What happened
Shares of Daseke (DSKE -0.12%) jumped nearly 13% by 3 p.m. EST on Monday. Driving the trucking company's rally was its fourth-quarter results and outlook for the coming year.
So what
Daseke's revenue grew by 3.5% in Q4 to $408.2 million, which exceeded analysts' expectations by $11.1 million. Meanwhile, adjusted net income improved from $13 million, or $0.18 per share, in last year's Q4 to $15.7 million, or $0.25 per share. That blew past the analysts' consensus estimate of $0.14 per share. The company also reported improving free cash flow.
A big driver of the company's outperformance was the strength of its specialized solutions segment. Revenue grew 10.9% in Q4 to $242.9 million. The company also benefited from its share repurchase program. It bought back a whopping 30% of its stock during Q4.
In addition, Daseke provided its outlook for 2023. CEO Jonathan Shepko stated, "Our outlook does acknowledge the slowing freight rate environment, ongoing inflationary pressures, and a still-recovering supply chain." Even with those headwinds, it sees flight to low single-digit revenue growth this year and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) close to last year's record. Shepko also noted,
We continue to have conviction in the ability of our ongoing transformation initiatives to largely offset near-term headwinds, and with the industry expecting a near-term inflection in the freight rate environment, we would expect additional upside to our earnings profile during the expansionary leg of the next impending cycle.
Now what
Daseke expects to shift gears on its capital allocation strategy this year. It will pivot from returning capital to investors toward enhancing its balance sheet and making select acquisitions. The company believes this strategy will drive operational excellence and shareholder value in 2023 and beyond. Its success in delivering on those goals and the eventual return to an expansionary cycle could give the stock more fuel to continue rising.
