Radiant Logistics (RLGT) has reported a consistent adjusted EBITDA of $9.5 million for the first fiscal quarter ending September 30, 2024, mirroring the performance of the previous year and quarter. Despite the ongoing difficulties in the freight market, the company has managed to maintain a strong financial position with a robust balance sheet, significant cash reserves, and minimal debt. The quarter saw the company complete strategic acquisitions and report an increase in net income and adjusted net income, with a positive outlook on future project-type business despite anticipated market headwinds.
Key Takeaways
- Radiant Logistics reported a steady adjusted EBITDA of $9.5 million.
- The company's net income increased to $3,376,000 from $2,622,000 year-over-year.
- Revenues for the quarter stood at $203.6 million, with adjusted net income rising by 20.4%.
- Strategic acquisitions and conversions have been completed, aiming for organic growth.
- Management anticipates project-type business to boost future quarters.
- Radiant Logistics expects continued market challenges in 2025.
Company Outlook
- The management forecasts project-type business to enhance future quarters.
- There is an expectation of continued market headwinds in 2025.
- CEO Bohn Crain expressed optimism for growth and value through technology and strategic acquisitions.
Bearish Highlights
- The overall freight market continues to pose challenges.
- Tariffs and market conditions have created unique hurdles, requiring supply chain adjustments.
- The food and beverage sectors, outside of e-commerce, are showing weakness.
- Cash from operations was nearly breakeven, influenced by acquisition-related outflows.
Bullish Highlights
- Storm-related opportunities have contributed to recent revenue increases.
- Potential short-term stability in ocean pricing was discussed.
- The company is actively exploring acquisition opportunities.
- There are emerging signs of capacity tightening on the West Coast, which may lead to increased charter activities and higher gross margin dollars.
Misses
- Revenues decreased slightly from $210.8 million in the previous year to $203.6 million.
- The company's cash flow from operations was impacted by acquisition-related outflows, resulting in a near breakeven figure of $205,000.
Q&A Highlights
- CEO Bohn Crain responded to questions about the impact of tariffs and market conditions.
- Crain acknowledged the unique challenges posed by tariffs and the need for adjustments in the supply chain.
- He described the market as soft, with particular softness outside the e-commerce sector.
Radiant Logistics (RLGT) has demonstrated resilience in the face of a challenging freight market, maintaining a stable adjusted EBITDA and showing an increase in net income and revenues. The company's strategic acquisitions and organic growth initiatives signal a commitment to enhancing shareholder value and capitalizing on market opportunities. Despite the softness in certain sectors and the impact of tariffs, Radiant Logistics is poised to leverage its network and technology to navigate market headwinds and drive future growth.
InvestingPro Insights
Radiant Logistics' (RLGT) recent financial performance aligns with several key insights from InvestingPro. Despite the challenging freight market conditions highlighted in the report, InvestingPro Tips indicate that RLGT's net income is expected to grow this year, supporting the company's positive outlook on future project-type business. This expectation is further reinforced by the fact that RLGT has been profitable over the last twelve months, with analysts predicting continued profitability this year.
The company's strong financial position, mentioned in the article, is corroborated by InvestingPro Data showing a gross profit of $158.31 million for the last twelve months as of Q4 2024, with a gross profit margin of 19.73%. Additionally, an InvestingPro Tip notes that RLGT's liquid assets exceed short-term obligations, which aligns with the report's emphasis on the company's robust balance sheet and significant cash reserves.
Investors should note the strong market performance of RLGT, with InvestingPro Data revealing a 45.66% price total return over the past six months and a 21.79% return over the last three months. This positive trend is highlighted as an InvestingPro Tip, indicating a strong return over the last three months.
For readers interested in a more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. In fact, there are 5 more InvestingPro Tips available for RLGT, providing a deeper understanding of the company's financial health and market position.
