Radiant Logistics, Inc. Price & Performance (RLGT)

In addition, past results are not necessarily an indication of future performance. I'd like to pass the call over to Radient's Founder and CEO Radiant, Thanks, Paul.

Good afternoon, everyone, and thank you for joining in on today's call. With the benefit of our diverse service offering, we continue to deliver solid financial results and generated $12,000,000 in adjusted EBITDA for our second fiscal quarter ended December 31, 2024, These results are generally ahead of results as well as our most recent previous quarter ended 09/30/2024. We continue to take great pride in our work to support relief related projects around the globe Our results this quarter reflect our support of our number of such projects including chartering 49 flights to bring approximately 8,000,000 units of IV fluid to The U. S. As a result of the national shortages resulting from Hurricane Milton. Notwithstanding these strong results for the quarter, we do expect our future near term results to continue to be challenged by market headwinds.

Near term results could also be further frustrated by the recently introduced tariffs with China, Mexico and Canada. As we head into our slowest seasonal quarter ended March 31. As previously discussed, we believe we are well positioned with a durable business model diverse service offering and strong balance sheet to navigate through these slower freight markets as we find our way back to more normalized market conditions. We continue to enjoy a strong balance sheet with approximately $20,000,000 of cash on hand no meaningful debt, and an untapped $200,000,000 credit facility. At the same time, we remain focused on delivering profitable growth through a combination of organic and acquisition initiatives and thoughtfully relevering our balance sheet through a combination of strategic operating partner conversions synergistic tuck in acquisitions and stock buybacks. Through this approach, we believe over time we will continue to deliver meaningful value for our shareholders operating partners and the end customers that we serve. We made good progress in this regard over this last quarter with the Act Logistics, The conversion of our Michigan based strategic operating partner, Focus Logistics, is combining with our existing Radian operations in Detroit, and the acquisition of TCV Transportation in St.

Louis, Missouri.

We believe these three transactions are representative of our broader pipeline of opportunities which includes both greenfield acquisitions those companies not currently part of our network as well as acquisition opportunities inherent in our agent based network where we can support our current operating partners in their exit strategies. We look forward to providing further updates as we continue to progress along these lines. With that said, I'll now turn it over to Todd Makehamber, our Chief Financial Officer to walk us through our detailed financial results and then we'll open it up for some Q and A. Thanks, Bon, and good afternoon, everyone. [indiscernible] will be discussing our financial results, including adjusted net income and adjusted EBITDA for the three and six months ended December 31, 2024. For the three months ended 12/31/2024, reported net income attributable to Radiant Logistics, of $6,467,000 on $264,500,000 of revenues or $0.14 per basic and $0.13 per fully diluted share. For the three months ended 12/31/2023, we reported net income attributable to Radiant Logistics of $985,000 on $201,000,000 of revenues or $0.02 per basic and fully diluted share. This represents an increase of approximately $5,420 of net income for the comparable prior year period or 556.5%.

Adjusted net income reported $10,695,000 for the three months ended 12/31/2024, compared to adjusted net income of $5,496,000 for the three months ended 12/31/2023. This represents an increase of approximately $5,199 or approximately 94.6% Adjusted EBITDA reported $12,016,000 for the three months ended 12/31/2024, compared to adjusted EBITDA of $7,708,000 for the three months ended 12/31/2023. This represents an increase of approximately $4,380 or approximately 55.9%. For the six months period, for the six months ended 12/31/2024, we reported net income attributable to Radiant Logistics of $9,843,000 on $468,100,000 of revenues or $0.21 per basic and $0.2 per fully diluted share.

The six months ended 12/31/2023 reported net income attributable to Radiant Logistics of $3,607,000 on 400 and hundred and $11,900,000 of revenues or $0.08 per basic and $0.07 per fully diluted share. This represents an increase of approximately $6,230 over the comparable year prior year period were 172.9%. Adjusted net income, we reported $1,800,000,578,000 dollars the six months ended December 31, 2024 compared to adjusted net income of $12,046,000 for the six months ended December 31, 2023. This represents an increase of approximately $6,532,000 or approximately 54.2%. For adjusted EBITDA, we reported $21,466.8000 for the six months ended 12/31/2024, compared to adjusted EBITDA of $16,874,000 for the six months ended 12/31/2023.

This represents an increase of approximately $4,594,000 or approximately 27.2%. With that, I will turn the call over to our moderator, to facilitate any Q and A from our callers.

Thank you. At this time, we'll be conducting a question and answer session. And the first question today is coming from Alper from TD count. Elliot, your line is All right. Yes. Thank you. This is Elliot on for Jason Seidl.

Maybe just starting off, you give more detail on maybe the outperformance in the December quarter? Was Milton the primary driver?

