Daseke cool on M&A, hot on logistics

Daseke cool on M&A, hot on logistics

Flatbed and heavy-freight hauler Daseke took in $1.6 billion in revenue in 2018. Photo credit: Daseke.

After nearly doubling in size from 2017 to 2018, heavy-freight hauler Daseke is taking a “pause” from acquisitions and mergers in 2019 to focus on the platform that allows its 17 companies to provide consistent, efficient, and complimentary services to customers.

“We’re really going to focus on integration, efficiency,” Don Daseke, founder, chairman and CEO told JOC.com in an interview.

“We’re going to maximize the ways our companies work together to serve customers” as varied as Boeing, General Electric, Caterpillar, and the Department of Defense that need oversized, overweight flatbed equipment, Daseke said. That includes investment in technology platforms that will provide greater visibility across company lines and investment in truck drivers.

Daseke plans to establish a third-party logistics division, Daseke Logistics, that will assist in brokering internal and external assets. “Brokerage has always been part of our company, not just externally but for using internal company resources optimally,” Daseke said. But brokerage in the oversized and specialized market is a different beast than in the dry-van sector.

The new brokerage business will follow the opening of Daseke Fleet Services last May. That division helps the company leverage its scale in areas such as purchasing, equipment optimization, and maintenance, maximizing national purchasing power. Daseke Logistics will leverage that scale to provide capacity where needed to the parent company’s shippers.

“It’s more challenging for our kind of freight because there’s such a variety of equipment,” Daseke said. “We have hundreds of pieces of different kinds of equipment for different freight. A wind turbine blade requires totally different equipment than a load of building materials. We’ve got more challenges making sure we have the right equipment for the right customer.”

Flatbed consolidation

Since 2009, Daseke has approached that challenge by building a large family of companies through waves of mergers, including seven in the past two years. Starting with $30 million in revenue following an initial “partnership” with Smokey Point Distributing in 2009, the flatbed and specialized enterprise has driven its total annual revenue to $1.6 billion in 2018.

That expansion soared following a $626 million merger agreement with Hennessy Capital in early 2017. That agreement provided the company with capital for more mergers and set an ambitious three-year goal for Daseke to double its earnings before interest, taxes, depreciation, and amortization. The company accomplished that goal in less than two years.

Today, there are 17 company logos on Daseke’s business card, but several of those companies, such as The Boyd Companies and The Roadmaster Group, own subsidiaries of their own. The holding company is headquartered in Addison, Texas, and its subsidiaries are spread across North America, from Canada and the Pacific Northwest to the southeastern United States.

In 2009, Daseke identified a problem — there was no “national leader” in the open-deck, heavy-haul flatbed trucking market. This is the market for companies that haul wind turbine blades and airplane wings, utility poles, oil pipe, and earthmoving equipment. Instead, the market was divided among thousands of regional and local firms with different specialties.

“We started with an idea,” Daseke said. “We were going to build the premiere open-deck specialized company in this country and we’ve done that.” For a time, Daseke topped The Journal of Commerce list of fastest-growing US trucking companies, as revenue soared 2,180 percent in its first five years in an industry roll-up only second to that of XPO Logistics.

Daseke shunned what he calls the “Wall Street” acquisition model. “We’re not acquiring broken companies that are fixer uppers,” he said. “We start with companies that are not for sale. On average they’ve been in business 50 years, and customers and drivers think highly of them. They’re typically owned by a family that doesn’t have to sell. We approach them directly.”

He prefers to call these deals “mergers.” The companies operate autonomously, keeping their original management. Of the 17 companies that have joined Daseke since 2009, 15 still have their original CEOs, Daseke said. “One retired, and one other was terminated.” That’s provided stability and continuity that kept customers and laid the foundation for further growth.

Daseke’s $846.3 million in revenue in 2017 jumped to $1.6 billion in 2018, thanks to the initial public offering that helped underwrite acquisitions and a strong US economy. Both organic growth and growth from mergers will continue in 2019, as the company assimilates the full earnings of companies purchased in 2018 and its businesses continue to expand.

The company has completed some management reorganization as well. R. Scott Wheeler was promoted from CFO to president in January 2018, and Bharat Mahajan, formerly CFO of Daseke subsidiary Aveda Transportation, became CFO in September. Chris Easter, a former CEO of Keen Transportation and logistics executive with Walmart and Schneider National, was named chief operating officer this January.

"If demand is strong, we’re going to have a good market, and a good year," said Daseke. "I’d guess we’ll look at more acquisition targets starting in 2020."

 Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy