 31, 2017 and 2016, respectively. NOTE 15 – REPORTABLE SEGMENTS – (Continued) The following tables reflect certain financial data of the Company’s reportable segments for the three months ended March 31, 2017 and 2016 (in thousands): Flatbed Specialized Solutions Solutions Corporate/ Consolidated Segment Segment Eliminations Total Three Months Ended March 31, 2017 Total revenue $ 81,304 $ 80,673 $ (1,543) $ 160,434 Operating income 3,879 1,007 (5,735) (849) Depreciation 7,083 7,751 39 14,873 Amortization of intangible assets 437 1,005 — 1,442 Income (loss) before income tax 2,105 (909) (11,712) (10,516) Total assets 281,800 281,666 37,584 601,050 Three Months Ended March 31, 2016 Total revenue $ 76,089 $ 81,574 $ (782) $ 156,881 Operating income 4,890 3,882 (5,803) 2,969 Depreciation 7,130 8,174 40 15,344 Amortization of intangible assets 489 1,040 — 1,529 Income (loss) before income tax 3,608 2,452 (8,349) (2,289) Total assets 301,129 308,356 10,585 620,070 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2017 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS On May 1, 2017, the Company acquired 100% of the outstanding stock of Schilli Transportation Services, Inc. and certain of its affiliates (Schilli), based in Indiana and Big Freight Systems, Inc. (Big Freight), based in Steinbach, Manitoba for a combined consideration of $36.8 million, consisting of $33.4 million in cash and 342,133 shares of Daseke common stock valued at $3.44 million. Additionally, the Company assumed approximately $32.5 million of outstanding debt. Big Freight’s purchase agreement also contains an earn-out for additional cash consideration to be paid on the excess of each of 2017, 2018 and 2019’s EBITDA Amount over 2016’s EBITDA Amount (as defined in the purchase agreement), multiplied by 0.4. |
NATURE OF OPERATIONS AND SUMM23
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ended December 31, 2017. The consolidated balance sheet as of December 31, 2016 has been derived from the audited consolidated financial statements at that date. For additional information, including the Company’s significant accounting policies, refer to the consolidated financial statements and related footnotes for the year ended December 31, 2016 as set forth in the Company’s Current Report on Form 8-K/A dated March 16, 2017. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Daseke, Inc. and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Deferred Financing Fees | Deferred Financing Fees In conjunction with obtaining long-term debt, the Company incurred financing costs which are being amortized using the straight-line method, which approximates the effective interest rate method, over the terms of the obligations. As of March 31, 2017 and December 31, 2016, the balance of deferred financing fees was $14.2 million and $4.1 million, respectively, which is included as a reduction of long-term debt, net of current portion in the consolidated balance sheets. Amortization expense for each of the three months ended March 31, 2017 and 2016 totaled $0.3 million, which is included in interest expense. In February 2017, in conjunction with new term loan financing discussed in Note 8, the Company incurred deferred financing costs of $14.2 million and expensed unamortized deferred financing fees totaling $3.9 million. |
Fair Value Measurements | Fair Value Measurements The Company follows the accounting guidance for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Fair value guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The three levels of the fair value framework are as follows: Level 1 - Quoted market prices in active markets for identical assets or liabilities. Level 2 - Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3 - Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets. A financial asset or liability’s classification within the framework is determined based on the lowest level of input that is significant to the fair value measurement. The fair value of the Company’s interest rate swaps is determined using cash flow computer models with unobservable inputs, therefore the liability for interest rate swaps is classified within Level 3 of the fair value framework. In conjunction with the Business Combination discussed in Note 2, the Company’s lone interest rate swap was terminated. At December 31, 2016, the fair value liability was $51,871 and is classified in accrued expenses and other liabilities on the consolidated balance sheets. The tables below are a summary of the changes in the fair value of this liability for the three months ended March 31, 2017 and 2016 (in thousands): 2016 Balance at January 1, 2016 $ (124) Change in fair value (62) Balance at March 31, 2016 $ (186) 2017 Balance at January 1, 2017 $ (52) Change in fair value 52 Balance at March 31, 2017 $ — |
Segment Reporting | Segment Reporting The Company determines its operating segments based on the information utilized by the chief operating decision maker to allocate resources and assess performance. Based on this information, the Company has determined it has eight operating segments that are aggregated into two reportable segments, Flatbed Solutions, which delivers its services using primarily flatbed transportation equipment to meet the needs of high-volume, time-sensitive shippers, and Specialized Solutions, which delivers transportation and logistics solutions for super heavy haul, high-value customized and over-dimensional loads, many of which require engineering and customized equipment. |
Earnings Per Share | Earnings Per Share Basic earnings per common share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in our earnings. For the three months ended March 31, 2017, shares of the Company’s 7.625% Series A Convertible Cumulative Preferred Stock (Series A Preferred Stock) were not included in the computation of diluted loss per share as their effects were anti-dilutive. For the three months ended March 31, 2017 and 2016, shares of Private Daseke’s Series B Convertible Preferred Stock (Series B Preferred Stock) were not included in the computation of diluted earnings per share as their effects were anti-dilutive. For the three months ended March 31, 2017, there was no dilutive effect from the Merger Agreement earn-out provision (see Note 2) or the outstanding warrants to purchase shares of the Company’s common stock (the common stock purchase warrants). |
