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Daseke, Inc. (NASDAQ:DSKE)
Q1 2021 Earnings Call
May 7, 2021, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, everyone. And thank you for participating in today's conference call to discuss Daseke's financial results for the First Quarter ended March 31, 2021.

With us today are Jonathan Shepko, Interim CEO and Board member; Jason Bates, EVP and CFO; and John Michell [Phonetic], VP of Treasury and Investor Relations. After their prepared remarks, the management team will take your questions.

As a reminder, you may now download a PDF of the presentation slides that we are able to accompany the remarks made on today's conference call as indicated in this press release we issued earlier today. You may access the slides in the Investor Relations section of our website.

Before we go further, I would like to turn the call over to John Michell, VP of Treasury and Investor Relations, who will read the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important caution regarding forward-looking statements.

John, please go ahead.

John Michell -- Vice President, Treasury and Investor Relations

Thanks, Kathy. Please turn to Slide 2 for a review of our Safe Harbor and non-GAAP statements. Today's presentation contains forward-looking statements as within the meaning of the Private Securities Litigation Reform Act of 1995. Projected financial information, including our guidance outlook are forward-looking statements. Forward-looking statements include those with respect to revenues, earnings, performance, strategies, prospects and other aspects of Daseke's business are based on management's current estimates, projections and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.

I encourage you to read our filings with the Securities and Exchange Commission for a discussion of the risks that can affect our business and to not place undue reliance on any forward-looking statements. We undertake no obligation to revise our forward-looking statements to reflect events or circumstances occurring after today, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

During the call, there will also be a discussion of some items that do not conform to US Generally Accepted Accounting Principles, or GAAP, including but not limited to adjusted EBITDA, adjusted operating ratio, adjusted operating income, adjusted net income or loss, free cash flow and net debt. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the appendix to the investor presentation and press release issued this morning, both of which are available on the Investors tab of the Daseke website, www.daseke.com.

In terms of the structure of our call today, Jonathan will start with a review of our business operations and the progress we are making as we execute against our key strategic priorities. Jason will then walk through a financial review of the quarter. And finally, Jonathan will come back to wrap up our remarks with a few closing comments before we open the line for your questions.

I'd like to turn the call over to Daseke's Interim CEO, Mr. Jonathan Shepko. Jonathan?

Jonathan Shepko -- Interim Chief Executive Officer

Thank you, John. Good morning, everyone. I'd like to start today's call by taking a moment to make mention of a noteworthy accomplishment by our company. This quarter will mark the fourth consecutive quarter in which our team has successfully executed against our internal and external expectations. What's more, this accomplishment has been realized in the midst of not only comprehensive transformational overhaul within our organization, but also strong headwinds from the global pandemic.

Our results continue to reflect the hard work and commitment of all of our employees and the benefit of our unique business model, which remains supported by diversity across our customer base as well as the industrial end markets that we serve. Our unique model, which at its core is constructed around an asset-light fleet serving a well-diversified portfolio of end markets, geographies and customers enable Daseke to better weather volatility across market cycles.

It offers a unique advantage in that it allows us to reposition and flex our resources to take advantage of the highest and best used opportunities available to our fleet at any point in time. And our strong performance this last quarter was underpinned by these very attributes as we capture the reflation in numerous markets such as steel, glass, construction and manufacturing that are approaching and in some cases exceeding their pre-pandemic levels.

Let's begin our discussion on Slide 3 where we outlined a few of the notable takeaways from the first quarter. We had $334 million of revenue during the period and nearly $36 million in adjusted EBITDA. Daseke's transformation over the last year-and-a-half has been focused on operational excellence and improving our cost structure in order to drive performance, reduce costs and achieve greater efficiency.

We held through with those lasting priorities and we are working hard to ensure continuous improvement remains part of our culture. To that end, we believe we are making solid progress as evidenced in our results as our adjusted operating ratio of 95.6% was a 140-basis-point improvement on a consolidated basis and our free cash flow was $34 million for the quarter.

Our business performance in Q1 was clearly supported by the improving economic landscape across the broader industrial economy, which is driving a healthy rate environment. For those of you not familiar with the seasonality of open deck transportation, I would like to note that we have the slightly different seasonal pattern for our friends in [Phonetic] dry van.

We traditionally see improved fundamentals in the second and third quarters with the first and fourth quarters being seasonally slower. That said, the strength of the market for the last two quarters, which should have been our off-market quarters, has been unprecedented and has us highly encouraged about the continued prospects for stronger performance in the second and third quarters.

With that, I will now turn the call over to Jason Bates to review our first quarter financial performance. Jason?

Jason Bates -- Executive Vice President and Chief Financial Officer

Thank you, Jonathan. I will start by briefly addressing the 10-K/A that we put out last night. As outlined in our press release on April 22, last month, the SEC issued a statement concerning the accounting for warrants issued by companies that went public through stacks. While that did go public through a SPAC vehicle, which involve the issuance of warrants, that process was completed over four years ago.

As outlined in our 10-K/A, we have restated our previously issued financial statements to reflect the warrants as a liability with subsequent changes in their estimated fair value recorded as non-cash income or expense. The corrections in the accounting for these warrants was non-operational and non-cash and those had no impact on our revenue, operating income, operating ratio, adjusted EBITDA, adjusted EPS or free cash flow in prior years or moving forward.

So with that, I'll now turn our discussion to the consolidated results from the first quarter, which can be found on Slide 4. As Jonathan mentioned at the top of the call, our results reflected our expectations of improving broader market dynamics, particularly on the flatbed side. These were partially offset by an expected normalization of demand in selected specialized markets, specifically wind energy and the uptake in certain operating costs, particularly stemming from the insurance markets.

Q1's results were driven by as a various ongoing operational improvements we have undertaken, combined with improving market demand. The uplift in construction-related verticals such as lumber, roofing, steel and glass, combined with strength in munitions, gained momentum in the first quarter and as growing demand combined with a tighter market capacity led to a strong rate environment in the first quarter.

Consolidated revenues were $333.9 million for the quarter, down 15% compared to revenues of $391 million in last year's first quarter. This decline in revenues was driven in large part by the strategic divestiture of the Aveda business and from fleet downsizing as we look to shed less attractive revenues. Similarly, to how we have been displaying results since the Aveda divestiture process began, on the right-hand portion of the slide, we are providing our financial performance exclusive of the impact that this has had on our comparable results.

This provides a view on the business on a like-for-like basis. But it's also more indicative of how leadership things about our business internally. Excluding Aveda, our consolidated revenues were down 4% year-over-year. This decline in revenues was driven by the strategic reduction of underutilized and less profitable trucks, lingering pockets of weakness stemming from the COVID-19 pandemic and the normalizations of wind energy project revenues versus last year's comparable quarter. The delta to the top-line compared to last year has incrementally but consistently fell closer to where we would have expected to be outside of the pandemic.

Excluding Aveda, the team delivered adjusted net income of $4.1 million or $0.04 per share in the quarter. Adjusted EBITDA of $35.8 million declined by 4% compared to the first quarter of 2020 after excluding the Aveda due to lower freight volumes and revenues from select wind energy markets, partially offset by growth in volumes and improvement in freight rates in the flatbed segment.

While the adjusted EBITDA is down marginally versus last year, it is worth pointing out that the same operating segment level, our consolidated adjusted EBITDA results of $44.1 million actually grew 5% versus the results of $42 million in last year's comparable quarter. The delta here was the year-over-year uptick in our corporate cost center, up primarily as a result of the build out of our executive leadership team.

Overall, despite the lower relative revenue base, our profitability continues to trend in the right direction and we will look to capture incremental improvement as we return to grow.

With that, I'd like to walk you through a detailed view of our results at the operating segment level. On Slide 5, we present our specialized segment results. However, in an effort to maintain comparability and consistency with our business going forward, we also presented the specialized segment results exclusive of the impact of the divested Aveda business, which is displayed on Slide 6.

Revenues of $183.6 million were down 7% versus the prior year with the decline primarily driven by a normalization of revenues from wind energy projects that were a strong contributor to results in the last year's first quarter. This phenomenon was consistent with our 2021 business outlook. Additionally, we saw lower freight volumes, which stem from the strategic fleet downsizing we did as a part of the operational and cost improvement initiatives. This impact to our results is further explained in our segment rates information on the right hand side of the slide.

Compared to last year's first quarter, the specialized segment saw a slight decline in freight rate per mile from $2.83 to $2.78 due to the tail off of wind energy project revenues, which was offset by strong rate growth in other verticals. However, fleet downsizing efforts and a more optimized usage of our fleet assets drove a roughly 4% increase in revenue per tractor of 57,200, up from 54,800 per tractor captured last year.

Adjusted EBITDA results of $24.6 million decreased by 6% compared to the $26.3 million delivered in the first quarter of 2020 with the decline driven by the same factors that drove the top-line decline relative to the prior year period as discussed previously. And that was partially offset by good contract rates in the market and improving demand in construction and building-related verticals. Despite this marginally lower EBITDA figure, specialized EBITDA margins incrementally improved up to 13.4%, which was up 10 basis points from 13.3% from the prior year quarter, again reflecting slightly more profitable operations despite the shift in end market mix.

On Slide 7, we detailed our flatbed segment's results for the quarter. Flatbed revenue in the first quarter was $153.5 million compared to the $155.2 million in the prior year quarter. Here's another instance where we see the contributions from our integrations and operational improvement plans are delivering value, nearly overcoming the impact of lower freight volumes from the strategic curtailing of less attractive revenues. Flatbed rates were very strong in the quarter as rate per miles rose 15% year-over-year as demand across the broader industrial market continues to improve sequentially.

Revenue of $45,700 per tractor grew by more than 8% from $42,300 as the more efficient and better utilized fleet stepped up to capture those strong rates in the market. That healthy demand and solid freight rates were significant contributors to the segment's adjusted EBITDA performance. Adjusted EBITDA results of $19.8 million grew by 11% compared to the results of $17.9 million in last year's first quarter. Stronger adjusted EBITDA and improved cost structure helped the flatbed segment EBITDA margins improve by 140 basis points to 12.9%, reflecting the more profitable operations from our better utilized fleet assets and a good freight environment. The segments' operating ratio improved 170 basis points to 92.8% with the adjusted operating ratio coming in at 92.2%, which was a 160-basis-point improvement versus last year's first quarter.

Turning to Slide 8, I'll take a moment to speak about our cash flows and balance sheet developments. Through the first quarter, Daseke generated $29.5 million in cash from operating activities. Cash capex was $5.2 million and we collected cash proceeds from the sale of equipment of $10.1 million. This resulted in free cash flow generation of $34.4 million during the quarter. Capex financed with debt or capital leases totaled $14.4 million, bringing in net after financing of $20 million.

We've made a significant amount of progress in our transformation efforts driving improved financial performance, strong operating and free cash flow generation and debt reduction. These results led to an improved and important restructuring of our balance sheet through the refinancing of our term loan where we highlight some of the salient points of the transaction on the right portion of this slide. We deployed $84 million of the excess cash generated from our strong operations and strategic divestitures last year to pay down debt as a part of the refinancing transaction. The result of the transaction met several key objectives, including a meaningfully lower interest rate, extending the maturity and adding financial flexibility through the new covenant light structure and other more attractive credit terms.

Additionally, we recently increased the size of our revolving credit facility to $150 million, further boosting liquidity available to our company. I'm proud of the hard work across the organization that helps make the strategic success possible. We have fortified and de-risked our balance sheet and the greater access to capital on more favorable terms help strengthen our ability to opportunistically execute on accretive growth opportunities. This consistently improving balance sheet health will further serve our goals for shareholder value creation and aid in our commitments to driving sustainable and profitable growth for our shareholders.

So, with that, I'll hand the call back over to Jonathan to offer a few final thoughts. Jonathan?

Jonathan Shepko -- Interim Chief Executive Officer

Thank you, Jason. I'll conclude our prepared remarks with Slide 9, where I'd like to spend some time discussing some meaningful inflight initiatives and milestone decisions we push forward in this first quarter, substantial progress this organization has made that isn't necessarily reflected in our numbers.

