UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2021
OR
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to _________
DASEKE, INC.
(Exact name of registrant as specified in its charter)
|
Delaware
|
|
001-37509
|
|
47-3913221
|
|
15455 Dallas Parkway, Suite 550
|
|
75001 |
|
(Address of Principal Executive Offices) |
|
(Zip Code) |
Registrant’s Telephone Number, Including Area Code: (972) 248-0412
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
|
Common Stock, par value $0.0001 per share |
DSKE |
The NASDAQ Stock Market LLC |
|
Warrants, each exercisable for one half of a share of Common Stock at an exercise price of $5.75 per half share |
DSKEW |
The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
☐ Large accelerated filer |
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|
|
Accelerated filer |
|
☐ Non-accelerated filer |
|
|
|
Smaller reporting company |
|
|
|
|
|
☐ Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Common shares of the registrant outstanding at July 30, 2021 were 62,323,709.
DASEKE, INC.
FORM 10-Q
For the Quarterly Period Ended June 30, 2021
INDEX
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this Report) of Daseke, Inc. (Daseke or the Company) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except as otherwise indicated by the context, references in this Report to “we,” “us” and “our” are to the consolidated business of the Company. All statements in this Report, including those made by the management of the Company, other than statements of historical fact, are forward-looking statements. These forward-looking statements are based on management’s estimates, projections and assumptions as of the date hereof. Forward-looking statements may contain words such as “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “believe,” “plan,” “should,” “could,” “would,” “forecast,” “seek,” “target,” “predict,” and “potential,” the negative of these terms, or other comparable terminology. Forward-looking statements may include statements about the Company’s goals; the Company’s financial strategy, liquidity and capital required for its business strategy and plans; the Company’s competition and government regulations; general economic conditions; and the Company’s future operating results.
These forward-looking statements are based on information available as of the date of this Report (or, in the case of forward-looking statements incorporated herein by reference, as of the date of the applicable filed document), and current expectations, forecasts and assumptions. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that the Company anticipates. Accordingly, forward-looking statements should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Accordingly, readers are cautioned not to place undue reliance on the forward-looking statements.
Forward-looking statements are subject to risks and uncertainties (many of which are beyond the Company’s control) that could cause actual results to differ materially from the Company’s historical experience and our present expectations or projections. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, general economic and business risks, such as downturns in customers’ business cycles and disruptions in capital and credit markets; impact to the Company’s business and operations resulting from the COVID-19 pandemic; the Company’s ability to adequately address downward pricing and other competitive pressures; driver shortages and increases in driver compensation or owner-operator contracted rates; the Company’s ability to execute and realize all of the expected benefits of its integration, business improvement and comprehensive restructuring plans; loss of key personnel; the Company’s ability to realize all of the intended benefits from recent or future acquisitions; the Company’s ability to complete recent or future divestitures successfully; seasonality and the impact of weather and other catastrophic events; fluctuations in the price or availability of diesel fuel; increased prices for, or decreases in the availability of, new revenue equipment and decreases in the value of used revenue equipment; the Company’s ability to generate sufficient cash to service all of the Company’s indebtedness and the Company’s ability to finance its capital requirements; restrictions in its existing and future debt agreements; increases in interest rates; changes in existing laws or regulations, including environmental and worker health safety laws and regulations and those relating to tax rates or taxes in general; the impact of governmental regulations and other governmental actions related to the Company and its operations; insurance and claims expenses; and litigation and governmental proceedings. For additional information regarding known material factors that could cause the Company’s actual results to differ from its projected results, please see the Company’s filings with the Securities and Exchange Commission (the SEC), particularly the section titled “Part I. Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K/A, filed with the SEC on May 6, 2021.
All forward-looking statements, expressed or implied, attributed to the Company or persons acting on its behalf are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that the Company or persons acting on its behalf may issue.
Part I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in millions, except per share data)
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2021 |
|
|
2020 |
|
||
|
ASSETS |
|
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
111.7 |
|
|
$ |
176.2 |
|
|
Accounts receivable, net of allowance of $2.0 at June 30, 2021 and $3.0 at December 31, 2020 |
|
|
189.8 |
|
|
|
154.4 |
|
|
Drivers’ advances and other receivables |
|
|
8.0 |
|
|
|
8.0 |
|
|
Other current assets |
|
|
25.1 |
|
|
|
26.5 |
|
|
Total current assets |
|
|
334.6 |
|
|
|
365.1 |
|
|
|
|
|
|
|
|
|
||
|
Property and equipment, net |
|
|
393.8 |
|
|
|
402.7 |
|
|
Intangible assets, net |
|
|
90.4 |
|
|
|
93.8 |
|
|
Goodwill |
|
|
140.4 |
|
|
|
140.1 |
|
|
Right-of-use assets |
|
|
124.5 |
|
|
|
121.1 |
|
|
Other non-current assets |
|
|
4.4 |
|
|
|
4.1 |
|
|
Total assets |
|
$ |
1,088.1 |
|
|
$ |
1,126.9 |
|
|
|
|
|
|
|
|
|
||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
|
||
|
Accounts payable |
|
$ |
16.2 |
|
|
$ |
16.5 |
|
|
Accrued expenses and other liabilities |
|
|
53.8 |
|
|
|
35.7 |
|
|
Accrued payroll, benefits and related taxes |
|
|
35.2 |
|
|
|
29.9 |
|
|
Accrued insurance and claims |
|
|
19.6 |
|
|
|
23.7 |
|
|
Current portion of long-term debt |
|
|
55.4 |
|
|
|
54.0 |
|
|
Warrant liability |
|
|
4.1 |
|
|
|
— |
|
|
Operating lease liabilities |
|
|
34.0 |
|
|
|
30.9 |
|
|
Total current liabilities |
|
|
218.3 |
|
|
|
190.7 |
|
|
|
|
|
|
|
|
|
||
|
Long-term debt, net of current portion |
|
|
530.8 |
|
|
|
618.6 |
|
|
Deferred tax liabilities |
|
|
80.2 |
|
|
|
70.0 |
|
|
Non-current operating lease liabilities |
|
|
95.4 |
|
|
|
96.0 |
|
|
Warrant liability |
|
|
— |
|
|
|
6.3 |
|
|
Other non-current liabilities |
|
|
5.4 |
|
|
|
6.5 |
|
|
Total liabilities |
|
|
930.1 |
|
|
|
988.1 |
|
|
|
|
|
|
|
|
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||
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Commitments and contingencies (Note 9) |
|
|
|
|
|
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||
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|
|
|
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||
|
Stockholders’ equity: |
|
|
|
|
|
|
||
|
Series A convertible preferred stock, $0.0001 par value; 10,000,000 shares authorized; 650,000 shares issued with liquidation preference of $65.0 at June 30, 2021 and December 31, 2020 |
|
|
65.0 |
|
|
|
65.0 |
|
|
Common stock, par value $0.0001 per share; 248,482,377 shares authorized, 63,804,434 and 65,023,174 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively |
|
|
— |
|
|
|
— |
|
|
Additional paid-in-capital |
|
|
394.9 |
|
|
|
401.6 |
|
|
Accumulated deficit |
|
|
(302.3 |
) |
|
|
(327.8 |
) |
|
Accumulated other comprehensive income |
|
|
0.4 |
|
|
|
— |
|
|
Total stockholders’ equity |
|
|
158.0 |
|
|
|
138.8 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
1,088.1 |
|
|
$ |
1,126.9 |
|
The accompanying notes are an integral part of the consolidated financial statements.
1
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(Dollars in millions, except per share data)
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Company freight |
|
$ |
163.6 |
|
|
$ |
167.0 |
|
|
$ |
308.7 |
|
|
$ |
347.9 |
|
|
Owner operator freight |
|
|
129.1 |
|
|
|
96.0 |
|
|
|
234.2 |
|
|
|
203.8 |
|
|
Brokerage |
|
|
66.7 |
|
|
|
57.9 |
|
|
|
115.2 |
|
|
|
119.6 |
|
|
Logistics |
|
|
10.7 |
|
|
|
8.8 |
|
|
|
19.2 |
|
|
|
18.9 |
|
|
Fuel surcharge |
|
|
33.9 |
|
|
|
22.0 |
|
|
|
60.6 |
|
|
|
52.5 |
|
|
Total revenue |
|
|
404.0 |
|
|
|
351.7 |
|
|
|
737.9 |
|
|
|
742.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Salaries, wages and employee benefits |
|
|
93.4 |
|
|
|
99.4 |
|
|
|
184.1 |
|
|
|
209.8 |
|
|
Fuel |
|
|
27.0 |
|
|
|
18.2 |
|
|
|
52.4 |
|
|
|
46.9 |
|
|
Operations and maintenance |
|
|
37.3 |
|
|
|
45.3 |
|
|
|
67.6 |
|
|
|
90.9 |
|
|
Communications |
|
|
1.1 |
|
|
|
0.9 |
|
|
|
2.2 |
|
|
|
1.9 |
|
|
Purchased freight |
|
|
155.3 |
|
|
|
112.2 |
|
|
|
276.7 |
|
|
|
246.4 |
|
|
Administrative expenses |
|
|
12.7 |
|
|
|
17.2 |
|
|
|
29.2 |
|
|
|
37.4 |
|
|
Sales and marketing |
|
|
0.5 |
|
|
|
0.3 |
|
|
|
1.1 |
|
|
|
1.0 |
|
|
Taxes and licenses |
|
|
3.8 |
|
|
|
4.0 |
|
|
|
7.7 |
|
|
|
8.5 |
|
|
Insurance and claims |
|
|
9.9 |
|
|
|
15.6 |
|
|
|
26.7 |
|
|
|
30.6 |
|
|
Depreciation and amortization |
|
|
22.2 |
|
|
|
22.8 |
|
|
|
44.4 |
|
|
|
49.1 |
|
|
(Gain) loss on disposition of property and equipment |
|
|
(4.6 |
) |
|
|
0.4 |
|
|
|
(7.7 |
) |
|
|
(0.8 |
) |
|
Impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
13.4 |
|
|
Restructuring charges |
|
|
0.1 |
|
|
|
3.0 |
|
|
|
0.1 |
|
|
|
3.5 |
|
|
Total operating expenses |
|
|
358.7 |
|
|
|
339.3 |
|
|
|
684.5 |
|
|
|
738.6 |
|
|
Income from operations |
|
|
45.3 |
|
|
|
12.4 |
|
|
|
53.4 |
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Interest income |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
(0.4 |
) |
|
Interest expense |
|
|
7.6 |
|
|
|
11.0 |
|
|
|
18.7 |
|
|
|
23.0 |
|
|
Change in fair value of warrant liability |
|
|
(7.8 |
) |
|
|
(1.1 |
) |
|
|
(2.2 |
) |
|
|
(2.1 |
) |
|
Other |
|
|
(0.4 |
) |
|
|
(1.1 |
) |
|
|
(0.8 |
) |
|
|
0.1 |
|
|
Total other expense (income) |
|
|
(0.7 |
) |
|
|
8.7 |
|
|
|
15.5 |
|
|
|
20.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income (loss) before income taxes |
|
|
46.0 |
|
|
|
3.7 |
|
|
|
37.9 |
|
|
|
(16.5 |
) |
|
Income tax expense (benefit) |
|
|
10.7 |
|
|
|
2.1 |
|
|
|
9.9 |
|
|
|
(1.8 |
) |
|
Net income (loss) |
|
|
35.3 |
|
|
|
1.6 |
|
|
|
28.0 |
|
|
|
(14.7 |
) |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Foreign currency translation adjustments, net of tax of $0.0, $0.1, $0.0 and $(0.1), respectively |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.4 |
|
|
|
(0.3 |
) |
|
Comprehensive income (loss) |
|
$ |
35.5 |
|
|
$ |
1.8 |
|
|
$ |
28.4 |
|
|
$ |
(15.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income (loss) |
|
$ |
35.3 |
|
|
$ |
1.6 |
|
|
$ |
28.0 |
|
|
$ |
(14.7 |
) |
|
Less dividends to Series A convertible preferred stockholders |
|
|
(1.3 |
) |
|
|
(1.3 |
) |
|
|
(2.5 |
) |
|
|
(2.5 |
) |
|
Net income (loss) attributable to common stockholders |
|
$ |
34.0 |
|
|
$ |
0.3 |
|
|
$ |
25.5 |
|
|
$ |
(17.2 |
) |
|
Income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
$ |
0.52 |
|
|
$ |
0.00 |
|
|
$ |
0.39 |
|
|
$ |
(0.27 |
) |
|
Diluted |
|
$ |
0.49 |
|
|
$ |
0.00 |
|
|
$ |
0.38 |
|
|
$ |
(0.27 |
) |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
|
64,842,620 |
|
|
|
64,173,164 |
|
|
|
64,960,833 |
|
|
|
64,625,347 |
|
|
Diluted |
|
|
71,866,303 |
|
|
|
64,711,210 |
|
|
|
66,154,571 |
|
|
|
64,625,347 |
|
|
Dividends declared per Series A convertible preferred share |
|
$ |
1.91 |
|
|
$ |
1.91 |
|
|
$ |
3.81 |
|
|
$ |
3.81 |
|
The accompanying notes are an integral part of the consolidated financial statements.
2
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Six Months Ended June 30, 2021
(Unaudited)
(Dollars in millions)
|
|
|
Series A Convertible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|||||||||||
|
|
|
Preferred Stock |
|
|
Common Stock |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Par |
|
|
Additional |
|
|
Accumulated |
|
|
Comprehensive |
|
|
|
|
||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Value |
|
|
Paid-In Capital |
|
|
Deficit |
|
|
Income (Loss) |
|
|
Total |
|
||||||||
|
Balance at January 1, 2021 |
|
|
650,000 |
|
|
$ |
65.0 |
|
|
|
65,023,174 |
|
|
$ |
— |
|
|
$ |
401.6 |
|
|
$ |
(327.8 |
) |
|
$ |
— |
|
|
$ |
138.8 |
|
|
Exercise of options |
|
|
— |
|
|
|
— |
|
|
|
149,545 |
|
|
|
— |
|
|
|
0.6 |
|
|
|
— |
|
|
|
— |
|
|
|
0.6 |
|
|
Vesting of restricted stock units |
|
|
— |
|
|
|
— |
|
|
|
5,737 |
|
|
|
— |
|
|
|
(0.8 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.8 |
) |
|
Series A convertible preferred stock dividend |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.2 |
) |
|
|
— |
|
|
|
(1.2 |
) |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.4 |
|
|
|
— |
|
|
|
— |
|
|
|
1.4 |
|
|
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7.3 |
) |
|
|
— |
|
|
|
(7.3 |
) |
|
Balance at March 31, 2021 |
|
|
650,000 |
|
|
$ |
65.0 |
|
|
|
65,178,456 |
|
|
$ |
— |
|
|
$ |
402.8 |
|
|
$ |
(336.3 |
) |
|
$ |
0.2 |
|
|
$ |
131.7 |
|
|
Exercise of options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Vesting of restricted stock units |
|
|
— |
|
|
|
— |
|
|
|
143,601 |
|
|
|
— |
|
|
|
(0.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.3 |
) |
|
Series A convertible preferred stock dividend |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.3 |
) |
|
|
— |
|
|
|
(1.3 |
) |
|
Common stock repurchased and retired |
|
|
— |
|
|
|
— |
|
|
|
(1,517,623 |
) |
|
|
— |
|
|
|
(10.5 |
) |
|
|
— |
|
|
|
— |
|
|
|
(10.5 |
) |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.9 |
|
|
|
— |
|
|
|
— |
|
|
|
2.9 |
|
|
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
35.3 |
|
|
|
— |
|
|
|
35.3 |
|
|
Balance at June 30, 2021 |
|
|
650,000 |
|
|
$ |
65.0 |
|
|
|
63,804,434 |
|
|
$ |
— |
|
|
$ |
394.9 |
|
|
$ |
(302.3 |
) |
|
$ |
0.4 |
|
|
$ |
158.0 |
|
The accompanying notes are an integral part of the consolidated financial statements.
3
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
Six Months Ended June 30, 2020
(Unaudited)
(Dollars in millions)
|
|
|
Series A Convertible |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|||||||||||
|
|
|
Preferred Stock |
|
|
Common Stock |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Par |
|
|
Additional |
|
|
Accumulated |
|
|
Comprehensive |
|
|
|
|
||||||||
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Value |
|
|
Paid-In Capital |
|
|
Deficit |
|
|
Income (Loss) |
|
|
Total |
|
||||||||
|
Balance at January 1, 2020 |
|
|
650,000 |
|
|
$ |
65.0 |
|
|
|
64,589,075 |
|
|
$ |
— |
|
|
$ |
396.9 |
|
|
$ |
(327.0 |
) |
|
$ |
(0.4 |
) |
|
$ |
134.5 |
|
|
Vesting of restricted stock units |
|
|
— |
|
|
|
— |
|
|
|
8,950 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Series A convertible preferred stock dividend |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.2 |
) |
|
|
— |
|
|
|
(1.2 |
) |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.9 |
|
|
|
— |
|
|
|
— |
|
|
|
0.9 |
|
|
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.5 |
) |
|
|
(0.5 |
) |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(16.3 |
) |
|
|
— |
|
|
|
(16.3 |
) |
|
Balance at March 31, 2020 |
|
|
650,000 |
|
|
$ |
65.0 |
|
|
|
64,598,025 |
|
|
$ |
— |
|
|
$ |
397.8 |
|
|
$ |
(344.5 |
) |
|
$ |
(0.9 |
) |
|
$ |
117.4 |
|
|
Vesting of restricted stock units |
|
|
— |
|
|
|
— |
|
|
|
129,400 |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
Series A convertible preferred stock dividend |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.3 |
) |
|
|
— |
|
|
|
(1.3 |
) |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.1 |
|
|
|
— |
|
|
|
— |
|
|
|
1.1 |
|
|
Foreign currency translation adjustments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
0.2 |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.6 |
|
|
|
— |
|
|
|
1.6 |
|
|
Balance at June 30, 2020 |
|
|
650,000 |
|
|
$ |
65.0 |
|
|
|
64,727,425 |
|
|
$ |
— |
|
|
$ |
398.8 |
|
|
$ |
(344.2 |
) |
|
$ |
(0.7 |
) |
|
$ |
118.9 |
|
The accompanying notes are an integral part of the consolidated financial statements.