Common Stock Purchase Warrants | Common Stock Purchase Warrants The Company accounts for the issuance of common stock purchase warrants in connection with equity offerings in accordance with the provisions of the Accounting Standards Codification (ASC) 815, Derivatives and Hedging (ASC 815). The Company classifies as equity any contracts that (i) require physical settlement or net-share settlement or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement (including a requirement to net-cash settle the contract if an event occurs and if that event is outside the control of the Company) or (ii) gives the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). See Note 10 for additional details on the common stock purchase warrants. The Company assessed the classification of its common stock purchase warrants and determined that such instruments meet the criteria for equity classification at the time of issuance. |
New Accounting Pronouncements | New Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles – Goodwill and Other (Topic 350). ASU 2017-04 removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for fiscal years beginning December 15, 2019, with early adoption permitted for interim and annual goodwill impairment tests performed on testing dates after January 1, 2017, and applied prospectively. The Company does not expect ASU 2017-04 to have a material impact on its consolidated results of operations, financial condition, cash flows, or financial statement disclosures. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 provides new guidance intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. ASU 2016-05 will become effective for fiscal years beginning after December 15, 2018 and interim periods within fiscal years beginning after December 31, 2019. Early adoption is permitted. ASU 2016-15 requires application using a retrospective transition method. The Company is currently evaluating the impact of adopting this guidance. In June 2016, the FASB issued ASU No. 2016-13, Accounting for Credit Losses (Topic 326). ASU 2016-13 requires the use of an “expected loss” model on certain types of financial instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 amends various aspects of existing guidance for leases. ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The main difference between previous GAAP and the amended standard is the recognition of lease assets and lease liabilities of lessees on the balance sheet for those leases classified as operating leases under previous GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect this ASU will have on the consolidated financial position and results of operations. NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – (Continued) In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued updated guidance with ASU 2015-14 and deferred the effective date of ASU 2014-09 by one year. The guidance in ASU 2014-09 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. In March 2016, the FASB issued an accounting standards update that further clarifies guidance under ASU 2014-09 with respect to principal versus agent considerations in revenue from contracts with customers. In the second quarter of 2016, the FASB issued two accounting standard updates that provide additional guidance when identifying performance obligations and licenses as well as allowing for certain narrow scope improvements and practical expedients. The Company is in the process of evaluating ASU 2014-09, including the expected impact on business processes, systems and controls, and potential differences in the timing and/or method of revenue recognition for contracts. The Company has not determined if adoption of ASU 2014-09 will have a material impact on results of operations or cash flows in the periods after adoption and expects to complete its assessment of the cumulative effect of adopting ASU 2014-09 during the third quarter of 2017. |
NATURE OF OPERATIONS AND SUMM24
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of changes in the fair value of the liabilities | 2016 Balance at January 1, 2016 $ (124) Change in fair value (62) Balance at March 31, 2016 $ (186) 2017 Balance at January 1, 2017 $ (52) Change in fair value 52 Balance at March 31, 2017 $ — |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
BUSINESS COMBINATION | |
Summary of cash proceeds and utilization of proceeds in Business Combination | The following table is a summary of cash proceeds and utilization of proceeds in the Business Combination (in thousands): Proceeds Public share proceeds (1) $ 83,429 Issuance of Series A Preferred Stock 65,000 Term Loan Facility 250,000 Cash (2) 3,209 Total proceeds 401,638 Use of Proceeds Repayment of Line of Credit (3) 16,717 Repayment of Senior Term Loan (4) 122,724 Repayment of equipment loans (5) 89,488 Repayment of subordinated debt (6) 67,460 Payment of deferred financing fees (7) 14,148 Repurchase Main Street and Prudential shares (8) 36,168 Hennessy transaction costs 19,063 Daseke transaction costs (9) 1,204 Total use of proceeds 366,972 Net cash received $ 34,666 (1) - 8,342,918 public shares outstanding valued at $10.00 per share (2) - Daseke cash utilized for payment of deferred financing fees and transaction costs (3) - includes payment of $59 accrued interest recognized in interest expense (4) - includes payment of $422 accrued interest recognized in interest expense (5) - includes payment of $731 accrued interest recognized in interest expense (6) - includes payment of $745 accrued interest recognized in interest expense (7) - excludes $81 paid subsequent to the Closing (8) - Hennessy repurchased Private Daseke shares held by Main Street Capital II, LP, Main Street Mezzanine Fund, LP, Main Street Capital Corporation, Prudential Capital Partners IV, L.P., Prudential Capital Partners (Parallel Fund) IV, L.P. and Prudential Capital Partners Management Fund IV, L.P. (9) - $0.8 million and $0.4 million expensed in fourth quarter 2016 and first quarter 2017, respectively |
PREPAID AND OTHER CURRENT ASS26
PREPAID AND OTHER CURRENT ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
PREPAID AND OTHER CURRENT ASSETS | |
Schedule of components of prepaid expenses and other current assets | The components of prepaid expenses and other current assets are as follows as of March 31, 2017 and December 31, 2016 (in thousands). 2017 2016 Other assets $ 4,267 $ 6,358 Insurance 2,329 2,246 Other prepaids 1,971 1,104 Licensing, permits and tolls 2,636 2,772 Highway and fuel taxes 714 1,024 $ 11,917 $ 13,504 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of other intangible assets | Intangible assets consisted of the following at March 31, 2017 and December 31, 2016 (in thousands): As of March 31, 2017 As of December 31, 2016 Intangible Accumulated Intangible Intangible Accumulated Intangible Assets Amortization Assets, net Assets Amortization Assets, net Non-competition agreements $ 8,350 $ (4,274) $ 4,076 $ 8,350 $ (3,929) $ 4,421 Customer relationships 56,210 (20,175) 36,035 56,210 (19,078) 37,132 Trade names 30,100 — 30,100 30,100 — 30,100 Total intangible assets $ 94,660 $ (24,449) $ 70,211 $ 94,660 $ (23,007) $ 71,653 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