First, we have developed a preliminary future state map outlining the necessary and continued evolution of Daseke that complements our longer-term vision, all of which we intend to share in more detail during our Investor Day, which we are tentatively slating for early fall. That said, what I can tell you is that it answers some of the fundamental questions around the value proposition of our consolidation strategy offering up a consolidated Shared Service Center model that'll drive efficiencies in the back-ended offices and provide some additional rationalization over time of our OpCo stable.

This next phase of inter-OpCo consolidation, however, will be carefully and thoughtfully executed with a keen eye on complement cultures and driven by strategic fit as opposed to the vintage 2019-2020 consolidations, which were generally done in an effort to salvage the brand and customer relationships of underperforming OpCos.

As discussed briefly on our last call, we will be undertaking a comprehensive overhaul of our system staff not only aimed at ensuring efficiencies across our enterprise but equally as important getting accurate insightful real-time data into the hands of our decision makers.

Moving down the slide, institutionalizing our company will be grounded in the fundamental shift of our mindset from one that focuses on the performance and capabilities of a single OpCo to one that unlocks the power of our entire network. We are rebuilding the business that function as the network operation, whereby we are able to better leverage the scale, capabilities and footprint of our entire platform to better service our customers. To help facilitate a more efficient shift, we have, among other things, established a number of councils and teams consisting of functional and cross-functional leaders from our corporate center and our OpCos.

These teams are closely working with senior leadership and a newly formed OpCo CEO Council and they have been tasked with the identification and prioritization of high impact initiatives and best-in-class vendors and then driving the implementation and adoption of those priorities across the enterprise. Examples of just some of the functional areas represented by these teams include safety, maintenance, procurement and business analytics.

Lastly, with respect to growth, as Jason mentioned a moment ago, we announced a very important win with refinancing our term loan this quarter. With the cash we have on hand, our upsized $150 million revolver and this new term loan facility, we have the financial wherewithal to do some very transformational things on the M&A front, coupled out with our ability to tuck-in OpCos and approach that successfully proven out during our 2019-2020 integration efforts. And it creates an exciting equation for strategic growth vis-a-vis this tuck-in strategy.

Additionally, we are building out longer-term sustainable fleet capabilities that will help drive organic growth with a renewed emphasis on third-party brokerage and a more coordinated network based initiatives focused on private dedicated sole source fleet services. As I've mentioned, we expect to be in a position in the coming months to share or redefine multi-year vision for Daseke's future with all of you, during which we will provide a greater breadth and depth around our strategy and playbook for organic and strategic growth among other things.

With that though, I'd like to conclude our prepared remarks this morning and I'm excited to turn the call over to the operator for your questions. Kathy?

Questions and Answers:

Operator

[Operator Instruction] And your first question is from Ryan Sigdahl of Craig-Hallum Capital.

Ryan Sigdahl -- Craig-Hallum Capital -- Analyst

Good morning, guys. Thanks for taking my questions.

Jonathan Shepko -- Interim Chief Executive Officer

Hey, Ryan.

Ryan Sigdahl -- Craig-Hallum Capital -- Analyst

Curious I know it's somewhat apples and oranges between you guys in the other public trucking companies. But industry trends are accelerating, most of them, again different trends and sectors, but most of them beat and raised, you guys reiterated your guidance a little more cautiousness kind of on the commentary. I guess, can you really walk through the differences and where you guys are seeing more headwinds than others?

Jonathan Shepko -- Interim Chief Executive Officer

Yeah. Yeah, I'm happy to hit that real quick, Ryan. So, I think-the way I think about it, it's important to kind of remind everyone about kind of the cadence that we've had here because there's been a lot of moving pieces in the Daseke's story over the last 18 to 24 months. And so, with the divestiture of the Aveda business and with really disproportionately strong wind energy market that we saw last year, it's important to kind of refresh everyone on how those things affect the earnings cadence for our business.

And so, if you think about it, really the 2019 kind of normalized adjusted EBITDA was about $155 million. And last year, we had about $178 million adjusted EBITDA, out of which we highlighted $22 million was a net benefit from that wind energy and high security cargo tailwinds. And so, when you look at it that way you had kind of $155 million in '19, $156 million on an -- I'm using air quotes here, adjusted basis for 2020. And our guide is kind of $165 million to $175 million for 2021. We knew we were going to have some insurance headwinds that we kind of highlighted to you guys in that roughly $8 million to $10 million headwind range that was factored into that. So when you think about all those different puts and takes, the $165 million to $175 million really represents a pretty meaningful and somewhat aggressive target.

And so, I think laid it out like that's important for people to have the context of kind of a stretch that we're placing on the organization this year, but we feel really good about it. We wouldn't have put that number out there. We didn't think we could achieve it. It's going to be a stretch or it's going to be a lot of hard work to get there to kind of overcome some of those unusually beneficial things that we saw last year. But with the COVID recovery that we're seeing, the strengthening that we're seeing in a lot of construction-related verticals, in the munitions area, we're really able to kind of overcome that year-over-year headwind on both the insurance and on the wind energy kind of softness.

And so, I do think it's important to kind of lay those bread crumbs out for everyone to kind of reiterate kind of some of the -- and there has been a lot of moving pieces in the Daseke's story. And so hopefully that helps kind of paint the picture of while we didn't necessarily -- it was a beat, but it wasn't a raise.

It's important that people understand the context of why. And we're rolling into the second quarter, which is typically Q2 and Q3 are our stronger quarters and we'll know a lot more here in the next three months about how the year is looking to shape up and hopefully second quarter will be a little bit even more optimistic than we are now.

Ryan Sigdahl -- Craig-Hallum Capital -- Analyst

Yeah. Couple other perspectives tacking on to Jason's comments and appreciate you acknowledging that, look, it's difficult to really have an apples to apples comparison here because I mean, we've got to understand that we look at earnings calls commentary from the analyst community as earnings have come out for our industry. And the asset-light guys are having understandably a great year, given where spot rates are, their ability to kind of flex that take advantage of the prevailing rate environment.

The asset heavy guys -- look, for a lot of those guys, if you look at the end markets that they service, I mean, it's been a tremendous boon for carriers servicing consumer facing verticals with e-commerce, e-retail, pull forward and some of the other COVID tailwinds Jason referenced. And so, we're -- as we look ahead, you look at one of the asset-light guys that shares comment in markets industrial facing end markets, mentioned that they saw their flatbed business up 5% year-over-year.

If you look at that some of the other data points really comparing flatbed segments within some of our peers, we're absolutely holding our ground, it's not exceeding and over performing relative to some of those data points. And I think the other thing here that some of our peers have talked about is the weather impact in Q1. For us, I mean, we're live load and unload versus the van guys that are drop and hook. So we think about our drivers out there in minus 10, minus 20, minus 30 degree weather tarps in their belts and cables and everything else, trailers are frozen over and it shuts us down. So it had a meaningful impact -- noteworthy impact in the storm, winter storm Uri, some of the other regional storms that came through in Q1, absolutely hit us around.

And I think the other point that Jason touched on in his monologue in our earnings call, which was really that the rightsizing that went on going into 2020 on the fleet side, I think. We took out nearly 400 trucks. I mean, those were obviously company trucks that had disproportionately high margin profile [Indecipherable] owner-operated no fleet trucks. So it hit us a lot more and it was the right thing to do at the time and it was one of the reasons we outperformed last year when everyone else get knocked around a bit with COVID. But we did it for efficiencies, better utilization, pulling down our fleet age and we'll look to add 60% or so of those trucks back on -- those 400 trucks are still back on really in Q2 and Q3 tying back to Jason's point, which is really peak season for us.

And what that's going to do is, it's going to provide a better maintenance profile. It provides our drivers with better safety features, better amenities, these newer trucks are better for the environment, most are SmartWay compliant. So, as you look at our capex then which is concentrated really in Q2, Q3 as we shift on season, start to have some of these new trucks come back into our fleet and met our fleet size and looking at what should continue to be a strong rate environment, we feel really good about the coming quarters. Helpful. Specifically on specialized, I get the year-over-year comps in some of the unusual good guys last year, but we've seen kind of rates sequentially declining each of the last couple of quarters here, I guess Q2 going forward what the visibility you have, do you think those trends continue or can we, at least on a sequential basis kind of relative to a more normalized Q1 here, start indicating up similar to kind of the flatbed trends on a lag?

Jason Bates -- Executive Vice President and Chief Financial Officer

Yeah. I mean, Ryan, the specialized rates are going to be tricky for the next two or three quarters from a comparable basis, because that was really when the wind energy. So we saw a little bit in Q1 and then in Q2 and especially in Q3, it was really strong. And those rates are -- as you know, the way that business is, it's not about the rate per mile, it's about the rate for the move, that the overall payment for the move. And they're usually not really long mileage moves. And so those rates are unusually high and skew those data points.

And so, I think it's important to keep that in mind that those Q2 and Q3 are really tough comps from a rate perspective. And that -- we really won't be normalized, again using air quotes on that kind of rate normalized rate trend until we get past those periods.

Ryan Sigdahl -- Craig-Hallum Capital -- Analyst

But what about specifically kind of sequentially use Q1 felt like more of a normal. I get the year-over-year ones, but on a sequential basis, can we work higher from here?

Jason Bates -- Executive Vice President and Chief Financial Officer

Yeah. I think you should see us trend upward from a rate perspective in the specialized and flatbed segments from Q1 as we move forward.

Ryan Sigdahl -- Craig-Hallum Capital -- Analyst

Good. CEO search, I don't believe I got an update there, can you give one? And then secondly on the stock buyback, I didn't see anything, but have you guys started to execute on that in the quarter or post quarter here?

Jonathan Shepko -- Interim Chief Executive Officer

Sure. Sure, Ryan. On the CEO search, just a couple of comments on that. So, the search is ongoing. We don't have any material updates at this time. We expect to have an announcement on or before our next earnings call certainly. And I think while we all look forward to next phase of leadership, look, I'd like to be clear from my perspective, from our senior leadership teams' perspective, from the Board's perspective, things are moving full steam ahead.

As mentioned on our last call, I'd slide into this role, because in my experience showing the operating committee in 2019 and 2020, I worked closely with Brian Bonner, the Executive Chairman at the time to architect the turnaround plan. And I have a lot of legacy with the company. And I'm always saying that because I want to reinforce that I'm not simply keeping the seat warm. I'm pushing -- the team is pushing and, look, we're all intensely focused on executing our vision and strategic plan while managing the opportunities ahead. It's the momentum that we're seeing hopefully, you're seeing it, it's the strong teams we have in place of corporate. It's the strong teams we have in place with the OpCos that are allowing the Board to be much more methodical around the search process.

Jason Bates -- Executive Vice President and Chief Financial Officer

Yeah. And I'll hit the second part of your question there about the share repurchase program. So, as a reminder, we did put into place -- there was a share of cooperation agreement entered into at the end of last year between Don and Phil [Phonetic] in the Board. And in conjunction with that, there was an agreement to do a $3 million share repurchase.

There has been a lot of moving pieces that have been going on specifically and around the 10-K/A and some of the other things that have kind of necessitated us to kind of wait until we got all that done, so that we can then get out of the blackout period and then put a 10b5-1 in place but we look to move forward on that here now that we've got all that behind us and we'll begin pursuing that share repurchase program that we had committed to in some form of fashion.

Ryan Sigdahl -- Craig-Hallum Capital -- Analyst

Great. I'll hop back in the queue. Good luck, guys.

Jonathan Shepko -- Interim Chief Executive Officer

Thanks, Ryan.

Operator

[Operator Instructions] Your next question is from Greg Gibas of Northland Securities.

Greg Gibas -- Northland Securities -- Analyst

Hey. Good morning, guys. Thanks for taking the questions. I guess first a follow-up on the revenue dynamics there. You mentioned the lower freight volumes from fleet downsizing, but that obviously being partially offset by the improving freight rates. So, I guess, just wondering if you could discuss maybe what revenue growth would have looked like, if you back out the downsizing on the fleet size. And I guess, along those lines, what those fleet reinvestment budget look like this year and maybe the cadence of that spend for the year?

Jason Bates -- Executive Vice President and Chief Financial Officer

Yeah. So I think our guide on kind of capex, we haven't really changed at this juncture, we still believe that the ranges that we put out at the outset of the year is still good ranges to use. And from a cadence perspective, as Jonathan I think alluded to earlier, you're going to see more of that in the second quarter and third quarter with a little bit less in the fourth quarter that is just from a cadence and flow on how that works, which kind of aligns with kind of our business trends anyway.

