Daseke, Inc.

Good morning, everyone, and thank you for joining today's conference call to discuss Dufsky's financial results for the first quarter, ended March 31st, 2023. With us today are Jonathan Shepko, Chief Executive Officer and Board Member, Aaron Coley, Executive Vice President and Chief Financial Officer, and Adrian Griffin, Vice President of Investor Relations and Treasurer. After their prepared remarks, the management team will open the call for a question and answer session. As a reminder, you may now download a PDF of the presentation slides that will accompany the remarks made on today's conference call as indicated in the press release issued earlier today. You may access these slides in the investor relations section of the DOFCU's website. I would like to now turn the call over to Adrienne Griffin, who will read the company's safe harbor statement that provides important cautions regarding forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Adrienne, please go ahead.

Adrienne Griffin Thank you, Michaela, and good morning, everyone. Slide 2 of today's presentation contains our safe harbor and non-GAAP statement. Today's presentation also contains forward-looking statements 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, including those with respect to revenue, earnings, performance, strategy, prospects, and other aspects of JASC'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 material from our expectations and projections. I encourage you to read our filing to the Security and Exchange Commission for a discussion of the risks that can affect our business, and not to 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 U.S. generally accepted accounting principles or GAAPs, including and not limited to adjusted EBITDA, adjusted EBITDA margin, adjusted operating ratios, adjusted operating income, adjusted net income or loss, and free cash flow. 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 Dasky website, www.dasky.com. In terms of the structure of our call today, I will start by turning the call over to Jonathan Shepko, who will review our business operations and the progress we're making as we execute against our key strategic priorities. Aaron Coley will then provide an update on our recent capital allocation actions and our first quarter results. Jonathan will conclude our prepared remarks with an updated 2023 outlook before we open the line for your questions. With that, I'll hand the call over to Jonathan.

Good morning, everyone. Thank you for joining our call today. At this point in this quarter's reporting cycle, it's likely no surprise to our listeners that our industry is facing weaker demand than many of us were forecasting at the beginning of this year. Smaller operators are experiencing near break-even spot rates, prompting an exit of capacity from the industry, with net revocations maintaining at record high levels. While at the same time, remaining capacity is being reallocated into the strongest end markets, resulting in rate pressure across nearly every industry sub-vertical. Compound this with persistent inflationary headwinds, most notably maintenance costs and driver pay, with driver pay typically lagging in response to the prevailing rate environment. The cumulative effect of weaker demand, lower prices, and inflationary headwinds set the backdrop for what is framing up to be a challenging year. Despite the strain these current challenges place on our sector's fundamentals, I'd like to contextualize where we are at as a company. First, 2022 was a record year for Dasky. It was notably the third consecutive year of record financial performance for our company, demonstrating the initial success of our transformation efforts and better preparing us for this year's challenges. Despite a drastically different rate environment in this first quarter of 2023, we reported a favorable $46.8 million of adjusted EBITDA. In fact, this was the second best adjusted EBIT.print for a first quarter in our company's history, and only 2.8 million shy of our record, achieved in the more frothy first quarter of 2022. Next, I'd like to point out the cross-cycle durability of our operating model, which is functioning as designed. Within our flatbed segment, which generally experiences more volatility in slower freight environments, we noted several positive indicators, including relatively flat load count with an increased length of haul, increased percentage of company load miles as a percentage of total miles, and reduced deadhead, each of which helped us drive adjusted EBITDA margin improvement as compared to not only the first quarter of 2022, but also the fourth quarter of 2022. These productivity improvements helped us stave off the full impact of the rate declines versus the prior year period. During the first quarter of 2023, our specialized segment delivered adjusted EBITDA and adjusted EBITDA margin flat to the prior year quarter. a substantial accomplishment in light of the macro environment. Lastly, I'd like to highlight the idiosyncratic opportunities still available to Dasky as we continue with our transformation. In my recent letter to shareholders, we introduced the name of these collective transformational work streams as One Dasky. One Dasky will leverage technology and facilitate the sharing of best practices while creating a more cost-efficient, durable business model that consistently delivers profitable growth across future cycles. It's a series of initiatives intended to unite the teams across the company around the culture of close coordination and continuous improvement. We are resequencing our transformation initiatives to pull forward these system deployments and extend out the operating subsidiary integrations to improve the efficiency of the integration process and the traction of the post-integration efforts, providing more sustainable long-term cost and revenue synergies. Over the coming quarters, we continue to expect these initiatives will provide cumulative incremental operating income in excess of $25 million, with additional cost and revenue synergy opportunities still available thereafter as we focus on the optimization of our business. While we do expect our one-dasky efforts to partially offset the collective headwinds in 2023 and still contribute approximately $15 million in support of adjusted EBITDA, as referenced on our last earnings call, our resequencing of these workstreams is expected to shift realization of the totality of these run rate synergies slightly from late 2023 to mid-2024. With that, I'll hand the call over to Aaron, and we're closing our prepared remarks. Aaron?