PROPERTY AND EQUIPMENT | |
Schedule of components of property and equipment | The components of property and equipment are as follows at March 31, 2017 and December 31, 2016 (in thousands): 2017 2016 Revenue equipment $ 394,174 $ 398,394 Buildings and improvements 42,970 43,000 Furniture and fixtures, office and computer equipment and vehicles 15,274 14,421 452,418 455,815 Accumulated depreciation (149,383) (137,068) $ 303,035 $ 318,747 |
SALES-TYPE LEASES (Tables)
SALES-TYPE LEASES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
SALES-TYPE LEASES | |
Schedule of components of the net investment in sales-type leases | The components of the net investment in sales-type leases are as follows at March 31, 2017 and December 31, 2016 (in thousands): 2017 2016 Minimum lease receivable $ 23,049 $ 21,055 Deferred gain (3,128) (3,049) Net minimum lease receivable 19,921 18,006 Unearned interest income (3,755) (3,671) Net investment in sales-type leases 16,166 14,335 Current portion (4,015) (3,516) $ 12,151 $ 10,819 |
ACCRUED EXPENSES AND OTHER LI30
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
ACCRUED EXPENSES AND OTHER LIABILITIES | |
Schedule of components of accrued expenses and other liabilities | The components of accrued expenses and other liabilities are as follows at March 31, 2017 and December 31, 2016 (in thousands): 2017 2016 Brokerage and escorts $ 4,461 $ 3,559 Unvouchered payables 2,629 2,587 Other accrued expenses 4,355 3,956 Owner operator deposits 2,620 2,032 Interest 152 1,705 Dividends — 1,209 Fuel 607 711 Fuel taxes 358 345 $ 15,182 $ 16,104 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Schedule of long term debt | Long-term debt consists of the following at March 31, 2017 and December 31, 2016 (in thousands): 2017 2016 Senior debt Revolving line of credit $ — $ 6,858 Term loan facility 250,000 — Senior term loan — 125,682 Equipment term loans 39,433 111,882 Real estate term loan — 13,772 Capital leases 5,317 13,818 294,750 272,012 Less current portion (14,131) (52,665) Less unamortized debt issuance costs (14,153) (4,117) Long-term portion 266,466 215,230 Subordinated debt Main Street Capital Corporation — 21,660 Prudential Capital Partners — 21,492 LST Seller notes — 22,000 DTR Seller notes — 1,000 BHE Seller notes — 291 Total subordinated debt — 66,443 Total long-term debt $ 266,466 $ 281,673 |
Future principal payments on long-term debt | Future principal payments on long-term debt as of March 31, 2017 are as follows (in thousands): Senior Equipment Debt Capital Total 2017 $ 2,500 $ 9,359 $ 2,450 $ 14,309 2018 2,500 9,696 1,845 14,041 2019 2,500 9,365 1,097 12,962 2020 2,500 5,138 306 7,944 2021 2,500 1,825 53 4,378 Thereafter 237,500 4,050 — 241,550 Total minimum lease payments 5,751 Loan amount attributable to interest (434) (434) Total (Present value of minimum lease payments on capital leases) $ 250,000 $ 39,433 5,317 $ 294,750 Less current portion (2,272) Long-term capital leases $ 3,045 |
Revolving line of credit | |
Schedule of adjustment for margin of line of credit and senior term loan corresponding to fixed charge coverage ratio. | Fixed Charge Coverage Ratio Base Rate Margins LIBOR Rate Margins Less than 1.25 to 1.00 2.25 % 3.25 % Greater than or equal to 1.25 to 1.00, but less than 1.50 to 1.00 1.75 % 2.75 % Greater than or equal to 1.50 to 1.00, but less than 1.75 1.25 % 2.25 % Greater than or equal to 1.75 to 1.00 0.75 % 1.75 % |
Old Line of Credit and PNC Term Loan | |
Schedule of adjustment for margin of line of credit and senior term loan corresponding to fixed charge coverage ratio. | Base Rate Margins LIBOR Rate Margins Fixed Charge Coverage Ratio Line of Credit Senior Term Loan Line of Credit Senior Term Loan Less than 1.25 to 1.00 2.25 % 3.00 % 3.25 % 4.00 % Greater than or equal to 1.25 to 1.00, but less than 1.50 to 1.00 1.75 % 2.50 % 2.75 % 3.50 % Greater than or equal to 1.50 to 1.00, but less than 1.75 1.25 % 2.00 % 2.25 % 3.00 % Greater than or equal to 1.75 to 1.00 0.75 % 1.50 % 1.75 % 2.50 % |
INTEREST RATE SWAP (Tables)
INTEREST RATE SWAP (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
INTEREST RATE SWAP | |
Schedule of interest rate swap designated as a cash flow hedge | The terms of the interest rate swap designated as a cash flow hedge at December 31, 2016 are as follows: Notional Termination Interest Rate Interest Rate Effective Date Amount Date Received Paid 11/12/2013 $ 12,000,000 4/30/2018 0.6 % 3.63 % |
REPORTABLE SEGMENTS (Tables)
REPORTABLE SEGMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
REPORTABLE SEGMENTS | |
Schedule of tabular disclosure of financial data of the Company’s reportable segments | The following tables reflect certain financial data of the Company’s reportable segments for the three months ended March 31, 2017 and 2016 (in thousands): Flatbed Specialized Solutions Solutions Corporate/ Consolidated Segment Segment Eliminations Total Three Months Ended March 31, 2017 Total revenue $ 81,304 $ 80,673 $ (1,543) $ 160,434 Operating income 3,879 1,007 (5,735) (849) Depreciation 7,083 7,751 39 14,873 Amortization of intangible assets 437 1,005 — 1,442 Income (loss) before income tax 2,105 (909) (11,712) (10,516) Total assets 281,800 281,666 37,584 601,050 Three Months Ended March 31, 2016 Total revenue $ 76,089 $ 81,574 $ (782) $ 156,881 Operating income 4,890 3,882 (5,803) 2,969 Depreciation 7,130 8,174 40 15,344 Amortization of intangible assets 489 1,040 — 1,529 Income (loss) before income tax 3,608 2,452 (8,349) (2,289) Total assets 301,129 308,356 10,585 620,070 |
NATURE OF OPERATIONS AND SUMM34
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 1 Months Ended | 3 Months Ended | 15 Months Ended | ||
Feb. 28, 2017USD ($) | Mar. 31, 2017USD ($)segmentshares | Mar. 31, 2016USD ($)shares | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Debt issuance cost | $ 14,200,000 | $ 14,200,000 | $ 14,200,000 | $ 4,100,000 | |
Amortization of deferred financing fees | 311,000 | $ 273,000 | 300,000 | ||
Expensed unamortized deferred financing fees | $ 3,900,000 | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Balance at the beginning of the period | (52,000) | (124,000) | (124,000) | ||
Change in fair value | 52,000 | (62,000) | |||
Balance at the end of the period | $ 0 | $ (186,000) | $ 0 | ||
Number of operating segments | segment | 8 | ||||
Number of reportable segments | segment | 2 | ||||
Accrued expenses and other liabilities | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Balance at the beginning of the period | $ (51,871) | ||||
Series A Convertible Preferred Stock Member | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Preferred stock dividend rate | 7.625% | ||||
Series B Convertible Preferred Stock | |||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||||