Full transcript - Radiant Logistics Inc (NYSE:RLGT) Q1 2025:
Operator: Good afternoon, Bohn Crain, Radiant Logistics' Founder and CEO and Radiant's Chief Financial Officer, Todd Macomber will provide a general business update and discuss financial results for the company's first fiscal quarter ended September 30, 2024. Following their comments, we will open the call to questions. This conference is scheduled for 30 minutes. This conference call may include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The company has based these forward-looking statements on its current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about the company that may cause the company's actual results or achievements to be materially different from those results or achievements expressed or implied by such forward looking statements. While it is impossible to identify all the factors that may cause the company's actual results or achievements to differ materially from those set forth in our forward looking statements. Such factors include those that have in the past may in the future be identified in the company's SEC filings and other public announcements, which are available on the Radiant website at www.radiantdelivers.com. In addition, past results are not necessarily an indication of future performance. Now I'd like to pass the call over to Radiant's Founder and CEO, Bohn Crain.
Bohn Crain: Thank you. Good afternoon everyone and thank you for joining in on today's call. While the slower freight markets persist, we continue to deliver solid financial results and generated $9.5 million in adjusted EBITDA for the fiscal quarter ended September 30, 2024, which is generally in line with results from the comparable prior year period as well as our most recent previous quarter ended June 30, 2024. And although, we believe our industry will likely continue to face market headwinds into 2025, we do expect to benefit from project type opportunities over the near-term that should fortify our results while we wait for a more durable broad based recovery. As previously discussed, we believe we are well positioned 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 $10 million in cash on hand as of September 30, 2024, no meaningful debt and a virtually untapped $200 million 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, strategic 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 acquisition of Texas based Foundation Logistics and the conversion of our Michigan based strategic operating partner location, Focus Logistics, which is combining with our existing Radiant operations in Detroit. We believe these two transactions are representative of our broader pipeline of opportunities, which includes both greenfield acquisitions i.e. companies not currently part of our network, as well as acquisition opportunities inherent in our agent based forwarding network where we can support our current operating partners in their exit strategies. We look forward to providing further updates as we progress along these lines. With that, I'll now turn it over to Todd Macomber, our CFO to walk us through our detailed financial results and then we'll open it up for Q&A.
Todd Macomber: Thanks, Bohn and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the three months ended September 30, 2024. For the three months ended September 30, 2024, we reported net income attributable to Radiant Logistics of $3,376,000 on $203.6 million of revenues or $0.07 per basic and fully diluted share, which includes a $1 million gain on litigation. September 30, 2023, we reported net income attributable to Radiant Logistics of $2,622,000 on $210.8 million of revenues or $0.06 per basic $0.05 per fully diluted share. This represents an increase of approximately $754,000 of net income over the comparable prior year period or 28.8%. For adjusted net income, we reported $7,883,000 for the three months ended September 30, 2024 compared to adjusted net income of $6,549,000 for the three months ended September 30, 2023. This represents an increase of approximately $1,334,000 or approximately 20.4%. For adjusted EBITDA, we reported $9,452,000 for three months ended September 30, 2024 compared to adjusted EBITDA of $9,167,000 for the three months ended September 30, 2023. This represents an increase of approximately $285,000 or 3.1%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.
Operator: Thank you very much. At this time, we will be conducting our question-and-answer session. [Operator Instructions] Your first question is coming from Jason Seidl of TD (TSX:TD) Cowen. Jason, your line is live.
Jason Seidl: Thank you, operator. A couple of quick questions here from my line. I guess number one, you talked a little bit about that pop up work. Where did it come from? Is this being generated from the retail side or is this maybe storm related?
Bohn Crain: Sure. B is the answer to the question, storm related. So as in some previous quarters, we've had opportunities to kind of respond to humanitarian natural disaster type situations. And so the hurricanes that impacted the southeast are creating some kind of -- it's turning out to be the recurring, non-recurring revenue line item as those opportunities continue to present themselves over time. So I think one of the points to be made is there's still quite a bit of challenge out in the marketplace for a lot of the transports, but in part thanks to the diversity of our portfolio and kind of all the different areas that we can play that we're kind of faring reasonably well in a tough environment. And we wanted to without getting into the details, wanted to foreshadow, we were expecting a kind of a stronger than might not otherwise be expected quarter ended December. It's not necessarily reflective of the new run rate, but we're going to have some project type business landing in Q4 or excuse me, quarter ended December 31, our fiscal Q2. That's going to help kind of help us show really well here in the coming quarter.
Jason Seidl: That makes sense. The other thing, I was at a lunch with clients today and sort of expectations on the ocean side for pricing sort of came up. I wonder your thoughts because obviously we were so high for so long with some exogenous events, I think driving up some of the ocean pricing. What are your expectations as we look into 2025?
Bohn Crain: It's going to be interesting -- it's always interesting, it seems, I think near-term prices are going to remain relatively robust due to people trying to get ahead of potential tariffs as well as some of the Red Sea (NYSE:SE) activities. So I think relatively near-term, I think there's a lot of things that would support prices, capacity will stay relatively tight, kind of how durable that is after we kind of get kind of past the tariff dynamics and hopefully things settle down in the Red Sea. I don't so I think short-term, yes, longer term is a TBD.
Jason Seidl: Okay, understood. And you brought up tariffs. I mean, is there any feedback from your customers to was there any pull forward in anticipation of a potential Trump victory? What should we sort of expect going forward?
Bohn Crain: Yes, I think generally speaking, there has been a kind of a pull forward and we'll see kind of how that plays out over time. But I do think part of what we're seeing, not just us but just kind of more broadly what we're seeing is people that were hedging their bets a little bit. And again, who knows what part of all of that narrative is posturing versus something that's really going to be put into motion. So we'll try to stay nimble and support our customers as best we can in kind of responding to those dynamics, which I'm sure will be lively.
Jason Seidl: And want to get back to the quarter ending December here coming up. Given your project work, how should we think about EBITDA margins on a sequential basis?
Bohn Crain: I would expect margins to be down a little bit because of the nature of some of the project work we're doing, but on an absolute basis, our gross margin dollars to be going up. That's code for charters.
Jason Seidl: Fair enough, Bob. Well, listen, I don't want to take up all the questions. Let me turn it over to somebody else here. Appreciate the time, guys.
Operator: Thank you very much. Your next question is coming from Jeff Kauffman of Vertical Research Partners. Jeff, your line is live.
Jeff Kauffman: Congratulations. It sounds like some exciting opportunities in 4Q. So good luck with that. I had just two questions that Jason didn't ask. Number one, Todd, I think you mentioned a $1 million litigation gain. Was that in other income that explains the differential in other income?
Todd Macomber: Yes. That's exactly what that is. Correct.
Bohn Crain: And add back in our adjusted EBITDA number. So we backed that out in kind of the numbers as presented.
Jeff Kauffman: Yes. Listen, some quarters is bad, some quarters is good. That's always nice to see. And then, could you help me understand, it looked like there was a big move downward in commissions this quarter relative to kind of the run rate it was at in previous quarters and a small jump in personnel cost. It looked a little too big to be explainable by, okay, well, we've bought in some agencies. I was just wondering, agency commissions seem to be down almost 700 basis points versus where it was running. So what was going on with the agency commission line?
Todd Macomber: I mean that well, obviously, it's a mix of product is a piece of it. And the other piece of it is, as we bring in so not only do we do the conversions, right? But in addition to that bringing in the other stations that were part of our network, for instance, foundation is an example where we're bringing in the revenue, bringing in the cost of sales and there's no commission paid. So that's -- those are the big drivers in the reduction in the overall commission expense.
Bohn Crain: And if I remember correctly and maybe this would also be somewhat helpful to it. In the comparable year ago period, one of our agency stations actually had some significant charters themselves. And so there was some kind of non-recurring project charter type business at the agency level in the year ago period. And that would also explain kind of a part of that reconciliation that you're thinking to.
