DSKE - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone, and thank you for participating in today's conference call to discuss Daseke's financial results for the fourth quarter and full year ended December 31, 2018. Delivering today's prepared remarks is Don Daseke, CEO and Chairman; Scott Wheeler, President and Director; Bharat Mahajan, CFO and Chris Easter, COO. After the prepared remarks, the management team will take your questions.

Before we go further, I would like to turn the call over to Cody Slach of Liolios Group, Daseke's IR Advisor, as he reads the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Cody, please go ahead.

Cody Slach

Nicole. Thanks, forward-looking of in XXXX. includes Litigation Private as Act Reform statements presentation the defined Securities Today's Such statements forward-looking include projected financial information.

our those other our business, cause actual including strategies, expectations to risks expectations statements, with to that revenues, you SEC subject to Forward-looking risks could events uncertainties earnings, that I today. prospects are and encourage based statements to differ We affect for aspects that discussion are projections. filings forward-looking Daseke's results the and of on read current obligation respect and with performance, or no materially from the a of can our after to business. undertake our circumstances revise occurring reflect to

that or included conform presentation morning, Appendix Accounting which of their measures non-GAAP do Generally the Accepted call, the of including measures. GAAP, Investors website, US to not most a the During the this will items issued also in to Principles, release there EBITDA to these tab be Daseke investor are Reconciliations daseke.com. and adjusted the both available measures press in acquisition-adjusted some discussion GAAP comparable are directly of of and

performing being of diligence join in Daseke trucking flatbed the in the due on should assume carriers is stock Daseke’s potential evaluating, business to specialized and Daseke. always addition acquiring In negotiating specialized in flatbed investors acquisitions. other business, to Therefore, is Daseke

Daseke's over I Mr. Now, turn to Daseke. CEO, Don? to call the would Don like

Don Daseke

topics. today, we share Well, on X, year. results cover record thank to several of Starting I'm excited be here you, and the today to everyone. Cody, good morning, slide will another

as we of address will results. compelling revisit First, market opportunity headed I then review where our year full XXXX provide an I will high a Daseke’s and are organization. level

focus will Chris detail Operating introduce I financial our cash then generating and provide for Easter, our we Bharat in on XXXX will strategic new and organic results growth, through month, Chief effectiveness, take Officer, flow our our sheet. in will our pre-announcement be then free operational driving you XXXX reported de-levering outlook. our As last balance and financial

close of priorities Finally, the present as XXXX. will Scott with XXXX a our our priorities well strategic call for as review

and million. The light is our in our solid we to consolidation acquisition has In drastically record with EBITDA XXXX, working million that and we business scale strategy Revenue revenue built diversified the Turning to year our our well term produce for organic XXXX pace and and adjusted scope consistent long solid a nimbler yielding shift operate our free revenue XX% meaningful, it cash higher from XXXX. to asset is mix lower in up ended light, with mix. a flow. expenditure, of have along that grew nearly and revenue, XX% We as This of proof company with us the with requirements, investment can capital is and organic allows capital asset XXXX growth. doubling revenue organization record as the basis, X, On organization. was was EBITDA XX% on to billion a an up EBITDA for XX%. up XXX XX% XXXX adjusted year a another growth basis of billion, was X.XX was outlook an our XX%. above adjusted at by driven increased XXX.X slide adjusted Adjusted as up revenue X.X acquisition of outlook grown EBITDA of was that our fact above

adjusted has over EBITDA grown XX%. first unique story company record growth significantly to of solid shows and X, The largest with of a business industrial CAGR mover tells the North our building that of XX-year Turning the of goods. our and slide XX% decade the revenue in America's CAGR an

on is years our course decade, slide on of building a capital. over the X, the next accelerate executed first scale. our over returns XX objective we Our to strategy On of

are we outlook. today, results, and runway decade company great with truly in Even a with what growth results I leader these have the with excited that I'm for surface market bring. line next produced will for the believe our consistently of plenty only the built scratched and strong and have We we've

and we’re shareholder Looking organic XXXX, flow at centered taking cash our a generation de-levering for the we pause strategy will on over long which believe focus our all sheet, balance and will our M&A free growth, term. be around drive of value

throughout to the our X, team that evolved and slide about am very and excited year. I Turning one has strengthened

and I Chris operations. In markets will on focus strategy, Scott terms tasked focus strategic while strategy on Bharat continue developing, will to roles, the be will and will big initiatives. focus of on trucking financial our capital picture implementing with

organization. scale for large be of confidence build our of ability I'd including broad driving impact of recipient key background proven logistics I'm experience team. and transportation, an organic flatbed maximizing and is growth, us be more great XX him lead to brings formally Desert and graduate, on a West cash teams of to style, with this his like leadership organizational introduce in the industry scale. excellent meaningful roles, instrumental the Point him Chris than on specialized and depth in flow and Speaking logistics in in a free knowledge transportation Chris’s our confident he Chris, will Star Schneider. and years gives and Army, Storm His experience Walmart, optimizing will and management addition in Bronze make call. to US ability skills

call speak the to and so So about with to in new his over like he turn the role business. Chris Chris? he the sees can opportunities that, I'd