Diluted earnings per share as their effects were anti-dilutive | shares | 0 | 0 |
BUSINESS COMBINATION (Details)
BUSINESS COMBINATION (Details) $ / shares in Units, $ in Thousands | Feb. 27, 2017USD ($)$ / sharesshares | Mar. 31, 2017USD ($)itemshares | Dec. 31, 2017USD ($) | Dec. 31, 2016shares |
Common stock shares issued | 37,715,960 | 37,715,960 | 37,715,960 | |
Common stock shares outstanding | 37,715,960 | 37,715,960 | ||
Proceeds from Issuance of Convertible Preferred Stock | $ | $ 65,000 | |||
Term loan facility | ||||
Credit facility | $ | $ 250,000 | |||
Delayed Draw Feature | ||||
Credit facility | $ | 100,000 | |||
ABL Member | ||||
Credit facility | $ | $ 70,000 | |||
Minimum | ||||
Earn out target ( as a percent) | 90.00% | |||
Maximum | ||||
Earn out target ( as a percent) | 100.00% | |||
Private placement | ||||
Common stock shares issued | 419,669 | |||
Senior Debt | ||||
Credit facility | $ | $ 350,000 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | ||||
Common stock shares outstanding | 37,715,960 | 8,342,918 | ||
Proceeds from Issuance of Convertible Preferred Stock | $ | $ 65,000 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | IPO | ||||
Common stock shares issued | 8,342,918 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Private placement | ||||
Common stock shares issued | 2,288,043 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Series A Convertible Preferred Stock Member | ||||
Proceeds from Issuance of Convertible Preferred Stock | $ | $ 65,000 | |||
Issuance of Series A Convertible Preferred Stock ( in shares) | 650,000 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Series A Convertible Preferred Stock Member | Private placement | ||||
Proceeds from Issuance of Convertible Preferred Stock | $ | $ 65,000 | |||
Issuance of Series A Convertible Preferred Stock ( in shares) | 650,000 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Earn out provision | ||||
Adjusted EBITDA | $ | $ 140,000 | |||
Number of trading days | item | 20 | |||
Number of consecutive trading days | 30 days | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Earn out provision | Minimum | ||||
Adjusted EBITDA - 2017 | $ | $ 140,000 | |||
Adjusted EBITDA - 2018 | $ | 170,000 | |||
Adjusted EBITDA - 2019 | $ | $ 200,000 | |||
Share price - 2017 | $ / shares | $ 12 | |||
Share price - 2018 | $ / shares | 14 | |||
Share price - 2019 | $ / shares | $ 16 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Earn out provision | Maximum | ||||
Shares payable annually in 2018 | 5,000,000 | |||
Shares payable annually in 2019 | 5,000,000 | |||
Private Daseke [Member] | ||||
Purchase price paid in common stock (in shares) | 26,665,330 | |||
Shares issued to former Daseke stockholders | 26,665,330 | |||
Private Daseke [Member] | Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | ||||
Consideration received upon closing | $ | $ 266,700 | |||
Value per share issued | $ / shares | $ 10 | |||
Private Daseke [Member] | Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Earn out provision | Maximum | ||||
Shares to be issued under earn-out provision | 15,000,000 | |||
Shares payable annually in 2017 | 5,000,000 |
BUSINESS COMBINATION (Details1)
BUSINESS COMBINATION (Details1) - USD ($) $ / shares in Units, $ in Thousands | Feb. 27, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 |
Public share proceeds(1) | $ 64,577 | |||
Issuance of Series A Convertible Preferred Stock | 65,000 | |||
Term Loan Facility | 250,000 | |||
Repayment of debt | $ 220,406 | $ 16,487 | ||
Common stock shares outstanding | 37,715,960 | 37,715,960 | ||
Shares outstanding value (par value) | $ 0.0001 | $ 0.0001 | ||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | ||||
Public share proceeds(1) | $ 83,429 | |||
Issuance of Series A Convertible Preferred Stock | 65,000 | |||
Term Loan Facility | 250,000 | |||
Cash2 | 3,209 | |||
Total proceeds | 401,638 | |||
Payment of deferred financing fees (7) | 14,148 | |||
Hennessy transaction costs | 19,063 | |||
Daseke transaction costs(9) | 1,204 | $ 400 | $ 800 | |
Total use of proceeds | 366,972 | |||
Net cash received | $ 34,666 | |||
Common stock shares outstanding | 37,715,960 | 8,342,918 | ||
Shares outstanding value (par value) | $ 10 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Main Street Capital Corporation and Prudential Capital Partners | ||||
Repayment of debt | $ 36,168 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Interest Expense | ||||
Excludes fees paid subsequent to closing | 81 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Line of credit | ||||
Repayment of debt | 16,717 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Line of credit | Interest Expense | ||||
Payment of accrued interest | 59 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Senior term loan | ||||
Repayment of debt | 122,724 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Senior term loan | Interest Expense | ||||
Payment of accrued interest | 422 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Equipment term loans | ||||
Repayment of debt | 89,488 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Equipment term loans | Interest Expense | ||||
Payment of accrued interest | 731 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Subordinated Debt. | ||||
Repayment of debt | 67,460 | |||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Subordinated Debt. | Interest Expense | ||||
Payment of accrued interest | $ 745 |
PREPAID AND OTHER CURRENT ASS37
PREPAID AND OTHER CURRENT ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
PREPAID AND OTHER CURRENT ASSETS | ||
Other assets | $ 4,267 | $ 6,358 |
Insurance | 2,329 | 2,246 |
Other prepaids | 1,971 | 1,104 |
Licensing, permits and tolls | 2,636 | 2,772 |
Highway and fuel taxes | 714 | 1,024 |
Total | $ 11,917 | $ 13,504 |
GOODWILL AND INTANGIBLE ASSET38
GOODWILL AND INTANGIBLE ASSETS (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Goodwill | |
Balance at the beginning of the period | $ 89,035 |
Impairment | 0 |
Balance at the end of the period | $ 89,035 |
GOODWILL AND INTANGIBLE ASSET39
GOODWILL AND INTANGIBLE ASSETS - Other Intangibles (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Intangible Assets | $ 94,660 | $ 94,660 | |
Accumulated Amortization | (24,449) | (23,007) | |
Intangible Assets, net | 70,211 | 71,653 | |
Amortization of intangible assets | 1,442 | $ 1,529 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
2,017 | 5,800 | ||
2,018 | 5,800 | ||
2,019 | 5,600 | ||
2,020 | 4,800 | ||
2,021 | 4,400 | ||
Trade names | |||
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract] | |||
Indefinite lived intangible assets | 30,100 | 30,100 | |
Non-competition agreements | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Finite lived, Intangible Assets | 8,350 | 8,350 | |