Jeff Kauffman: Okay. I just -- I know it jumps around a little bit quarter to quarter. I was just trying to reconcile. So, the way I would interpret that is if you're doing more charters in 4Q, maybe this is a little elevated and that goes to your point on higher gross margin dollars, lower revenue or I'm sorry, lower margin?
Bohn Crain: Yes, lower margin percentage.
Jeff Kauffman: Okay. And just one last question, if I can. So in terms of what you're seeing, I saw the commentary, hey, it's still a tough environment. We're holding in and doing everything we can while we're waiting for the turn. There's been some talk of green shoots in different industry segments or different parts of the supply chain this past quarter, maybe not enough to move the whole needle but encouraging nonetheless. Where would you say you're seeing more green shoots, whether it's a geography or a vertical or something like that?
Bohn Crain: I think we're definitely seeing kind of a tightening of capacity on the West Coast largely influenced by the kind of the ocean import activity that's going on. So I think we're definitely seeing a little bit of capacity tightening, which hasn't been part of the narrative for several quarters now. The real I think the ultimate question, which we don't have a good answer for is just kind of the durability, whether this is going to be short lived or whether this will be more sustainable. I'm hopeful that kind of a more business friendly tax environment will get corporate America investing and kind of growing again and all that kind of stuff. But it's kind of way too early to start to draw conclusions about that. But if you lean just right, you can kind of see a path to hopefully that type of environment.
Jeff Kauffman: All right. Well, thanks so much and congratulations.
Operator: Thank you very much, Jeff. And the next question is coming from Mark Argento of Lake Street Capital. Mark, your line is live.
Mark Argeto: I wanted to follow-up. Looks like you made a couple incremental tuck-in acquisitions. You guys have done a handful this year. Looks like you're continuing to that pace. Any kind of incremental thoughts, Bohn about what you're seeing in the marketplace? What are you these guys are kind of getting to the point where it's just time to back it in or value proposition is high? What's the thing that seems to be tipping these over for you?
Bohn Crain: I think it's a combination of things. Mark, you've been involved in the story a long time now and kind of this notion of the gray tail or kind of our agency partners as they're getting older and kind of approaching retirement age, just that whole pipeline is maturing, no pun intended. And so just the frequency is kind of natural -- kind of that all those conversations are accelerating. And we expect that trend to continue. So we remain actively involved with a number of operating locations and we're excited to support them kind of when and if they're ready to transact. So that's part of what we're doing. And then kind of the other part which is equally exciting is the -- we've been pretty disciplined over the years in terms of our own thoughts around valuation and structure. And while we were -- while we've always been kind of open for business, the market kind of had moved away from us for a period of time. But the market, generally speaking, has kind of come back to us. So we haven't necessarily changed what we're doing or our approach or our thoughts or our philosophy, but the markets have just kind of come back to us in a way where we can get deals done. And so we're really excited about that, particularly if you think about the fact that we have an unlevered balance sheet, many of our competitors' balance sheets are actually out of whack and they're kind of a little bit of a penalty box as they're having to kind of recapitalize and do a number of kind of awkward things to kind of steady themselves. And so in my mind, we can effectively double our EBITDA within our existing capital structure. And so that's really exciting and I think it's at least -- I think that message is starting to sink in and why we're starting to see some positive and hopefully durable lift in our stock price.
Mark Argeto: All right. And just to refresh memory in terms of the general structure that you guys have is some upfront and then an earn-out, maybe just refresh me and the audience on that?
Bohn Crain: Yes. So we would typically use an earn-out structure or almost exclusively use earn-outs in terms of our structure where we would value a business. And again, just for the benefit of the conversation, we typically most of our transactions have been what I'll characterize as plus or minus $2 million EBITDA type transactions. And we believe we can value and structure those in a way that is a win-win for everybody, and that includes the use of earn-outs where the sellers continue to have skin in the game for several years post-closing to ensure that the business continues to perform and that helps kind of structurally mitigate against overpaying for a business in the case of underperformance.
