Radiant Logistics Q4 2024 Earnings Call Transcript

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September 12, 2024

There are 6 speakers on the call.

Operator

This 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 4th fiscal quarter year ended June 30, 2024. Following their comments, we will open the call to questions. 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 the results or achievements expressed or implied by such forward looking statements.

Operator

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 and 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 Radient's Founder and CEO, Bohn Crain.

Speaker 1

Thanks, John. Good afternoon, everyone, and thank you for joining in on today's call. While our full year results continue to reflect the difficult freight markets being experienced by the entire industry as well as our own operations, we did see good sequential improvement in our financial results for the 4th fiscal quarter ended June 30, 2024 when compared to our 3rd fiscal quarter ended March 31. With net income up over 7 50%, adjusted net income up 94.4% and adjusted EBITDA up 75%. We hope to continue to build on this positive trend in coming quarters as markets find their way to more sustainable and normalized levels.

Speaker 1

Notwithstanding the tough year over year comparisons, we continue to deliver meaningfully positive results and have generated $31,200,000 in adjusted EBITDA and $17,300,000 in cash from operations for the fiscal year ended June 30, 2024. In addition, we continue to enjoy a strong balance sheet and after completing 5 tuck in acquisitions and deploying over $4,000,000 in support of our stock buyback program, we were able to finish the quarter with approximately $25,000,000 of cash on hand and still nothing drawn in our $200,000,000 credit facility. 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. 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 agent station 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.

Speaker 1

In this regard, we made good progress in supporting 3 Asia Station conversions over the course of fiscal 2024 with the acquisition of Florida based Delray in October of 2023, the select businesses in February of 2024 and Minnesota based Viking Worldwide in April of 2024. We launched Radiant in 2006 with the goal of partnering with logistics entrepreneurs who would benefit from our unique value proposition and our built in access strategy. We believe these three transactions strategy. We believe these three transactions are representative of a broader pipeline of opportunities inherent in our agent based network and we look forward to continuing to support other strategic operating partners when they are ready to begin their transition from an agency to a company owned location. In addition, in June of this year, we were able to welcome 2 new teams to our network with the acquisition of Portland based DVA Associates and Seattle based Cascade Transportation, both of which joined us from a competing network.

Speaker 1

And most recently, we completed the acquisition of Foundation Logistics, another great addition to the Radient network based in Houston, Texas. We will continue to look for greenfield acquisition opportunities where we find opportunities that bring critical mass to our current platform with respect to geography, purchasing power and targeted industry segments. With that, I'll turn it over to Todd Macomber, our CFO to walk us through our detailed financial results and then we'll open it up for some Q and A.

Speaker 2

Thanks, Vaughn, and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the 3 12 months ended June 30, 2024. For the 3 months ended June 30, 2024, we reported net income attributable to Radiant Logistics of $4,781,000 on $206,000,000 of revenues or $0.10 per basic and fully diluted share. For the 3 months ended June 30, 2023, we reported net income attributable to Radiant Logistics of $3,143,000 on $232,200,000 of revenue or $0.07 per basic and $0.06 per fully diluted share. This represents an increase of approximately $1,638,000 of net income over the comparable prior year period or 52.1%.

Speaker 2

For adjusted net income, we reported $7,015,000 for the 3 months ended June 30, 2024 compared to adjusted net income of $6,457,000 for the 3 months ended June 30, 2023. This represents an increase of approximately $558,000 or approximately 8.6%. For adjusted EBITDA, we reported $9,078,000 for the 3 months ended June 30, 2024 compared to adjusted EBITDA of $9,208,000 for the 3 months ended June 30, 2023. This represents a decrease of approximately $130,000 or approximately 1.4%. Moving along to the 12 month results.

Speaker 2

For the 12 months ended June 30, 2024, we reported net income attributable to Radiant Logistics of $7,685,000 on Logistics of $7,685,000 on $802,500,000 of revenues or $0.16 per basic and fully diluted share. For the 12 months ended June 30, 2023, we reported net income attributable to Radiant Logistics of $20,595,000 on $1,085,000,000 of revenues or $0.43 per basic and $0.42 per fully diluted share. This represents a decrease of approximately $12,910,000 over the comparable prior year period or 62.7%. For adjusted net income, we reported $22,147,006 for the 12 months ended June 30, 2024 compared to adjusted net income of $39,301,000 for the 12 months ended June 30, 2023. This represents a decrease of approximately $16,654,000 or approximately 42.4%.

Speaker 2

For adjusted EBITDA, we reported $31,160,000 for the 12 months ended June 30, 2024 compared to adjusted EBITDA of $55,638,000 for the 12 months ended June 30, 2023. This represents a decrease of approximately $24,478,000 or approximately 44%. With that, I will turn the call back over to our moderator to facilitate any Q and A from our callers.

Operator

Thank The first question comes from Elliot Alber with TD Cowen. Please proceed.

Speaker 3

Hey, guys. Thanks. This is Elliot on for Jason Seidl. Maybe just first starting on the quarter. EBITDA sequentially almost $4,000,000 I guess above our expectations.