4
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in millions)
|
|
|
Six Months Ended |
|
|||||
|
|
|
June 30, |
|
|||||
|
|
|
2021 |
|
|
2020 |
|
||
|
Cash flows from operating activities |
|
|
|
|
|
|
||
|
Net income (loss) |
|
$ |
28.0 |
|
|
$ |
(14.7 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities |
|
|
|
|
|
|
||
|
Depreciation |
|
|
40.9 |
|
|
|
45.5 |
|
|
Amortization of intangible assets |
|
|
3.5 |
|
|
|
3.6 |
|
|
Amortization of deferred financing fees |
|
|
1.1 |
|
|
|
2.1 |
|
|
Non-cash operating lease expense |
|
|
(0.8 |
) |
|
|
2.7 |
|
|
Change in fair value of warrant liability |
|
|
(2.2 |
) |
|
|
(2.1 |
) |
|
Write-off of deferred financing fees |
|
|
1.1 |
|
|
|
— |
|
|
Stock-based compensation expense |
|
|
3.2 |
|
|
|
2.6 |
|
|
Deferred taxes |
|
|
9.8 |
|
|
|
(1.8 |
) |
|
Bad debt (recovery) expense |
|
|
(0.3 |
) |
|
|
1.3 |
|
|
Gain on disposition of property and equipment |
|
|
(7.7 |
) |
|
|
(0.8 |
) |
|
Impairment |
|
|
— |
|
|
|
13.4 |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
||
|
Accounts receivable |
|
|
(34.8 |
) |
|
|
34.0 |
|
|
Drivers’ advances and other receivables |
|
|
0.6 |
|
|
|
(1.2 |
) |
|
Other current assets |
|
|
1.1 |
|
|
|
(4.6 |
) |
|
Accounts payable |
|
|
(0.3 |
) |
|
|
(2.3 |
) |
|
Accrued expenses and other liabilities |
|
|
14.9 |
|
|
|
5.2 |
|
|
Net cash provided by operating activities |
|
|
58.1 |
|
|
|
82.9 |
|
|
|
|
|
|
|
|
|
||
|
Cash flows from investing activities |
|
|
|
|
|
|
||
|
Purchases of property and equipment |
|
|
(18.0 |
) |
|
|
(14.9 |
) |
|
Proceeds from sale of property and equipment |
|
|
26.6 |
|
|
|
36.4 |
|
|
Net cash provided by investing activities |
|
|
8.6 |
|
|
|
21.5 |
|
|
|
|
|
|
|
|
|
||
|
Cash flows from financing activities: |
|
|
|
|
|
|
||
|
Advances on line of credit |
|
|
747.2 |
|
|
|
736.4 |
|
|
Repayments on line of credit |
|
|
(747.2 |
) |
|
|
(738.1 |
) |
|
Principal payments on long-term debt |
|
|
(212.4 |
) |
|
|
(39.1 |
) |
|
Proceeds from long-term debt |
|
|
97.5 |
|
|
|
— |
|
|
Payments of deferred financing fees |
|
|
(3.4 |
) |
|
|
— |
|
|
Repurchases of common stock |
|
|
(10.5 |
) |
|
|
— |
|
|
Exercise of options, net |
|
|
0.4 |
|
|
|
— |
|
|
Series A convertible preferred stock dividends |
|
|
(2.5 |
) |
|
|
(2.5 |
) |
|
Net cash used in financing activities |
|
|
(130.9 |
) |
|
|
(43.3 |
) |
|
|
|
|
|
|
|
|
||
|
Effect of exchange rates on cash and cash equivalents |
|
|
(0.3 |
) |
|
|
0.5 |
|
|
|
|
|
|
|
|
|
||
|
Net increase (decrease) in cash and cash equivalents |
|
|
(64.5 |
) |
|
|
61.6 |
|
|
Cash and cash equivalents – beginning of period |
|
|
176.2 |
|
|
|
95.7 |
|
|
Cash and cash equivalents – end of period |
|
$ |
111.7 |
|
|
$ |
157.3 |
|
The accompanying notes are an integral part of the consolidated financial statements.
5
DASEKE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS – (Continued)
(Unaudited)
(Dollars in millions)
|
|
|
Six Months Ended |
|
|||||
|
|
|
June 30, |
|
|||||
|
|
|
2021 |
|
|
2020 |
|
||
|
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
||
|
Cash paid for interest |
|
$ |
15.1 |
|
|
$ |
20.8 |
|
|
Cash paid for income taxes |
|
$ |
3.4 |
|
|
$ |
1.3 |
|
|
|
|
|
|
|
|
|
||
|
Noncash investing and financing activities |
|
|
|
|
|
|
||
|
Property and equipment acquired with debt or finance lease obligations |
|
$ |
29.2 |
|
|
$ |
30.0 |
|
|
Property and equipment sold for notes receivable |
|
$ |
— |
|
|
$ |
0.1 |
|
|
Right-of-use assets acquired |
|
$ |
16.5 |
|
|
$ |
26.8 |
|
The accompanying notes are an integral part of the consolidated financial statements.
6
NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Daseke, Inc.’s (the Company or Daseke) wholly-owned subsidiary Daseke Companies, Inc., was incorporated in December 2008 and began operations on January 1, 2009. Daseke is engaged in full service open-deck trucking that focuses primarily in flatbed truckload and heavy haul transportation of specialized items throughout the United States, Canada and Mexico. The Company also provides logistical planning and warehousing services to customers. The Company is subject to regulation by the Department of Transportation, the Department of Defense, the Department of Energy, and various state regulatory authorities in the United States. The Company is also subject to regulation by the Ministries of Transportation and Communications and various provincial regulatory authorities in Canada.
Basis of Presentation
These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (US 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 US 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 and six months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021.
The consolidated balance sheet as of December 31, 2020 has been derived from the audited consolidated financial statements at that date. On May 6, 2021, the Company filed an Amended Annual Report on Form 10-K/A (Amended 10-K) in order to restate the financial statements to reflect warrants as a liability and changes in fair value recorded as non-cash income or expense. 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, 2020 as set forth in the Company’s Amended 10-K.
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 Company may be required, on a non-recurring basis, to adjust the carrying value of the Company’s property and equipment, intangible assets, goodwill and contingent consideration. When necessary, these valuations are determined by the Company using Level 3 inputs. These assets are subject to fair value adjustments in certain circumstances, such as when there is evidence that impairment may exist.
The Company’s warrant liabilities are included within the Level 1 and Level 3 fair value hierarchy. The fair value of the Public Warrants is determined using the closing price of the warrants on the NASDAQ market. The fair value of the Private Placement Warrants is determined using the Black-Scholes option pricing formula. The primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility. The expected volatility was estimated considering observable Daseke public warrant pricing, Daseke’s own historical volatility and the volatility of guideline public companies.
The following table sets forth by level within the fair value hierarchy the Company’s assets and liabilities that were accounted for at fair value (in millions):
|
|
|
Fair value as of June 30, 2021 |
|
|||||||||||||
|
Liabilities: |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Warrant liability |
|
$ |
2.3 |
|
|
$ |
— |
|
|
$ |
1.8 |
|
|
$ |
4.1 |
|
|
Total fair value |
|
$ |
2.3 |
|
|
$ |
— |
|
|
$ |
1.8 |
|
|
$ |
4.1 |
|
|
|
|
Fair value as of December 31, 2020 |
|
|||||||||||||
|
Liabilities: |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
|
Warrant liability |
|
$ |
3.6 |
|
|
$ |
— |
|
|
$ |
2.7 |
|
|
$ |
6.3 |
|
|
Total fair value |
|
$ |
3.6 |
|
|
$ |
— |
|
|
$ |
2.7 |
|
|
$ |
6.3 |
|
The table below is a summary of the changes in the fair value of the warrant liability within the Level 3 fair value hierarchy for the six months ended June 30, 2021 (in millions):
|
|
|
Six Months Ended |
|
|
|
|
|
June 30, 2021 |
|
|
|
Balance at beginning of period |
|
$ |
2.7 |
|
|
Change in fair value |
|
|
(0.9 |
) |
|
Balance at end of period |
|
$ |
1.8 |
|
Recently Issued Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06 – Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The guidance simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. The amendments are effective for the Company for fiscal years beginning after December 15, 2021. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The guidance must be adopted as of the beginning of the fiscal year of adoption. ASU 2020-06 is not expected to have a material impact on the Company’s consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04 – Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. ASU 2020-04 is not expected to have a material impact on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12 – Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes, as part of its initiative to reduce complexity in the accounting standards. The amendments in ASU 2019-12 eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The amendments in ASU 2019-12 will become effective for the Company on January 1, 2022. Early adoption is permitted, including adoption in any interim period. ASU 2019-12 is not expected to have a material impact on the Company’s consolidated financial statements.
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. The ASU sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. The new standard will become effective for the Company beginning with the first quarter 2023 and is not expected to have a material impact on the Company’s consolidated financial statements.
Lease Income
The Company leases tractors and trailers to certain of its owner-operators and accounts for these transactions as operating leases. These leases typically have terms of 30 to 72 months and are collateralized by a security interest in the related revenue equipment. The Company recognizes income for these leases as payments are received over the lease term, which are reported in purchased freight on the consolidated statements of operations and comprehensive income (loss). The Company's equipment leases may include options for the lessee to purchase the equipment at the end of the lease term or terminate the lease prior to the end of the lease term. When an asset reaches the end of its useful economic life, the Company disposes of the asset.
8
Lease income from lease payments related to these operating leases for the three and six months ended June 30, 2021 was $7.0 million and $13.0 million, respectively. Lease income from lease payments related to these operating leases for the three and six months ended June 30, 2020 was $6.2 million and $12.4 million, respectively.
NOTE 2 – OTHER CURRENT ASSETS
The components of other current assets are as follows as of June 30, 2021 and December 31, 2020 (in millions):
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2021 |
|
|
2020 |
|
||
|
Insurance |
|
$ |
8.0 |
|
|
$ |
12.0 |
|
|
Licensing, permits and tolls |
|
|
5.2 |
|
|
|
4.9 |
|
|
Parts supplies |
|
|
3.5 |
|
|
|
3.1 |
|
|
Highway and fuel taxes |
|
|
3.4 |
|
|
|
1.1 |
|
|
Other prepaids |
|
|
1.7 |
|
|
|
3.2 |
|
|
Other assets |
|
|
1.7 |
|
|
|
0.6 |
|
|
Income tax receivable |
|
|
1.6 |
|
|
|
1.6 |
|
|
|
|
$ |
25.1 |
|
|
$ |
26.5 |
|
NOTE 3 – INTEGRATION AND RESTRUCTURING
On July 30, 2019, the Company internally announced a plan to integrate three operating segments with three other operating segments (Project Synchronize or the Plan), which reduced the number of operating segments from 16 to 13. On September 4, 2019, the Company announced a comprehensive restructuring plan (Project Pivot) intended to reduce its cost base, right size its organization and management team and increase and accelerate its previously announced operational improvement goals. The integration and restructuring costs consist of asset impairments, employee-related costs, and other transition and termination costs related to restructuring activities. Employee-related costs include severance, tax preparation, and relocation costs, which are accounted for in accordance with ASC 420 Exit or Disposal Cost Obligations. Other transition and termination costs include fixed asset-related charges, contract and lease termination costs, professional fees, and other miscellaneous expenditures associated with the integration or restructuring activities, which are expensed as incurred. Costs are reported in restructuring charges in the consolidated statements of operations and comprehensive income (loss). The obligation related to employee separation costs is included in other current liabilities in the consolidated balance sheets.
During the first quarter of 2020, the Company made the decision to close certain of the Aveda terminals and wind down those operations, which was completed during the fourth quarter of 2020. As a result of the planned divestiture of Aveda, impairment charges of $13.4 million were recorded for the three months ended March 31, 2020 consisting of property and equipment of $4.0 million, right-of-use assets of $3.2 million and tradename intangible assets of $6.2 million.
On March 10, 2020, the Company announced a plan to integrate three operating segments with three other operating segments (Phase II of the Plan). Phase II of the Plan was initially expected to be significantly completed by June 30, 2020, however, due to uncertainties and changes in focus caused by the COVID-19 pandemic, the Company delayed and reevaluated Phase II of the Plan and reduced the planned number of integrations from three to two operating segments. As of June 30, 2021, one of these integrations had been completed, and the Company expects to complete the remaining integration in late 2021.
The Company recorded $0.1 million and $3.0 million of integration and restructuring expenses in connection with the Plan and Project Pivot in the three months ended June 30, 2021 and 2020, respectively. The Company recorded $0.1 million and $3.5 million of integration and restructuring expenses in connection with the Plan and Project Pivot in the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, we have incurred a cumulative total of $9.8 million in integration and restructuring costs since inception of the Plan.
9
The following table summarizes the integration and restructuring costs as of June 30, 2021 (in millions):
|
|
|
Severance |
|
|
Operating |
|
|
|
|
|
|
|
||||
|
|
|
and |
|
|
Lease |
|
|
|
|
|
|
|
||||
|
|
|
Other Payroll |
|
|
Termination |
|
|
Other |
|
|
Total |
|
||||
|
Balance at December 31, 2020 |
|
$ |
0.1 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.1 |
|
|
Specialized Solution |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Costs accrued |
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
Amounts paid or charged |
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
Specialized Solution balance at June 30, 2021 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Flatbed Solution |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Costs accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Amounts paid or charged |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Flatbed Solution balance at June 30, 2021 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Costs accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Amounts paid or charged |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Adjustments |
|
|
(0.1 |
) |
|
|
— |
|
|
|
|
|
|
(0.1 |
) |
|
|
Corporate balance at June 30, 2021 |
|
|
(0.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Costs accrued |
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
Amounts paid or charged |
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
Adjustments |
|
|
(0.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
Consolidated balance at June 30, 2021 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
NOTE 4 – PROPERTY AND EQUIPMENT
The components of property and equipment are as follows as of June 30, 2021 and December 31, 2020 (in millions):
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2021 |
|
|
2020 |
|
||
|
Revenue equipment |
|
$ |
516.4 |
|
|
$ |
546.7 |
|
|
Assets leased and available for lease to owner-operators |
|
|
110.8 |
|
|
|
87.1 |
|
|
Buildings and improvements |
|
|
56.4 |
|
|
|
57.0 |
|
|
Furniture and fixtures, office and computer equipment and vehicles |
|
|
33.4 |
|
|
|
31.9 |
|
|
|
|
|
717.0 |
|
|
|
722.7 |
|
|
Accumulated depreciation |
|
|
(323.2 |
) |
|
|
(320.0 |
) |
|
Property and equipment, net |
|
$ |
393.8 |
|
|
$ |
402.7 |
|
Depreciation expense on property and equipment was $20.4 million and $21.0 million for the three months ended June 30, 2021 and 2020, respectively. Depreciation expense on property and equipment was $40.9 million and $45.5 million for the six months ended June 30, 2021 and 2020, respectively.
NOTE 5 – ACCRUED EXPENSES AND OTHER LIABILITIES
The components of accrued expenses and other liabilities are as follows as of June 30, 2021 and December 31, 2020 (in millions):
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2021 |
|
|
2020 |
|
||
|
Brokerage and escorts |
|
$ |
17.1 |
|
|
$ |
11.9 |
|
|
Unvouchered payables |
|
|
12.8 |
|
|
|
6.1 |
|
|
Owner-operator deposits |
|
|
10.2 |
|
|
|
7.8 |
|
|
Other accrued expenses |
|
|
8.6 |
|
|
|
6.8 |
|
|
Fuel and fuel taxes |
|
|
1.8 |
|
|
|
1.1 |
|
|
Accrued property taxes and sales taxes payable |
|
|
1.7 |
|
|
|
1.5 |
|
|
Interest |
|
|
1.6 |
|
|
|
0.5 |
|
|
|
|
$ |
53.8 |
|
|
$ |
35.7 |
|
10
NOTE 6 – LONG-TERM DEBT
Long-term debt consists of the following as of June 30, 2021 and December 31, 2020 (in millions):
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2021 |
|
|
2020 |
|
||
|
Term loan facility |
|
$ |
399.0 |
|
|
$ |
483.5 |
|
|
Equipment term loans |
|
|
163.6 |
|
|
|
164.9 |
|
|
Finance leases |
|
|
31.8 |
|
|
|
31.3 |
|
|
|
|
|
594.4 |
|
|
|
679.7 |
|
|
Less current portion |
|
|
(55.4 |
) |
|
|
(54.0 |
) |
|
Less unamortized debt issuance costs |
|
|
(8.2 |
) |
|
|
(7.1 |
) |
|
Total long-term debt |
|
$ |
530.8 |
|
|
$ |
618.6 |
|
Term Loan Facility
On March 9, 2021, the Company and Daseke Companies, Inc., a wholly-owned subsidiary of the Company (the Term Loan Borrower), entered into a Refinancing Amendment (Amendment No. 3 to Term Loan Agreement) (the Term Loan Amendment) with JPMorgan Chase Bank, N.A., as successor administrative agent and collateral agent and a replacement lender, Credit Suisse AG, Cayman Islands Branch, as predecessor administrative agent and collateral agent, the other loan parties party thereto and the other financial institutions party thereto. Pursuant to the Term Loan Amendment, the Company prepaid, refinanced and replaced all of its issued and outstanding term loans under its Term Loan Facility (as defined below) in an aggregate principal amount of approximately $483.5 million (the Prior Term Loans) utilizing proceeds from (i) replacement term loans in aggregate principal amount of $400.0 million (the Replacement Term Loans) and (ii) approximately $83.5 million from its cash balance.
The terms of the Replacement Term Loans are governed by a $400.0 million term loan facility (the Term Loan Facility) evidenced by a Term Loan Agreement dated as of February 27, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the Term Loan Agreement), among the Company, the Term Loan Borrower, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (the Term Loan Agent), and the other lenders from time to time party thereto with a scheduled maturity date of March 9, 2028. The Replacement Term Loans 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 1.75% floor) plus 3.00% per annum and LIBOR (subject to a 0.75% floor) plus 4.00% per annum. During the three months ended June 30, 2021 and 2020, the weighted average interest rate on the Term Loan Facility was 4.8% and 6.0%, respectively. During the six months ended June 30, 2021 and 2020, the weighted average interest rate on the Term Loan Facility was 5.1% and 6.3%, respectively.
The Term Loan Facility is secured by substantially all assets of the Company, excluding those assets collateralizing certain equipment and real estate debt and other customary exceptions.
The Term Loan Facility permits voluntary prepayments of borrowings. 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 Replacement Term Loans 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 Replacement Term Loans 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%, 25% or 0% for excess cash flow periods for the year ending December 31, 2018 and beyond, 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. As of June 30, 2021, the Company was in compliance with all covenants contained in the Term Loan Facility.
