Radiant Logistics - Earnings Call - Q3 2025

Executive Summary

• Strong Q3 FY2025 beat vs consensus: revenue $214.0M vs $194.0M est (+10.3%); Primary EPS $0.14 vs $0.04 est (+223%); EBITDA $8.73M vs $5.45M est (+60%) driven by base business improvement and recent acquisitions; GAAP diluted EPS was $0.05 as reported. Revenue growth +15.9% YoY; adjusted EBITDA +~80% YoY. Revenue/EPS/EBITDA beats from S&P Global estimates.*
• Mix and M&A: contributions from greenfield/acquired operations (Cascade, Foundation, TCB, Transcon; plus USA Logistics and Universal subsequent to quarter-end) lifted profitability; Canada outperformed internal expectations.
• Macro/tariffs: management flagged near‑term volatility; ~25–30% of gross margin tied to international trade would have been impacted by tariffs; expects June quarter (Q4 FY25) to be “soft,” with potential bullwhip rebound thereafter.
• Balance sheet/capacity to act: $19.0M cash, $15.0M drawn on $200M revolver; low leverage supports continued tuck‑ins, partner conversions, and buybacks as pipeline remains active.

What Went Well and What Went Wrong

What Went Well

• Broad-based profitability improvements: adjusted EBITDA up ~80% YoY to $9.4M; adjusted EBITDA margin on adjusted gross profit up 640 bps to 16.2% driven by base business gains and acquisitions.
• Acquisitions scaling international and intermodal capabilities: closed Transcon (ocean freight gateways; 2024 EBITDA ~$4.0M on $75M revenue), and post-quarter closed USA Logistics (Mid‑Atlantic) and Universal (Houston) to strengthen network density and modal breadth.
• Management confidence and liquidity: $19M cash, $15M on $200M facility; reiteration of strategy to profitably grow via partner conversions/tuck-ins and buybacks (re-lever prudently).

What Went Wrong

• Sequential moderation from project-rich Q2: revenue fell to $214.0M from $264.5M in Q2; adjusted EBITDA to $9.4M from $12.0M; adjusted EBITDA margin compressed to 16.2% from 19.0%.
• Tariff-driven uncertainty: management expects Q4 (June) to be soft; ~25–30% of gross margin tied to international trade makes results sensitive to tariff timing/changes.
• Gross margin rate below prior year: GAAP gross margin 25.5% vs 26.4% in Q3 FY2024, reflecting mix and market headwinds despite YoY revenue growth.

Transcript

Operator (participant)

Greetings, and welcome to the Radiant Logistics third quarter fiscal year 2025 earnings call. At this time, all participants are on a listen-only mode, and a question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. This afternoon, Bohn Crain, Radiant Logistics Founder and Chief Executive Officer, and Radiant's Chief Financial Officer, Todd Macomber, will provide a general business update and discuss financial results for the company's third fiscal quarter and nine months ended March 31, 2025. 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 meanings 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. 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 in the past and may in the future be identified in the company's SEC filings and other public announcements that 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.

Sir, the floor is yours.

Bohn Crain (Foubder and CEO)

Thank you. 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 $9.4 million in adjusted EBITDA for our third fiscal quarter ended March 31, 2025, which is up $4.2 million and just over 80% relative to the comparable prior year period. The comparable year-over-year improvement in adjusted EBITDA was driven through a combination of improvements in our base business operations along with contributions from our recent acquisitions. For the quarter ended March 31, our legacy U.S. operations generated $1.5 million in incremental adjusted EBITDA, while our legacy Canadian operations generated $0.5 million in incremental adjusted EBITDA.

An additional $2 million in adjusted EBITDA for the quarter ended March is driven principally by our Greenfield acquisitions of Seattle-based Cascade Transportation from June of 2024, Houston-based Foundation Logistics & Services from our September 2024 acquisition, St. Louis-based TCB Transportation from our December 2024 acquisition, and Los Angeles-based Transcon Shipping from our March 2025 acquisition, along with the conversion of our strategic operating partner, Miami-based Select Logistics, in February of 2024. Notwithstanding these strong results for the quarter ended March 31, we are expecting some near-term volatility in our results tied to the ebb and flow of the ongoing U.S. negotiations around trade and tariffs and estimate that approximately 25%-30% of our gross margins for the March quarter would have been impacted by the recently announced tariffs.

With that said, we also expect that any near-term slowdown will likely result in a corresponding bullwhip effect with the surge in global trade as these tariff disputes are brought to rest and are encouraged by the de-escalation of U.S. and China trade tensions that have occurred over the weekend. In any event, we intend to remain nimble in our response to tariff announcements by the U.S. administration and continue to support our customers in navigating these quickly evolving markets and executing thoughtful supply chain strategies to provide our customers with competitive advantage. As previously discussed, we believe we are well-positioned with a durable business model, diverse service offerings, and strong balance sheet to navigate through a slower freight market.