Speaker 3

Can you talk about maybe the drivers of the outperformance in the June

Speaker 2

quarter? Sure. Yes. I mean, it's hard to know the numbers, of course, and we're just seeing sequential growth, quite honestly. The Q3 was obviously weak, but we it's just I can't really speak to any particular thing in particular, but we're seeing growth in the quarter as far as volume and the pricing is coming up.

Speaker 3

Got it. Okay. And then there's a lot of noise with the poor data we look at. I guess maybe a couple of questions here, but maybe one, can you talk through kind of what you're seeing in terms of peak season this year, if you saw any pull forward earlier in the summer? And then maybe 2, are you seeing kind of any customers shift freight ahead of the potential port strike on October 1?

Speaker 1

Yes. So I'll take a shot at that. So I think the short answer is yes, we did see some pull forward, a combination of global events, risk of changeover in elections and potential tariffs. And there's a lot of factors I think that have caused some level of pull forward and an acceleration in terms of kind of a more traditional peak. So I think the answer to that is yes.

Speaker 1

And so we're in the past several months, we've seen kind of additional pressure on the West Coast, which we view as a positive thing. Ocean rates are up as well as we're starting to see a little relief and a little tightening, I guess, to be more precise tightening in capacity off of the West Coast, which we think ultimately is a net positive for us and other transports in the marketplace.

Speaker 3

Okay. And then Bonnie, curious to just hear your thoughts. I mean, do you think there's a real probability of a rail strike or excuse me, port strike? There's a report out this week suggesting both sides are pretty far apart on negotiations. Would love to hear your thoughts.

Speaker 1

I wouldn't want to speculate on that. I would just to the extent that happens, we'll be here to support our customers with diversions and kind of other ways to solve the problems when it occurs. Hopefully it doesn't. But we'll be there to support our customers as best we can to the extent that happens.

Speaker 3

Got it. All right.

Speaker 1

I was asked for a non answer answer.

Speaker 3

Exactly. All right. Appreciate

Operator

it. Okay. The next question comes from Kevin Gainey with Thompson Davis. Kevin, please proceed.

Speaker 4

Good afternoon, Pavan and Todd. How's it going?

Speaker 1

Good. Thanks. Good. Thank you.

Speaker 4

Maybe we could start off looking at a little bit of forward as you think about entering fiscal year 2025. Maybe you guys can talk with kind of talk about how you've seen the market at least over maybe the July, August timeframe? And then how you're thinking about how that might shape up for 2025?

Speaker 1

Well, I think we I'm going to kind of point back to our last quarter. We are hopeful and the numbers are kind of backing up the idea that the March quarter was kind of the bottom at least for us. And we saw some sequential improvement here in this quarter. And I think at least in my mind and we'll see how it plays out, but I think kind of this plus or minus, I think this quarter is kind of indicative of the run rate that we would expect based upon what we know today, right, as we continue to work through. Now I wouldn't say we're back to normal, but whatever that means these days.

Speaker 1

But kind of based upon what we are seeing, I do think the worst is behind us and that kind of this quarter is more indicative of what you can expect of us going forward hopefully. And but with that said, we're not seeing some big catalyst that's going to drive yet another step function increase. I think everybody is grinding, right? And we're grinding right along with the best of them and trying to be thoughtful in our cost structure and making sure we're continuing to keep that aligned with the business opportunities that we see. I would pivot your question just slightly because I think it's so relevant to our individual story.

Speaker 1

A lot of folks have balance sheets that are in disarray and are not really in a position to be acquisitive in this market, but we are and we've been doing our darndest to be active out there in the marketplace, most of them tuck in acquisitions, but we're open for business and we're looking for acquisitions that make sense for us in terms of valuation and structure and fit. And so we were pretty active here this last year and we expect to continue to be active in the 2025.

Speaker 4

Since you brought up the M and A piece, maybe kind of two questions on that. As far as seller expectations, how have they changed? Do you feel like they've become more reasonable? And then I know you mentioned in the release that there were targeted industry segments that you guys were looking at. And I'm kind of curious what those might be from both a transportation segment or maybe like an end market vertical that you're interested in?

Speaker 1

Yes, sure. So, I guess trying to hit the first part of that question in terms of sellers' expectations. I don't know the sellers' expectations have changed kind of necessarily so much. I just think there's less a couple of things at play. One, we kind of have the, what I'll call the hockey stick behind us.

Speaker 1

So it's easier to transact off of the trailing 12 month type numbers that we're seeing now rather than before kind of in the height of COVID and kind of what that market represented for everybody. So the numbers have settled down where everybody can feel more comfortable about transacting around the numbers that we're seeing and kind of coming back to kind of participants in the marketplace. I think there's just not as many folks right now who are kind of leaning in or not in a position to lean into the opportunity the way that we are. Now don't get me wrong, we're not the only person out there active. There certainly are quite a few quite competent healthy competitors.