Operator: Thank you very much. Your next question is coming from Kevin Gainey from Thompson Davis. Kevin, your line is live.
Kevin Gainey: Maybe I wanted to see if you guys could remind us how you guys reacted with the first, or may -- and maybe how your customers reacted with the first round of tariffs that came back in the first phase of that administration and how -- what that did to your business and how we might think about what it could do moving forward?
Bohn Crain: Well, I think we saw -- a few things going on at the time, right? So there was a kind of a natural pull forward where people try well, anytime that these things happen there will be winners and losers, right? And some particular product will be subject to tariffs and others might not. So it's not a one size fits all question. First, you have to kind of look at businesses or industry groups that are the subject of the tariffs to begin with. So that'll be part of the analysis. But for those affected players, they're going to be trying to construct solutions and mitigate their own exposures to the tariffs. So that may there's a number of different things that can happen. It can take the form of trying to just beat the clock and kind of get product move in advance of the effective dates of the tariffs. In other scenarios, it might cause kind of a reconfiguration of the supply chain and cause raw materials and sub assembly workflows to get repositioned into different parts of the world to try to navigate those exposures as well. And so we try to help execute those strategies. Last time that all this was also happening in the face of kind of the huge congestions and kind of post-COVID hangover and all of that type of stuff. So I don't know that what we're going to see next is going to be -- I'm not sure history is a perfect kind of reflection of what we would expect here because that was such a unique kind of moment in time back when we were kind of dealing with the shutdowns and the tariffs concurrently. But it is going to create challenges for shippers and we'll be here to help however we can. And we'll see kind of how long the pressures remain on the West Coast ports in particular to kind of digest the volumes. And I really haven't heard much of it as of late, but I would expect warehousing capacity to get tight again, right? It had loosened up a little bit and we were kind of going through a little bit of a destocking exercise. But if people are pulling forward, they got to find some place to put all their stuff, right? So I would see at least near-term kind of warehousing capacity getting precious again.
Kevin Gainey: That makes a lot of sense. Maybe you could also talk a little bit about maybe specific end markets, whether it be retail, consumer, maybe industrial or something along those lines, what you're hearing from them, especially entering peak season, I guess, for the retailers?
Bohn Crain: Yes. I don't have a lot of color to add on an individual industry vertical. I would say all in all the market remains pretty darn soft. Outside of e-com and e-com exposure, you don't hear a lot of chest thumping from any of the players out there, ourselves including. We just happen to have kind of through the portfolio effect I was alluding to earlier, some opportunities to kind of do some and be involved with some really interesting project type work. But across a lot of -- even things like food and beverage and CPG, which are normally pretty steady on a comparable basis, even those markets have been approved to be soft at least through our lens.
Kevin Gainey: I appreciate the color. And Todd, I know the queue will come out. I just wanted to see what you guys have for operating cash flow in the quarter. So I could think about free cash flow, really trying to get the free cash flow.
Todd Macomber: Yes, I mean, it's really -- I mean, overall cash flow, I mean, we spend a lot right with the acquisitions. That was the biggest driver. So I mean -- the net cash, what are we coming out. I think cash from operations for the quarter was near breakeven. It was $205,000 and then we had big outflows of course with the acquisitions.
Kevin Gainey: Makes sense. Appreciate the time, guys.
Operator: Thank you very much. Well, we appear to have reached the end of our question-and-answer session. I will now turn the call back over to Bohn for closing remarks.
Bohn Crain: Thank you. Let me close by saying 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 Radiant. At the same time, we intend to thoughtfully relever our balance sheet and through a combination of agent station conversions, strategic tuck-in acquisitions and stock buybacks continue to create shareholder value. Through this multipronged approach, we believe we will continue to bring good value to our shareholders, operating partners and the end customers that we serve. Thanks for listening and your support of Radiant Logistics.
Operator: Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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