Finite lived, Intangible Assets, net | 4,076 | 4,421 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Accumulated Amortization | $ (4,274) | (3,929) | |
Weighted average remaining useful lives | 2 years 5 months 9 days | ||
Customer relationships | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Finite lived, Intangible Assets | $ 56,210 | 56,210 | |
Finite lived, Intangible Assets, net | 36,035 | 37,132 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Accumulated Amortization | $ (20,175) | $ (19,078) | |
Weighted average remaining useful lives | 8 years 3 months 7 days |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Property and equipment, Gross | $ 452,418 | $ 455,815 | |
Accumulated depreciation | (149,383) | (137,068) | |
Property and equipment, Net | 303,035 | 318,747 | |
Depreciation | 14,873 | $ 15,344 | |
Revenue equipment | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Property and equipment, Gross | 394,174 | 398,394 | |
Buildings and improvements | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Property and equipment, Gross | 42,970 | 43,000 | |
Furniture and fixtures, office and computer equipment and vehicles | |||
Property, Plant and Equipment, Net, by Type [Abstract] | |||
Property and equipment, Gross | $ 15,274 | $ 14,421 |
SALES-TYPE LEASES (Details)
SALES-TYPE LEASES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Capital Leases, Net Investment in Sales Type Leases [Abstract] | |||
Minimum lease receivable | $ 23,049 | $ 21,055 | |
Deferred gain | (3,128) | (3,049) | |
Net minimum lease receivable | 19,921 | 18,006 | |
Unearned interest income | (3,755) | (3,671) | |
Net investment in sales-type leases | 16,166 | 14,335 | |
Current portion | (4,015) | (3,516) | |
Non-current portion | 12,151 | $ 10,819 | |
Gain on disposition of revenue equipment leased to owner-operators | 156 | $ 163 | |
Purchased Freight | |||
Capital Leases, Net Investment in Sales Type Leases [Abstract] | |||
Gain on disposition of revenue equipment leased to owner-operators | $ 200 | $ 100 | |
Minimum | |||
Capital Leases of Lessor [Abstract] | |||
Lease term | 30 months | ||
Maximum | |||
Capital Leases of Lessor [Abstract] | |||
Lease term | 72 months |
ACCRUED EXPENSES AND OTHER LI42
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
ACCRUED EXPENSES AND OTHER LIABILITIES | ||
Brokerage and escorts | $ 4,461 | $ 3,559 |
Unvouchered Payables | 2,629 | 2,587 |
Other accrued expenses | 4,355 | 3,956 |
Owner operator deposits | 2,620 | 2,032 |
Interest | 152 | 1,705 |
Dividends | 1,209 | |
Fuel | 607 | 711 |
Fuel taxes | 358 | 345 |
Total | $ 15,182 | $ 16,104 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Feb. 28, 2017 | Dec. 31, 2016 |
Long-term debt | |||
Total | $ 266,466 | $ 281,673 | |
Less current portion | (14,131) | (52,665) | |
Less unamortized debt issuance costs | (14,200) | $ (14,200) | (4,100) |
Long-term portion | 266,466 | 208,372 | |
Long-term debt | |||
Long-term debt gross | 294,750 | 272,012 | |
Subordinated debt | 66,443 | ||
Total | 266,466 | 281,673 | |
Senior Debt | |||
Long-term debt | |||
Less current portion | (14,131) | (52,665) | |
Less unamortized debt issuance costs | (14,153) | (4,117) | |
Long-term portion | 266,466 | 215,230 | |
Senior Debt | Revolving line of credit | |||
Long-term debt | |||
Long-term debt gross | 6,858 | ||
Senior Debt | Term loan facility | |||
Long-term debt | |||
Long-term debt gross | 250,000 | 125,682 | |
Equipment term loans | |||
Long-term debt | |||
Long-term debt gross | 39,433 | 111,882 | |
Real estate term loan | |||
Long-term debt | |||
Less unamortized debt issuance costs | (400) | ||
Long-term debt | |||
Long-term debt gross | 13,772 | ||
Capital leases | |||
Long-term debt | |||
Total | 5,317 | ||
Long-term debt | |||
Long-term debt gross | 5,317 | 13,818 | |
Total | $ 5,317 | ||
Subordinated Debt. | |||
Long-term debt | |||
Long-term debt gross | 66,443 | ||
Subordinated Debt. | Main Street Capital Corporation | |||
Long-term debt | |||
Long-term debt gross | 21,660 | ||
Subordinated Debt. | Prudential Capital Partners | |||
Long-term debt | |||
Long-term debt gross | 21,492 | ||
Subordinated Debt. | LST Seller notes | |||
Long-term debt | |||
Long-term debt gross | 22,000 | ||
Subordinated Debt. | DTR Seller notes | |||
Long-term debt | |||
Long-term debt gross | 1,000 | ||
Subordinated Debt. | BHE Seller notes | |||
Long-term debt | |||
Long-term debt gross | $ 291 |
LONG-TERM DEBT - Line of Credit
LONG-TERM DEBT - Line of Credit and Senior Term Loan (Details) - USD ($) | Feb. 27, 2017 | Aug. 31, 2016 | Jul. 31, 2016 | Mar. 31, 2017 | Dec. 31, 2016 |
Senior term loan | |||||
Line of Credit Facility [Line Items] | |||||
Monthly installments | $ 1,690,154 | ||||
Average interest rate on term loan | 4.40% | ||||
Loan amount | $ 137,100,000 | $ 150,000,000 | |||
Senior term loan | LIBOR | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 3.75% | 4.00% | |||
Senior term loan | Alternate Base Rate | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 2.75% | 3.00% | |||
Senior term loan | PNC Bank National Association [Member] | LIBOR | Less than 1.25 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 4.00% | ||||
Senior term loan | PNC Bank National Association [Member] | LIBOR | Greater than or equal to 1.25 to 1.00, but less than 1.50 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 3.50% | ||||
Senior term loan | PNC Bank National Association [Member] | LIBOR | Greater than or equal to 1.50 to 1.00, but less than 1.75 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 3.00% | ||||
Senior term loan | PNC Bank National Association [Member] | LIBOR | Greater than or equal to 1.75 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 2.50% | ||||
Senior term loan | PNC Bank National Association [Member] | Alternate Base Rate | Less than 1.25 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 3.00% | ||||
Senior term loan | PNC Bank National Association [Member] | Alternate Base Rate | Greater than or equal to 1.25 to 1.00, but less than 1.50 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 2.50% | ||||
Senior term loan | PNC Bank National Association [Member] | Alternate Base Rate | Greater than or equal to 1.50 to 1.00, but less than 1.75 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 2.00% | ||||
Senior term loan | PNC Bank National Association [Member] | Alternate Base Rate | Greater than or equal to 1.75 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 1.50% | ||||
Letter of credit | |||||
Line of Credit Facility [Line Items] | |||||
Outstanding letter of credit | $ 4,100,000 | ||||
Letter of credit | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | 10,000,000 | ||||
Line of credit | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | $ 75,000,000 | ||||
Percentage of accounts receivable used as part of the borrowing base calculation | 85.00% | ||||
Percentage of unbilled accounts receivable used as part of the borrowing base calculation | 80.00% | ||||
Percentage of parts supplies used as part of the borrowing base calculation | 50.00% | ||||
Availability at closing | $ 33,000,000 | ||||
Average interest on the line of credit | 4.50% | ||||
Line of credit | LIBOR | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 3.25% | ||||
Line of credit | Alternate Base Rate | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 2.25% | ||||
Equipment notes | |||||
Line of Credit Facility [Line Items] | |||||
Loan amount | $ 73,000,000 | ||||
Refinanced amount | 73,000,000 | ||||
Senior Debt | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | $ 350,000,000 | ||||
Revolving line of credit | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | 75,000,000 | ||||
Revolving line of credit | PNC Bank National Association [Member] | LIBOR | Less than 1.25 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 3.25% | ||||
Revolving line of credit | PNC Bank National Association [Member] | LIBOR | Greater than or equal to 1.25 to 1.00, but less than 1.50 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 2.75% | ||||
Revolving line of credit | PNC Bank National Association [Member] | LIBOR | Greater than or equal to 1.50 to 1.00, but less than 1.75 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 2.25% | ||||
Revolving line of credit | PNC Bank National Association [Member] | LIBOR | Greater than or equal to 1.75 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 1.75% | ||||
Revolving line of credit | PNC Bank National Association [Member] | Alternate Base Rate | Less than 1.25 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 2.25% | ||||
Revolving line of credit | PNC Bank National Association [Member] | Alternate Base Rate | Greater than or equal to 1.25 to 1.00, but less than 1.50 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 1.75% | ||||
Revolving line of credit | PNC Bank National Association [Member] | Alternate Base Rate | Greater than or equal to 1.50 to 1.00, but less than 1.75 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 1.25% | ||||
Revolving line of credit | PNC Bank National Association [Member] | Alternate Base Rate | Greater than or equal to 1.75 to 1.00 | |||||
Line of Credit Facility [Line Items] | |||||
Fixed charge coverage ratio | 0.75% | ||||
Revolving line of credit | Senior term loan | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | $ 212,100,000 | $ 150,000,000 | |||
Delayed Draw Feature | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | 100,000,000 | ||||
Delayed Draw Feature | Senior Debt | Credit Suisse AG | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | 100,000,000 | ||||
ABL Member | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | $ 70,000,000 | ||||
Outstanding letters of credit | $ 4,600,000 | ||||
Leverage ratio | 4.25% | ||||
Excess availability falling below amount | $ 15,000,000 | ||||
Maximum credit amount (as a percent) | 20.00% | ||||
Number of consecutive days, a financial covenant requiring the Company to maintain a minimum consolidated fixed charge coverage ratio | 60 days | ||||
Minimum consolidated fixed charge coverage ratio | 1.00% | ||||
Availability at closing | 51,600,000 | ||||
ABL Member | PNC Bank National Association [Member] | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | $ 70,000,000 | ||||
Term loan amortization period | 5 years | ||||
Maximum increase (decrease) in debt | $ 30,000,000 | ||||
Percentage of accounts receivable used as part of the borrowing base calculation | 85.00% | ||||
Percentage of unbilled accounts receivable used as part of the borrowing base calculation | 80.00% | ||||
Percentage of parts supplies used as part of the borrowing base calculation | 50.00% | ||||
Term loan facility | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | $ 250,000,000 | ||||
Term loan facility | Credit Suisse AG | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 5.50% | ||||
Debt less certain cash and cash equivalents | $ 5,000,000 | ||||
Percentage of EBITDA permitted to be added back (as a percent) | 25.00% | ||||
Prepayment premium | 1.00% | ||||
Repayment of term loan (in percentage) | 50.00% | ||||
Percentage of excess cash flow, mandatory prepayment, 2018 | 50.00% | ||||
Percentage of excess cash flow, mandatory prepayment, 2019 | 25.00% | ||||
Percentage of excess cash flow, mandatory prepayment, 2020 | 0.00% | ||||
Term loan facility | Credit Suisse AG | Commencing June 30 2017 | |||||
Line of Credit Facility [Line Items] | |||||
Consolidated total leverage ratio commencing on June 30, 2017 | 4.25% | ||||
Term loan facility | Credit Suisse AG | Commencing March 31 2019 | |||||
Line of Credit Facility [Line Items] | |||||
Consolidated total leverage ratio commencing on March 31, 2019 | 4.00% | ||||
Term loan facility | Credit Suisse AG | Commencing March 31 2021 | |||||
Line of Credit Facility [Line Items] | |||||
Consolidated total leverage ratio commencing on March 31, 2021 | 3.75% | ||||
Term loan facility | Credit Suisse AG | LIBOR | |||||
Line of Credit Facility [Line Items] | |||||
Floor rate (as a percent) | 1.00% | ||||
Term loan facility | Credit Suisse AG | Alternate Base Rate | |||||
Line of Credit Facility [Line Items] | |||||
Floor rate (as a percent) | 2.00% | ||||
Basis spread on variable rate | 4.50% | ||||
Term loan facility | Senior Debt | Credit Suisse AG | |||||
Line of Credit Facility [Line Items] | |||||
Credit facility | $ 350,000,000 | ||||
Average interest rate on term loan | 6.50% | ||||
Uncommitted Incremental Facility | Senior Debt | Credit Suisse AG | |||||
Line of Credit Facility [Line Items] | |||||
Committed amount | $ 65,000,000 |
LONG-TERM DEBT - Equipment Term
LONG-TERM DEBT - Equipment Term Loans and Mortgages (Details) | Feb. 27, 2017USD ($) | Apr. 30, 2016USD ($)item | Mar. 31, 2017USD ($)Lender | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | Feb. 28, 2017USD ($) | Oct. 29, 2016 | Apr. 26, 2016USD ($) | Feb. 19, 2015USD ($) |
Repayments of Long-term Debt | $ 220,406,000 | $ 16,487,000 | |||||||
Loan balance | 294,750,000 | $ 272,012,000 | |||||||
Debt issuance cost | 14,200,000 | 4,100,000 | $ 14,200,000 | ||||||
Book value recorded under capital leases | 22,400,000 | 24,100,000 | |||||||
Accumulated depreciation | 18,300,000 | 17,000,000 | |||||||
Depreciation expense leased equipment | 1,500,000 | 1,700,000 | |||||||
Equipment term loans | |||||||||
Equipment which collateralizes term loans | $ 36,700,000 | ||||||||
Number of lenders | Lender | 18 | ||||||||
Interest rate (as a percent) | 3.25% | ||||||||
Loan balance | $ 39,433,000 | 111,882,000 | |||||||
Loan amount | $ 8,800,000 | $ 7,800,000 | |||||||