We continue to enjoy a strong balance sheet with approximately $19 million of cash on hand as of March 31, 2024, and only $15 million drawn on our $200 million credit facility. At the same time, we remain focused on the long term, staying true to our strategy to deliver profitable growth through a combination of organic and acquisition initiatives while thoughtfully re-levering 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 acquisition of California-based Transcon Shipping, the conversion of our Pennsylvania-based strategic operating partner, USA Logistics and USA Carriers, which is being combined with our existing Radiant operations in Philadelphia, and the conversion of our Texas-based strategic operating partner, Universal Logistics, which is being combined with our existing Radiant operation in Houston. We believe these three transactions are representative of our broader pipeline of opportunities, which includes both Greenfield acquisitions, 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. With that, I'm now turning 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&A.

Todd Macomber (CFO)

Thanks, Bohn, and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the three and nine months ended March 31, 2025. For the three months ended March 31, 2025, we reported net income attributable to Radiant Logistics of $2,541,000 on $214 million of revenues or $0.05 per basic and fully diluted share. For the three months ended March 31, 2024, we reported a net loss attributable to Radiant Logistics of $703,000 on $184.6 million of revenue or $0.02 per basic and fully diluted share. This represents an improvement of approximately $3,244,000 of net income over the comparable prior year period. For adjusted net income, we reported $6,881,000 for the three months ended March 31, 2025, compared to adjusted net income of $3,586,000 for the three months ended March 31, 2024.

This represents an increase of approximately $3,295,000 or approximately 91.9%. For adjusted EBITDA, we reported $9,398,000 for the three months ended March 31, 2025, compared to adjusted EBITDA of $5,208,000 for the three months ended March 31, 2024. This represents an increase of approximately $4,190,000 or approximately 80.5%. Moving along to the nine-month results, for the nine months ended March 31, 2025, we reported net income attributable to Radiant Logistics of $12,384,000 on $682.1 million of revenues or $0.26 per basic and $0.25 per fully diluted share. For the nine months ended March 31, 2024, we reported net income attributable to Radiant Logistics of $2,904,000 on $596.4 million of revenues or $0.06 per basic and fully diluted share. This represents an increase of approximately $9,480,000 over the comparable prior year period or 326.4%.

For adjusted net income, we reported $25,459,000 for the nine months ended March 31, 2025, compared to adjusted net income of $15,632,000 for the nine months ended March 31, 2024. This represents an increase of approximately $9,827,000 or approximately 62.9%. For adjusted EBITDA, we reported $30,866,000 for the nine months ended March 31, 2025, compared to adjusted EBITDA of $22,083,000 for the nine months ended March 31, 2024. This represents an increase of approximately $8,783,000 or approximately 39.8%. With that, I will turn the call over to our moderator to facilitate any Q&A from our callers.

Operator (participant)

Thank you. At this time, we will be conducting our question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue, and you may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you. Our first question is coming from Elliot Alper with Cowen. Your line is live.

Elliot Alper (VP)

Hi, Crain. Thank you. This is Elliot Alper for Jason Seidl. Can you elaborate more on.

Bohn Crain (Foubder and CEO)

Hey, Elliot.

Elliot Alper (VP)

Hey. Could you elaborate more on what drove the outperformance of the base business this quarter? Given your commentary on the bullwhip effect, could you talk about maybe kind of the puts and takes into the June quarter?

Bohn Crain (Foubder and CEO)

It's certainly a little early into the June quarter to have a lot of, to be able to get at that with any granularity. We certainly saw some kind of slowing or beginning to see some slowing in some of the international trade volumes in response to all the trade tensions that are going on. We'll see kind of how long that lasts in the scheme of things. Early indications for April were that, candidly, the business was doing better than I was expecting it to, or that we're not being as heavily impacted as I thought we might be. It's certainly early in the process, and it seems like every day things are shifting around. It's quite fluid right now.

While we certainly have a fair amount of our business involved in the support of global trade, it also, these challenges create opportunities. Kind of one of our taglines is never waste a good chaos here or do not let chaos go to waste in terms of the opportunities that it is creating for us to support our partners in navigating kind of the current environment. We would expect whatever near-term impacts that we will experience, we are pretty optimistic that over time we will kind of more than offset that through the following surge that is sure to come as folks begin to reset their supply chains.

At the same time, as I think you're familiar, we do have a fairly good-sized presence in Canada and Mexico, and kind of those markets have been kind of quasi-beneficiaries of some of these trade dynamics as shippers are kind of working to kind of navigate within the constraints of these what hope to be or proving to be interim tariffs. While there's a lot of uncertainty, I think at the end of the day, we're going to be better than okay, I think. Having said that, the quarter ended June should be solved. I would expect it to be solved. In terms of.

Elliot Alper (VP)

Yeah. This is maybe just looking back at the March quarter. I mean, kind of came above kind of where we were coming out for the estimates. I guess anything to call out there? Was it broad-based strength or any pockets of outperformance you saw?

Bohn Crain (Foubder and CEO)

Todd's got some of the details there that he's looking at, so.

Todd Macomber (CFO)

Yeah. I mean, it's just, yeah, I mean, Canada performed better than I anticipated. I'll put it that way. We have had, I mean, some of the files were down on account for the international, but the margin characteristics per file were up. It was really broad-based. Factoring in the acquisitions that we ended up getting done also helped contribute to the overall increase in the quarter.

Elliot Alper (VP)

Makes sense. Thanks. You've historically had some good insights into bookings out of Asia. This is given all the tariff news. I mean, curious about any trends you've seen evolve through April and maybe how you're expecting shippers to react in anything out of Asia bookings you're seeing. Just these last few days would be helpful.

Bohn Crain (Foubder and CEO)

We all woke up to the same news you did this morning, right? I think it's a little early to start calling it out, but in terms of how folks will ultimately respond. Basically, ocean imports ex-China had come to a virtual standstill most recently. Again, I think it's going to be very short-lived. Time will tell, right? There had been so much kind of movement in terms of trying to find alternative sources or diverting manufacturing sites to Southeast Asia or otherwise where certain things have been set in motion that'll have to run its course. I think there's been some level of kind of damage done that will have to kind of run its course. We'll see kind of how quickly things kind of revert back to some semblance of normal.

I'm sure you're aware, a number of the steamship lines have blank sailings, and they reposition ships kind of in anticipation of the slower volumes. It's a little bit of a firefight out there. I guess another callout that I would make to just give a little bit more color is that before some of our most recent transactions, the majority of our international business actually comes to us through our agency stations. We will be less affected on a net basis than you might otherwise expect because our historical kind of trailing 12-month international numbers, much of that comes through our international agent locations. With that said, our most recent acquisition of Transcon, in particular, is focused heavily on ocean imports and out of Asia and kind of the Trans-Pacific trade.

We're particularly interested to see how things progress in and around trade and tariffs and what kind of happened over the weekend, which I came in early this morning and tweaked the press release a little bit kind of in connection with this very recent news, which we view all as positive and hopefully constructive to getting things moving forward again.

Elliot Alper (VP)

Helpful. Thank you, Bohn. Thank you, Todd.

Bohn Crain (Foubder and CEO)

You bet. Thanks.

Operator (participant)

Thank you. Once again, ladies and gentlemen, if you do have any questions, please press star one on your telephone keypad. Our next question is coming from Jeff Kauffman with Vertical Research Partners. Your line is live.

Jeff Kauffman (Partner of Transportation and Logistics Equity Research)

Thank you very much. Hey, congratulations, guys. Challenging quarter, solid results. A couple of questions. I guess the first one, I just want to understand what you're saying when you say gross margin was affected 25%-30%. Is that implying that the AGP of $58 million could have been $70 million or $80 million, or is that more talking about the percentage of 27% could have been 30% or 31%? What exactly did you mean when you said AGP 25%-30% was affected?

Bohn Crain (Foubder and CEO)

No, I was saying 25%-30% of our gross margin is associated with international trade.

Jeff Kauffman (Partner of Transportation and Logistics Equity Research)

Okay. So not necessarily that the number could have been 25% or 30% higher. It's just that's how much of your freight was.

Bohn Crain (Foubder and CEO)

Right.

Jeff Kauffman (Partner of Transportation and Logistics Equity Research)

Okay. Touched by it. Okay. Thank you. That's it.

Bohn Crain (Foubder and CEO)

Yeah. And what was part of how you should also interpret that, or you should not necessarily interpret that as necessarily exposure to the downside, right? That 25%-30% of our business is an opportunity to engage on a real-time basis with our customers to try to kind of help them through the situation. Because there certainly are aspects of this. Jeff, as you might remember, we have a customs brokerage capability and a fairly robust PO management collaboration platform called GTM that came to us through the Navegate transaction. That team has just been extraordinarily busy on a consultative basis trying to help customers kind of figure out whether to zig or zag in the context of the information that keeps flowing.

One of the things we probably did not focus on enough as I am thinking about it is the removal of the kind of $800 de minimis. Historically, we really were not active or did not have much, if any, exposure to that parcel-level direct-to-consumer e-commerce play at all. Those businesses are getting crushed by that kind of change in the rule and going to, I think, ultimately kind of create more opportunities for us and companies like us because there is a lot of freight that has been moving by kind of international parcel-type carriers that are not well-positioned to support these trade flows outside of that de minimis relief. I think there is going to be kind of incremental opportunity for us around that particular change.

Jeff Kauffman (Partner of Transportation and Logistics Equity Research)

Bohn, I have a big-picture question here. I know it's only been a day since we heard about the thaw in U.S.-China here. Having said that, there are some things that still are going to be impacted by this, even on the reduced level. I'm just kind of curious in your mind. This isn't really a green light on everything. What do you think is still kind of frozen or stuck in the mud, and what kinds of business for your customers gets kind of unfogged by this change?

Bohn Crain (Foubder and CEO)

I don't know. That's a good question. But before kind of this kind of the tariff discussion revealed itself, there was already a move afoot for people to continue to look critically at their supply chains and look to further diversify their sourcing strategies, ultimately certainly not abandoning China, but diversifying to Southeast Asia and India and Mexico or other locations. I just don't think that I think this kind of volatility is just going to reinforce the continued pursuit of those strategies. I think the kind of whatever metaphor you want to use, the genie's out of the bottle or the conversation's already been started, I don't think you can kind of put the bullet back into the gun to continue to mix metaphors. I think this is we're just kind of continuing along the journey.

Honestly, I take even kind of a broader point of view personally, which is which of these strategies are going to survive the Trump administration? I expect that I and Radiant's going to be here long after Trump's gone, and I just do not, I fail to see how some of this stuff is really going to be durable. We are trying not to be too affected. I mean, obviously, we are all affected on the near term, but we are really trying to stay the course in terms of our fundamental strategies and not be swayed, if you will, by what ultimately are going to be kind of short-term phenomena. You will see we have continued to be kind of aggressive in our M&A activities. We are still kind of executing the same strategies, notwithstanding kind of the noise of tariffs.

Jeff Kauffman (Partner of Transportation and Logistics Equity Research)

Along those lines, currencies moved a lot in the last 90 or 100 days. How do you think the battlefield or the roadmap, whichever metaphor you want to roll with here, changes as a result of the changes in the currency flows?

Bohn Crain (Foubder and CEO)

I don't know. Yeah. I'll leave that to the economists. What I would tell you is we have a little exposure to the Canadian dollar based on what's happening based upon our business up there. Outside of that, most of our business is conducted in U.S. dollars. Now, that's not to say I can't sit here today and tell you what the landed cost of a particular widget, the sensitivity of the landed cost of a widget based upon the exchange rate relative to the pound. We would have to have several bottles of wine to answer that question.

Jeff Kauffman (Partner of Transportation and Logistics Equity Research)

Oh, okay. I can't get you wine right now, but let me throw just one last one in. You did mention kind of a mucky fourth fiscal quarter here and maybe a bullwhip sometime in the next fiscal year. I think going into the release today, consensus was thinking that fourth quarter is normally a pretty strong quarter for you fundamentally. Maybe it'll be your second best quarter this year. Do you still feel that the fourth quarter might be the second best quarter this year? Would you kind of put the caveat that there's just so much we don't know, we can't still be thinking along those lines?

Bohn Crain (Foubder and CEO)

Yeah. I think traditional sensitivity or traditional seasonality is kind of out the window right now. We still don't have great visibility to what's or how quickly things are going to change or how people are going to react to this news or how durable this news is or what tomorrow's tweet might be. I would say, at least for me, I'm expecting softness in the June quarter. I guess to answer your question more precisely, I would not expect June to be our second strongest quarter if I had to.

Jeff Kauffman (Partner of Transportation and Logistics Equity Research)

Your feeling is that, yeah, what you might lose in the June quarter, at some point, you recapture in fiscal 2026.

Bohn Crain (Foubder and CEO)

Right. That's what we think. Yeah.

Jeff Kauffman (Partner of Transportation and Logistics Equity Research)

Okay. Okay. Great. Thank you so much.

Operator (participant)

Thank you. As we have no further questions on the line at this time, I would like to hand the call back over to Mr. Crain for any closing remarks.

Bohn Crain (Foubder and CEO)

Thank you. 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 have created here at Radiant. At the same time, we intend to thoughtfully re-lever our balance sheet and through a combination of agent station conversions, strategic 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.

Operator (participant)

Thank you. Ladies and gentlemen, this concludes today's call. You may disconnect your lines at this time, and we thank you for your participation.