Maybe anything else you saw unusual about peak season or curious if you saw any pull forward in the market?

Sure. I'll take a crack at that. I think the conversation has start with kind of the diversity of our service offering in fact that we did have an opportunity to support a number of initiatives in and around Hurricane Milton that was the real driver in the out performance for the quarter. And we're appreciative for that do our best at temper the press release itself because it's still tough going out there and kind of this project activity is kind of helping us through the trough, but it's still kind of slow going. I do think as you were alluding to, there was some some a little bit of pull forward this quarter kind of in anticipation of tariffs. So we got a little bit of what I would call a modest bump there But more broadly, it's pretty tough out there for us and our competitors And we were just fortunate enough to have some pretty meaningful [indiscernible] Meaningful in terms of human impact and ultimately meaningful in terms of financial performance for us in and around supporting this IV fluid project. Okay. Great. And then wanted to ask about the acquisition of TCB you made in December.

You talk about the strategic rationale of acquiring an intermodal marketing company and maybe a ballpark of how we should think about the size of that business or maybe the margins versus your existing business?

Yes, sure. So this is a really a great question. Thank you for that. Just to kind of kind of provide some foundational comments to my response Back in 2015, we acquired another public company that was called Wheels Group. Which we rebranded as Radiant Global Logistics Canada. Wheels itself had done some acquisitions at a had acquired [indiscernible] company from ABF kind of back in the day that many people will know as CLIPPER Express, we ultimately rebranded CLIPPER Express as Radiant Road and Rail. So and we often refer to that as our U. S.-based brokerage platform and for us that means both intermodal and truck brokerage And so and anecdotally, Radiant Road and Rail formerly known as Clipper Express is quite literally the oldest subsidiary in our consolidated group. It was in incorporated in 1938, one of the original intermodal marketing companies.

But in any event, their core or principal business was in the 53 foot space. And TCB brought an incremental competency to our intermodal offering around 40 foot And And then again, just for context, we've been working hard to build out a true bimodal service offering from our Radiant Rail platform in Chicago to have a robust over the road and intermodal service offering. So we see a lot of potential revenue synergies Through the onboarding of this [indiscernible] [indiscernible] a small but mighty player in the 40 foot space. And we're really excited to have them and the team as part of our organization moving forward.

And [indiscernible] kind of stayed away from a lot of details around the precision of the purchase price and numbers, but I think dimensionally, it's in $2,000,000 to $3,000,000 of incremental EBITDA Okay. And then maybe just last one.

And there's been just a lot of news on tariffs changing by the day. Can you talk about your customs brokerage operation, kind of what you're seeing now or how shippers are reacting? Like how big is that business or do you charge customers on on how much they're speaking with their sales contract contract? Any color there would be helpful. Thank you.

Sure. So there again, I'll ground the conversation and some of our prior acquisition activities So we had historically been what I would characterize as dabbling in the customs brokerage space But a few years back, we acquired a company called Navigate, which was principally an NVOCC and Customs Brokerage platform based in Minneapolis. And we've since rebranded that business as Radiant World Trade Services.

So we have it's relatively small in the scheme of things, but but an extraordinarily strong competency in the customs brokerage space, both transactionally and just from an advisory standpoint trying to help our customers understand and respond to the shifting sands of of tariffs and The quickly evolving landscape in which we're all operating And I would be remiss to not also take the opportunity to talk about the technology that we acquired in connection with our acquisition of Navigate because we are very excited about what I'll call the bundled solution offering that we now to be able to provide a really robust collaboration platform for PO management, vendor management, customs brokerage in a really robust holistic way that historically we and most people kind of in our relative size don't kind of play in that way or that dimension. And so so we're very active. We are growing our customers brokerage and we continue to to try to cross sell our customs brokerage capabilities into our other but I really am quite hopeful that over time, we'll have more and more to tell more and more of a story to tell around our technology platform which we're kind of repositioning our branding as Navigate.

And the global trade management capabilities inclusive of custom brokerage that will set inside that Navigate platform. So that was a really broad answer to your customs brokerage question, but we're we're a meaningful player and definitely punching above our weight these days in and around that offering. And it's probably one of the most exciting threads and opportunities as we move forward. And catalyst for growth for us.

Thanks, Von. Appreciate it.

Thank you. And once again, it is The next question is coming from Mark Argento from Lake Street. Mark, your line is live.

Hey, Bonnie, Todd. Just a quick one if you could help us think through a little bit Has it been pretty active on the M and A side, which is Radiant anticipating that will continue given the environment. But could you help maybe just size up a little bit And you did that with the TCB acquisition, but just help us think about Either gross or net revenue or adjusted EBITDA contributions from some of these acquisitions? And I know it's a little bit tough to probably pin it all down, but is it in this quarter $12,000,000 was that same store EBITDA contribution, did you a couple of million bucks from these acquisitions? Is it more? Is it less? Just trying to get a little bit of a feel for kind of organic versus acquisition type contribution?