Number of days of adjustment of interest rate and monthly payments | 45 days | ||||||||
Equipment term loans | Maximum | |||||||||
Interest rate (as a percent) | 6.80% | ||||||||
Equipment term loans | Minimum | |||||||||
Interest rate (as a percent) | 1.50% | ||||||||
Bank mortgage loan member | |||||||||
Interest rate (as a percent) | 3.70% | ||||||||
Loan balance | $ 2,700,000 | ||||||||
Monthly installments | 15,776 | ||||||||
Real estate term loan | |||||||||
Loan balance | 13,772,000 | ||||||||
Loan amount | $ 14,200,000 | ||||||||
Monthly installments | $ 59,109 | ||||||||
Number of real estate assets | item | 9 | ||||||||
Term loan amortization period | 20 years | ||||||||
Debt issuance cost | $ 400,000 | ||||||||
Debt issuance cost, amortization period | 5 years | ||||||||
Real estate term loan | LIBOR | |||||||||
Basis spread on variable rate | 2.75% | ||||||||
Subordinated Debt. | |||||||||
Loan balance | $ 66,443,000 | ||||||||
November 1 2017 | Equipment term loans | |||||||||
Interest rate (as a percent) | 2017.00% | ||||||||
November 1 2020 | Equipment term loans | |||||||||
Interest rate (as a percent) | 2.50% | ||||||||
November 2017 And 2020 | Equipment term loans | Maximum | |||||||||
Interest rate (as a percent) | 3.70% | ||||||||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Equipment term loans | |||||||||
Repayments of Long-term Debt | $ 89,488,000 | ||||||||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | Subordinated Debt. | |||||||||
Repayments of Long-term Debt | $ 67,460,000 |
LONG-TERM DEBT - Additional inf
LONG-TERM DEBT - Additional information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2017 | Dec. 31, 2013 | Dec. 31, 2016 | Oct. 29, 2016 | Apr. 26, 2016 | Feb. 19, 2015 | |
Long-term Debt and Capital Lease Obligations, Including Current Maturities [Abstract] | ||||||
2,017 | $ (14,309,000) | |||||
2,018 | (14,041,000) | |||||
2,019 | (12,962,000) | |||||
2,020 | (7,944,000) | |||||
2,021 | (4,378,000) | |||||
Thereafter | (241,550,000) | |||||
Loan amount attributable to interest | (434,000) | |||||
Total | 266,466,000 | $ 281,673,000 | ||||
Total (Present value of minimum lease payments on capital leases) | 294,750,000 | |||||
Senior Debt | ||||||
Long-term Debt and Capital Lease Obligations, Including Current Maturities [Abstract] | ||||||
2,017 | (2,500,000) | |||||
2,018 | (2,500,000) | |||||
2,019 | (2,500,000) | |||||
2,020 | (2,500,000) | |||||
2,021 | (2,500,000) | |||||
Thereafter | (237,500,000) | |||||
Total (Present value of minimum lease payments on capital leases) | 250,000,000 | |||||
Equipment term loans | ||||||
Loan amount | $ 8,800,000 | $ 7,800,000 | ||||
Interest rate (as a percent) | 3.25% | |||||
Long-term Debt and Capital Lease Obligations, Including Current Maturities [Abstract] | ||||||
2,017 | (9,359,000) | |||||
2,018 | (9,696,000) | |||||
2,019 | (9,365,000) | |||||
2,020 | (5,138,000) | |||||
2,021 | (1,825,000) | |||||
Thereafter | (4,050,000) | |||||
Total (Present value of minimum lease payments on capital leases) | 39,433,000 | |||||
Capital leases | ||||||
Long-term Debt and Capital Lease Obligations, Including Current Maturities [Abstract] | ||||||
2,017 | (2,450,000) | |||||
2,018 | (1,845,000) | |||||
2,019 | (1,097,000) | |||||
2,020 | (306,000) | |||||
2,021 | (53,000) | |||||
Total minimum lease payments | 5,751,000 | |||||
Loan amount attributable to interest | (434,000) | |||||
Total | 5,317,000 | |||||
Less current portion | (2,272,000) | |||||
Long-term capital leases | 3,045,000 | |||||
Senior subordinated secured debt | Main Street Capital Corporation | ||||||
Loan amount | $ 20,000,000 | |||||
Interest rate (as a percent) | 12.00% | |||||
Paid-in-kind interest (as a percent) | 2.50% | |||||
Accrued, Paid-in-kind interest added to principal balance | 100,000 | 500,000 | ||||
Accrued, Paid-in-kind, interest | 100,000 | |||||
Senior subordinated secured debt | Prudential Capital Partners | ||||||
Loan amount | $ 20,000,000 | |||||
Interest rate (as a percent) | 12.00% | |||||
Paid-in-kind interest (as a percent) | 2.50% | |||||
Accrued, Paid-in-kind interest added to principal balance | $ 100,000 | 500,000 | ||||
Accrued, Paid-in-kind, interest | $ 100,000 | |||||
Subordinated Debt. | ||||||
Make-whole payment | 5.00% | |||||
Subordinated Debt. | LST Seller notes | ||||||
Loan amount | $ 22 | |||||
Interest rate (as a percent) | 10.00% | |||||
Subordinated Debt. | DTR Seller notes | ||||||
Loan amount | $ 1 | |||||
Interest rate (as a percent) | 5.00% | |||||
Subordinated Debt. | BHE Seller notes | ||||||
Loan amount | $ 2 | |||||
Interest rate (as a percent) | 7.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statutory federal tax rate | 35.00% | |
Changes in uncertain tax positions | $ 0 | |
Minimum | ||
State tax rates | 1.00% | |
Effective tax rates | 26.30% | |
Maximum | ||
State tax rates | 6.00% | |
Effective tax rates | 45.80% |
STOCKHOLDERS_ EQUITY (Details)
STOCKHOLDERS’ EQUITY (Details) | Feb. 27, 2017USD ($)shares | Feb. 21, 2017$ / shares | Oct. 13, 2016$ / shares | Feb. 28, 2017shares | Mar. 31, 2017USD ($)item$ / sharesshares | Mar. 31, 2016$ / shares | Dec. 31, 2016USD ($) |
Proceeds from Issuance of Convertible Preferred Stock | $ | $ 65,000,000 | ||||||
Quarterly dividend (in dollars per share) | $ / shares | $ 12.50 | $ 18.75 | |||||
Value of stock issued | $ | $ 65,000,000 | ||||||
Warrants | |||||||
Shares that can be purchased out of each warrant | 0.50 | ||||||
Exercise price per half share | $ / shares | $ 5.75 | ||||||
Exercise price per whole share | $ / shares | $ 11.50 | ||||||
Number of fractional shares to be issued | 0 | ||||||
Total number of warrants outstanding | 35,040,664 | ||||||
Warrants to purchase shares of common stock | 17,520,332 | ||||||
Expiration term of public warrants | 5 years | ||||||
Public Warrants [Member] | |||||||
Total number of warrants outstanding | 19,959,908 | ||||||
Warrants exercisable period | 30 days | ||||||
Number of trading days in which the price per share should equals or exceeds $24.00 per share to call the Public Warrants for redemption | item | 20 | ||||||
Redemption price per warrant | $ | $ 0.01 | ||||||
Redemption price per warrant subject to stated common stock value | $ / shares | $ 24 | ||||||
Number of trading days in which the common stock price equals or exceeds the specified price | item | 20 | ||||||
Private Warrants [Member] | |||||||
Total number of warrants outstanding | 15,080,756 | ||||||
Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | |||||||
Proceeds from Issuance of Convertible Preferred Stock | $ | $ 65,000,000 | ||||||
Series A Convertible Preferred Stock Member | |||||||
Initial conversion rate per share | 8.6957 | ||||||
Initial conversion rate per share | $ / shares | $ 11.50 | ||||||
Number of years of anniversary from issue date for holder elects to convert (in years) | 7 years | ||||||
Number of consecutive trading days at option by delivery of Notice of Conversion (in days) | 10 days | ||||||
Number of consecutive trading days commencing on trading day immediately following notice (in days) | 20 days | ||||||
Shares would be issuable upon conversion of currently outstanding shares (in shares) | 5,652,171 | ||||||
Minimum percentage of weighted average price of common stock under preferred stock conversion on or after third anniversary (as a percent) | 140.00% | ||||||
Minimum trading days of weighted average price of common stock under preferred stock conversion on or after third anniversary (in days) | 20 days | ||||||
Maximum trading days of weighted average price of common stock under preferred stock conversion on or after third anniversary (in days) | 30 days | ||||||
Minimum percentage of weighted average price of common stock under preferred stock conversion on or after fifth anniversary (as a percent) | 115.00% | ||||||
Minimum trading days of weighted average price of common stock under preferred stock conversion on or after fifth anniversary (in days) | 20 days | ||||||
Maximum trading days of weighted average price of common stock under preferred stock conversion on or after fifth anniversary (in days) | 30 days | ||||||
Minimum trading days of weighted average price of common stock under preferred stock conversion on or after seventh anniversary (in days) | 10 days | ||||||
Maximum days for conversion of preferred stock into common stock due to fundamental changes (in days) | 15 days | ||||||
Base price for calculation of conversion rate | $ / shares | $ 100 | ||||||
Percentage of closing sale price of common stock | 66.67% | ||||||
Minimum percentage of shares of common stock owned by holder for limitation in preferred stock | 9.99% | ||||||
Maximum percentage of shares can be converted to common stock | 19.99% | ||||||
Preferred share liquidation amount per share | $ / shares | $ 100 | ||||||
Dividend rate (as a percent) | 7.625% | ||||||
Preferred stock dividend rate | 7.625% | ||||||
Series A Convertible Preferred Stock Member | Maximum | |||||||
Number of business days following tenth consecutive trading day to convert shares (in days) | 5 days | ||||||
Number of trading days from receipt of Notice of Conversion (in days) | 2 days | ||||||
Series A Convertible Preferred Stock Member | Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | |||||||
Issuance of Series A Convertible Preferred Stock ( in shares) | 650,000 | ||||||
Proceeds from Issuance of Convertible Preferred Stock | $ | $ 65,000,000 | ||||||
Series A Convertible Preferred Stock Member | Private placement | Hennessy Capital Acquisition Corp II and HCAC Merger Sub Inc | |||||||
Issuance of Series A Convertible Preferred Stock ( in shares) | 650,000 | ||||||
Proceeds from Issuance of Convertible Preferred Stock | $ | $ 65,000,000 | ||||||
Series B Convertible Preferred Stock | |||||||
Quarterly dividend (in dollars per share) | $ / shares | $ 12.50 | $ 18.75 | |||||
Conversion of Convertible Stock to common shares (in shares) | 9,301,150 | ||||||
Series B Convertible Preferred Stock | Accrued expenses and other liabilities | |||||||
Dividends | $ | $ 1,200,000 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - shares | Mar. 31, 2017 | Dec. 31, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, authorized | 250,000,000 | 250,000,000 |
2017 Omnibus Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, authorized | 4,500,000 |
DEFINED CONTRIBUTION PLAN (Deta
DEFINED CONTRIBUTION PLAN (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
DEFINED CONTRIBUTION PLAN | ||
Company's expense under matching requirements | $ 0.6 | $ 0.6 |
INTEREST RATE SWAP (Details)
INTEREST RATE SWAP (Details) - Interest Rate Swap Agreement - Designated as hedging - Cash flow hedge | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Derivative [Line Items] | |
Interest rate swap liability at fair value | $ 51,871 |
Notional Amount | $ 12,000,000 |
Termination Date | Apr. 30, 2018 |
Interest Rate Received (in percentage) | 60.00% |
Interest Rate Paid (in percentage) | 3.63% |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Letter of credit | ||
Operating Leased Assets [Line Items] | ||
Outstanding letters of credit | $ 7 | |
Building and terminal | ||
Operating Leased Assets [Line Items] | ||
Rent expense | 0.8 | $ 0.6 |
Tractor, trailer and other revenue equipment | ||
Operating Leased Assets [Line Items] | ||
Rent expense | $ 3.9 | $ 2.6 |
REPORTABLE SEGMENTS (Details)
REPORTABLE SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Segment Reporting Information, Profit (Loss) [Abstract] | |||
Total revenue | $ 160,434 | $ 156,881 | |
Operating income | (849) | 2,969 | |
Depreciation | 14,873 | 15,344 | |
Amortization of intangible assets | 1,442 | 1,529 | |
Income (loss) before income tax | (10,516) | (2,289) | |
Total assets | 601,050 | 620,070 | $ 570,235 |
Corporate/Eliminations | |||
Segment Reporting Information, Profit (Loss) [Abstract] | |||
Total revenue | (1,543) | (782) | |
Operating income | (5,735) | (5,803) | |
Depreciation | 39 | 40 | |
Income (loss) before income tax | (11,712) | (8,349) | |
Total assets | 37,584 | 10,585 | |
Flatbed | |||
Segment Reporting Information, Profit (Loss) [Abstract] | |||
Intersegment revenues and expenses | 300 | ||
Total revenue | 81,304 | 76,089 | |
Operating income | 3,879 | 4,890 | |
Depreciation | 7,083 | 7,130 | |
Amortization of intangible assets | 437 | 489 | |
Income (loss) before income tax | 2,105 | 3,608 | |
Total assets | 281,800 | 301,129 | |
Flatbed | Operating Segments | |||
Segment Reporting Information, Profit (Loss) [Abstract] | |||
Intersegment revenues and expenses | 900 | 900 | |
Specialized | |||
Segment Reporting Information, Profit (Loss) [Abstract] | |||
Total revenue | 80,673 | 81,574 | |
Operating income | 1,007 | 3,882 | |
Depreciation | 7,751 | 8,174 | |
Amortization of intangible assets | 1,005 | 1,040 | |
Income (loss) before income tax | (909) | 2,452 | |
Total assets | 281,666 | 308,356 | |
Specialized | Operating Segments | |||
Segment Reporting Information, Profit (Loss) [Abstract] | |||
Intersegment revenues and expenses | $ 600 | $ 500 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event $ in Thousands | May 01, 2017USD ($)shares |
Schilli and Big Freight Systems, Inc. | |
SUBSEQUENT EVENTS | |
Voting interest acquired (as a percent) | 100.00% |
Combined consideration | $ 36,800 |
Consideration in cash | $ 33,400 |
Purchase price paid in common stock (in shares) | shares | 342,133 |
Consideration in shares | $ 3,440 |
Outstanding debt assumed in acquisition | $ 32,500 |
Big Freight Systems Inc [Member] | |
SUBSEQUENT EVENTS | |
Times of additional cash consideration to be paid on excess of EBIDTA | 0.4 |