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EX-99.2 - EX-99.2 - Daseke, Inc.a18-5227_7ex99d2.htm
EX-99.1 - EX-99.1 - Daseke, Inc.a18-5227_7ex99d1.htm
EX-23.1 - EX-23.1 - Daseke, Inc.a18-5227_7ex23d1.htm
8-K/A - 8-K/A - Daseke, Inc.a18-5227_78ka.htm

Exhibit 99.3

 

On December 1, 2017, Daseke TSH LLC (“TSH”), an indirect wholly owned subsidiary of Daseke, Inc. (“Daseke”), and Sidney T. Stanley 2007 Family Irrevocable Gift Trust, Sidney Stanley, Craig Stanley, Gregg Stanley, Sara Beth Sheehan, Craig T. Stanley 2012 GST-Exempt Family Trust, Gregg F. Stanley 2012 GST-Exempt Family Trust, and Sara Beth Sheehan 2012 GST-Exempt Family Trust entered into a Purchase and Sale Agreement pursuant to which TSH purchased 100% of the outstanding equity interests of (1) Tennessee Steel Haulers, Inc., a Tennessee corporation, (2) Alabama Carriers, Inc., a Tennessee corporation, (3) Fleet Movers Inc., a Tennessee corporation (collectively “TSH & Co.”), for total consideration of $74.9 million in cash and 972,680 shares of Daseke common stock with a value of approximately $12.0 million (the “Transaction”).

 

TSH & Co. has a 1,100 flatbed-focused fleet with a 100% asset-light operating model and operations throughout the East Coast and Southeast as well as Mexico.  TSH & Co. generated $213.4 million and $171.8 million in revenues for the year ended December 31, 2016 and for the nine months ended September 30, 2017, respectively.

 

The unaudited pro forma combined financial statements have been presented for illustrative purposes only and are not intended to represent or be indicative of what the combined company’s financial position or results of operations actually would have been had the Transaction been completed as of the dates indicated. In addition, the unaudited pro forma combined financial information does not purport to project the future financial position or operating results of the combined company. The unaudited pro forma combined financial information does not include the impact of any revenue, cost or other operating synergies that may result from the Transaction.

 

The pro forma adjustments are based upon information and assumptions available at the time of the filing of the Current Report on Form 8-K/A to which these unaudited pro forma combined financial statements are filed as Exhibit 99.3 (the “Current Report”). The pro forma combined financial information is derived from and should be read in conjunction with (i) the consolidated financial statements and related footnotes for the year ended December 31, 2016 as set forth in Daseke’s Current Report on Form 8-K/A filed March 16, 2017, (ii) the unaudited consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations, which appear in Daseke’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, (iii) the combined  financial statements of TSH & Co., which are filed as Exhibits 99.1 and 99.2 to the Current Report.

 



 

DASEKE, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

As of September 30, 2017

(in thousands)

 

 

 

Daseke, Inc.

 

TSH & Co

 

Pro Forma
Adjustments

 

Footnote
Reference

 

Pro Forma
Combined

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

112,510

 

$

415

 

$

63,700

 

(3)(8)(9)(10)

 

$

176,625

 

Accounts receivable, net

 

106,081

 

21,674

 

 

 

 

127,755

 

Total other current assets

 

33,628

 

5,234

 

 

 

 

38,862

 

Total current assets

 

252,219

 

27,323

 

63,700

 

 

 

343,242

 

Property and equipment, net

 

369,199

 

27,143

 

4,432

 

(1)(7)

 

400,774

 

Intangible assets, net

 

77,541

 

 

 

 

 

77,541

 

Goodwill

 

139,889

 

 

56,901

 

(4)

 

196,790

 

Other long-term assets

 

18,573

 

3,375

 

 

 

 

21,948

 

Total assets

 

$

857,421

 

$

57,841

 

$

125,033

 

 

 

$

1,040,295

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Checks outstanding in excess of bank balances

 

$

1,479

 

$

 

$

 

 

 

$

1,479

 

Accounts payable

 

12,493

 

1,364

 

 

 

 

13,857

 

Accrued expenses and other liabilities

 

24,660

 

5,544

 

5,455

 

(11)

 

35,659

 

Accrued payroll, benefits and related taxes

 

12,027

 

 

 

 

 

12,027

 

Accrued insurance and claims

 

10,248

 

 

 

 

 

10,248

 

Current portion of long-term debt

 

26,514

 

4,840

 

1,491

 

(10)

 

32,845

 

Total current liabilities

 

87,421

 

11,748

 

6,946

 

 

 

106,115

 

Line of credit

 

 

600

 

(600

)

(3)

 

 

Long-term debt, net of current portion

 

395,841

 

4,721

 

144,621

 

(10)(12)

 

545,183

 

Deferred tax liabilities

 

114,900

 

75

 

9,127

 

(2)(13)

 

124,102

 

Other long-term liabilities

 

1,342

 

 

 

 

 

1,342

 

Total liabilities

 

599,504

 

17,144

 

160,094

 

 

 

776,742

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

Series A convertible preferred stock

 

65,000

 

 

 

 

 

65,000

 

Common Stock

 

4

 

2

 

(2

)

(5)(6)

 

4

 

Additional paid-in-capital

 

222,102

 

5,580

 

6,420

 

(5)(6)

 

234,102

 

Retained earnings (accumulated deficit)

 

(30,221

)

35,115

 

(41,479

)

(5)

 

(36,585

)

Accumulated other comprehensive income (loss)

 

1,032

 

 

 

 

 

1,032

 

Total stockholders’ equity

 

257,917

 

40,697

 

(35,061

)

 

 

263,553

 

Total liabilities and stockholders’ equity

 

$

857,421

 

$

57,841

 

$

125,033

 

 

 

$

1,040,295

 

 

See accompanying notes to the Unaudited Pro Forma Combined Financial Statements.

 



 

DASEKE, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Nine Months Ended September 30, 2017

(in thousands, except share and per share amounts)

 

 

 

Daseke, Inc.

 

TSH & Co

 

Pro Forma
Adjustments
3(a)

 

Footnote
Reference

 

Pro Forma
Combined

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Freight

 

$

446,454

 

$

142,090

 

(27,335

)

 

 

$

561,209

 

Brokerage

 

83,723

 

4,575

 

30,773

 

 

 

119,071

 

Logistics

 

10,571

 

6,996

 

(5,318

)

 

 

12,249

 

Fuel surcharge

 

48,331

 

18,159

 

(2,377

)

 

 

64,113

 

Total revenue

 

589,079

 

171,820

 

(4,257

)

 

 

756,642

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and employee benefits

 

174,253

 

9,063

 

 

 

 

183,316

 

Fuel

 

64,423

 

 

10,000

 

 

 

74,423

 

Operations and maintenance

 

86,332

 

2,884

 

1,185

 

 

 

90,401

 

Communications

 

1,491

 

 

 

 

 

1,491

 

Purchased freight

 

148,945

 

138,680

 

(13,684

)

 

 

273,941

 

Administrative expenses

 

24,019

 

2,903

 

(1,211

)

 

 

25,711

 

Sales and marketing

 

1,425

 

 

 

 

 

1,425

 

Taxes and licenses

 

7,855

 

1,073

 

 

 

 

8,928

 

Insurance and claims

 

15,516

 

5,714

 

(547

)

 

 

20,683

 

Acquisition-related transaction expenses

 

2,255

 

 

 

 

 

2,255

 

Depreciation and amortization

 

53,758

 

5,608

 

(287

)

(1)

 

59,079

 

(Gain) loss on disposition of revenue property and equipment

 

(513

)

703

 

 

 

 

190

 

Total operating expenses

 

579,759

 

166,628

 

(4,544

)

 

 

741,843

 

Income from operations

 

9,320

 

5,192

 

287

 

 

 

14,799

 

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

(130

)

(244

)

 

 

 

(374

)

Interest expense

 

21,064

 

341

 

7,805

 

(2)(3)

 

29,210

 

Write-off of unamortized deferred financing fees

 

3,883

 

 

 

 

 

3,883

 

Other

 

(247

)

(37

)

 

 

 

(284

)

Total other expense

 

24,570

 

60

 

7,805

 

 

 

32,435

 

Loss before provision (benefit) for income taxes

 

(15,250

)

5,132

 

(7,518

)

 

 

(17,636

)

Provision (benefit) for income taxes

 

(3,448

)

 

(539

)

(5)

 

(3,987

)

Net income (loss)

 

(11,802

)

5,132

 

(6,979

)

 

 

(13,649

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Unrealized income (loss) on interest rate swaps

 

52

 

 

 

 

 

52

 

Foreign currency translation adjustments

 

1,032

 

 

 

 

 

1,032

 

Comprehensive income (loss)

 

$

(10,718

)

$

5,132

 

(6,979

)

 

 

$

(12,565

)

Net income (loss)

 

(11,802

)

5,132

 

(6,979

)

 

 

(13,649

)

Less dividends to preferred stockholders

 

(3,725

)

 

 

 

 

(3,725

)

Net loss attributable to common stockholders

 

$

(15,527

)

$

5,132

 

(6,979

)

 

 

$

(17,374

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

$

(0.45

)

 

 

 

 

 

 

$

(0.49

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

34,790,861

 

 

 

972,680

 

(4)

 

35,763,541

 

 

See accompanying notes to the Unaudited Pro Forma Combined Financial Statements.

 



 

DASEKE, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2016

(in thousands, except share and per share amounts)

 

 

 

Daseke, Inc 12/31/16

 

TSH & Co 12/31/2016

 

Pro Forma
Adjustments
4(a)

 

Footnote
Reference

 

Pro Forma
Combined

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Freight

 

$

517,861

 

$

177,834

 

(37,512

)

 

 

$

658,183

 

Brokerage

 

87,410

 

6,200

 

38,926

 

 

 

132,536

 

Logistics

 

 

9,167

 

(7,190

)

 

 

1,977

 

Fuel surcharge

 

46,531

 

20,178

 

(2,633

)

 

 

64,076

 

Total revenue

 

651,802

 

213,379

 

(8,409

)

 

 

856,772

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Salaries, wages and employee benefits

 

197,789

 

13,631

 

 

 

 

211,420

 

Fuel

 

66,865

 

 

11,760

 

 

 

78,625

 

Operations and maintenance

 

96,100

 

4,861

 

1,337

 

 

 

102,298

 

Communications

 

1,618

 

 

 

 

 

1,618

 

Purchased freight

 

154,054

 

171,788

 

(19,296

)

 

 

306,546

 

Administrative expenses

 

25,250

 

3,827

 

(1,759

)

 

 

27,318

 

Sales and marketing

 

1,743

 

 

 

 

 

1,743

 

Taxes and licenses

 

9,222

 

1,476

 

 

 

 

10,698

 

Insurance and claims

 

19,114

 

7,584

 

(451

)

 

 

26,247

 

Acquisition-related transaction expenses

 

25

 

 

 

 

 

25

 

Depreciation and amortization

 

67,500

 

7,141

 

(369

)

(1)

 

74,272

 

(Gain) loss on disposition of revenue property and equipment

 

(116

)

633

 

 

 

 

517

 

Impairment

 

2,005

 

 

 

 

 

2,005

 

Total operating expenses

 

641,169

 

210,941

 

(8,778

)

 

 

843,332

 

Income from operations

 

10,633

 

2,438

 

369

 

 

 

13,440

 

Other (income) expense:

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

(44

)

(315

)

 

 

 

(359

)

Interest expense

 

23,124

 

514

 

10,386

 

(2)(3)

 

34,024

 

Other

 

(331

)

(166

)

 

 

 

(497

)

Total other expense

 

22,749

 

33

 

10,386

 

 

 

33,168

 

Loss before provision (benefit) for income taxes

 

(12,116

)

2,405

 

(10,017

)

 

 

(19,728

)

Provision (benefit) for income taxes

 

163

 

(199

)

99

 

(5)

 

63

 

Net income (loss)

 

(12,279

)

2,604

 

(10,116

)

 

 

(19,791

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

Unrealized income (loss) on interest rate swaps

 

62

 

 

 

 

 

62

 

Comprehensive income (loss)

 

$

(12,217

)

$

2,604

 

(10,116

)

 

 

$

(19,729

)

Net income (loss)

 

(12,279

)

2,604

 

(10,116

)

 

 

(19,791

)

Less dividends to preferred stockholders

 

(4,770

)

 

4,770

 

(6)

 

 

Net loss attributable to common stockholders

 

$

(17,049

)

$

2,604

 

(5,346

)

 

 

$

(19,791

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

$

(117.18

)

 

 

 

 

 

 

$

(0.63

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted

 

145,495

 

 

 

31,109,296

 

(4)(6)

 

31,254,791

 

 

See accompanying notes to the Unaudited Pro Forma Combined Financial Statements.

 



 

DASEKE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

 

NOTE 1 — Purchase Price

 

The estimated purchase price and the allocation of the estimated purchase price discussed below are preliminary, and subject to certain post-closing adjustments. A final determination of required adjustments will be made based upon final evaluation of the fair value of tangible and identifiable intangible assets acquired and liabilities assumed.

 

The following table summarizes the purchase price allocation adjustments of the assets acquired and liabilities assumed. The final allocation of the purchase price will be determined at a later date and is dependent on a number of factors, including the final evaluation of the fair value of tangible and identifiable intangible assets acquired and liabilities assumed. Final adjustments, including increases and decreases to depreciation and amortization resulting from the allocation of the purchase price to amortizable tangible and intangible assets, may be material. Adjustments to the fair value of tangible and intangible assets acquired and liabilities assumed will impact the value of goodwill recognized in the Transaction, and the adjustment to goodwill may be material. For illustrative purposes, the preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed was as follows:

 

Cash

 

$

284

 

Accounts receivable

 

20,207

 

Prepaid & Other

 

10,421

 

Other assets

 

19,049

 

Property and equipment

 

8,705

 

Goodwill

 

56,901

 

Deferred tax liability

 

(9,742

)

Total liabilities

 

(13,894

)

 

 

$

91,931

 

 

NOTE 2 — PRO FORMA ADJUSTMENTS, AS PRESENTED ON THE SEPTEMBER 30, 2017 BALANCE SHEET

 

The pro forma adjustments are based upon information and assumptions available at the time of the filing of the Current Report. The unaudited pro forma combined balance sheet includes adjustments that are factually supportable and directly attributable to the transaction regardless of whether they will have a continuing impact or were non-recurring.

 

Represents adjustments for the Transaction as follows:

 

1.              Represents an increase of $4.1 million in property and equipment to appraised values.

 

2.              Represents increase in deferred tax liabilities due to the increase in property and equipment values and deferred taxes on non-deductible goodwill of $9.7 million.

 

3.              Represents the payoff of line of credit of $0.6 million.

 

4.              Recognition of the preliminary goodwill resulting from the pro forma allocation of the purchase price as if the Transaction had occurred using a preliminary goodwill estimate.  Goodwill resulting from the Transaction is not amortized, and will be assessed for impairment at least annually in accordance with ASC 350. The goodwill as a result of the Transaction is not deductible for income tax purposes.

 

5.              Represents adjustment to eliminate TSH & Co. common stock, additional paid-in capital, and retained earnings of $2 thousand, $5.6 million, and $35.1 million, respectively.

 

6.              Represents 972,680 shares of common stock issued to the sellers of TSH & Co. resulting in adjustments to common stock, and additional paid-in capital of $97 dollars and $12.0 million, respectively.

 

7.              Adjustment to reflect a decrease in accumulated depreciation of $287 thousand after the adjustment for the increase in fair value of property and equipment, reduced by the impact of adjustments to the remaining useful lives of the assets.

 

8.              Represents cash consideration paid in the transaction of $80.0 million.

 



 

DASEKE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

 

9.              Represents elimination of historical cash balances not received by Daseke in the transaction of $131 thousand.

 

Other adjustments are as follows:

 

10.       Represents increase in term loan of $150.0 million, net of deferred finance fees of $4.4 million and interest expense of $1.8 million, resulting in net cash of $143.8 million.

 

11.       Represents additional interest on the term loan advance at 6.5% of $5.5 million, net of $30 thousand interest expense on debt paid off in the Transaction.

 

12.       Adjustment to reflect amortization of deferred loan fees associated with the term loan advance of $.5 million.

 

13.       Adjustment to reflect $1.7 million tax benefit on the impact of pro forma adjustments, offset by $1.2 million of tax expense to reflect the conversion from Subchapter S to C corporations in the Transaction.

 

NOTE 3 — PRO FORMA ADJUSTMENTS, AS PRESENTED IN THE STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017

 

The unaudited pro forma combined statements of operations include adjustments which give effect to the events that are factually supportable, directly attributable to the Transaction, and are expected to have a continuing impact on Daseke and the Transaction on a consolidated basis.

 

(a)         Certain reclassifications have been made to the TSH & Co. historical combined statement of operations to conform to Daseke’s presentation.

 

Represents adjustments for the Transaction as follows:

 

1.              Represents adjustment to record a decrease in depreciation expense of $287 thousand on the purchase price allocation for the fair value of assets of TSH & Co. as adjusted for the remaining useful lives of the assets.

 

2.              Represents incremental interest expense of $7.3 million from the advance on Daseke’s term loan as if the advance occurred on January 1, 2016 partially offset by $30 thousand reversal of interest on existing TSH & Co. debt upon assumed refinance of debt on January 1, 2016 utilizing funds from the advance on the Daseke term loan.

 

3.              Represents amortization of $0.5 million of deferred finance fees incurred in term loan increase.

 

4.              Represents 972,680 shares of common stock issued to the sellers of TSH & Co.

 

5.              Represents $1.7 million tax benefit on the impact of pro forma adjustments, offset by $1.2 million of tax expense to reflect the conversion from Subchapter S to C corporations in the Transaction, calculated using Daseke’s effective tax rate of 22.6% for the nine months ended September 30, 2017.

 



 

DASEKE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

 

NOTE 4 — PRO FORMA ADJUSTMENTS, AS PRESENTED IN THE STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2016

 

The unaudited pro forma combined statements of operations include adjustments which give effect to the events that are factually supportable, directly attributable to the Transaction, and are expected to have a continuing impact on Daseke and the Transaction on a consolidated basis.

 

(a)         Certain reclassifications have been made to the TSH & Co. historical combined statement of operations to conform to Daseke’s presentation.

 

Represents adjustments for the Transaction as follows:

 

1.              Represents adjustment to record a pro forma decrease to depreciation expense of $369 thousand on the purchase price allocation for the fair value of assets of TSH & Co. as adjusted for the remaining useful lives of the assets.

 

2.              Represents incremental interest expense of $9.7 million from the advance on Daseke’s term loan as if the advance occurred on January 1, 2016 partially offset by $60 thousand reversal of interest on existing TSH & Co. debt upon assumed refinance of debt on January 1, 2016 utilizing funds from the advance on the Daseke term loan.

 

3.              Represents amortization of $0.7 million of deferred finance fees incurred on the term loan increase.

 

4.              Represents 972,680 shares of common stock issued to the sellers of TSH & Co.

 

5.              Represents $131 thousand tax expense on impact of pro forma adjustments, offset by $31 thousand tax benefit to reflect the conversion from Subchapter S to C corporations in the Transaction, calculated using Daseke’s effective tax rate of (1.3%) for the year ended December 31, 2016.

 

6.              Represents conversion of 145,495 shares of common stock and 64,500 shares of Series B Convertible Preferred Stock of pre-merger Daseke at a conversion of 144.2 shares for each share outstanding, resulting in 30,282,111 shares of common stock.  Dividends to preferred stockholders of $4.8 million were removed from the calculation of basic and diluted earnings per share due to the conversion of the Series B preferred stock to common.