With regard to what the kind of revenue growth or earnings profile might have looked like, absent the shedding of the business, I think if you go and you look at kind of the truck count trends and you can see what kind of reductions we had in truck counts, that hopefully will help you depending on kind of what assumptions you're assuming there with regard to revenues and profitability that will help inform you about how strong the performance really was in the quarter.

With regard to get to an apples-to-apples basis and I appreciate, Greg, that the challenge right because there so many moving pieces in our business over the last 18 to 24 months. It is hard to see, and that's why we want to make sure we take the time to highlight for you guys that the business is actually doing really good. And when you look at it on an apples-to-apples basis, which is tough to get to, we're seeing really strong rate environment, we're seeing really good execution in the field, we're seeding trucks, getting good rate increases with customers. There are some cost headwinds that we got to be mindful of, right, on the insurance front, on the driver front, but overall the business is actually trending really well.

Greg Gibas -- Northland Securities -- Analyst

Great. Yeah. That's helpful. And I guess, given you maintain the full-year guidance, I guess I just wanted to ask and maybe this isn't the case but if any of your end market verticals are performing differently than expected so far this year?

Jason Bates -- Executive Vice President and Chief Financial Officer

Yeah. I would say, we had highlighted the fact that we expected wind energy to be down, aerospace is still down. If -- I mean, honestly I think we would have hoped it would have been doing a little bit better right now than it is, so that when I guess is a little bit of a disappointment or different than our expectation. But on the flip side of that, several of these construction verticals are doing very well. And I would say, it's better than we expected. When you look at roofing and lumber and flat glass and steel, some of these things are doing really, really well. And the other one that's kind of been up really pleasant surprise, to be honest with you, is munitions. Munitions has been killing it here, pun intended, in the first quarter and hopefully that trend continues.

Greg Gibas -- Northland Securities -- Analyst

Great. Yeah. That's good to hear. Regarding your efforts to continue streamlining the business and then maximizing efficiency, I recognize it's always an ongoing process. But where are you finding near-term opportunities there? You talked a little bit about in your prepared remarks. But for improved optimization, what kind of financial impact might we see this year or maybe more near-term?

Jonathan Shepko -- Interim Chief Executive Officer

Yeah. Look, I'll give you some high level points, don't need to be circumspect on this, but this is something we'll provide quite a bit of detail on in the coming months. But our efforts to refine systems and processes just to hit some of these efficiencies, it's something we've been focused on for a while. You all have been focused on it for a while and we're addressing it. We don't think the answer is necessarily centralizing everything and corporate pulling everything up to the membership, but a hybrid approach that provides the benefits. It really does a better job at purchasing the talent depth we have in the field and our OpCo is part of that playbook.

And a lot of this is going to be driven by systems. I mean I think that's the fulcrum for a lot of the change within our organization right now as these overhauling the system stack and providing a system that's capable of driving through some of these efficiencies through mid and back office, providing the ability to leverage some of the insights, perspectives and better decision making for the front office. That's where a lot of this is going to come.

Greg Gibas -- Northland Securities -- Analyst

Okay, great. Thank you.

Jason Bates -- Executive Vice President and Chief Financial Officer

Thank you, Greg.

Operator

And that is all the time we have allocated for Q&A today. I will now turn the call back to Jonathan Shepko for closing remarks.

Jonathan Shepko -- Interim Chief Executive Officer

Yeah. Thank you, Kathy. Thank you all for your time and support today. We look forward to speaking with you again soon. And everyone enjoy their weekend.

Jason Bates -- Executive Vice President and Chief Financial Officer

Thanks everyone.

Operator

[Operator Closing Remarks]

Duration: 36 minutes

Call participants:

John Michell -- Vice President, Treasury and Investor Relations

Jonathan Shepko -- Interim Chief Executive Officer

Jason Bates -- Executive Vice President and Chief Financial Officer

Ryan Sigdahl -- Craig-Hallum Capital -- Analyst

Greg Gibas -- Northland Securities -- Analyst

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