Chris Easter

fantastic how and the exceptional company like joining you selected Thank of you, I’d and to to lead an morning, flatbed what’s and done logistics. specialized on good Don operating Daseke team have and to everyone. am great team our been build It's say focused transportation to honored I be today.

customers I an success different and technical many an of of impressive with decades unmatched coupled seen verticals. many and As industry I spanning across legacy and success, breadth look across Daseke, knowhow, equally depth a over

both effectiveness across and uniquely tremendous ahead the are the to positioned for and organization. over operational Daseke entire the pass will marketplace that, We I in Bharat. opportunities With growth I see call

Bharat Mahajan

Thank you, Chris.

a X, on adjusted. slide a our like term Before results, acquisition about reference talk I'd to to basis, regular we I turning that discuss

financial adjusted date. the the adjusted only quarter transaction a are proxy some of results up is helpful now XX%, our On and to will the which XXX Operating we to presented move both was on post fourth acquisition loss of internally how XXXX. the organic on to view of increased which Daseke revenues compared million XXX.X organic in points. year Therefore, and highly XXXX transaction X.X an in post which ago our details, date basis, we million and slide pre were financial adjusted again a acquisition XX. was and acquisitive and X.X to the the growth data includes Our year I XX% basis believe million, statement period compared include quarter. ago acquisition results loss provides our an results Revenue throughout better growth. million, are size quarter.

result, as assets income well as depreciation our the and makes companies, value to assets which step-up less trucking operating acquisition, meaningful. and comparability companies the we when value the of intangible the book recorded amortization net acquisitive, customer acquired non-compete market of of intangible other value value of are income, fair impact as we As as to not impacts stepped fair of agreements. that relationships, assets the and such The up a market for each

year-over-year goodwill share step amortization million fourth the Net cash net XX.X million of of of adjusted income, exceeded For million EBITDA increased this EBITDA for in quarter Adjusted loss or increased million. increased million, fourth impact that related related for the quarter were of XX.X basis, in Further, to of has per XX.X to a to of business tax X.X quarter step-up XXXX, fifth to and tax deferred quarter where XX.X million to compared taxes million, change combined and of million of loss or million XX.X per quarter. impact XXXX. by the -- rate to expenses, a XXXX, non XX% was compared share, growth the net of quarter million. of was the adjusted impairment. to the cuts million of of had in impact assets, revaluation impact acquired adjust of non-cash act total up the income impact step up of X.X intangible depreciation in combination assets, in the Adjusted to to the we for of quarter million X% in jobs net assets fourth X.X a year X% XX.X was the goodwill to consecutive XXXX million the or ago to XX.X in XX.X adjusted the compared the EBITDA fourth the due of and X.X due net costs acquired Acquisition related The XX%. increased $X.XX impairment, acquisition represents XXXX. XX.X was net depreciation and impact fourth QX in compared operating intangible $X.XX basis writedown basis amortization impacted the amortization of and an the

XX% revenue segment, Specialized to was revenue Looking adjusted XX% XX.X XX.X EBITDA to XX% to at increased adjusted flatbed in million. up the increased our EBITDA million up results quarter XX% XXX.X solutions to by with fourth XXX.X and billion. million

higher the exposed revenue third deck providing typically quarters. reminder, to seasonality move freight elements rates, of in levels our second our by demand quarters and and the there in fourth lower freight, months. levels is business. a in is will you in earnings the further and Typically, see warmer open commentary segment, as is We and the Before first so higher and

view light Please expenditure have addition XX flatbed asset for to owner-operator XX% lower flatbed free adjusted XX% a truck our last QX generates to fleet, Tennessee EBITDA Steel EBITDA our however, in flow. XXXX an margins, to December, lower of from long actual of requirements, segment. XXXX. capital revenues and detailed our asset resulting term a on acquisition a slide revenues basis segment XXXX cash light in substantially our caused adjusted Haulers and revenue increase segment higher in in view Moving on The more recall of results, provides

to decision move light margin, experienced of a more amount actual grew to by XX%. EBITDA we dollar asset our strategic adjusted our a lower but mix, Given EBITDA

segment. and non-driving personnel with have quarter, in headwinds both flatbed drivers for to our continued the markets. labor tight During Wages experienced rise we