ABL Facility
The Company has a senior secured asset-based revolving line of credit (the ABL Facility) under a credit agreement (as amended, restated, supplemented or otherwise modified from time to time, the ABL Credit Agreement) with PNC Bank, National Association, as administrative agent and the lenders party thereto (the ABL Agent).
11
On April 29, 2021, the Company, Daseke Companies, Inc., a wholly-owned subsidiary of the Company, and the Company’s other domestic subsidiaries party thereto (together with Daseke Companies, Inc., the ABL Borrowers) entered into the Fifth Amendment to Fifth Amended and Restated Revolving Credit and Security Agreement (the ABL Amendment) with the financial institutions party thereto as lenders and the ABL Agent), which amends certain terms of the ABL Credit Agreement.
Principally, the ABL Amendment extended the scheduled maturity date of the ABL Facility from February 27, 2025 to April 29, 2026. The ABL Amendment also, among other things, (a) increased the Maximum Revolving Advance Amount from $100 million to $150 million, (b) provides that the Maximum Revolving Advance Amount (as defined therein) may be increased further from $150 million to $200 million (the ABL Amendment did not result in such an increase), (c) removed the ABL Borrowers’ total leverage financial covenant, which had been tested on a quarterly basis and (d) provided additional covenant flexibility in the form of increased debt, lien, investment, disposition and restricted payment baskets.
The ABL Facility also provides for the issuance of letters of credit subject to certain restrictions and a sublimit of $40 million. As of June 30, 2021, the Company had no borrowings, $23.7 million in letters of credit outstanding, and could incur approximately $119.3 million of additional indebtedness under the ABL Facility, based on current qualified collateral.
At June 30, 2021, the interest rate on the ABL Facility was 3.75%. Margins on the ABL Facility are adjusted, if necessary, to the applicable rates set forth in the following table corresponding to the average RLOC Utilization for the trailing 12 month period on the last day of the most recently completed fiscal quarter. RLOC Utilization at a particular date shall mean an amount equal to (a)(i) outstanding amount of Revolving Advances plus (ii) the outstanding amount of the Swing Loans plus (iii) the aggregate Maximum Undrawn Amount of all outstanding Letters of Credit, divided by (b) Maximum Revolving Advance Amount.
|
RLOC Utilization |
|
Base Rate Margins |
|
|
LIBOR Rate Margins |
|
||
|
Less than 33.3% |
|
|
0.50 |
% |
|
|
1.50 |
% |
|
Greater than or equal to 33.3%, but less than 66.6% |
|
|
0.75 |
% |
|
|
1.75 |
% |
|
Greater than or equal to 66.6% |
|
|
1.00 |
% |
|
|
2.00 |
% |
The ABL Facility is secured by all of the Company’s U.S.-based accounts receivable, parts supplies, 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.
The ABL Facility contains a financial covenant such that during any period after a default or event of default or after excess availability falling below 17.5% 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.
As of June 30, 2021, the Company was in compliance with all covenants contained in the ABL Facility.
Equipment Term Loans and Mortgages
As of June 30, 2021, the Company had term loans collateralized by equipment in the aggregate amount of $161.2 million with 16 lenders (Equipment Term Loans). The Equipment Term Loans bear interest at rates ranging from 2.6% to 5.9%, require monthly payments of principal and interest and mature at various dates through July 2027. The weighted average interest rate for the three months ended June 30, 2021 and 2020 was 3.9% and 3.8%, respectively. The weighted average interest rate for the six months ended June 30, 2021 and 2020 was 4.1% and 4.4%, respectively. 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.
As of June 30, 2021, the Company has a bank mortgage loan with a balance of $2.4 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 approximately $15,000, including interest at 3.7%, and a balloon payment of approximately $2.1 million at maturity date. The bank mortgage loan matures November 1, 2023.
12
NOTE 7 – INCOME TAXES
The effective tax rates for the three months ended June 30, 2021 and 2020 were 23.3% and 56.8%, respectively. The effective tax rates for the six months ended June 30, 2021 and 2020 were 26.1% and 10.9%, respectively. The difference between the Company’s effective tax rate and the federal statutory rate primarily results from the jurisdictional mix of earnings, combined with the unfavorable impact of nondeductible expenses, including the effect of the per diem pay structure for drivers and the change in fair value of warrant liability. State tax rates vary among states and typically range from 1% to 6%, although some state rates are higher and a small number of states do not impose an income tax. The effective tax rate for the three months ended June 30, 2021 differs from the effective tax rate for the same period in 2020 primarily due to the decision to use the actual effective tax rate in the first quarter of 2020 as the annual effective tax rate method did not provide a reliable estimate of the income tax benefit. The effective tax rate for the six months ended June 30, 2021 differs from the effective tax rate for the same period in 2020 primarily due to the impact of permanent differences in relation to forecasted earnings before income taxes each period.
There were no changes in uncertain tax positions during the three and six months ended June 30, 2021.
NOTE 8 – STOCK-BASED COMPENSATION
Under the 2017 Omnibus Incentive Plan (as amended from time to time, the Plan), the Company may grant awards of stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and performance awards. On June 18, 2021, at the Company's 2021 annual meeting of stockholders, the Company’s stockholders approved an amendment and restatement (the Restatement) of the Plan. The Restatement Plan increased the number of shares that may be granted as awards thereunder by 4.0 million and extended the scheduled expiration date of the Plan from February 27, 2027 to June 18, 2031.
As of June 30, 2021, the Company has 3.2 million shares of common stock available for issuance under the Plan. Equity awards to non-directors under the Plan generally vest annually on a pro-rata basis over a three to five-year period on the anniversary of each grant date. The Company also grants equity awards to our directors under the Plan. The awards granted to directors vest ratably over periods of one to five years annually on the anniversary of each grant date.
Aggregate stock-based compensation charges, net of forfeitures, were $0.8 million and $1.1 million for the three months ended June 30, 2021 and 2020, respectively, and $3.2 million and $2.0 million for the six months ended June 30, 2021 and 2020, respectively. These expenses are included as a component of salaries, wages and employee benefits on the accompanying consolidated statements of operations and comprehensive income (loss).
Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized on a straight-line basis over the employees’ requisite service period. Forfeitures are recorded as a cumulative adjustment to stock-based compensation expense in the period forfeitures occur. As of June 30, 2021, there was $3.2 million, $2.0 million, and $5.3 million of unrecognized stock-based compensation expense related to stock options, restricted stock units and performance stock units (PSUs), respectively. This expense will be recognized over the weighted average periods of 1.6 years for stock options, 1.1 years for restricted stock units and 1.8 years for PSUs.
Stock Options
The following table summarizes stock option grants:
|
Grantee Type |
|
# of
|
|
|
Issued and
|
|
|
Vesting
|
|
Weighted
|
|
|
Weighted Average
|
|
||||
|
Director Group |
|
|
150,000 |
|
|
|
75,000 |
|
|
5 years |
|
$ |
9.98 |
|
|
$ |
4.36 |
|
|
Employee Group |
|
|
4,662,630 |
|
|
|
2,571,557 |
|
|
3-5 years |
|
$ |
5.60 |
|
|
$ |
3.08 |
|
|
Total |
|
|
|
|
|
2,646,557 |
|
|
|
|
|
|
|
|
|
|||
13
A summary of option activity as of June 30, 2021 and changes during the six months then ended are as follows:
|
|
|
Shares |
|
|
Weighted
|
|
|
Weighted
|
|
|
Aggregate
|
|
||||
|
Outstanding as of January 1, 2021 |
|
|
3,114,931 |
|
|
$ |
6.19 |
|
|
|
7.9 |
|
|
$ |
5.9 |
|
|
Exercised |
|
|
(149,545 |
) |
|
|
2.96 |
|
|
|
|
|
|
|
||
|
Forfeited or expired |
|
|
(318,829 |
) |
|
|
6.66 |
|
|
|
|
|
|
|
||
|
Outstanding as of June 30, 2021 |
|
|
2,646,557 |
|
|
$ |
6.32 |
|
|
|
7.3 |
|
|
$ |
5.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Exercisable as of June 30, 2021 |
|
|
1,539,985 |
|
|
$ |
7.90 |
|
|
|
6.8 |
|
|
$ |
2.0 |
|
|
Vested and expected to vest as of June 30, 2021 |
|
|
2,646,557 |
|
|
$ |
6.32 |
|
|
|
7.3 |
|
|
$ |
5.9 |
|
The stock options’ maximum contract term is ten years. The Company did not grant any stock options during the six months ended June 30, 2021.
Restricted Stock Units
Restricted stock units are nontransferable until vested. The Plan Committee (as defined in the Plan) may, in its sole discretion, grant dividend or dividend equivalents with respect to non-vested units. Prior to vesting, the grantees of restricted stock units are not entitled to vote the shares. Restricted stock unit awards typically vest in equal annual increments over the vesting period.
The following table summarizes restricted stock unit grants under the Plan:
|
Grantee Type |
|
# of
|
|
|
Issued and Outstanding |
|
|
Vesting
|
|
Weighted Average Grant Date Fair Value (Per Unit) |
|
|||
|
Director Group |
|
|
933,237 |
|
|
|
289,241 |
|
|
1-2 years |
|
$ |
2.96 |
|
|
Employee Group |
|
|
1,647,461 |
|
|
|
212,920 |
|
|
3-5 years |
|
$ |
10.40 |
|
|
Total |
|
|
|
|
|
502,161 |
|
|
|
|
|
|
||
A summary of restricted stock unit awards activity under the Plan as of June 30, 2021 and changes during the six months then ended are as follows:
|
|
|
Units |
|
|
Weighted
|
|
||
|
Non-vested as of January 1, 2021 |
|
|
594,801 |
|
|
$ |
5.72 |
|
|
Granted |
|
|
118,047 |
|
|
|
6.92 |
|
|
Vested |
|
|
(180,549 |
) |
|
|
6.35 |
|
|
Forfeited |
|
|
(30,138 |
) |
|
|
10.08 |
|
|
Non-vested as of June 30, 2021 |
|
|
502,161 |
|
|
$ |
5.52 |
|
Performance Stock Units
PSUs become eligible for vesting in shares upon the achievement of specific performance and market-based conditions and subject to final vesting based on the participant’s continued employment through the end of the requisite service periods. The grant date fair value of PSUs was determined using a Monte Carlo probability model and compensation cost is recognized ratably over the requisite service period.
As of June 30, 2021, the Company had 1,613,210 total PSUs outstanding. There are 1,495,000 PSUs in which the vesting occurs upon the achievement of specific market-based conditions based on the performance of per share price of the Company’s common stock and subject to final vesting based on the participant’s continued employment through the end of the requisite service periods.
In addition, there are 118,210 PSUs in which the vesting occurs upon the achievement of specific performance-based conditions based on the Company's financial performance over a three year performance period and modified based on the Company's Relative Total Shareholder Return and subject to final vesting based on the participant’s continued employment through the end of the requisite service periods. The
14
amount of awards that will ultimately vest for these 118,210 PSUs can range from 0% to 200% based on the Company’s Relative Total Shareholder Return calculated over a three year period beginning January 1 of the year each grant was made. The Company currently expects that these PSUs will vest at 100%.
The following inputs and assumptions were used to calculate the fair value of the PSUs for the shares granted during the six months ended June 30, 2021:
|
Weighted average expected life |
|
2.5 years |
|
Risk-free interest rate |
|
0.38% |
|
Expected volatility |
|
93.80% |
|
Expected dividend yield |
|
0.00% |
A summary of performance stock unit awards activity as of June 30, 2021 and changes during the six months ended are as follows:
|
|
|
Units |
|
|
Weighted
|
|
||
|
Non-vested as of January 1, 2021 |
|
|
1,716,100 |
|
|
$ |
1.38 |
|
|
Granted |
|
|
118,210 |
|
|
|
7.45 |
|
|
Vested |
|
|
— |
|
|
|
— |
|
|
Forfeited |
|
|
(221,100 |
) |
|
|
6.30 |
|
|
Non-vested as of June 30, 2021 |
|
|
1,613,210 |
|
|
$ |
2.28 |
|
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Letters of Credit
The Company had outstanding letters of credit as of June 30, 2021 totaling approximately $26.1 million, including those disclosed in Note 6. These letters of credit are related to liability and workers compensation 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 to pay self-insurance and deductibles on such matters up to a certain threshold before the insurance is applied.
NOTE 10 – COMMON STOCK REPURCHASE PROGRAM
On March 22, 2021, the Company’s Board of Directors authorized the repurchase of up to three million shares of the Company’s common stock. Shares are effectively retired at the time of purchase. As of and during the three months ended June 30, 2021, the Company repurchased and retired 1,517,623 shares, at an aggregate price of $10.5 million.
NOTE 11 – REPORTABLE SEGMENTS
The Company evaluates the performance of the reportable 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 $1.8 million for the three months ended June 30, 2021 and 2020, respectively. Intersegment revenues and expenses for the Specialized Solutions segment totaled $2.0 million and $4.8 million for the three months ended June 30, 2021 and 2020, respectively. Intersegment revenues and expenses for the Flatbed Solutions segment totaled $1.8 million and $3.5 million for the six months ended June 30, 2021 and 2020, respectively. Intersegment revenues and expenses for the Specialized Solutions segment totaled $4.3 million and $7.5 million for the six months ended June 30, 2021 and 2020, respectively.
15
The following tables reflect certain financial data of the Company’s reportable segments for the three and six months ended June 30, 2021 and 2020 (in millions):
|
|
|
Flatbed |
|
|
Specialized |
|
|
|
|
|
|
|
||||
|
|
|
Solutions |
|
|
Solutions |
|
|
Corporate/ |
|
|
Consolidated |
|
||||
|
|
|
Segment |
|
|
Segment |
|
|
Eliminations |
|
|
Total |
|
||||
|
Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total revenue |
|
$ |
180.9 |
|
|
$ |
226.1 |
|
|
$ |
(3.0 |
) |
|
$ |
404.0 |
|
|
Company freight |
|
|
47.7 |
|
|
|
118.3 |
|
|
|
(2.4 |
) |
|
|
163.6 |
|
|
Owner operator freight |
|
|
88.9 |
|
|
|
40.7 |
|
|
|
(0.5 |
) |
|
|
129.1 |
|
|
Brokerage |
|
|
25.3 |
|
|
|
41.5 |
|
|
|
(0.1 |
) |
|
|
66.7 |
|
|
Logistics |
|
|
1.3 |
|
|
|
9.3 |
|
|
|
0 |
|
|
|
10.7 |
|
|
Fuel surcharge |
|
|
17.7 |
|
|
|
16.3 |
|
|
|
(0.1 |
) |
|
|
33.9 |
|
|
Operating income (loss) |
|
|
22.9 |
|
|
|
29.0 |
|
|
|
(6.6 |
) |
|
|
45.3 |
|
|
Depreciation |
|
|
8.1 |
|
|
|
12.1 |
|
|
|
0.2 |
|
|
|
20.4 |
|
|
Amortization of intangible assets |
|
|
0.8 |
|
|
|
1.0 |
|
|
|
— |
|
|
|
1.8 |
|
|
Restructuring |
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
Non-cash operating lease expense |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
|
— |
|
|
|
(0.4 |
) |
|
Interest expense |
|
|
0.9 |
|
|
|
1.3 |
|
|
|
5.4 |
|
|
|
7.6 |
|
|
Income (loss) before income tax |
|
|
22.1 |
|
|
|
28.0 |
|
|
|
(4.1 |
) |
|
|
46.0 |
|
|
Capital expenditures |
|
|
7.7 |
|
|
|
13.5 |
|
|
|
6.4 |
|
|
|
27.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total revenue |
|
$ |
137.2 |
|
|
$ |
221.5 |
|
|
$ |
(7.0 |
) |
|
$ |
351.7 |
|
|
Company freight |
|
|
48.9 |
|
|
|
121.6 |
|
|
|
(3.5 |
) |
|
|
167.0 |
|
|
Owner operator freight |
|
|
60.1 |
|
|
|
38.3 |
|
|
|
(2.4 |
) |
|
|
96.0 |
|
|
Brokerage |
|
|
15.5 |
|
|
|
43.1 |
|
|
|
(0.7 |
) |
|
|
57.9 |
|
|
Logistics |
|
|
0.7 |
|
|
|
8.1 |
|
|
|
— |
|
|
|
8.8 |
|
|
Fuel surcharge |
|
|
12.0 |
|
|
|
10.4 |
|
|
|
(0.4 |
) |
|
|
22.0 |
|
|
Operating income (loss) |
|
|
10.7 |
|
|
|
14.5 |
|
|
|
(12.8 |
) |
|
|
12.4 |
|
|
Depreciation |
|
|
8.5 |
|
|
|
12.2 |
|
|
|
0.3 |
|
|
|
21.0 |
|
|
Amortization of intangible assets |
|
|
0.8 |
|
|
|
1.0 |
|
|
|
— |
|
|
|
1.8 |
|
|
Restructuring |
|
|
0.2 |
|
|
|
2.8 |
|
|
|
— |
|
|
|
3.0 |
|
|
Non-cash operating lease expense |
|
|
1.2 |
|
|
|
(1.4 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
Interest expense |
|
|
2.4 |
|
|
|
2.8 |
|
|
|
5.8 |
|
|
|
11.0 |
|
|
Income (loss) before income tax |
|
|
8.5 |
|
|
|
12.5 |
|
|
|
(17.3 |
) |
|
|
3.7 |
|
|
Capital expenditures |
|
|
9.2 |
|
|
|
21.4 |
|
|
|
— |
|
|
|
30.6 |
|
16
|
|
|
Flatbed |
|
|
Specialized |
|
|
|
|
|
|
|
||||
|
|
|
Solutions |
|
|
Solutions |
|
|
Corporate/ |
|
|
Consolidated |
|
||||
|
|
|
Segment |
|
|
Segment |
|
|
Eliminations |
|
|
Total |
|
||||
|
Six Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total revenue |
|
$ |
334.4 |
|
|
$ |
409.8 |
|
|
$ |
(6.3 |
) |
|
$ |
737.9 |
|
|
Company freight |
|
|
92.4 |
|
|
|
221.1 |
|
|
|
(4.8 |
) |
|
|
308.7 |
|
|
Owner operator freight |
|
|
159.9 |
|
|
|
75.3 |
|
|
|
(1.0 |
) |
|
|
234.2 |
|
|
Brokerage |
|
|
47.5 |
|
|
|
68.1 |
|
|
|
(0.4 |
) |
|
|
115.2 |
|
|
Logistics |
|
|
2.5 |
|
|
|
16.5 |
|
|
|
0.2 |
|
|
|
19.2 |
|
|
Fuel surcharge |
|
|
32.1 |
|
|
|
28.8 |
|
|
|
(0.3 |
) |
|
|
60.6 |
|
|
Operating income (loss) |
|
|
33.9 |
|
|
|
39.5 |
|
|
|
(20.0 |
) |
|
|
53.4 |
|
|
Depreciation |
|
|
16.1 |
|
|
|
24.2 |
|
|
|
0.6 |
|
|
|
40.9 |
|
|
Amortization of intangible assets |
|
|
1.5 |
|
|
|
2.0 |
|
|
|
— |
|
|
|
3.5 |
|
|
Restructuring |
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
Non-cash operating lease expense |
|
|
(0.2 |
) |
|
|
(0.6 |
) |
|
|
— |
|
|
|
(0.8 |
) |
|
Interest expense |
|
|
2.6 |
|
|
|
3.4 |
|
|
|
12.7 |
|
|
|
18.7 |
|
|
Income (loss) before income tax |
|
|
31.5 |
|
|
|
36.8 |
|
|
|
(30.4 |
) |
|
|
37.9 |
|
|
Capital expenditures |
|
|
16.7 |
|
|
|
24.1 |
|
|
|
6.4 |
|
|
|
47.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total revenue |
|
$ |
292.4 |
|
|
$ |
461.9 |
|
|
$ |
(11.6 |
) |
|
$ |
742.7 |
|
|
Company freight |
|
|
100.2 |
|
|
|
253.7 |
|
|
|
(6.0 |
) |
|
|
347.9 |
|
|
Owner operator freight |
|
|
126.3 |
|
|
|
81.0 |
|
|
|
(3.5 |
) |
|
|
203.8 |
|
|
Brokerage |
|
|
35.0 |
|
|
|
86.0 |
|
|
|
(1.4 |
) |
|
|
119.6 |
|
|
Logistics |
|
|
1.5 |
|
|
|
17.3 |
|
|
|
0.1 |
|
|
|
18.9 |
|
|
Fuel surcharge |
|
|
29.4 |
|
|
|
23.9 |
|
|
|
(0.8 |
) |
|
|
52.5 |
|
|
Operating income (loss) |
|
|
19.3 |
|
|
|
8.0 |
|
|
|
(23.2 |
) |
|
|
4.1 |
|
|
Depreciation |
|
|
16.8 |
|
|
|
28.1 |
|
|
|
0.6 |
|
|
|
45.5 |
|
|
Amortization of intangible assets |
|
|
1.6 |
|
|
|
2.0 |
|
|
|
— |
|
|
|
3.6 |
|
|
Impairment |
|
|
— |
|
|
|
13.4 |
|
|
|
— |
|
|
|
13.4 |
|
|
Restructuring |
|
|
0.2 |
|
|
|
3.3 |
|
|
|
— |
|
|
|
3.5 |
|
|
Non-cash operating lease expense |
|
|
2.1 |
|
|
|
0.6 |
|
|
|
— |
|
|
|
2.7 |
|
|
Interest expense |
|
|
4.9 |
|
|
|
5.9 |
|
|
|
12.2 |
|
|
|
23.0 |
|
|
Income (loss) before income tax |
|
|
14.6 |
|
|
|
1.8 |
|
|
|
(32.9 |
) |
|
|
(16.5 |
) |
|
Capital expenditures |
|
|
17.0 |
|
|
|
27.9 |
|
|
|
— |
|
|
|
44.9 |
|
17
NOTE 12 – EARNINGS (LOSS) PER SHARE
ASC Topic 260, “Earnings Per Share”, provides that unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The Company’s outstanding non-vested restricted stock units are participating securities unless there is a net loss attributable to common stockholders. Accordingly, earnings per common share are computed using the two-class method.
Basic earnings per common share is calculated by dividing net income available 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 the Company’s earnings.
For the six months ended June 30, 2021, 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 and six months ended June 30, 2020, shares of the Company’s 7.625% Series A Convertible Cumulative Preferred Stock (Series A Preferred Stock) and shares of the Company’s outstanding stock options and performance share units were not included in the computation of diluted loss per share as their effects were anti-dilutive.
The following table sets forth the computation of basic and diluted earnings per share under the two-class method:
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
June 30, |
|
|
June 30, |
|
||||||||||
|
(in millions, except per share data) |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income (loss) |
|
$ |
35.3 |
|
|
$ |
1.6 |
|
|
$ |
28.0 |
|
|
$ |
(14.7 |
) |
|
Less Series A preferred dividends |
|
|
(1.3 |
) |
|
|
(1.3 |
) |
|
|
(2.5 |
) |
|
|
(2.5 |
) |
|
Net income (loss) attributable to common stockholders |
|
|
34.0 |
|
|
|
0.3 |
|
|
|
25.5 |
|
|
|
(17.2 |
) |
|
Allocation of earnings to non-vested participating restricted stock units |
|
|
(0.3 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
Numerator for basic EPS - income (loss) available to common stockholders - two class method |
|
$ |
33.7 |
|
|
$ |
0.3 |
|
|
$ |
25.3 |
|
|
$ |
(17.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Add back Series A preferred dividends |
|
$ |
1.3 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
Add back allocation earnings to participating securities |
|
|
0.3 |
|
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
|
Reallocation of earnings to participating securities considering potentially dilutive securities |
|
|
(0.3 |
) |
|
|
— |
|
|
|
(0.2 |
) |
|
|
— |
|
|
Numerator for diluted EPS - income (loss) available to common shareholders - two class method |
|
$ |
35.0 |
|
|
$ |
0.3 |
|
|
$ |
25.3 |
|
|
$ |
(17.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Denominator for basic EPS - weighted-average shares |
|
|
64.8 |
|
|
|
64.2 |
|
|
|
65.0 |
|
|
|
64.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Stock options and performance share units |
|
|
1.4 |
|
|
|
0.5 |
|
|
|
1.2 |
|
|
|
— |
|
|
Convertible preferred stock |
|
|
5.7 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Denominator for diluted EPS - weighted-average shares |
|
|
71.9 |
|
|
|
64.7 |
|
|
|
66.2 |
|
|
|
64.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic earnings (loss) per share |
|
$ |
0.52 |
|
|
$ |
0.00 |
|
|
$ |
0.39 |
|
|
$ |
(0.27 |
) |
|
Diluted earnings (loss) per share |
|
$ |
0.49 |
|
|
$ |
0.00 |
|
|
$ |
0.38 |
|
|
$ |
(0.27 |
) |
NOTE 13 – SUBSEQUENT EVENTS
In July 2021, the Company repurchased and retired 1,482,377 common shares at an aggregate price of $9.8 million under the common stock repurchase program.
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Introductory Note
Daseke is a leading provider and consolidator of transportation and logistics solutions focused exclusively on flatbed and specialized (open-deck) freight in North America. The Company believes it provides one of the most comprehensive transportation and logistics solution offerings in the open-deck industry. The Company delivers a diverse offering of transportation and logistics solutions to approximately 6,700 customers across the continental United States, Canada and Mexico through two reportable segments: Flatbed Solutions and Specialized Solutions. The Flatbed Solutions segment focuses on delivering transportation and logistics solutions that principally require the use of flatbed and retractable-sided transportation equipment, and the Specialized Solutions segment focuses on delivering transportation and logistics solutions that require the use of specialized trailering transportation equipment.
Both of the Company’s reportable segments operate highly flexible business models comprised of company-owned tractors and trailers and asset-light operations (which consist of owner-operator transportation, freight brokerage and logistics). The Company’s asset-based operations have the benefit of providing shippers with certainty of delivery and continuity of operations. Alternatively, the Company’s asset-light operations offer flexibility and scalability to meet customers’ dynamic needs and have lower capital expenditure requirements and fixed costs.
Recent Developments
COVID-19 Pandemic
The levels of activity in the Company’s business have historically been positively correlated to broad measures of economic activity and to measures of industrial production because many of the Company’s customers are in the manufacturing and industrial segments. In the first half of 2021, the Company saw improvement in industrial demand, which had previously been pressured by the COVID-19 pandemic, and in the second quarter of 2021, the industrial end-market in various verticals (particularly in construction and steel and other metals) appeared to have returned to near pre-pandemic levels. As a result, in the second quarter of 2021, the Flatbed Solutions segment experienced a significantly improved rate environment, with rates 38.9% higher than the second quarter of 2020. During the second quarter of 2021, the Specialized Solutions segment also benefitted from continued strong demand and freight rates, primarily serving construction, high security cargo and glass.
As the coronavirus pandemic continues to evolve, we believe the extent of the impact to our business, operating results, cash flows, liquidity and financial condition will be primarily driven by the severity and duration of the coronavirus pandemic, including as a result of the emergence of new variants of the coronavirus; the development, acceptance and efficacy of treatments and vaccines; the pandemic’s impact on the U.S. and global economies; and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic. Those primary drivers are beyond our knowledge and control, and there are no comparable recent events that provide guidance as to the effect the COVID-19 global pandemic may have. As a result, the ultimate impact of the pandemic is highly uncertain and subject to change. See “Item 1A. Risk Factors—Risks Relating to the COVID-19 Pandemic” in our Annual Report on Form 10-K/A, filed with the SEC on May 6, 2021, for more information regarding risks relating to the COVID-19 pandemic.
Debt Refinancing and ABL Amendment
On March 9, 2021, the Company, Daseke Companies, Inc., a wholly-owned subsidiary of the Company, and the Company’s other domestic subsidiaries party thereto entered into the Term Loan Amendment. Pursuant to the Term Loan Amendment, the Company prepaid, refinanced and replaced all of the issued and outstanding term loans, which had an aggregate principal amount of $483.5 million, under the Term Loan Agreement with $83.5 million in cash on hand and new replacement terms loans in an aggregate principal amount of $400 million. The Replacement Term Loans have a scheduled maturity date of March 9, 2028 and an interest rate of LIBOR plus 4.00 percent (with a 0.75 percent LIBOR floor). The Prior Term Loans had a maturity date of February 27, 2024 and an interest rate of LIBOR plus 5.00 percent (with a 1.00 percent LIBOR floor). In addition, the Term Loan Amendment, among other things, (a) removed the total leverage financial covenant, which had been tested on a quarterly basis, and (b) provided additional covenant flexibility in the form of increased debt, lien, investment, disposition and restricted payment baskets.
On April 29, 2021, the Company, Daseke Companies, Inc. and the Company’s other domestic subsidiaries party thereto entered into the ABL Amendment, which extended the scheduled maturity date of the ABL Facility from February 27, 2025 to April 29, 2026. The ABL Amendment also, among other things, (a) increased the Maximum Revolving Advance Amount from $100 million to $150 million, (b) provides that the Maximum Revolving Advance Amount may be increased further from $150 million to $200 million (the ABL Amendment did not result in such an increase), (c) removed the total leverage financial covenant, which had been tested on a quarterly basis, and (d) provided additional covenant flexibility in the form of increased debt, lien, investment, disposition and restricted payment baskets.
19
Results of Operations
The following table sets forth certain operating statistics for the three months ended June 30, 2021 and 2020 as well as items derived from the Company’s consolidated statements of operations for the three months ended June 30, 2021 and 2020. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner-operator miles driven in the period. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner-operator tractors.
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
Increase (Decrease) |
|
|||||||||||||||
|
(Dollars in millions, except Rate per mile and Revenue per tractor) |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
|
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company freight |
|
$ |
163.6 |
|
|
|
40.5 |
|
|
$ |
167.0 |
|
|
|
47.5 |
|
|
$ |
(3.4 |
) |
|
|
(2.0 |
) |
|
Owner operator freight |
|
|
129.1 |
|
|
|
32.0 |
|
|
|
96.0 |
|
|
|
27.3 |
|
|
|
33.1 |
|
|
|
34.5 |
|
|
Brokerage |
|
|
66.7 |
|
|
|
16.5 |
|
|
|
57.9 |
|
|
|
16.5 |
|
|
|
8.8 |
|
|
|
15.2 |
|
|
Logistics |
|
|
10.7 |
|
|
|
2.6 |
|
|
|
8.8 |
|
|
|
2.5 |
|
|
|
1.9 |
|
|
|
21.6 |
|
|
Fuel surcharge |
|
|
33.9 |
|
|
|
8.4 |
|
|
|
22.0 |
|
|
|
6.3 |
|
|
|
11.9 |
|
|
|
54.1 |
|
|
Total revenue |
|
|
404.0 |
|
|
|
100.0 |
|
|
|
351.7 |
|
|
|
100.0 |
|
|
|
52.3 |
|
|
|
14.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Salaries, wages and employee benefits |
|
|
93.4 |
|
|
|
23.1 |
|
|
|
99.4 |
|
|
|
28.3 |
|
|
|
(6.0 |
) |
|
|
(6.0 |
) |
|
Fuel |
|
|
27.0 |
|
|
|
6.7 |
|
|
|
18.2 |
|
|
|
5.2 |
|
|
|
8.8 |
|
|
|
48.4 |
|
|
Operations and maintenance |
|
|
37.3 |
|
|
|
9.2 |
|
|
|
45.3 |
|
|
|
12.9 |
|
|
|
(8.0 |
) |
|
|
(17.7 |
) |
|
Communications |
|
|
1.1 |
|
|
|
0.3 |
|
|
|
0.9 |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
22.2 |
|
|
Purchased freight |
|
|
155.3 |
|
|
|
38.4 |
|
|
|
112.2 |
|
|
|
31.9 |
|
|
|
43.1 |
|
|
|
38.4 |
|
|
Administrative expenses |
|
|
12.7 |
|
|
|
3.1 |
|
|
|
17.2 |
|
|
|
4.9 |
|
|
|
(4.5 |
) |
|
|
(26.2 |
) |
|
Sales and marketing |
|
|
0.5 |
|
|
|
0.1 |
|
|
|
0.3 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
66.7 |
|
|
Taxes and licenses |
|
|
3.8 |
|
|
|
0.9 |
|
|
|
4.0 |
|
|
|
1.1 |
|
|
|
(0.2 |
) |
|
|
(5.0 |
) |
|
Insurance and claims |
|
|
9.9 |
|
|
|
2.5 |
|
|
|
15.6 |
|
|
|
4.4 |
|
|
|
(5.7 |
) |
|
|
(36.5 |
) |
|
Depreciation and amortization |
|
|
22.2 |
|
|
|
5.5 |
|
|
|
22.8 |
|
|
|
6.5 |
|
|
|
(0.6 |
) |
|
|
(2.6 |
) |
|
(Gain) loss on disposition of revenue property and equipment |
|
|
(4.6 |
) |
|
|
(1.1 |
) |
|
|
0.4 |
|
|
|
0.1 |
|
|
|
(5.0 |
) |
|
|
(1,250.0 |
) |
|
Restructuring charges |
|
|
0.1 |
|
|
|
— |
|
|
|
3.0 |
|
|
|
0.9 |
|
|
|
(2.9 |
) |
|
|
(96.7 |
) |
|
Total operating expenses |
|
|
358.7 |
|
|
|
88.8 |
|
|
|
339.3 |
|
|
|
96.5 |
|
|
|
19.4 |
|
|
|
5.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
INCOME FROM OPERATIONS |
|
|
45.3 |
|
|
|
11.2 |
|
|
|
12.4 |
|
|
|
3.5 |
|
|
|
32.9 |
|
|
|
265.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Interest income |
|
|
(0.1 |
) |
|
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Interest expense |
|
|
7.6 |
|
|
|
1.9 |
|
|
|
11.0 |
|
|
|
3.1 |
|
|
|
(3.4 |
) |
|
|
(30.9 |
) |
|
Change in fair value of warrant liability |
|
|
(7.8 |
) |
|
|
(1.9 |
) |
|
|
(1.1 |
) |
|
|
(0.3 |
) |
|
|
(6.7 |
) |
|
|
609.1 |
|
|
Other |
|
|
(0.4 |
) |
|
|
(0.1 |
) |
|
|
(1.1 |
) |
|
|
(0.3 |
) |
|
|
0.7 |
|
|
|
(63.6 |
) |
|
Total other expense (income) |
|
|
(0.7 |
) |
|
|
(0.2 |
) |
|
|
8.7 |
|
|
|
2.5 |
|
|
|
(9.4 |
) |
|
|
(108.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Income before income taxes |
|
|
46.0 |
|
|
|
11.4 |
|
|
|
3.7 |
|
|
|
1.1 |
|
|
|
42.3 |
|
|
|
1,143.2 |
|
|
Income tax expense |
|
|
10.7 |
|
|
|
2.6 |
|
|
|
2.1 |
|
|
|
0.6 |
|
|
|
8.6 |
|
|
|
409.5 |
|
|
Net income |
|
$ |
35.3 |
|
|
|
8.7 |
|
|
$ |
1.6 |
|
|
|
0.5 |
|
|
$ |
33.7 |
|
|
|
2,106.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company miles |
|
|
57.7 |
|
|
|
|
|
|
63.5 |
|
|
|
|
|
|
(5.8 |
) |
|
|
(9.1 |
) |
||
|
Owner operator miles |
|
|
47.9 |
|
|
|
|
|
|
47.5 |
|
|
|
|
|
|
0.4 |
|
|
|
0.8 |
|
||
|
Total miles (in millions) |
|
|
105.6 |
|
|
|
|
|
|
111.0 |
|
|
|
|
|
|
(5.4 |
) |
|
|
(4.9 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Rate per mile |
|
$ |
2.77 |
|
|
|
|
|
$ |
2.37 |
|
|
|
|
|
$ |
0.40 |
|
|
|
16.9 |
|
||
|
Revenue per tractor |
|
$ |
60,400 |
|
|
|
|
|
$ |
47,400 |
|
|
|
|
|
$ |
13,000 |
|
|
|
27.4 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, at period-end |
|
|
2,715 |
|
|
|
|
|
|
3,137 |
|
|
|
|
|
|
(422 |
) |
|
|
(13.5 |
) |
||
|
Owner-operated tractors, at period-end |
|
|
2,112 |
|
|
|
|
|
|
2,104 |
|
|
|
|
|
|
8 |
|
|
|
0.4 |
|
||
|
Number of trailers, at period-end |
|
|
11,266 |
|
|
|
|
|
|
11,855 |
|
|
|
|
|
|
(589 |
) |
|
|
(5.0 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, average for the period |
|
|
2,723 |
|
|
|
|
|
|
3,376 |
|
|
|
|
|
|
(653 |
) |
|
|
(19.3 |
) |
||
|
Owner-operated tractors, average for the period |
|
|
2,123 |
|
|
|
|
|
|
2,176 |
|
|
|
|
|
|
(53 |
) |
|
|
(2.4 |
) |
||
|
Total tractors, average for the period |
|
|
4,846 |
|
|
|
|
|
|
5,552 |
|
|
|
|
|
|
(706 |
) |
|
|
(12.7 |
) |
||
20
The following table sets forth certain operating statistics of the Company’s Specialized Solutions segment for the three months ended June 30, 2021 and 2020, as well as revenue, operating expenses and income (loss) from operations for the three months ended June 30, 2021 and 2020. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner-operator miles driven in the period. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner-operator tractors.
SPECIALIZED SOLUTIONS
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
Increase (Decrease) |
|
|||||||||||||||
|
(Dollars in millions, except Rate per mile and Revenue per tractor) |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
|
REVENUE(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company freight |
|
$ |
118.3 |
|
|
|
52.3 |
|
|
$ |
121.6 |
|
|
|
54.9 |
|
|
$ |
(3.3 |
) |
|
|
(2.7 |
) |
|
Owner operator freight |
|
|
40.7 |
|
|
|
18.0 |
|
|
|
38.3 |
|
|
|
17.3 |
|
|
|
2.4 |
|
|
|
6.3 |
|
|
Brokerage |
|
|
41.5 |
|
|
|
18.4 |
|
|
|
43.1 |
|
|
|
19.5 |
|
|
|
(1.6 |
) |
|
|
(3.7 |
) |
|
Logistics |
|
|
9.3 |
|
|
|
4.1 |
|
|
|
8.1 |
|
|
|
3.7 |
|
|
|
1.2 |
|
|
|
14.8 |
|
|
Fuel surcharge |
|
|
16.3 |
|
|
|
7.2 |
|
|
|
10.4 |
|
|
|
4.7 |
|
|
|
5.9 |
|
|
|
56.7 |
|
|
Total revenue |
|
|
226.1 |
|
|
|
100.0 |
|
|
|
221.5 |
|
|
|
100.0 |
|
|
|
4.6 |
|
|
|
2.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING EXPENSES(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Salaries, wages and employee benefits |
|
|
58.6 |
|
|
|
25.9 |
|
|
|
63.7 |
|
|
|
28.8 |
|
|
|
(5.1 |
) |
|
|
(8.0 |
) |
|
Fuel |
|
|
18.6 |
|
|
|
8.2 |
|
|
|
11.4 |
|
|
|
5.1 |
|
|
|
7.2 |
|
|
|
63.2 |
|
|
Operations and maintenance |
|
|
26.9 |
|
|
|
11.9 |
|
|
|
35.1 |
|
|
|
15.8 |
|
|
|
(8.2 |
) |
|
|
(23.4 |
) |
|
Purchased freight |
|
|
66.2 |
|
|
|
29.3 |
|
|
|
60.0 |
|
|
|
27.1 |
|
|
|
6.2 |
|
|
|
10.3 |
|
|
Depreciation and amortization |
|
|
13.0 |
|
|
|
5.7 |
|
|
|
13.2 |
|
|
|
6.0 |
|
|
|
(0.2 |
) |
|
|
(1.5 |
) |
|
Restructuring |
|
|
0.1 |
|
|
|
— |
|
|
|
2.8 |
|
|
|
1.3 |
|
|
|
(2.7 |
) |
|
|
(96.4 |
) |
|
Other operating expenses |
|
|
13.7 |
|
|
|
6.1 |
|
|
|
20.8 |
|
|
|
9.4 |
|
|
|
(7.1 |
) |
|
|
(34.1 |
) |
|
Total operating expenses |
|
|
197.1 |
|
|
|
87.2 |
|
|
|
207.0 |
|
|
|
93.5 |
|
|
|
(9.9 |
) |
|
|
(4.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
INCOME FROM OPERATIONS |
|
$ |
29.0 |
|
|
|
12.8 |
|
|
$ |
14.5 |
|
|
|
6.5 |
|
|
$ |
14.5 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company miles |
|
|
38.3 |
|
|
|
|
|
|
37.8 |
|
|
|
|
|
|
0.5 |
|
|
|
1.3 |
|
||
|
Owner operator miles |
|
|
12.7 |
|
|
|
|
|
|
12.8 |
|
|
|
|
|
|
(0.1 |
) |
|
|
(0.8 |
) |
||
|
Total miles (in millions) |
|
|
51.0 |
|
|
|
|
|
|
50.6 |
|
|
|
|
|
|
0.4 |
|
|
|
0.8 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Rate per mile |
|
$ |
3.12 |
|
|
|
|
|
$ |
3.16 |
|
|
|
|
|
$ |
(0.04 |
) |
|
|
(1.3 |
) |
||
|
Revenue per tractor |
|
$ |
66,700 |
|
|
|
|
|
$ |
56,400 |
|
|
|
|
|
$ |
10,300 |
|
|
|
18.3 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, at period-end |
|
|
1,878 |
|
|
|
|
|
|
1,986 |
|
|
|
|
|
|
(108 |
) |
|
|
(5.4 |
) |
||
|
Owner-operated tractors, at period-end |
|
|
511 |
|
|
|
|
|
|
555 |
|
|
|
|
|
|
(44 |
) |
|
|
(7.9 |
) |
||
|
Number of trailers, at period-end |
|
|
7,059 |
|
|
|
|
|
|
7,280 |
|
|
|
|
|
|
(221 |
) |
|
|
(3.0 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, average for the period |
|
|
1,871 |
|
|
|
|
|
|
2,205 |
|
|
|
|
|
|
(334 |
) |
|
|
(15.1 |
) |
||
|
Owner-operated tractors, average for the period |
|
|
512 |
|
|
|
|
|
|
631 |
|
|
|
|
|
|
(119 |
) |
|
|
(18.9 |
) |
||
|
Total tractors, average for the period |
|
|
2,383 |
|
|
|
|
|
|
2,836 |
|
|
|
|
|
|
(453 |
) |
|
|
(16.0 |
) |
||
21
The following table sets forth certain operating statistics of the Company’s Flatbed Solutions segment for the three months ended June 30, 2021 and 2020, as well as revenue, operating expenses and income (loss) from operations for three months ended June 30, 2021 and 2020. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner-operator miles driven in the period. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner-operator tractors.
FLATBED SOLUTIONS
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
Increase (Decrease) |
|
|||||||||||||||
|
(Dollars in millions, except Rate per mile and Revenue per tractor) |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
|
REVENUE(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company freight |
|
$ |
47.7 |
|
|
|
26.4 |
|
|
$ |
48.9 |
|
|
|
35.6 |
|
|
$ |
(1.2 |
) |
|
|
(2.5 |
) |
|
Owner operator freight |
|
|
88.9 |
|
|
|
49.1 |
|
|
|
60.1 |
|
|
|
43.8 |
|
|
|
28.8 |
|
|
|
47.9 |
|
|
Brokerage |
|
|
25.3 |
|
|
|
14.0 |
|
|
|
15.5 |
|
|
|
11.3 |
|
|
|
9.8 |
|
|
|
63.2 |
|
|
Logistics |
|
|
1.3 |
|
|
|
0.7 |
|
|
|
0.7 |
|
|
|
0.5 |
|
|
|
0.6 |
|
|
|
85.7 |
|
|
Fuel surcharge |
|
|
17.7 |
|
|
|
9.8 |
|
|
|
12.0 |
|
|
|
8.7 |
|
|
|
5.7 |
|
|
|
47.5 |
|
|
Total revenue |
|
|
180.9 |
|
|
|
100.0 |
|
|
|
137.2 |
|
|
|
100.0 |
|
|
|
43.7 |
|
|
|
31.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING EXPENSES(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Salaries, wages and employee benefits |
|
|
29.1 |
|
|
|
16.1 |
|
|
|
30.7 |
|
|
|
22.4 |
|
|
|
(1.6 |
) |
|
|
(5.2 |
) |
|
Fuel |
|
|
8.4 |
|
|
|
4.6 |
|
|
|
6.7 |
|
|
|
4.9 |
|
|
|
1.7 |
|
|
|
25.4 |
|
|
Operations and maintenance |
|
|
10.5 |
|
|
|
5.8 |
|
|
|
10.2 |
|
|
|
7.4 |
|
|
|
0.3 |
|
|
|
2.9 |
|
|
Purchased freight |
|
|
92.2 |
|
|
|
51.0 |
|
|
|
59.2 |
|
|
|
43.1 |
|
|
|
33.0 |
|
|
|
55.7 |
|
|
Depreciation and amortization |
|
|
8.9 |
|
|
|
4.9 |
|
|
|
9.3 |
|
|
|
6.8 |
|
|
|
(0.4 |
) |
|
|
(4.3 |
) |
|
Restructuring |
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
(0.2 |
) |
|
|
(100.0 |
) |
|
Other operating expenses |
|
|
8.9 |
|
|
|
4.9 |
|
|
|
10.2 |
|
|
|
7.4 |
|
|
|
(1.3 |
) |
|
|
(12.7 |
) |
|
Total operating expenses |
|
|
158.0 |
|
|
|
87.3 |
|
|
|
126.5 |
|
|
|
92.2 |
|
|
|
31.5 |
|
|
|
24.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
INCOME FROM OPERATIONS |
|
$ |
22.9 |
|
|
|
12.7 |
|
|
$ |
10.7 |
|
|
|
7.8 |
|
|
$ |
12.2 |
|
|
|
114.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company miles |
|
|
19.4 |
|
|
|
|
|
|
25.7 |
|
|
|
|
|
|
(6.3 |
) |
|
|
(24.5 |
) |
||
|
Owner operator miles |
|
|
35.2 |
|
|
|
|
|
|
34.7 |
|
|
|
|
|
|
0.5 |
|
|
|
1.4 |
|
||
|
Total miles (in millions) |
|
|
54.6 |
|
|
|
|
|
|
60.4 |
|
|
|
|
|
|
(5.8 |
) |
|
|
(9.6 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Rate per mile |
|
$ |
2.50 |
|
|
|
|
|
$ |
1.80 |
|
|
|
|
|
$ |
0.70 |
|
|
|
38.9 |
|
||
|
Revenue per tractor |
|
$ |
55,500 |
|
|
|
|
|
$ |
40,100 |
|
|
|
|
|
$ |
15,400 |
|
|
|
38.4 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, at period-end |
|
|
837 |
|
|
|
|
|
|
1,151 |
|
|
|
|
|
|
(314 |
) |
|
|
(27.3 |
) |
||
|
Owner-operated tractors, at period-end |
|
|
1,601 |
|
|
|
|
|
|
1,549 |
|
|
|
|
|
|
52 |
|
|
|
3.4 |
|
||
|
Number of trailers, at period-end |
|
|
4,207 |
|
|
|
|
|
|
4,575 |
|
|
|
|
|
|
(368 |
) |
|
|
(8.0 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, average for the period |
|
|
852 |
|
|
|
|
|
|
1,171 |
|
|
|
|
|
|
(319 |
) |
|
|
(27.2 |
) |
||
|
Owner-operated tractors, average for the period |
|
|
1,611 |
|
|
|
|
|
|
1,545 |
|
|
|
|
|
|
66 |
|
|
|
4.3 |
|
||
|
Total tractors, average for the period |
|
|
2,463 |
|
|
|
|
|
|
2,716 |
|
|
|
|
|
|
(253 |
) |
|
|
(9.3 |
) |
||
22
Revenue. Total revenue increased 14.9% to $404.0 million for the three months ended June 30, 2021 from $351.7 million for the same period in 2020. The exit of the Aveda operations resulted in a $9.8 million, or 2.8%, reduction in total revenue. The increase in total revenue was due primarily to increases in owner operator freight, fuel surcharge and brokerage revenue. Company freight revenue decreased $3.4 million, or 2.0%, to $163.6 million for the three months ended June 30, 2021 from $167.0 million for the same period in 2020. The decrease in company freight revenue was a result of a 9.1% decrease in company miles driven primarily driven by downsizing of company trucks partially offset by an increase in rate per mile. Owner operator freight revenue increased $33.1 million, or 34.5%, and was a result of a 0.8% increase in owner operator miles driven and a 33.4% increase in rate per mile. The increase in total freight revenue was primarily due to a 16.9% increase in rate per mile. Brokerage revenue increased $8.8 million, or 15.2%, to $66.7 million for the three months ended June 30, 2021 from $57.9 million for the same period in 2020 primarily due to an increase in customer sales volumes and rate. Fuel surcharge revenue, increased $11.9 million, or 54.1%, to $33.9 million for the three months ended June 30, 2021 from $22.0 million for the same period in 2020 due to increased fuel costs that led to higher fuel surcharges.
The Company’s Specialized Solutions segment’s revenue increased 2.1% to $226.1 million for the three months ended June 30, 2021 from $221.5 million for the same period in 2020. The increase was primarily due to increases in owner operator freight and fuel surcharge. Company freight revenue decreased $3.3 million, or 2.7%, to $118.3 million for the three months ended June 30, 2021 from $121.6 million for the same period in 2020. The decrease in company freight revenue was primarily a result of a 4.0% decrease in rate per mile, partially offset by a 1.3% increase in company miles driven compared to the same period in 2020. The increase in owner operator freight revenue was primarily a result of a 7.1% increase in rate per mile, partially offset by a 0.8% decrease in miles driven compared to the same period in 2020. Brokerage revenue decreased $1.6 million, or 3.7%, to $41.5 million for the three months ended June 30, 2021 from $43.1 million for the same period in 2020 primarily due to the exit of the Aveda operations.
The Company’s Flatbed Solutions segment’s revenue increased $43.7 million, or 31.9%, to $180.9 million for the three months ended June 30, 2021 from $137.2 million for the same period in 2020, which was primarily due to an increase in owner operator freight. Company freight revenue decreased $1.2 million, or 2.5%, to $47.7 million for the three months ended June 30, 2021 from $48.9 million for the same period in 2020. Owner operator freight revenue increased $28.8 million, or 47.9%, to $88.9 million for the three months ended June 30, 2021 from $60.1 million for the same period in 2020. The increase in the freight revenue was the result of a 38.9% increase in rate per mile partially offset by a 9.6% decrease in total miles driven compared to the same period in 2020, primarily driven by downsizing of company trucks. Brokerage revenue increased $9.8 million, or 63.2%, to $25.3 million for the three months ended June 30, 2021 from $15.5 million for the same period in 2020 due to increase in customer sales volumes and rate. Fuel surcharge revenue increased $5.7 million, or 47.5%, to $17.7 million for the three months ended June 30, 2021 from $12.0 million for the same period in 2020 due to increased fuel costs that led to higher fuel surcharges.
Salaries, Wages and Employee Benefits. Salaries, wages and employee benefits expense, which consists of compensation for all employees, is primarily affected by the number of miles driven by Company drivers, the rate per mile paid to Company drivers, employee benefits including, but not limited to, health care and workers’ compensation, and to a lesser extent, the number of, and compensation and benefits paid to, non-driver employees. In general, the Specialized Solutions segment drivers receive a higher driver pay per total mile than Flatbed Solutions segment drivers due to the former requiring a higher level of training and expertise.
Salaries, wages and employee benefits expense decreased 6.0% to $93.4 million for the three months ended June 30, 2021 from $99.4 million for the same period in 2020. The decrease in salaries, wages and employee benefits expense was primarily due to decreased employee headcount related to Project Synchronize and driver pay due to the decrease in company miles compared to the same period in 2020. Salaries, wages and employee benefits expense, as a percentage of consolidated revenue (excluding brokerage revenue), decreased 6.1% for the three months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Specialized Solutions segment had a $5.1 million, or 8.0%, decrease in salaries, wages and employee benefits expense for the three months ended June 30, 2021 compared to the same period in 2020, primarily as a result of the decreased employee headcount related to Project Synchronize. Salaries, wages and employee benefits expense, as a percentage of Specialized Solutions revenue (excluding brokerage revenue), decreased 4.0% for the three months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Flatbed Solutions segment had a $1.6 million, or 5.2%, decrease in salaries, wages and employee benefits expense for the three months ended June 30, 2021 compared to the same period in 2020, primarily as a result of the decreased employee headcount related to Project Synchronize and driver pay due to the decrease in company miles compared to the same period in 2020. Salaries, wages and employee benefits expense, as a percentage of Flatbed Solutions revenue (excluding brokerage revenue), decreased 6.5% for the three months ended June 30, 2021 as compared to the same period in 2020.
Fuel. Fuel expense consists primarily of diesel fuel expense for company-owned tractors and fuel taxes. The primary factors affecting fuel expense are the cost of diesel fuel, the miles per gallon realized with company equipment and the number of miles driven by company drivers.
23
Total fuel expense increased $8.8 million, or 48.4%, to $27.0 million for the three months ended June 30, 2021 from $18.2 million for the same period in 2020. This increase was primarily due to a 32.2% increase in fuel price, partially offset by a 9.1% decrease in company miles driven. The U.S. national average diesel fuel price, as published by the U.S. Department of Energy, was $3.212 for the three months ended June 30, 2021, compared to $2.429 for the same period in 2020.
The Company’s Specialized Solutions segment’s fuel expense increased 63.2% to $18.6 million for the three months ended June 30, 2021 from $11.4 million for the same period in 2020, as a result of a 1.3% increase in company miles driven and increase of fuel price mentioned above for the three months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Flatbed Solutions segment’s fuel expense increased 25.4% to $8.4 million for the three months ended June 30, 2021 from $6.7 million for the same period in 2020, primarily as a result of the increase in fuel price and partially offset by a 24.5% decrease in company miles driven for the three months ended June 30, 2021 as compared to the same period in 2020.
Operations and Maintenance. Operations and maintenance expense consists primarily of ordinary vehicle repairs and maintenance, costs associated with preparing tractors and trailers for sale or trade-in, driver recruiting, training and safety costs, permitting and pilot car fees and other general operations expenses. Operations and maintenance expense is primarily affected by the age of company-owned tractors and trailers, the number of miles driven in a period and driver turnover.
Operations and maintenance expense decreased 17.7% to $37.3 million for the three months ended June 30, 2021 from $45.3 million for the same period in 2020 due to a decrease of $0.6 million in maintenance costs such as repairs and tires, $6.8 million in operation costs such as pilot car and permit fees, and $0.6 million in other operations expenses. Operations and maintenance expense, as a percentage of consolidated revenue (excluding brokerage revenue), decreased 4.3% for the three months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Specialized Solutions segment’s operations and maintenance expense decreased $8.2 million, or 23.4%, for the three months ended June 30, 2021 as compared to the same period in 2020 as a result of a decrease of $0.6 million in maintenance expense such as repairs, washes and tires due to a reduction of tractors and trailers in the Company’s fleet, a decrease of $6.9 million in operation costs such as pilot car and permit fees and a decrease of $0.7 million in other operations expenses. Operations and maintenance expense, as a percentage of Specialized Solutions revenue (excluding brokerage revenue), decreased 5.1% for the three months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Flatbed Solutions segment’s operations and maintenance expense increased $0.3 million, or 2.9%, for the three months ended June 30, 2021 as compared to the same period in 2020 due to miscellaneous increases. Operations and maintenance expense, as a percentage of Flatbed Solutions revenue (excluding brokerage revenue), decreased 1.7% for the three months ended June 30, 2021 as compared to the same period in 2020.
Purchased Freight. Purchased freight expense consists of the payments to owner-operators, including fuel surcharge reimbursements, and payments to third-party capacity providers that haul loads brokered to them. Purchased freight expense generally takes into account changes in diesel fuel prices, resulting in lower payments during periods of declining fuel prices.
Total purchased freight expense increased $43.1 million, or 38.4%, to $155.3 million during the three months ended June 30, 2021 from $112.2 million during the same period in 2020. Purchased freight expense from owner-operators increased 39.5% to $106.7 million during the three months ended June 30, 2021 from $76.5 million during the same period in 2020 as a result of a 0.8% increase in owner operator miles driven and a 33.4% increase in rate. Purchased freight expense from third-party capacity providers increased 36.1% to $48.6 million during the three months ended June 30, 2021 from $35.7 million during the same period in 2020, as a result of increased utilization of third-party capacity providers.
The Company’s Specialized Solutions segment’s purchased freight expense increased 10.3% to $66.2 million during the three months ended June 30, 2021 from $60.0 million during the same period in 2020. Purchased freight expense from owner-operators increased 18.8% to $31.6 million during the three months ended June 30, 2021 from $26.6 million during the same period in 2020, as a result of a 7.1% increase in rate, partially offset by a 0.8% decrease in owner operator miles driven. Purchased freight expense from third-party capacity providers increased 3.6% to $34.6 million during the three months ended June 30, 2021 from $33.4 million during the same period in 2020, as a result of an increase in utilization of third-party capacity providers.
The Company’s Flatbed Solutions segment’s purchased freight expense increased 55.7% to $92.2 million for the three months ended June 30, 2021 from $59.2 million for the same period in 2020. Purchased freight expense from owner-operators increased 50.7% to $75.2 million for the three months ended June 30, 2021 from $49.9 million for the same period in 2020, as a result of a 45.8% increase in owner operators’ rate. Purchased freight expense from third-party capacity providers increased 82.8% to $17.0 million during the three months ended June 30, 2021 from $9.3 million during the same period in 2020, primarily as a result of increased utilization of third-party capacity providers.
24
Depreciation and Amortization. Depreciation and amortization expense consists primarily of depreciation for company-owned tractors and trailers and amortization of those financed with finance leases. The primary factors affecting these expense items include the size and age of company-owned tractors and trailers and the cost of new equipment. Amortization of intangible assets is also included in this expense.
Depreciation and amortization expense decreased $0.6 million, or 2.6%, to $22.2 million during the three months ended June 30, 2021 from $22.8 million during the same period in 2020 as a result of a 19.3% decrease in average tractor count in the Company’s fleet.
The Company’s Specialized Solutions segment’s depreciation and amortization expense decreased $0.2 million, or 1.5%, for the three months ended June 30, 2021 as compared to the same period in 2020 as a result of a 15.1% decrease in average tractor count in the segment’s fleet.
The Company’s Flatbed Solutions segment’s depreciation and amortization expense decreased $0.4 million, or 4.3%, for the three months ended June 30, 2021 as compared to the same period in 2020 as a result of a 27.2% decrease in average tractor count in the segment’s fleet.
Administrative Expenses. Administrative expenses consists of operating lease cost for real estate, professional fees and other expenses that are not directly associated with the Company’s fleet services. Administrative expense decreased $4.5 million for the three months ended June 30, 2021 as compared to the same period in 2020 as a result of cost reduction initiatives. Administrative expenses, as a percentage of revenue, decreased 1.8% from the same period in 2020.
Taxes and Licenses. Operating taxes and licenses expense primarily represents the costs of taxes and licenses associated with the Company’s fleet of equipment and will vary according to the size of its equipment fleet. Taxes and license expense decreased $0.2 million for the three months ended June 30, 2021. Operating taxes and license expense, as a percentage of revenue, was generally consistent for the three months ended June 30, 2021 and 2020.
Insurance and Claims. Insurance and claims expense consists of insurance premiums and the accruals the Company makes for estimated payments and expenses for claims for bodily injury, property damage, cargo damage and other casualty events. The primary factor affecting the Company’s insurance and claims expense is seasonality (the Company typically experiences higher accident frequency in winter months), the frequency and severity of accidents, trends in the development factors used in its accruals and developments in large, prior-year claims. The frequency of accidents tends to increase with the miles the Company travels. Insurance and claims expense decreased 36.5% to $9.9 million during the three months ended June 30, 2021 from $15.6 million during the same period in 2020 due to decreases in insurance claims and premiums. Insurance and claims, as a percentage of revenue, decreased 1.9% for the three months ended June 30, 2021 as compared to the same period in 2020.
Restructuring Costs. Restructuring costs of $0.1 million and $3.0 million were recognized in the three months ended June 30, 2021 and 2020, respectively. The restructuring costs in the three months ended June 30, 2020 were primarily related to Phase II of Project Synchronize and the closure of certain Aveda terminals.
Other (Income) Expense. Interest expense consists of cash interest, amortization and write-off of debt issuance costs and fees and prepayment penalties. Interest expense decreased 30.9% to $7.6 million for the three months ended June 30, 2021 from $11.0 million for the same period in 2020. It was primarily attributable to lower interest rates on the Term Loan Facility and decreases in equipment term loan outstanding balance. Change in fair value of warrant liability was a gain of $7.8 million for the three months ended June 30, 2021 compared to a gain of $1.1 million for the same period in 2020. The change in fair value is directly related to the fair value of the warrant liability as of each period end as calculated using Level 1 and Level 3 inputs. Other income for the three months ended June 30, 2021 was $0.4 million compared to other income of $1.1 million for the same period in 2020 related to gain on disposal of assets.
Income Tax. Income tax expense was $10.7 million for the three months ended June 30, 2021 compared to income tax expense of $2.1 million for the same period in 2020. The effective tax rate was 23.3% for the three months ended June 30, 2021, compared to 56.8% for the same period in 2020. The effective income tax rate varies from the federal statutory rate primarily due to the jurisdictional mix of earnings, combined with the unfavorable impact of nondeductible expenses, including the effect of the per diem pay structure for drivers and the change in fair value of warrant liability.
25
The following table sets forth certain operating statistics for the six months ended June 30, 2021 and 2020 as well as items derived from the Company’s consolidated statements of operations for the six months ended June 30, 2021 and 2020. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner-operator miles driven in the period. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner-operator tractors.
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
Increase (Decrease) |
|
|||||||||||||||
|
(Dollars in millions, except Rate per mile and Revenue per tractor) |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
|
REVENUE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company freight |
|
$ |
308.7 |
|
|
|
41.8 |
|
|
$ |
347.9 |
|
|
|
46.8 |
|
|
$ |
(39.2 |
) |
|
|
(11.3 |
) |
|
Owner operator freight |
|
|
234.2 |
|
|
|
31.7 |
|
|
|
203.8 |
|
|
|
27.4 |
|
|
|
30.4 |
|
|
|
14.9 |
|
|
Brokerage |
|
|
115.2 |
|
|
|
15.6 |
|
|
|
119.6 |
|
|
|
16.1 |
|
|
|
(4.4 |
) |
|
|
(3.7 |
) |
|
Logistics |
|
|
19.2 |
|
|
|
2.6 |
|
|
|
18.9 |
|
|
|
2.5 |
|
|
|
0.3 |
|
|
|
1.6 |
|
|
Fuel surcharge |
|
|
60.6 |
|
|
|
8.2 |
|
|
|
52.5 |
|
|
|
7.1 |
|
|
|
8.1 |
|
|
|
15.4 |
|
|
Total revenue |
|
|
737.9 |
|
|
|
100.0 |
|
|
|
742.7 |
|
|
|
100.0 |
|
|
|
(4.8 |
) |
|
|
(0.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Salaries, wages and employee benefits |
|
|
184.1 |
|
|
|
24.9 |
|
|
|
209.8 |
|
|
|
28.2 |
|
|
|
(25.7 |
) |
|
|
(12.2 |
) |
|
Fuel |
|
|
52.4 |
|
|
|
7.1 |
|
|
|
46.9 |
|
|
|
6.3 |
|
|
|
5.5 |
|
|
|
11.7 |
|
|
Operations and maintenance |
|
|
67.6 |
|
|
|
9.2 |
|
|
|
90.9 |
|
|
|
12.2 |
|
|
|
(23.3 |
) |
|
|
(25.6 |
) |
|
Communications |
|
|
2.2 |
|
|
|
0.3 |
|
|
|
1.9 |
|
|
|
0.3 |
|
|
|
0.3 |
|
|
|
15.8 |
|
|
Purchased freight |
|
|
276.7 |
|
|
|
37.5 |
|
|
|
246.4 |
|
|
|
33.2 |
|
|
|
30.3 |
|
|
|
12.3 |
|
|
Administrative expenses |
|
|
29.2 |
|
|
|
4.0 |
|
|
|
37.4 |
|
|
|
5.0 |
|
|
|
(8.2 |
) |
|
|
(21.9 |
) |
|
Sales and marketing |
|
|
1.1 |
|
|
|
0.1 |
|
|
|
1.0 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
10.0 |
|
|
Taxes and licenses |
|
|
7.7 |
|
|
|
1.0 |
|
|
|
8.5 |
|
|
|
1.1 |
|
|
|
(0.8 |
) |
|
|
(9.4 |
) |
|
Insurance and claims |
|
|
26.7 |
|
|
|
3.6 |
|
|
|
30.6 |
|
|
|
4.1 |
|
|
|
(3.9 |
) |
|
|
(12.7 |
) |
|
Depreciation and amortization |
|
|
44.4 |
|
|
|
6.0 |
|
|
|
49.1 |
|
|
|
6.6 |
|
|
|
(4.7 |
) |
|
|
(9.6 |
) |
|
Gain on disposition of revenue property and equipment |
|
|
(7.7 |
) |
|
|
(1.0 |
) |
|
|
(0.8 |
) |
|
|
(0.1 |
) |
|
|
(6.9 |
) |
|
|
862.5 |
|
|
Impairment |
|
|
— |
|
|
|
— |
|
|
|
13.4 |
|
|
|
1.8 |
|
|
|
(13.4 |
) |
|
|
(100.0 |
) |
|
Restructuring charges |
|
|
0.1 |
|
|
|
— |
|
|
|
3.5 |
|
|
|
0.5 |
|
|
|
(3.4 |
) |
|
|
(97.1 |
) |
|
Total operating expenses |
|
|
684.5 |
|
|
|
92.8 |
|
|
|
738.6 |
|
|
|
99.4 |
|
|
|
(54.1 |
) |
|
|
(7.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
INCOME FROM OPERATIONS |
|
|
53.4 |
|
|
|
7.2 |
|
|
|
4.1 |
|
|
|
0.6 |
|
|
|
49.3 |
|
|
|
1,202.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Interest income |
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.4 |
) |
|
|
(0.1 |
) |
|
|
0.2 |
|
|
|
(50.0 |
) |
|
Interest expense |
|
|
18.7 |
|
|
|
2.5 |
|
|
|
23.0 |
|
|
|
3.1 |
|
|
|
(4.3 |
) |
|
|
(18.7 |
) |
|
Change in fair value of warrant liability |
|
|
(2.2 |
) |
|
|
(0.3 |
) |
|
|
(2.1 |
) |
|
|
(0.3 |
) |
|
|
(0.1 |
) |
|
|
4.8 |
|
|
Other |
|
|
(0.8 |
) |
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
— |
|
|
|
(0.9 |
) |
|
|
(900.0 |
) |
|
Total other expense |
|
|
15.5 |
|
|
|
2.1 |
|
|
|
20.6 |
|
|
|
2.8 |
|
|
|
(5.1 |
) |
|
|
(24.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Income before income taxes |
|
|
37.9 |
|
|
|
5.1 |
|
|
|
(16.5 |
) |
|
|
(2.2 |
) |
|
|
54.4 |
|
|
|
(329.7 |
) |
|
Income tax expense |
|
|
9.9 |
|
|
|
1.3 |
|
|
|
(1.8 |
) |
|
|
(0.2 |
) |
|
|
11.7 |
|
|
|
(650.0 |
) |
|
Net income |
|
$ |
28.0 |
|
|
|
3.8 |
|
|
$ |
(14.7 |
) |
|
|
(2.0 |
) |
|
$ |
42.7 |
|
|
|
(290.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company miles |
|
|
116.4 |
|
|
|
|
|
|
130.8 |
|
|
|
|
|
|
(14.4 |
) |
|
|
(11.0 |
) |
||
|
Owner operator miles |
|
|
92.6 |
|
|
|
|
|
|
97.4 |
|
|
|
|
|
|
(4.8 |
) |
|
|
(4.9 |
) |
||
|
Total miles (in millions) |
|
|
209.0 |
|
|
|
|
|
|
228.2 |
|
|
|
|
|
|
(19.2 |
) |
|
|
(8.4 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Rate per mile |
|
$ |
2.60 |
|
|
|
|
|
$ |
2.42 |
|
|
|
|
|
$ |
0.18 |
|
|
|
7.4 |
|
||
|
Revenue per tractor |
|
$ |
111,100 |
|
|
|
|
|
$ |
98,000 |
|
|
|
|
|
$ |
13,100 |
|
|
|
13.4 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, at period-end |
|
|
2,715 |
|
|
|
|
|
|
3,137 |
|
|
|
|
|
|
(422 |
) |
|
|
(13.5 |
) |
||
|
Owner-operated tractors, at period-end |
|
|
2,112 |
|
|
|
|
|
|
2,104 |
|
|
|
|
|
|
8 |
|
|
|
0.4 |
|
||
|
Number of trailers, at period-end |
|
|
11,266 |
|
|
|
|
|
|
11,855 |
|
|
|
|
|
|
(589 |
) |
|
|
(5.0 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, average for the period |
|
|
2,778 |
|
|
|
|
|
|
3,432 |
|
|
|
|
|
|
(654 |
) |
|
|
(19.1 |
) |
||
|
Owner-operated tractors, average for the period |
|
|
2,110 |
|
|
|
|
|
|
2,198 |
|
|
|
|
|
|
(88 |
) |
|
|
(4.0 |
) |
||
|
Total tractors, average for the period |
|
|
4,888 |
|
|
|
|
|
|
5,630 |
|
|
|
|
|
|
(742 |
) |
|
|
(13.2 |
) |
||
26
The following table sets forth certain operating statistics of the Company’s Specialized Solutions segment for the six months ended June 30, 2021 and 2020, as well as revenue, operating expenses and income (loss) from operations for the six months ended June 30, 2021 and 2020. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner-operator miles driven in the period. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner-operator tractors.
SPECIALIZED SOLUTIONS
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
Increase (Decrease) |
|
|||||||||||||||
|
(Dollars in millions, except Rate per mile and Revenue per tractor) |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
|
REVENUE(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company freight |
|
$ |
221.1 |
|
|
|
54.0 |
|
|
$ |
253.7 |
|
|
|
54.9 |
|
|
$ |
(32.6 |
) |
|
|
(12.8 |
) |
|
Owner operator freight |
|
|
75.3 |
|
|
|
18.4 |
|
|
|
81.0 |
|
|
|
17.5 |
|
|
|
(5.7 |
) |
|
|
(7.0 |
) |
|
Brokerage |
|
|
68.1 |
|
|
|
16.6 |
|
|
|
86.0 |
|
|
|
18.6 |
|
|
|
(17.9 |
) |
|
|
(20.8 |
) |
|
Logistics |
|
|
16.5 |
|
|
|
4.0 |
|
|
|
17.3 |
|
|
|
3.7 |
|
|
|
(0.8 |
) |
|
|
(4.6 |
) |
|
Fuel surcharge |
|
|
28.8 |
|
|
|
7.0 |
|
|
|
23.9 |
|
|
|
5.2 |
|
|
|
4.9 |
|
|
|
20.5 |
|
|
Total revenue |
|
|
409.8 |
|
|
|
100.0 |
|
|
|
461.9 |
|
|
|
100.0 |
|
|
|
(52.1 |
) |
|
|
(11.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING EXPENSES(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Salaries, wages and employee benefits |
|
|
115.2 |
|
|
|
28.1 |
|
|
|
137.9 |
|
|
|
29.9 |
|
|
|
(22.7 |
) |
|
|
(16.5 |
) |
|
Fuel |
|
|
35.7 |
|
|
|
8.7 |
|
|
|
29.8 |
|
|
|
6.5 |
|
|
|
5.9 |
|
|
|
19.8 |
|
|
Operations and maintenance |
|
|
46.9 |
|
|
|
11.4 |
|
|
|
69.8 |
|
|
|
15.1 |
|
|
|
(22.9 |
) |
|
|
(32.8 |
) |
|
Purchased freight |
|
|
115.5 |
|
|
|
28.2 |
|
|
|
128.5 |
|
|
|
27.8 |
|
|
|
(13.0 |
) |
|
|
(10.1 |
) |
|
Depreciation and amortization |
|
|
26.2 |
|
|
|
6.4 |
|
|
|
30.1 |
|
|
|
6.5 |
|
|
|
(3.9 |
) |
|
|
(13.0 |
) |
|
Impairment |
|
|
— |
|
|
|
— |
|
|
|
13.4 |
|
|
|
2.9 |
|
|
|
(13.4 |
) |
|
|
(100.0 |
) |
|
Restructuring |
|
|
0.1 |
|
|
|
— |
|
|
|
3.3 |
|
|
|
0.7 |
|
|
|
(3.2 |
) |
|
|
(97.0 |
) |
|
Other operating expenses |
|
|
30.7 |
|
|
|
7.5 |
|
|
|
41.1 |
|
|
|
8.9 |
|
|
|
(10.4 |
) |
|
|
(25.3 |
) |
|
Total operating expenses |
|
|
370.3 |
|
|
|
90.4 |
|
|
|
453.9 |
|
|
|
98.3 |
|
|
|
(83.6 |
) |
|
|
(18.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
INCOME FROM OPERATIONS |
|
$ |
39.5 |
|
|
|
9.6 |
|
|
$ |
8.0 |
|
|
|
1.7 |
|
|
$ |
31.5 |
|
|
|
393.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company miles |
|
|
76.2 |
|
|
|
|
|
|
78.5 |
|
|
|
|
|
|
(2.3 |
) |
|
|
(2.9 |
) |
||
|
Owner operator miles |
|
|
24.1 |
|
|
|
|
|
|
26.1 |
|
|
|
|
|
|
(2.0 |
) |
|
|
(7.7 |
) |
||
|
Total miles (in millions) |
|
|
100.3 |
|
|
|
|
|
|
104.6 |
|
|
|
|
|
|
(4.3 |
) |
|
|
(4.1 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Rate per mile |
|
$ |
2.96 |
|
|
|
|
|
$ |
3.20 |
|
|
|
|
|
$ |
(0.24 |
) |
|
|
(7.5 |
) |
||
|
Revenue per tractor |
|
$ |
124,000 |
|
|
|
|
|
$ |
116,100 |
|
|
|
|
|
$ |
7,900 |
|
|
|
6.8 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, at period-end |
|
|
1,878 |
|
|
|
|
|
|
1,986 |
|
|
|
|
|
|
(108 |
) |
|
|
(5.4 |
) |
||
|
Owner-operated tractors, at period-end |
|
|
511 |
|
|
|
|
|
|
555 |
|
|
|
|
|
|
(44 |
) |
|
|
(7.9 |
) |
||
|
Number of trailers, at period-end |
|
|
7,059 |
|
|
|
|
|
|
7,280 |
|
|
|
|
|
|
(221 |
) |
|
|
(3.0 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, average for the period |
|
|
1,882 |
|
|
|
|
|
|
2,240 |
|
|
|
|
|
|
(358 |
) |
|
|
(16.0 |
) |
||
|
Owner-operated tractors, average for the period |
|
|
509 |
|
|
|
|
|
|
643 |
|
|
|
|
|
|
(134 |
) |
|
|
(20.8 |
) |
||
|
Total tractors, average for the period |
|
|
2,391 |
|
|
|
|
|
|
2,883 |
|
|
|
|
|
|
(492 |
) |
|
|
(17.1 |
) |
||
27
The following table sets forth certain operating statistics of the Company’s Flatbed Solutions segment for the six months ended June 30, 2021 and 2020, as well as revenue, operating expenses and income (loss) from operations for six months ended June 30, 2021 and 2020. Rate per mile is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by total number of company and owner-operator miles driven in the period. Revenue per tractor is the period’s revenue less fuel surcharge, brokerage and logistics revenues divided by the average number of tractors in the period, including owner-operator tractors.
FLATBED SOLUTIONS
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
Increase (Decrease) |
|
|||||||||||||||
|
(Dollars in millions, except Rate per mile and Revenue per tractor) |
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
|
$ |
|
|
% |
|
||||||
|
REVENUE(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company freight |
|
$ |
92.4 |
|
|
|
27.6 |
|
|
$ |
100.2 |
|
|
|
34.3 |
|
|
$ |
(7.8 |
) |
|
|
(7.8 |
) |
|
Owner operator freight |
|
|
159.9 |
|
|
|
47.8 |
|
|
|
126.3 |
|
|
|
43.2 |
|
|
|
33.6 |
|
|
|
26.6 |
|
|
Brokerage |
|
|
47.5 |
|
|
|
14.2 |
|
|
|
35.0 |
|
|
|
12.0 |
|
|
|
12.5 |
|
|
|
35.7 |
|
|
Logistics |
|
|
2.5 |
|
|
|
0.7 |
|
|
|
1.5 |
|
|
|
0.5 |
|
|
|
1.0 |
|
|
|
66.7 |
|
|
Fuel surcharge |
|
|
32.1 |
|
|
|
9.6 |
|
|
|
29.4 |
|
|
|
10.1 |
|
|
|
2.7 |
|
|
|
9.2 |
|
|
Total revenue |
|
|
334.4 |
|
|
|
100.0 |
|
|
|
292.4 |
|
|
|
100.0 |
|
|
|
42.0 |
|
|
|
14.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING EXPENSES(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Salaries, wages and employee benefits |
|
|
57.7 |
|
|
|
17.3 |
|
|
|
64.2 |
|
|
|
22.0 |
|
|
|
(6.5 |
) |
|
|
(10.1 |
) |
|
Fuel |
|
|
16.7 |
|
|
|
5.0 |
|
|
|
17.1 |
|
|
|
5.8 |
|
|
|
(0.4 |
) |
|
|
(2.3 |
) |
|
Operations and maintenance |
|
|
20.8 |
|
|
|
6.2 |
|
|
|
21.0 |
|
|
|
7.2 |
|
|
|
(0.2 |
) |
|
|
(1.0 |
) |
|
Purchased freight |
|
|
167.6 |
|
|
|
50.1 |
|
|
|
129.6 |
|
|
|
44.3 |
|
|
|
38.0 |
|
|
|
29.3 |
|
|
Depreciation and amortization |
|
|
17.7 |
|
|
|
5.3 |
|
|
|
18.4 |
|
|
|
6.3 |
|
|
|
(0.7 |
) |
|
|
(3.8 |
) |
|
Restructuring |
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
(0.2 |
) |
|
|
(100.0 |
) |
|
Other operating expenses |
|
|
20.0 |
|
|
|
6.0 |
|
|
|
22.6 |
|
|
|
7.7 |
|
|
|
(2.6 |
) |
|
|
(11.5 |
) |
|
Total operating expenses |
|
|
300.5 |
|
|
|
89.9 |
|
|
|
273.1 |
|
|
|
93.4 |
|
|
|
27.4 |
|
|
|
10.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
INCOME FROM OPERATIONS |
|
$ |
33.9 |
|
|
|
10.1 |
|
|
$ |
19.3 |
|
|
|
6.6 |
|
|
$ |
14.6 |
|
|
|
75.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
OPERATING STATISTICS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company miles |
|
|
40.2 |
|
|
|
|
|
|
52.3 |
|
|
|
|
|
|
(12.1 |
) |
|
|
(23.1 |
) |
||
|
Owner operator miles |
|
|
68.5 |
|
|
|
|
|
|
71.3 |
|
|
|
|
|
|
(2.8 |
) |
|
|
(3.9 |
) |
||
|
Total miles (in millions) |
|
|
108.7 |
|
|
|
|
|
|
123.6 |
|
|
|
|
|
|
(14.9 |
) |
|
|
(12.1 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Rate per mile |
|
$ |
2.32 |
|
|
|
|
|
$ |
1.83 |
|
|
|
|
|
$ |
0.49 |
|
|
|
26.8 |
|
||
|
Revenue per tractor |
|
$ |
101,000 |
|
|
|
|
|
$ |
82,500 |
|
|
|
|
|
$ |
18,500 |
|
|
|
22.4 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, at period-end |
|
|
837 |
|
|
|
|
|
|
1,151 |
|
|
|
|
|
|
(314 |
) |
|
|
(27.3 |
) |
||
|
Owner-operated tractors, at period-end |
|
|
1,601 |
|
|
|
|
|
|
1,549 |
|
|
|
|
|
|
52 |
|
|
|
3.4 |
|
||
|
Number of trailers, at period-end |
|
|
4,207 |
|
|
|
|
|
|
4,575 |
|
|
|
|
|
|
(368 |
) |
|
|
(8.0 |
) |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Company-operated tractors, average for the period |
|
|
896 |
|
|
|
|
|
|
1,192 |
|
|
|
|
|
|
(296 |
) |
|
|
(24.8 |
) |
||
|
Owner-operated tractors, average for the period |
|
|
1,601 |
|
|
|
|
|
|
1,555 |
|
|
|
|
|
|
46 |
|
|
|
3.0 |
|
||
|
Total tractors, average for the period |
|
|
2,497 |
|
|
|
|
|
|
2,747 |
|
|
|
|
|
|
(250 |
) |
|
|
(9.1 |
) |
||
Revenue. Total revenue decreased 0.6% to $737.9 million for the six months ended June 30, 2021 from $742.7 million for the same period in 2020. The exit of the Aveda operations resulted in a $51.8 million, or 7.0%, reduction in total revenue. Company freight revenue decreased $39.2 million, or 11.3%, to $308.7 million for the six months ended June 30, 2021 from $347.9 million for the same period in 2020. The decrease in company freight revenue was a result of a $31.6 million reduction due to the exit of the Aveda operations in conjunction with a 11.0% decrease in miles driven. The increase in owner operator freight revenue was a result of a 20.9% increase in rate per mile, partially offset by $8.4 million reduction due to the exit of the Aveda operations. Brokerage revenue decreased $4.4 million, or 3.7%, to $115.2 million for the six months ended June 30, 2021 from $119.6 million for the same period in 2020 due to a $11.4 million reduction due to the exit of the Aveda operations, which was offset by $7.0 million in brokerage growth in the flatbed segment. Fuel surcharge revenue increased $8.1 million, or 15.4%, to $60.6 million for the six months ended June 30, 2021 from $52.5 million for the same period in 2020 due to increased fuel costs that led to higher fuel surcharges.
The Company’s Specialized Solutions segment’s revenue decreased 11.3% to $409.8 million for the six months ended June 30, 2021 from $461.9 million for the same period in 2020. The exit of the Aveda operations resulted in a $51.8 million, or 11.2%, reduction in the Specialized Solutions segment’s revenue. The remaining decrease was primarily due to decreases in company freight and brokerage revenue.
28
The decrease in total freight revenue was primarily a result of a $40.0 million reduction due to the exit of the Aveda operations. Brokerage revenue decreased $17.9 million, or 20.8%, to $68.1 million for the six months ended June 30, 2021 from $86.0 million for the same period in 2020 primarily due to a $11.4 million reduction due to the exit of the Aveda operations combined with a decrease in customer sales volumes.
The Company’s Flatbed Solutions segment’s revenue increased $42.0 million, or 14.4%, to $334.4 million for the six months ended June 30, 2021 from $292.4 million for the same period in 2020, which was primarily due to increases in owner operator freight revenue and brokerage revenue. Company freight revenue decreased $7.8 million, or 7.8%, to $92.4 million for the six months ended June 30, 2021 from $100.2 million for the same period in 2020 due to a 23.1% decrease in miles driven, partially offset by a 20.0% increase in rate per mile. Owner operator freight revenue increased $33.6 million, or 26.6%, to $159.9 million for the six months ended June 30, 2021 from $126.3 million for the same period in 2020 predominantly due to a 31.8% increase in rate per mile, partially offset by a 3.9% decrease in miles driven. Brokerage revenue increased $12.5 million, or 35.7%, to $47.5 million for the six months ended June 30, 2021 from $35.0 million for the same period in 2020 due to increase in rate. Fuel surcharge revenue increased $2.7 million, or 9.2%, to $32.1 million for the six months ended June 30, 2021 from $29.4 million for the same period in 2020 due to increased fuel costs that led to higher fuel surcharges.
Salaries, Wages and Employee Benefits. Salaries, wages and employee benefits expense, which consists of compensation for all employees, is primarily affected by the number of miles driven by Company drivers, the rate per mile paid to Company drivers, employee benefits including, but not limited to, health care and workers’ compensation, and to a lesser extent, the number of, and compensation and benefits paid to, non-driver employees. In general, the Specialized Solutions segment drivers receive a higher driver pay per total mile than Flatbed Solutions segment drivers due to the former requiring a higher level of training and expertise.
Salaries, wages and employee benefits expense decreased 12.2% to $184.1 million for the six months ended June 30, 2021 from $209.8 million for the same period in 2020. The decrease in salaries, wages and employee benefits expense was primarily due to decreased employee headcount related to Project Synchronize and driver pay due to the decrease in company miles compared to the same period in 2020. Salaries, wages and employee benefits expense, as a percentage of consolidated revenue (excluding brokerage revenue), decreased 4.1% for the six months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Specialized Solutions segment had a $22.7 million, or 16.5%, decrease in salaries, wages and employee benefits expense for the six months ended June 30, 2021 compared to the same period in 2020, primarily as a result of the decreased employee headcount related to Project Synchronize and driver pay due to the decrease in company miles compared to the same period in 2020. Salaries, wages and employee benefits expense, as a percentage of Specialized Solutions revenue (excluding brokerage revenue), decreased 3.0% for the six months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Flatbed Solutions segment had a $6.5 million, or 10.1%, decrease in salaries, wages and employee benefits expense for the six months ended June 30, 2021 compared to the same period in 2020, primarily as a result of the decreased employee headcount related to Project Synchronize and driver pay due to the decrease in company miles compared to the same period in 2020. Salaries, wages and employee benefits expense, as a percentage of Flatbed Solutions revenue (excluding brokerage revenue), decreased 4.8% for the six months ended June 30, 2021 as compared to the same period in 2020.
Fuel. Fuel expense consists primarily of diesel fuel expense for company-owned tractors and fuel taxes. The primary factors affecting fuel expense are the cost of diesel fuel, the miles per gallon realized with company equipment and the number of miles driven by Company drivers.
Total fuel expense increased $5.5 million, or 11.7%, to $52.4 million for the six months ended June 30, 2021 from $46.9 million for the same period in 2020. This increase was primarily due to a 15.3% increase in fuel price, partially offset by a 11.0% decrease in Company miles driven. The U.S. national average diesel fuel price, as published by the U.S. Department of Energy, was $3.062 for the six months ended June 30, 2021, compared to $2.656 for the same period in 2020.
The Company’s Specialized Solutions segment’s fuel expense increased 19.8% to $35.7 million for the six months ended June 30, 2021 from $29.8 million for the same period in 2020, primarily as a result of increase in fuel price mentioned above, partially offset by a 2.9% decrease in Company miles driven for the six months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Flatbed Solutions segment’s fuel expense decreased 2.3% to $16.7 million for the six months ended June 30, 2021 from $17.1 million for the same period in 2020, primarily as a result of a 23.1% decrease in Company miles driven for the six months ended June 30, 2021 as compared to the same period in 2020, partially offset by the increase in fuel price mentioned above.
Operations and Maintenance. Operations and maintenance expense consists primarily of ordinary vehicle repairs and maintenance, costs associated with preparing tractors and trailers for sale or trade-in, driver recruiting, training and safety costs, permitting and pilot car fees and other general operations expenses. Operations and maintenance expense is primarily affected by the age of company-owned tractors and trailers, the number of miles driven in a period and driver turnover.
29
Operations and maintenance expense decreased 25.6% to $67.6 million for the six months ended June 30, 2021 from $90.9 million for the same period in 2020 due to a decrease of $3.7 million in maintenance costs such as repairs and tires, $15.0 million in operation costs such as pilot car and permit fees, and $4.6 million in other operations expenses. Operations and maintenance expense, as a percentage of consolidated revenue (excluding brokerage revenue), decreased 3.7% for the six months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Specialized Solutions segment’s operations and maintenance expense decreased $22.9 million, or 32.8%, for the six months ended June 30, 2021 as compared to the same period in 2020 as a result of a decrease of $3.7 million in maintenance expense such as repairs, washes and tires due to a reduction of tractors and trailers in the Company’s fleet, a decrease of $15.1 million in operation costs such as pilot car and permit fees and a decrease of $4.1 million in other operations expenses. Operations and maintenance expense, as a percentage of Specialized Solutions revenue (excluding brokerage revenue), decreased 4.9% for the six months ended June 30, 2021 as compared to the same period in 2020.
The Company’s Flatbed Solutions segment’s operations and maintenance expense decreased $0.2 million, or 1.0%, for the six months ended June 30, 2021 as compared to the same period in 2020. Operations and maintenance expense, as a percentage of Flatbed Solutions revenue (excluding brokerage revenue), decreased 1.0% for the six months ended June 30, 2021 as compared to the same period in 2020.
Purchased Freight. Purchased freight expense consists of the payments to owner-operators, including fuel surcharge reimbursements, and payments to third-party capacity providers that haul loads brokered to them. Purchased freight expense generally takes into account changes in diesel fuel prices, resulting in lower payments during periods of declining fuel prices.
Total purchased freight expense increased $30.3 million, or 12.3%, to $276.7 million during the six months ended June 30, 2021 from $246.4 million during the same period in 2020. Purchased freight expense from owner-operators increased 16.3% to $193.2 million during the six months ended June 30, 2021 from $166.1 million during the same period in 2020 as a result of a 20.9% increase in rate, partially offset by a 4.9% decrease in owner operator miles driven. Purchased freight expense from third-party capacity providers increased 4.0% to $83.5 million during the six months ended June 30, 2021 from $80.3 million during the same period in 2020, as a result of an increase in utilization of third-party capacity providers. Purchased freight expense, as a percentage of consolidated revenue, for the six months ended June 30, 2021, increased 4.3% for the as compared to the same period in 2020.
The Company’s Specialized Solutions segment’s purchased freight expense decreased 10.1% to $115.5 million during the six months ended June 30, 2021 from $128.5 million during the same period in 2020. Purchased freight expense from owner-operators decreased 1.9% to $57.9 million during the six months ended June 30, 2021 from $59.0 million during the same period in 2020, as a result of a 7.7% decrease in owner operator miles driven, offset by a 0.7% increase in rate. Purchased freight expense from third-party capacity providers decreased 17.1% to $57.6 million during the six months ended June 30, 2021 from $69.5 million during the same period in 2020, as a result of a decrease in utilization of third-party capacity providers. Purchased freight expense, as a percentage of Specialized Solutions revenue, for the six months ended June 30, 2021, increased 0.4% as compared to the same period in 2020.