Speaker 1

But in the same breath, there's quite a few that are not in that situation. And so I think that's making a difference for us right now. And then fundamentally just coming back to the notion of kind of the inherent acquisition pipeline within our own network, it's been our long standing brand promise to support our operating partners when and if they were ready for their own access strategy. And what's the saying, father time waits for no man, right? So everybody's getting a little older and just so that kind of opportunity set just continues to mature literally and figuratively.

Speaker 1

And so we're going to we would expect kind of the rate of that to continue as we move forward.

Speaker 4

Sounds good. And then just to kind of give you a chance to talk about the contract itself and probably the first test of it, the USAID contract. Maybe if you could talk about Francine, the hurricane and then just in general how that contract shapes up for you guys and what it might be?

Speaker 1

Yes, yes. We're not in a position to get into too much detail on that for a number of reasons. But as we have natural disasters and kind of other opportunities into which there would be a response, we're our expectations is we'll be one of the first people that's called and given an opportunity to support to kind of support that opportunity.

Speaker 4

Sounds like a place to be. Appreciate the time guys.

Speaker 1

Yes, you

Operator

The next question comes from Jeff Kauffman with Vertical Research Partners. Please proceed.

Speaker 5

Thank you very much. Hey guys, congratulations. Thank you. Terrific with the numbers. Thank you.

Speaker 1

Just a

Speaker 5

couple of quick questions. If I look at the 6 acquisitions you've made in the last 12 months, In aggregate, roughly how much EBITDA are we bringing in incrementally?

Speaker 1

Good question. That is a good question. And then what we have not disclosed that. And so I'm going to punt because of the fact that we haven't and I will respond this way. Jeff, you've been following us so long and I appreciate that.

Speaker 1

And there was a time when every transaction we did was material and we had to disclose it and file an 8 ks and pro formas and we had to kind of lift our pants, right, for the benefit of our competition to see what we were doing. And I'm so glad to be on this call here today and tell you we don't have to do that anymore. And so we're quite happy to just keep our lives zipped as best we can and tend to our business and share the results as they occur.

Speaker 5

Fair enough. I just thought maybe as a collective group, maybe I could get that answer. All right. Go a different direction. Revenues down about 11%, operating partner commissions down about 20%.

Speaker 5

Why were commissions down so much more than revenues? Normally those 2 are fairly close.

Speaker 1

Well, there's some let me try that. It's kind of 2 things at play, right? So we had some significant kind of non recurring project business in the year ago period that takes those kind of the top line numbers down. And on the kind of the part of the commission dynamic you're seeing is conversion of agency stations to company owned stores. So as we're buying in agency stations, that would be kind of a natural thing that we would expect to see happening.

Speaker 5

Okay. So if the agency can make sense

Speaker 1

Just a quick reminder, right. So as we buy an agency stations, nothing changes down to the gross margin line item. But as we buy folks in, the agent station commission goes away, we pick up their local level personnel and SG and A costs. And the difference is kind of their incremental EBITDA that we would onboard into our consolidated results.

Speaker 5

Okay. So a couple

Speaker 1

of $1,000,000 of that. That's fair.

Speaker 5

All right. Well, that's well, I guess one more. You know, Bahn, you said, we think we bottomed, but we're lacking a catalyst to take us up to the next step, which seems to be the view of most folks in the market. What isn't happening that you would hope should be happening in the global economy right now? Like what do you think is holding us back?

Speaker 1

Well, it's kind of for us, our fate goes as our customers fate goes, right? So we need our customers conducting more business. We need more hard freight. While the service economy is great, that doesn't create a lot of hard freight for us to move around. So we need hopefully an improving investment client where people are making investments, feel confident in their businesses and are making investments in hard freight.

Speaker 1

I think we're largely behind kind of the old conversation of safety stocks and kind of excess inventories. So I think that story is largely played out. So it's really kind of getting the proverbial economic engine firing on more, I won't even say all cylinders, but more cylinders than it is now.

Speaker 5

So the way we should think in the near term would be business moving forward plus or minus acquisitions until the world changes?

Speaker 1

I think that's right.

Speaker 5

Okay. But

Speaker 1

it may change in November, who knows?

Speaker 2

We're seeing slight upticks in volumes, Jeff, month over month, but it's not for now, it's fairly I wouldn't say it like Von saying, I mean there's nothing that's going to dramatically uptick it. We are seeing strengthening. And on top of that the revenue per file I'm seeing has been increased that's been slowly increasing too. But it's going to take a while, like Vaughn says, before we get back to where we think it will ultimately land.

Speaker 5

All right, guys. So that's all I have. Congratulations and thank you.

Speaker 2

Thank you.

Operator

Okay. We have no further questions in queue. I'd like to turn the floor back to Bohn Crain for any closing remarks.

Speaker 1

Thanks again, John. 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, extensive global network of service partners to continue to build on the great platform that we've created here at Radian. At the same time, we intend to thoughtfully delever our balance sheet and through a combination of agent station conversions, synergistic tuck in acquisitions and stock buybacks. Through our multipronged 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 Radian Logistics.

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