demand but to substantially. was temporary market to market the term of into some the are like trucking led the rates indicators the lower still market. exist, manufacturing provide industrial Conversations some capacity, constraints and spring continue all relief typically we we the is shippers this to shippers XXXX, pricing end quarter seeing of points, incremental to index demand, environment. Fourth to flatbed. significant few While but monitor revenue and capacity year-over-year, time ISM adjusting the the still there of was coming will a the index Long freight $X.XX. X% because mile data a season. to towards significantly holidays. Slide the within are rate in a encouraging current with listening highlights with leading up per which provide weather caused we production into head the term winter year, market as is that dislocation In metrics This in up around increase short XX

and up X% in segment. XX compared QX tractor percentage to a XXXX, operating higher specialized rates by over major ones XX, our can undertaken defense and glass business. in increase capital with mix, to to XXX points XX%. light slightly revenue specialized in and were see review rate driven mainly customers energy, our of XX% improvement the freight per commercial XXXX. EBITDA you the XX% slide that rate addition our strength per XXXX leverage, increased of the heavy to in revenues and the XX,XXX QX Revenue the increased dimensional by we in asset tough to growth ago QX The shift associated rates meaning XX,XXX, provides realized On to XX% context, fourth projects of more tractor For the improved by rate our adjusted basis fourth to due Aveda’s compared from have QX of compared comps. detailed cents volume, in mile margins asset Slide we high XXXX, driven $X.XX up of Flatbed quarter The business. for in against project of XX,XXX per of decreased to year XXXX still the compared to improved in XXXX, to of XX,XXX adjusted revenue from $X.XX and quarter. business quarter per mile EBITDA a

the in made we in XXX% up Operating slide on net year transitioning expense revenue completed to compared XXXX. to The total XXXX, net significantly in income million, million, to EBITDA in $X.X the XXXX million. EBITDA acquisitions million an for in results. compared X XX% Included for to XX acquired million XXXX growth acquisitions adjusted another basis million XX.X Turning for strong million non-cash $X.XX growth the intangibles with to million by the increased and impact to million to benefits XXXX, XX.X per share of compared in acquisition share, XXX.X four adjusted Acquisition million, XXXX income to a expense Revenue in million was XXXX. intangibles XX.X operating in XX% in XXXX. basis, amortization per in up XX.X was assets, X.X XXXX. of and XX.X XXX.X Adjusted goodwill XX% loss to XXXX. of and billion. the revenue added increased XX.X million, $X.XX organic for increased the driven compared full Net and in X.X of XXX.X related or XX.X Adjusted to of XXXX increased million is depreciation of million from writedown up was XXXX impact XX to of XX%. of or income step solid net

driven segment, this XXX.X million. by to million, results was revenue due we Slide December acquisition two solutions revenue XX% XXX segment acquisitions XXXX made December with adjusted to flatbed largely primarily on by measures Specialized an acquisitions EBITDA XXXX adjusted XX% EBITDA EBITDA, million, this adjusted increased to up XX specialized basis. to XXX% XXX.X increased XXXX. two flatbed XX% Specialized by our to up Turning million. XX.X to

million results XXX.X by higher on way, EBITDA Looking in side, XXX our to XXXX, specialized our and in in the compared particularly XXXX, business. glass XXXX. made adjusted due at wind of our flatbed EBITDA XX.X our to in to an in acquisition X% commercial increase support to had segment we XX.X XX% adjusted million, in this Acquisition our in from investments million increased business, volumes million

item, an costs, doubling adjustment line nearly Finally, you will by had primarily in see we revenues XXXX. the corporate driven increase in in

a growth, growth slide percentage revenue. is While an corporate to acquisition are initiatives as of percentage key year, basis of increase XX% we working. corporate driving on X.X% Despite in XXXX growth a demonstrates our organic overhead as for overhead the in XXXX. we costs basis, down to dollar are our this reported adjusted The the takeaway on which X.X% revenue, declined EBITDA XX compared that absolute points overhead our

to our sheet. balance turning Now,

debt liquidity XX, XXXX, we As cash total XX.X had XXX.X slide under December XXX.X million XX our XX available million, indicates, available of at million. million was asset was backlog. and Net

which XXXX. Additionally, of at was capital, capital cash compares up revenue of efficient growth working end XX% expansion. which excluding million the use of or the versus totaled XX% total XX.X XX.X period million, of end liabilities the This during our the to earn-out year, shows XXXX, during business significant and of

leverage without into using taking the leverage slide calculate one leverage to X.X impact financial common acquisitions one EBITDA. platform metrics of a times use reported account, our calculate historical of could if approximately ratio on full to Moving on a were reporting to XX, results

debt closing, leverage, XX. corresponding statements defined, because However, the is financial but calculation in used very from was acquired to to note it that after year acquisitions accordance our reflect important times reflect show, full this Note is than right commonly calculations the that December financial reported facility, platform off lower our debt these at as what what X.X equates not and based simple of a with do earnings.

our slide adjustments made for Our debt we On reiterate XXXX outlook. forma pro agreements XX, this.

X.X Adjusted million, billion is to to million acquisition EBITDA of year. that compared XX% XXX in to capital XXX to capital be approximately XXXX. represents billion, two be in our our in the XXXX, over quarters be million, million anticipated XX total increase are in Net XXX.X invested of range of of approximately increase the the range XX% XX range an XX% over million first XXXX. XX% in XXXX. X% anticipate For of to we adjusted be over XXXX. X.X of approximately of million to growth to in the an XXXX in XX% XXX the will revenue We of EBITDA expect to This expenditures approximately to expenditures expected

by as year We XXXX. of of sheet end balance ratio, expect our net defined be de-lever in the December the to is approximately end debt at the X.X times the leverage agreements, and year our XX, expected to

press For end the the issued reference of we XXXX the today. release a view of please more at outlook, detailed our table

will I the Now, turn to over call Scott.

Scott Wheeler

Thank morning, Good Brian. you, everyone.

that like priorities. accomplishments to many strategic I under the XXXX would First, our the achieved organization highlight

joining the of acquisition. introduce finally, sharing I And priorities show I a for of benefits our the Second, recent Daseke by the will platform results will XXXX.

review priority. to XXXX XX slide under strategic we major turn please Now, each priorities the achieved accomplishments our and and

our in As and growth, out all we've focused organic three fronts. I significant in laid M&A. main priorities prior on strategic calls, XXXX made were In strides three operational XXXX, effectiveness

initiative First, was growth always organization be will and today. And discussing a that for are primary company. saw the we results organic the clearly you with our throughout grabbing

and our effectively had and as numerous purchasing allowed programs manage our revenue. effectiveness of of fleet Daseke These advantage maintain under overall in we power, costs a a operational through Second, reduce range new facilities fleet our us initiatives. percentage produced to our in achievements operating equipment invest corporate to services, significant take more that overhead in consolidated XXXX desired

strategic our was for focused priority Finally, XXXX third M&A.

when an provided we we Aveda have we quarters. This the can the short joined created in XXXX, see initiatives achieve after color believe combined produced all additional Aveda. that period made our X, great December made became to $XX.X of and each I revenue average with public and Daseke. XX, team companies year, this beginning business XX.X%. wasn't compared extremely adjusted is allow platform due XX% that the ago set the outstanding transaction fit largest the two adjusted with will and produce the combined the XXXX. Daseke. year seventh increased not operational highlight EBITDA as scale acquisitions The XX% nicely such On given up we June for years past results continue acquisition scale XX% joined results test subsidiaries same and the XXXX going the been and the increased we’ve benefit a in of generate scale during the amazing you built We talented But the points produced a and two in EBITDA uplift these on Aveda, into significant our not of acquisition, solid in of platform. have adjusted within us to us driving clearly growth on platform strategic appreciate period, we to XXXX, you to we're These results built have to of $XXX.X has two we found slide that Daseke. and the company. of we the is XX, at month available achievements During from well to our discussed achieved, acquisition hope forward, expect million, that that we our to synergies the and operations XXXX. at size priorities We increased but to closed break don't acquisitions out Overall, it year, businesses existing for the margin Aveda the excellence existing companies value will the we with two often XXX basis the acquisition million profile average if EBITDA to adjusted tackle We our would time.

objectives, organizational a cash growth. operations objectives areas of focus we're in will generation, to accomplish an operational de-leveraging prioritize with balance and turn XXXX let's center our level, over operational on focused to of effectiveness. effort around and effectiveness flow our to plan slide There At starting drive high organic are on several and then XXXX free will Speaking acquisitions to in The we sheet. which, XX. we

new maximization, brokerage overall growth business, and be increases drive operational capacity to by on efficiency, growth, organic our expanding sales our drive efforts appropriate Our mix. growing which customer with revenue growth rate overhead will led low and low can capital

several services will we building our shared be areas. out in platform key Next,

via purchasing maximize fleet greater allow of advantage gain assets generating our to efficiency maintenance will fleet our manage the capital We mix, will us services. through revenue of optimizing and taking help This and expenditures. operations Daseke optimal power and efficiency our maintain fleet of our the

build the and out maximize country. build the our capacity efforts our across sales the infrastructure, people will and We the business to of development systems, teams efforts

Finally, end with appropriate that of will we an year amount anticipate the financial leverage. we

us accomplish producing require position we business any on leverage hard confident work in and net the strategic The entire we priorities free developing processes and the focus in But the the to forward agility for have dedication set cash flow XXXX from goals naturally Our right for year. for drive also to structures market business condition. reduce will we will people, the organization. have the that are and I'm set

questions call organic and XXXX, review delivered the operator the for to on exceeded Before In acquisitions. great exceptional turning back let's several takeaways. the key executed turn expectations, slide to growth XX answers, and we to

out cash and our we net leverage. strategic financial focused We be on laid free reducing flow for XXXX will generation plan and have

grow is ahead will and we the look on our remarks to to for to in all now, costs, opportunities advantage continue we our execute the have about the excited our us XXXX, through our on I we operations updating as organization Q&A. turn taking call This and and plan. business we to back organically existing of the you The over maximizing forward built, operator progress the concludes scale processes, team that succeed. will people, we the of have Additionally, ensuring that and this business controlling structures of systems

Operator

Company. from comes Seidl [Operator And question Cowen first our Instructions] from Jason &

Unidentified Analyst

this may for other write something anticipate charge just again, this higher one-time quarter down thing Adam impairment won't businesses little simply first a guess you or was wondering, is question again? and occurring on was is a where my was have Jason. be you This I than happening usual. to this just And

Bharat Mahajan

those kind we one-time was a when Daseke impairment business looking The when here. view have it we and challenges a at at at to units It that go of at We a an particular past we've Bharat from to had then business operating Daseke level, particular as this well look impairments, company that down some as It’s operating level past got going standpoint, charge, to the we feel of we flatbed in look just from and that. kind and results related event. are XXXX. and we company company and this specialized operational past it a do operating to be unit strong

So just one-time event. a

Unidentified Analyst

from And acquisitions last initial then revenue of your little initial kind up. to you're of from a targeting year? quick are follow to this bit a and synergies focuses guess, drive that or acquisitions trying of working one maybe, off about synergies you more on? projects How can cost the Chris, some and I synergies think your what guys

Chris Easter

immersion, going deeply My to four initial half I've operational teams. thank visits that. you our described visit operating leadership the my prioritizing, focus to job. what really for I'm listening, weeks. those just been focus able assessing is units week and next their complete of on the the of fifth balance finishing then on over Yeah, I as just over and

I of April, first all by will hit a kind the completed tour a and week national of operating units. have So that

could to I'm the at both that put since better initiatives that, still on any a deep not I'm place new to assessment. existing I prioritize ready that point where I'm current effectiveness. operational feel drive help to think organic in at and/or we into the I'll growth able get details point, any into yet be and be initiatives that

Operator

from Steve Craig-Hallum. And next from question comes our Dyer

Steve Dyer

different the leverage year I'm there you seems organically. seem of the over last inherently something the you more less into to flatbed. about struggle different on there's extract the And about think be the operating so, the on of business, companies or specialized getting and digging around synergies segments, two be those year over to year ability the and good to really if Just side that forward. how acquired wondering that And two just sides going business that you

Scott Wheeler

the take and Scott. traditional lot specialized, the per mile, specialized market differences more is material and traditional There equipment, market platform, significant between equipment a are trailer that move will This fluctuations. more different Clearly, different building flatbed is more will segments. different cycles two rates and

lot you market to being a and able specialized you're picking think in significantly of see is continue it's I us will or pretty lot environment was seeing So year. back areas in do of we a that rate But are to up a so. I achieve where able be based a what to the think half based the

Steve Dyer

decent Yeah. I the growth understand a flatbed businesses, mean I the but amount. adjusted EBITDA exceeded growth two revenue on by acquisition basis differences in an on

just de-leveraging. I'm basis on why So wondering operating an that side is

Scott Wheeler

Oh yeah, absolutely.

mix asset Sorry, showed the Bharat I didn't post. slides understand lighter dramatically the became and your on pre question. That segment business of and our

I drivers concentration much year have has our XXX% fact prior even so, over mean. greater owner-operators which in to quarter-over-quarter, lower year over opposed of margins was We and up as year, company the brokerage, over

would it of really platform less shift on the but show an be -- in So that combination flatbed the of may delivery anticipated because delivery mechanism. it lower expansion, asset up of margin be to lighter focused dramatically nature in to

Steve Dyer

Okay. I offline. can take the rest

Just this it of think the do generate should and a we bit think heard you don't for CapEx or And percentage to there? level is leaner a free this view you're maintenance public, is of some cash you've view year year maintenance guess question of I'm forward, sustainable and this going around revenue guiding to just level X X.X thumb you've -- what's I know trying average as what a year, do CapEx, that sustainable guess with I I how you I -- gone of about, wrestled everything your age to X. that about from equipment, rule think as or our since terms a in to little what think a year flow as about I've

Bharat Mahajan

Bharat. It’s

also then things generally through that is leases we've business $XX from million models XXXX several gone we've some respect maintenance to some one land of fleet to flexibility already reflected maintenance is is at with CapEx. $XX our gives And and supplement -- now us CapEx also we've better that depending where to we this fleet right operating well. able some run manage things the we've and through in to started as of and how cycles landed, on and to And well. with to and that that generally started going in given the million So being guidance various at somewhere where is that look we're as that our do different looked perspectives range other like

So the XXXX, those comfortable for with that we've very out level of feel we put kind levels.

Steve Dyer

And less assumptions I at to flow CapEx, if different number then XXXX, guess I cash cash around by to a free started of there? million I kind to free the as GAAP get including in defined $XX $XX cash to million CapEx. operations, a from flow ballpark the for of get I am look I

Bharat Mahajan

XX kind kind up range looked and off with items, generally. we from of between all the an EBITDA it that somewhere the at XX on million Depending standpoint take how in to back million Yeah. we and come of, we

Operator

Capital. comes Northland from question next Paul our And from Penney

Paul Penney

it maybe [Technical debt was the bit credit come Difficulty]. of Bharat before focus spreads in little down On and year on this a have terms side, mentioned a

Bharat Mahajan

bit. up Paul, a repeat little question? that could You you broke

Paul Penney

touched just banking to the there question just ability of upon ability I earlier, and some on, of is to Oh, that ability quarters cost sort your thoughts get relationship was think debt, lower to new refinance -- ago -- of or somewhat a debt. couple the about

Bharat Mahajan

answer that to Happy Paul. Yeah.

a amount, something that our of million you ABL substantial capital We structure at certainly pretty have, we AR basis. we're visiting So XXX constant do over on look against and $XXX as is that know, always a only that is an million.

So markets. there. see we with We’ve the happening there looked are that what's also to respect kind at opportunities of debt

do at that, strong is down timing for be they we end are naturally transactions we're is we X.X the so ourselves XXXX. when de-levering the As market we're be look pretty in a this opportunistic year, done, to and you right end know, right, going favorable of conditions The and we’ll were Daseke to can position where by to times the can this very good news a something. of get feel difficult year we

Paul Penney

efforts debt you that your the buying an covenants stock focus de-lever absolute given achievements of your would back Is any applaud free and totally stock, prevent I on And in the to side there from cash. relative basis? and on

Bharat Mahajan

done with our that There that, how on to want is then just that the is agreement best restrictions cash. we much de-levering now back, predominantly of we the can debt after we respect decide decision use to are could certain buy but right business the what we've and focus stock within

Paul Penney

you on one give loaded then the And just this just versus front quick more just can year, year? this on side it is loaded front it color why back end CapEx loader question end again, was why

Bharat Mahajan

anything to else. year, last the to that more in -- like of just It things than bill how manage that, was we timing did and terms respect it related what with them, really we of clause our

So that's reason the end that’s loaded. main front

Paul Penney

appreciate the truly do we and acquisition. extra Aveda your on Scott, disclosure And

So there. complements

Operator

our Research. question Brooklier comes Buckingham from And from next Matt

Matt Brooklier

a expectations, for on you're little question color of terms to of X.X% just and expecting then growth division you to what you side are rate you're the So provide talked pricing expecting basis, what on consolidated in a your your of flatbed specialized able a bit on things?

Don Daseke

line. something along this expect would we Well,

transactional continue will strong. continue it specialized that specialized. that and activity be makes very We tight be capacity guidance. believe ability achieve things. that There's looser all But lot and specialized a still we our to business. a in feel we a to therefore of flatbed will pricing bit confident regardless very in will combination, those affect it pricing of to us still, environment would be of be Weather in will our that strong this events looser think We and feel little

Matt Brooklier

little So bit side in from rate of versus we're to the the growth early specialized on bid business contribution incremental just know and it your you're And a ‘XX could trying rate sounds I season, flatbed terms business. contract talk in kind guess, I getting okay. experience to, you of like of but if your about more the get for talk

of board, looking worse, little they just a of better with kind So, gone expectations, those conversations are your the negotiations, across have progress how in those terms initial bit how season? or in for have bid they color more the gone, line have through

Don Daseke

I still progress a great heightened specialized to side. there is and in a very of of Once what outlined, the is our deal capacity analogous tightness initial demand

while in but in become very On we discussions when have in go caused environment XXXX, profitable, expect in a we in side, we things the areas what But depend those up to that it -- rates to pricing volumes. stronger flatbed we lot and hurricane affected large good, and is but a positive had and the of the exposure more have a the upon almost And specialized don't like end will pricing generally ticking. day, to spot, But of exposure premium like we been flat. the call be the premium at don't XXXX. that, place do rate, to

Matt Brooklier

‘XX. were Okay. from there like that highlighted ‘XX Is up should you look a think corporate And corporate about way then to Bharat your in good costs cost what perspective? a

Bharat Mahajan

Yeah, I did million probably of and $XX in million XX at in to about look XXXX. that at for somewhere -- million XXXX look kind XX we