Yes, sure. So again, we got to as you described, we have to paint with a pretty broad brush here. A number of contributing factors. So I would start with when we acquire in an agency station or convert an agency station, we really don't see any change at the revenue or gross margin line item. Because that business is already flowing through our financials. We end up reducing commission expense paid out and kind of that difference, if you will, is what will flow through in terms of incremental EBITDA. So that's one of the areas where we talk about margin expansion, margin expansion defined as EBITDA divided by gross margin And kind of one of the byproducts of that convert those conversion efforts of agency stations We did we've got a number of those recently and we would anticipate that for those who have been following our story for a long time, the notion of the gray tail and the aging of the of our strategic operating partners. We think that that theme will continue and just continue to accelerate as we move forward. So there's not going to be a kind of a lot of top line impact of that particular piece.

I would say on kind of And so TCB is a little different because that's a Greenfield acquisition. But quite literally, we only had one month of those activities in our December quarter. So we really haven't seen the flow through effects of TCB in our financials yet as it relates to the December. And without getting in too much detail, I would say on a same store basis, we were relatively flat Candidly best case flat. And this some of this project opportunity really helped lift the numbers. And I'll just I'll say it again for emphasis. That's why we were kind of caution As good as this is and we're really grateful to have it, we don't want people to take this quarterly result, multiply it by four and think that's our go forward run [indiscernible] it's going to be tougher sledding ahead in particular this March quarter seasonality and tariffs and everything else going on. So So hopefully that's at least somewhat responsive to your question. [indiscernible] that was very helpful. I mean, drawing on your past experiences with tariffs I know this is kind of a unique and somewhat unprecedented environment right now, so it's hard to handicap with great precision.

But what obviously there was some pull forward which you mentioned and then just But how does this normally play out? Like there's a pull forward and then there's a little bit of a normalization in the market. How do you guys kind of play the situation or at least try to handicap it a little It's a tough one.

I will give you my perspective, but it's I think it's worth what you pay for it here, right? So but at the end of the day, I think when tariffs get put into place, there will be some short term disruptions as people try to respond and kind of reconfigure or adjust. Individually within our own portfolio of customers, There could conceivably be some winners and losers within our own portfolio of customers and and kind of what happens to the underlying products that they're making and how they are impacted to the good or the bad relative to the tariffs. But at the end of the day, we just simply don't as a country, simply don't have the manufacturing capability to support the consumption requirements of The U. S. Consumer. So even though prices may go up, Somebody is still going to have to pay for them just by the laws of simple supply and demand. Whether it comes continues to come from China or gets repositioned and it's coming from Vietnam and or U. S. And Canada, those trade flows are still going to have to happen albeit likely higher prices for consumers, but that's an entirely different conversation.

And kind of beyond the scope of this call. [indiscernible] I can't tell you what will or won't happen and what's posturing or is actually going to come to pass but we and the rest of the industry will digest it and continue to move forward.

Thanks. Just one last one, I think I asked question pretty much every time, so I'm going to do it again. But in terms of the environment on the net on the M and A side, seems like things remain robust. And is this kind of environment of uncertainty, is that what compels some of these conversations that turn into transactions or what do you foresee there?

Well, not necessarily that. I think for us, it's a there's a number of things afoot, right? So we have our aging agent stations that just kind of biologically are raising their hands because they're aging out and need to think about their own succession planning and exit strategies. And so so we've been playing that as a long game for a very long time. So that's just continuing to move forward. So that is one threat of it. And then then there's a certainly not all, but a good number of of folks in our space were ultimately levered up at peak peak earnings and as the markets soften, they really found their balance sheets in disarray. So there's a lot of kind of what I would characterize as normal participants in the M and A space or somewhat sidelined right now while they try to figure out how to get their own balance sheets right size so that they could become actionable again So that's another piece of it, which has from my standpoint, we're still the same guys executing the same plan with the same discipline we always have been. It's just the market is kind of coming back to us because of some of these dynamics part of the dynamic in the transactional space and you hear We and others have talked about it's kind of hard to transact on peak earnings and kind of understanding that.

Now are we in trough earnings and kind of working our way through some of those dynamics, but that's one of the precise reasons why we use earn out structures in our deals and that we really try to structure to mitigate risk to make sure we don't ultimately overpay for the businesses that we acquire. So we still have a lot of dry powder. We expect to continue to be very disciplined, but we're really executing the same playbook we were ten years ago, Mark. [indiscernible] true. One final, final, anything on the buyback in the quarter?

No.

Not this quarter.

We're too busy doing deals.

Yes. If we could use the capital it's great.

But thanks, guys.