The Company’s Flatbed Solutions segment’s purchased freight expense increased 29.3% to $167.6 million for the six months ended June 30, 2021 from $129.6 million for the same period in 2020. Purchased freight expense from owner-operators increased 26.2% to $135.2 million for the six months ended June 30, 2021 from $107.1 million for the same period in 2020, as a result of a 31.8% increase in owner operators’ rate. Purchased freight expense from third-party capacity providers increased 44.0% to $32.4 million during the six months ended June 30, 2021 from $22.5 million during the same period in 2020, primarily as a result of increased utilization of third-party capacity providers. Purchased freight expense, as a percentage of Flatbed Solutions revenue, for the six months ended June 30, 2021, increased 5.8% as compared to the same period in 2020.
Depreciation and Amortization. Depreciation and amortization expense consists primarily of depreciation for company-owned tractors and trailers and amortization of those financed with finance leases. The primary factors affecting these expense items include the size and age of company-owned tractors and trailers and the cost of new equipment. Amortization of intangible assets is also included in this expense.
Depreciation and amortization expense decreased $4.7 million, or 9.6%, to $44.4 million during the six months ended June 30, 2021 from $49.1 million during the same period in 2020 as a result of a 19.1% decrease in average tractor count in the Company’s fleet.
The Company’s Specialized Solutions segment’s depreciation and amortization expense decreased $3.9 million, or 13.0%, for the six months ended June 30, 2021 as compared to the same period in 2020 as a result of a 16.0% decrease in average tractor count in the segment’s fleet.
The Company’s Flatbed Solutions segment’s depreciation and amortization expense decreased $0.7 million, or 3.8%, for the six months ended June 30, 2021 as compared to the same period in 2020 as a result of a 24.8% decrease in average tractor count in the segment’s fleet.
30
Administrative Expenses. Administrative expenses consists of operating lease cost for real estate, professional fees and other expenses that are not directly associated with the Company’s fleet services. Administrative expense decreased $8.2 million for the six months ended June 30, 2021 as compared to the same period in 2020 as a result of cost reduction initiatives. Administrative expenses, as a percentage of revenue, decreased 1.0% from the same period in 2020.
Taxes and Licenses. Operating taxes and licenses expense primarily represents the costs of taxes and licenses associated with the Company’s fleet of equipment and will vary according to the size of its equipment fleet. Taxes and license expense decreased $0.8 million for the six months ended June 30, 2021. Operating taxes and license expense, as a percentage of revenue, was generally consistent for the six months ended June 30, 2021 and 2020.
Insurance and Claims. Insurance and claims expense consists of insurance premiums and the accruals the Company makes for estimated payments and expenses for claims for bodily injury, property damage, cargo damage and other casualty events. The primary factor affecting the Company’s insurance and claims expense is seasonality (the Company typically experiences higher accident frequency in winter months), the frequency and severity of accidents, trends in the development factors used in its accruals and developments in large, prior-year claims. The frequency of accidents tends to increase with the miles the Company travels. Insurance and claims expense decreased 12.7% to $26.7 million during the six months ended June 30, 2021 from $30.6 million during the same period in 2020 due to decreases in insurance claims and premiums. Insurance and claims, as a percentage of revenue, decreased 0.5% for the six months ended June 30, 2021 as compared to the same period in 2020.
Impairment. No impairment expense was recognized during the six months ended June 30, 2021. As a result of the then-planned divestiture of Aveda, impairment charges of $13.4 million were recorded for the same period in 2020 consisting of property and equipment of $4.0 million, right-of-use assets of $3.2 million and tradename intangible assets of $6.2 million.
Restructuring Costs. Restructuring costs of $0.1 million were recognized in the six months ended June 30, 2021, compared to $3.5 million in the same period of 2020. The restructuring costs in the six months ended June 30, 2020 was primarily related to Phase I and II of Project Synchronize, and the closure of certain Aveda terminals.
Other (Income) Expense. Interest expense consists of cash interest, amortization and write-off of related issuance costs and fees and prepayment penalties. Interest expense decreased 18.7% to $18.7 million for the six months ended June 30, 2021 from $23.0 million for the same period in 2020. This decrease was primarily attributable to lower interest rates on the Term Loan Facility and decreases in equipment term loan outstanding balance. Change in fair value of warrant liability was a gain of $2.2 million for the six months ended June 30, 2021 compared to a gain of $2.1 million for the same period in 2020. The change in fair value is directly related to the fair value of the warrant liability as of each period end as calculated using Level 1 and Level 3 inputs. In addition, for the six months ended June 30, 2021, there was $1.5 million included in interest expense related to the write-off of unamortized debt issuance costs associated with the extinguishment of certain lenders in the debt refinancing. Other income for the six months ended June 30, 2021 was $0.8 million compared to other expense of $0.1 million for the same period in 2020 and related to gain or loss on disposal of non-revenue assets.
Income Tax. Income tax expense was $9.9 million for the six months ended June 30, 2021 compared to income tax benefit of $1.8 million for the same period in 2020. The effective tax rate was 26.1% for the six months ended June 30, 2021, compared to 10.9% for the same period in 2020. The effective income tax rate varies from the federal statutory rate primarily due to the jurisdictional mix of earnings, combined with the unfavorable impact of nondeductible expenses, including the effect of the per diem pay structure for drivers and the change in fair value of warrant liability.
Liquidity, Capital Resources and Capital Requirements
The Company had the following sources of liquidity available at June 30, 2021 and December 31, 2020.
|
(Dollars in millions) |
|
June 30, 2021 |
|
|
December 31, 2020 |
|
||
|
|
|
|
|
|
|
|
||
|
Cash |
|
$ |
111.7 |
|
|
$ |
176.2 |
|
|
Availability under line of credit |
|
|
119.3 |
|
|
|
83.2 |
|
|
Total |
|
$ |
231.0 |
|
|
$ |
259.4 |
|
The Company’s primary sources of liquidity have been provided by operations, issuances of capital stock and borrowings under its credit facilities. Cash decreased by $64.5 million at June 30, 2021 as compared to December 31, 2020. This decrease primarily resulted from $130.9 million in net cash used in financing activities, partially offset by $58.1 million in net cash provided by operating activities. See below for more information. As of June 30, 2021, the Company had no borrowings, $23.7 million in letters of credit outstanding, and could incur approximately $119.3 million of additional indebtedness under the ABL Facility.
31
The Company’s business requires substantial amounts of cash for operating expenses, including salaries and wages paid to employees, contract payments to independent contractors, insurance and claims payments, tax payments, and others. On March 22, 2021, the Company’s Board of Directors authorized the repurchase of up to three million shares of the Company’s common stock, of which 1,517,623 shares have been repurchased by the Company for approximately $10.5 million in cash through June 30, 2021. The Company also uses large amounts of cash and credit for capital expenditures.
Capital Expenditures
The Company follows a dual strategy of both owning assets and employing asset-light activities, the latter of which reduces the capital expenditures required to operate the business. Asset-light activities are conducted utilizing tractors and trailers provided by owner-operators and third-party carriers for significant portions of our flatbed and specialized services. Company-owned asset expenditures require substantial cash and financing (including finance and operating leases) to maintain a modern tractor fleet, refresh the trailer fleet, fund replacement and or growth in the revenue equipment fleet, and for the acquisition of real property and improvements to existing terminals and facilities.
Total capital expenditures for the six months ended June 30, 2021 and 2020 are shown below:
|
|
|
Six Months Ended June 30, |
|
|||||
|
(Dollars in millions) |
|
2021 |
|
|
2020 |
|
||
|
|
|
|
|
|
|
|
||
|
Net cash capital receipts |
|
$ |
(8.6 |
) |
|
$ |
(21.5 |
) |
|
Financed capital expenditures |
|
|
29.2 |
|
|
|
30.0 |
|
|
Property and equipment purchases and sales |
|
$ |
20.6 |
|
|
$ |
8.5 |
|
Property and equipment purchases and sales increased primarily due to a decrease in net cash capital receipts which resulted from fewer sales of equipment compared to the prior period.
Additionally, the Company entered into operating leases for revenue equipment with terms of 2 to 5 years and real property with terms of 3 to 7 years having asset values at lease inception of $12.5 million and $4.0 million, respectively, for the six months ended June 30, 2021.
Material Debt
Overview
As of June 30, 2021, the Company had the following material debt:
The amounts outstanding under such agreements, excluding financing fees, were as follows as of June 30, 2021 (in millions):
|
Term Loan Facility |
$ |
399.0 |
|
|
Mortgages |
|
2.4 |
|
|
Equipment term loans |
|
161.2 |
|
|
Finance lease obligations |
|
31.8 |
|
|
Total long-term debt and finance leases |
|
594.4 |
|
|
Less: current portion |
|
(55.4 |
) |
|
Long-term debt and finance leases obligations, less current portion |
$ |
539.0 |
|
ABL and Term Loan Facilities and Equipment Financing Agreements
As of June 30, 2021, the Company has (i) a $400.0 million senior secured term loan credit facility, and (ii) an asset-based senior secured revolving credit facility with an aggregate maximum credit amount equal to $150.0 million (that may be increased to $200.0 million, subject to availability under a borrowing base). See Note 6 of Notes to Consolidated Financial Statements for more information regarding the Term Loan Facility and the ABL Facility, including the March 9, 2021 Term Loan refinancing and the April 29, 2021 ABL Amendment.
32
The Company had $161.2 million of term loans and $31.8 million of finance leases collateralized primarily by revenue equipment, with terms of 48 to 60 months. Certain of the 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 ABL Facility) and transfers of assets.
The Company believes it can finance its expected cash needs, including debt repayment, in the short-term with cash flows from operations and borrowings available under the ABL Facility. The Company expects that the ABL Facility will provide sufficient credit availability to support its ongoing operations, fund debt service requirements, capital expenditures, and working capital needs. Over the long-term, the Company will continue to have significant capital requirements, and expects to devote substantial financial resources to grow its operations and fund its acquisition activities. As a result of these funding requirements, the Company may need to sell additional equity or debt securities or seek additional financing through additional borrowings, lease financing or equity capital, though it is not likely that the Company will issue any common stock in the near term. The availability of financing or equity capital will depend upon the Company’s financial condition and results of operations as well as prevailing market conditions. If such additional borrowings, lease financing or equity capital is not available at the time it needs to incur such expenditures, the Company may be required to extend the maturity of then outstanding indebtedness, rely on alternative financing arrangements or engage in asset sales.
Letters of credit – Under the terms of the ABL Facility, lenders may issue up to $40 million of standby letters of credit on our behalf. Outstanding letters of credit reduce the availability on the $150 million ABL Facility. Standby letters of credit are generally issued for the benefit of regulatory authorities, insurance companies and state departments of insurance for the purpose of satisfying certain collateral requirements, primarily related to automobile, workers’ compensation, and general insurance liabilities.
Off-Balance Sheet Arrangements
Information about the Company’s standby letters of credit is included in Note 6 of the Notes to Consolidated Financial Statements included herein. See also Liquidity and Capital Resources above.
Cash Flows
The Company’s summary statements of cash flows information for the six months ended June 30, 2021 and 2020 is set forth in the table below:
|
|
|
Six Months Ended June 30, |
|
|||||
|
(Dollars in millions) |
|
2021 |
|
|
2020 |
|
||
|
|
|
|
|
|
|
|
||
|
Net cash provided by operating activities |
|
$ |
58.1 |
|
|
$ |
82.9 |
|
|
Net cash provided by investing activities |
|
$ |
8.6 |
|
|
$ |
21.5 |
|
|
Net cash used in financing activities |
|
$ |
(130.9 |
) |
|
$ |
(43.3 |
) |
Operating Activities. Cash provided by operating activities was $58.1 million during the six months ended June 30, 2021 and consisted of $28.0 million of net income plus $48.6 million of non-cash items, consisting primarily of depreciation, amortization, non-cash operating lease expense, change in fair value of warrant liability and stock-based compensation, plus $18.5 million of net cash used in working capital and other activities. Cash used in working capital and other activities during the six months ended June 30, 2021 reflect a $1.1 million decrease in other current assets, $0.6 million decrease in drivers’ advances and other receivables, and a decrease of $0.3 million in accounts payable, partially offset by an increase of $34.8 million in accounts receivable and a $14.9 million increase in accrued expenses and other liabilities.
The $24.8 million decrease in cash provided by operating activities during the six months ended June 30, 2021, as compared with the six months ended June 30, 2020, was the result of a $42.7 million improvement in net income, reduced by decreases of $13.4 million in impairment, $6.9 million increase in gain on disposition of property and equipment, $4.6 million in depreciation, $3.5 million in non-cash operating lease expense, $1.6 million in bad debt expense, $1.0 million in amortization of deferred financing fees, $0.1 million in amortization of intangible assets, and $0.1 million in change in fair value of warrant liability, increased by $11.6 million in deferred taxes, $1.1 million in write-off of deferred financing fees and $0.6 million in stock-based compensation expense. Net cash used in working capital decreased $24.8 million.
Investing Activities. Cash flows from investing activities decreased from $21.5 million provided by investing activities for the three months ended June 30, 2020 to $8.6 million provided by investing activities for the six months ended June 30, 2021 reflecting an increase of $3.1
33
million in cash equipment purchases and an decrease of $9.8 million in cash receipts from sales of revenue equipment for the six months ended June 30, 2021.
Total net cash capital expenditures (receipts) for the six months ended June 30, 2021 and 2020 are shown below:
|
|
|
Six Months Ended June 30, |
|
|||||
|
(Dollars in millions) |
|
2021 |
|
|
2020 |
|
||
|
|
|
|
|
|
|
|
||
|
Revenue equipment (tractors, trailers and trailer accessories) |
|
$ |
15.2 |
|
|
$ |
13.9 |
|
|
Buildings and building improvements |
|
|
0.3 |
|
|
|
0.6 |
|
|
Other |
|
|
2.5 |
|
|
|
0.4 |
|
|
Total cash capital expenditures |
|
|
18.0 |
|
|
|
14.9 |
|
|
Less: Proceeds from sales of property and equipment |
|
|
26.6 |
|
|
|
36.4 |
|
|
Net cash capital expenditures (receipts) |
|
$ |
(8.6 |
) |
|
$ |
(21.5 |
) |
Financing Activities. Cash flows from financing activities changed from $43.3 million used in financing activities for the six months ended June 30, 2020 to $130.9 million used in financing activities for the six months ended June 30, 2021. This change was primarily a result of net debt payments of $77.5 million and $10.5 million in repurchases of common stock.
Inflation
Inflation can have an impact on the Company’s operating costs. A prolonged period of inflation could cause interest rates, fuel, wages and other costs to increase, which would adversely affect the Company’s results of operations unless freight rates correspondingly increase. The Company attempts to limit the effects of inflation through increases in freight rates, certain cost control efforts and limiting the effects of fuel prices through fuel surcharges and measures intended to reduce the consumption of fuel. Over the past three fiscal years, the effect of inflation has been immaterial.
Seasonality
In the transportation industry, results of operations generally show a seasonal pattern. The Company’s productivity decreases during the winter season because inclement weather impedes operations, end-users reduce their activity and certain shippers reduce their shipments during winter. At the same time, operating expenses increase and fuel efficiency decreases because of engine idling and harsh weather creating higher accident frequency, increased claims and higher equipment repair expenditures. The Company also may suffer from weather-related or other events such as tornadoes, hurricanes, blizzards, ice storms, floods, fires, earthquakes and explosions. These events may disrupt fuel supplies, increase fuel costs, disrupt freight shipments or routes, affect regional economies, destroy the Company’s assets, increase insurance costs or adversely affect the business or financial condition of its customers, any of which could adversely affect the Company’s results of operations or make such results more volatile.
Critical Accounting Policies
The Company’s significant accounting policies are described in Note 1 of Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K/A filed on May 6, 2021. The Company considers certain of these accounting policies to be “critical” to the portrayal of the Company’s financial position and results of operations, as they require the application of significant judgment by management. As a result, they are subject to an inherent degree of uncertainty. The Company identifies and discusses these “critical” accounting policies in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the Company’s Annual Report on Form 10-K/A filed on May 6, 2021. Management bases its estimates and judgments on historical experience and on various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. On an ongoing basis, management evaluates its estimates and judgments, including those considered “critical.” Management has discussed the development, selection and evaluation of accounting estimates, including those deemed “critical,” and the associated disclosures in this Quarterly Report on Form 10-Q with the Audit Committee of the Company’s board of directors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the Company’s market risk since December 31, 2020. For further information on the Company’s market risk, refer to “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K/A filed on May 6, 2021.
34
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s management conducted an evaluation, under the supervision and with the participation of the principal executive and principal financial officers, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities and Exchange Act of 1934 (the Exchange Act)). Based on this evaluation, the principal executive and principal financial officers concluded our disclosure controls and procedures were not effective as of June 30, 2021 due to material weaknesses in internal control over financial reporting that were disclosed in our Amendment No. 2 to our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the three months ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and its subsidiaries are involved in litigation and claims primarily arising in the normal course of business, which include claims for personal injury or property damage incurred in the transportation of freight. Based on its knowledge of the facts and, in certain cases, advice of outside counsel, the Company believes the resolution of claims and pending litigation will not have a material adverse effect on the Company’s financial position, results of operations or cash flows, and the Company and its subsidiaries are not currently a party to, nor is their property currently subject to, any material legal proceedings other than ordinary routine litigation incidental to the business, and we are not aware of any such proceedings contemplated by governmental authorities.
Item 1A. Risk Factors
There have been no material changes in the risks facing the Company as described in Amendment No. 2 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2020.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table provides information about our repurchases of Common Stock during the three months ended June 30, 2021:
ISSUER PURCHASES OF EQUITY SECURITIES
|
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |
|
|
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs(1) |
|
||||
|
04/01/2021 to 04/30/2021 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
3,000,000 |
|
|
05/01/2021 to 05/31/2021 |
|
|
452,793 |
|
|
$ |
6.74 |
|
|
|
452,793 |
|
|
|
2,547,207 |
|
|
06/01/2021 to 06/30/2021 |
|
|
1,064,830 |
|
|
$ |
7.04 |
|
|
|
1,064,830 |
|
|
|
1,482,377 |
|
|
Total |
|
|
1,517,623 |
|
|
$ |
6.95 |
|
|
|
1,517,623 |
|
|
|
|
|
35
Item 6. Exhibits
EXHIBIT INDEX
|
* |
Filed herewith. |
|
** |
Furnished herewith. |
|
+ |
Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules and attachments upon request by the SEC; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedules and attachments so furnished. |
36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Date: August 3, 2021 |
DASEKE, INC. |
|
|
|
|
|
|
|
By: |
/s/ Jason Bates |
|
|
Name: |
Jason Bates |
|
|
Title: |
Chief Financial Officer |
37