Matt Brooklier

specifically be little X.X% than Could a the thinking things. a it think it'll about less, ‘XX? Do question pace bit ‘XX. about on my be pass driver of you costs are What how driver along, little keep then And in this they are last thoughts more bit think wages because market we of and wages, it in in rates? in increase that, with a should your cost and big saw increases wage driver terms increase side you driver I'll how

Chris Easter

one shippers goals like a our that. major mid part going fulfill rate rising believe we've environment in wage drivers of be But in know, We single a driver over wages, rates you for XXXX. able XXXX in the rising will that to rising in until and probably need that the drivers as environment year again, up been all of be were driver about once wage QX wages is environment increasing something the In of QX a to XXXX. Well, We that also will be continue XX, XX digits, a believe know of that. are do that to all XX%. we

Operator

And our question Stifel. next from from comes Ross David

David Ross

and morning. Yes, thank good you

on Just them is down it about basis, rates, customers are to artificially on if talk follow you're you comp of there's the I like you had getting what pricing apples-to-apples from year-over-year when just with up on sounds low, last spot that guidance X.X% because contract some kind now? sitting guess to, an question renewals that is that. challenging

Don Daseke

We don't data. release that

David Ross

Okay. then the is what flatbed contracted? percentage being you talked side, than contracts transactional, more And because spot being in versus but flatbed about not

Don Daseke

question, to David, I going the answer try I'm I'm it understand anyway. but not and sure

David Ross

Is it the loads spot contracts on and XX% XX% flatbed. for

Don Daseke

like a spot. probably we’ve something that. gotten yeah, more Oh, Well, little

So it's that. like XX-XX, XX-XX, probably something

David Ross

similar is that year to come or a the it back more And to ago contract side? does

Don Daseke

point It's that going we more kind spot But than will, in if at fact to that effect, of a acquisitions place into exposure it were in was some time well. and is a a lot then historically premium of rates was as had spot than hadn't that this year whereas you more the taking made had just in of couple ago. we XXXX,

David Ross

XQ, quarter. but in a And talked about three then it's weeks only first left the we lot

is in and how So I specifically it was market guess first how the week?

Chris Easter

X.X our million billion discuss XXX very comfortable before million and quarters What don't can they've end. I to in with revenue we you XXXX, EBITDA. tell guidance billion feel in XXX come We to is that the of normally an overall, to X.X for

David Ross

average specialized the with across age flatbed fleet? you what's can it Bharat, and stands, you right as aggregate the for and fleet either now, overall look do or And separately it

Bharat Mahajan

line to our X.X in is be generally, haul X.X going X.X, David, to years.

the those a that age years, between trailers haul to fleet of age XX to XX the Aveda the fleet years, line will the last type in last an our side older going trucks longer longer, and of has business, are lot see business XX business. You like side XX so heavy than a of haul,

David Ross

put understand, year per they Yes, them? fewer on because miles

Bharat Mahajan

Absolutely.

David Ross

quarter. years. that? guess adjusted tired as in Aren’t of your How What the much year-over-year fourth was acquisition EBITDA [indiscernible] was adjusted reason down after the for I few a flatbed

Bharat Mahajan

of a owner of a it We had vertically. percentage shift mixed to bit I combo company the operator just it the hurricanes probably was down tightening, and were from of mix our with we biggest miles is bonus one in already the rates almost Well, a largely about the X%, and things were Irma, those was X.X%, heavy talked and of time QX kind tough was results, capacity but about, in related Harvey revenues XX, mix. but mostly to getting

fourth and in would in, in. seeing effects the quarter would if as a mix in whole grew well was grew really the light an and a kick asset significantly for took was our what kicked there our tariffs steel any we've quarter, There they brokerage then of waiting So acceleration discussion and as forward inventories or We was were and there tariff pause significantly. think that the time, people of third noticed business. happen some our in first when anticipation

numbers. affected to And steel we so there fourth believe degree see a some the was in those kind wait and in of quarter

David Ross

And to held flats both is that just both got there separately there two specialized that Is the brokerage combine brokerage? handles a a or is separately and to flatbed the thought you've reason in brokerage basically segments, have brokerage specialized the segments? in and

Bharat Mahajan

execute Number to and is Yes. There's a reason right order they're and so. we ahead to if right arms. not brokerage that this typically the but company clear or entrust very don't and key key through one, equipment, the have our compelling on major drivers same at the do customer move thing, focused time the so our own on place brokerage go at we handled that and us equipment today will of primarily business would freight customers, our availability

that and general to a customers. in general their high broad is right some So customer, of ours to but kind on our focused do cetera XXXX, grow the executing is that to directly objective majority brokerage. brokerage at that of on of behalf an key now, of We brokerage the vast and as et it a with of broad requirements, close needs, customer is customers, focused just of knowledge degree more opposed

David Ross

debt if covenant know the touched I the at of at EBITDA, apologize. to covenants on look there on leverage X.X don’t as a been around, what’s year, guess numbers Leverage either, of you are has lot I flying Bharat, we end through question. but guys this you the Last the out I XX?

Bharat Mahajan

Yeah.

and XXXX covenant rounded kind was X.XX. the at really of number, end up X.XX is at was X.X the of it So the

were we the So almost a turn at below end of -- covenant coverage the the XXXX. full

of the We end will covenant expect time times. be at to ‘XX by and at X.X four be that the

full turn be to expect below So the we a covenant.

David Ross

Okay.

That's You're Thank very the me. time. making -- you're much for covenants out for it you sense? the that running in

Bharat Mahajan

you. Thank

Operator

from comes you. your Milby Thank from next Willard Global. Seaport question And

Willard Milby

pockets If to talking was your start here a business, I being the top what any the the in of DoD I about QX I QX? close shut out government down and impact customer, guess government guess could the impact ten of

Bharat Mahajan

the shutdowns effect. of our effect real government no saw no discernible We business, in

largest they Our to were the of to exposure Defense and government freight is subject shutdown. Department the not

Willard Milby

as loosening at of in kind overall look and pie, mix the -- well, which you is of kind slices capacity presuming market. that short of think a as slices which are comments -- Scott the probably maybe XXXX? through seeing on that are out your broader about you talked tightness you specialized, bit some of tied a would Bharat, you say Where you, I'm revenue flatbed, was at, term getting look when mostly And kind have the most some the particular concerning just indicators. attention to look Daseke, as or ones strength getting you you I what little more guess, economic maybe do but

Scott Wheeler

is and in that will that side. where have some I take cumbersome will strength what supplier seeing cargo, offs be softening seen core opposed heavy will a is one. strength continuing to transactional, in those values we to think see transactional described as flatbed flatbed where the there. that's It's sensitive or I think high to be shipper. the value a loosening to we're we’re Yeah. one time earlier we core We in as XXXX little softening continue the that Where large the

Willard Milby

Is any more business? subjects there market is end transactional maybe that particular

Scott Wheeler

all side, so. think majority is the materials vast mean, flatbed of types. of on fleet the I there particular, moving building No. types don't In and all we're of I what

will of categories biggest be So those flatbed. our

of kind So broadly. this

Willard Milby

of to the how just as As to equipment levels, in spot -- far over have you a shaping shift to shift, business be XXXX exposure more look exposure available appears conscious year the overall at as to spot loads. the Is market allowing is year the want we that business tied is to shift in kind saying, it we this or more transactional up? that more

Scott Wheeler

the conditions When the we was spot or looked that pricing some the more premium which and caused contract to cover spot frankly. a marketplace. demand amount call in little to the at did enough was market one pricing reasons that one to activity it, shift I really, what spot company in and think not I of There a we XXXX, more capacity we just want liked was huge the of exposure that, but would

Willard Milby

questions, those All housekeeping follow this I Got right. some up appreciate time I'll the Okay. but guys. offline. other

Operator

next comes Barry Sage question from Haimes our And Asset from Management.

Barry Haimes

efforts. the a in on the year truck you little feel difference One retention loosening or the to the sense maybe question, year ago on just earlier recruitment a market for maybe just a and unseeded Thanks. and any count quarter get drivers, are seeing compared with in a bit,

Don Daseke

us. I very Yeah, strong say for to be a would -- really retention continues suit

which in there. good over about And have be a have transportation, But to quarter this that and improvement can pretty the in to the as reason significant in internal opposed owner then a a owner owner biggest paid, operators really and – have we're last crazy. they you been attract how and greater and being real to seen a continue our to going [indiscernible]. as will, if The rates trucking still supply opposed have world, looking XX in number own sounds good we drivers have we've are percentage tight everything it’s seen get do drivers to is in We what XX% turnover, shift there there will feel driver, we kind probably lease months, so operators them. interest as revenue is of for or -- a you're as to being has risen, generally the is, paid purchase company of operators greater that's we typically a shift a something is results

Operator

concludes turn remarks. time, to session. this the now call I’d Mr. like this over to back At our for closing Daseke question-and-answer

Don Daseke

consistently Thank am exceeded the very excited XXXX. you. or I about results targets. in produced met we We our

and to our and again growth, laid And look to listening a call. with XXXX, everyone. talking We free to management achieve strategy net results For forward around out I interest great thank reducing in future. centered position leverage. I the we're in these the organic to especially for to additions like us. Thanks with your our believe appreciate clear our a flow we team. we've everyone in you cash

Operator

gentlemen, conclude teleconference. and does Ladies today's this

disconnect your may you at your for this time. participation. Thank You lines

Daseke (DSKE) 8 Mar 192018 Q4 Earnings call transcript