All right. Thank you.

Thank you. And the next question is coming from Kevin Gainey from Thompson Davis. Kevin, your line is live.

Hi, Bon, Todd. Good quarter guys.

Maybe if you could kind of talk about how you're feeling about market conditions currently? I know you've Kind of reiterated that they're still slow but maybe compare it to how you guys felt this time last year. And that's a lifetime ago. I would say I'm more bullish today I mean, we again, I'm going to say it again, Business remains soft. It's going to be soft for us, I think heading into 2025, not just for us, but for our industry. I think it's going to be tough going. Near term, But having said that, I've never been more bullish about kind of where we are in our relative kind of position or relative place out there in the landscape. And that we're actionable and we have the financial flexibility and we've got some as I alluded to some really interesting things kind of in the tech stack world that we're bringing to market that we think are going to be a differentiator for us So it's it's going to be there's still going to be plenty of bumps and bruises as we get through 25 tariffs to the extent they're brought into place that's going to I think cause some further near term kind of dislocation and confusion in the marketplace.

But notwithstanding all of that, I think to answer your fundamental question, I'm more bullish about the prospects for Radiant and kind of where we are in the cycle and all of those things. That I feel really good That's That's good to hear. Maybe also if we could talk a little bit about the competitive landscape and how you guys have seen your competitors? Have they In comparison to maybe again last cycle, has there been more I guess like risk maturity from some competitors, are they is everybody holding strong on pricing? Whatever the factors that they may decide on Yes, I'm not sure. I mean, I think it's certainly remains a very, very tough market out there. The shippers have been kind of more aggressive in pricing [indiscernible] [indiscernible] I don't I think I think we have and again not just us, but I think as an industry, I think we've been kind of bouncing along the bottom here for more than a couple of quarters at this point. And significantly more upside than downside in terms of where we where we go from here there's still probably At the end of the day, we this isn't directly related to the non asset based 3PL space But from a within a broader context, we still need more capacity to come out of the marketplace, right?

So and It's been an ongoing conversation for the last year or so that that there's quite a few asset based transports that are really, really having a tough go and [indiscernible] we need that to kind of further resolve itself to get better alignment between supply and demand of transportation capacity And I think we're slowly getting there.

But we still have a little ways to go.

All right. And maybe one more just on kind of the near term outlook. Q1. If you could kind of talk about what you guys maybe saw in January or if there's anything odd that you may think has happened so far? And would you think you could do for Q1?

I mean, it's seasonally our slowest quarter and it's I mean, I think that we're starting to see a little uptick, but nothing It's going to play out, we believe, similar to last year.

And like Bon saying, I'm looking at the numbers of what we posted for the for the month. And we're seeing some strength in some areas. Ocean is one for instance. But by and large, it's going to be a soft quarter. I think when we get to Q4, I think that's when things are going to hopefully start uptaking the tariffs is really anybody's guess. Right? That's the wildcard that I don't think we really know. At this point, but But that's what we're seeing. We're seeing it's going to be like Bon saying, we've got some headwinds compared to the Compared to the sequentially, Yes.

But I would look to the year ago March as more indicative of where we're likely to land.

Perfect. Sounds good guys. I appreciate the color.

You bet.

We did have another question come in from Jeff Kauffman from Vertical Research Partners. Jeff, your line is live. Thank you. Thanks.

Hey, Bun.

Hey, Todd. Good morning.

Well, first of all, congratulations, greetings. I apologize, I got on a little bit late, but did you talk at all about currency and how currency may or may not be impacting your market. And I know you've got a big Canadian operation. How is that affecting as we think about first quarter comparison or first quarter third quarter comparisons, fourth quarter comparisons, because we've had a lot companies flag currency having a bigger impact, I think, than people expected.

Yes, it didn't have a huge I mean, it did impact us, don't get me wrong, But I ran the numbers and it wasn't meaningful. In regards to our when we retranslated to U. S. Dollars, and the EBITDA.

So last I'm just talking about this last quarter. So numbers were reported. It was in wasn't anything it definitely had a small impact is what I would say.

Okay.

That was my one.

Thank you.

You bet. Thanks, Joe.

Thank you. And that does conclude today's Q and A session. I would now like to hand the call back to Bon Crane for closing remarks.

All right.

Let me close by saying that we remain optimistic about our prospects and opportunities to continue to leverage our best in class technology robust North American footprint and extensive global network of service partners to continue to build on the great platform we've created here at Radian. At the same time, we intend to thoughtfully relever our balance sheet and through a combination of agent station conversions synergistic tuck in acquisitions and stock buybacks. Through our multi pronged approach, we believe we will continue to create meaningful value for our shareholders operating partners and the end customers that we serve. Thanks for listening and your support of Radiant Logistics. [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible]