Radiant Logistics - Q4 2024
September 12, 2024
Transcript
Operator (participant)
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 fourth fiscal quarter and year ended June 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 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 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 Radiant's Founder and CEO, Bohn Crain.
Bohn Crain (Founder, Chairman, and CEO)
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 fourth fiscal quarter into June 30, 2024, when compared to our third fiscal quarter ended March 31. With net income up 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.
Notwithstanding the tough year-over-year comparisons, we continued to deliver meaningfully positive results and have generated $31.2 million in Adjusted EBITDA and $17.3 million 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 five tuck-in acquisitions and deploying over $4 million dollars in support of our stock buyback program, we were able to finish the quarter with approximately $25 million of cash on hand and still nothing drawn in our $200 million dollar 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. In this regard, we made good progress in supporting three agent 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 exit 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 two new teams to our network with the acquisition of Portland-based DBA Associates and Seattle-based Cascade Transportation, both of which joined us from a competing network. And most recently, we completed the acquisition of Foundation Logistics, another great addition to the Radiant 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&A.
Todd Macomber (Senior VP and 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 12 months ended June 30th, 2024. For the three months ended June 30th, 2024, we reported net income attributable to Radiant Logistics of $4,781,000 on $206 million of revenues, or $0.10 per basic and fully diluted share. For the three months ended June 30th, 2023, we reported net income attributable to Radiant Logistics of $3,143,000 on $232.2 million 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%. For Adjusted Net Income, we reported $7,015,000 for the three months ended June 30th, 2024, compared to Adjusted Net Income of $6,457,000 for the three months ended June 30th, 2023. This represents an increase of approximately $558,000 or approximately 8.6%. For Adjusted EBITDA, we reported $9,078,000 for the three months ended June 30th, 2024, compared to Adjusted EBITDA of $9,208,000 for the three months ended June 30th, 2023. This represents a decrease of approximately $130,000, or approximately 1.4%.
Moving along to the 12-month results. For the 12 months ended June 30th, 2024, we reported net income attributable to Radiant Logistics of $7,685,000 on $802.5 million of revenues, or $0.16 per basic and fully diluted share. For the 12 months ended June 30th, 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 of the comparable prior year period, or 62.7%.
Adjusted Net Income, we reported $22,647,000 for the 12 months ended June 30th, 2024, Adjusted Net Income of $39,301,000 for the 12 months ended June 30th, 2023. This will represent a decrease of approximately $16,654,000, or approximately 42.4%. For Adjusted EBITDA, we reported $31,160,000 for the 12 months ended June 30th, 2024, compared to Adjusted EBITDA of $55,638,000 for the 12 months ended June 30th, 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&A from our callers.
Operator (participant)
Thank you. At this time, we will be conducting a 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. You may press star two if you'd 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 poll for questions. Once again, please press star one if you have a question or a comment. The first question comes from Elliot Alper with TD Cowen. Please proceed.
Elliot Alper (VP)
Hey, guys, thanks. This is Elliot Alper on for Jason Seidl. Maybe just first starting on the quarter, EBITDA up sequentially, almost $4 million, I guess, above our expectations. Can you talk about maybe the drivers of the outperformance in the June quarter?
Todd Macomber (Senior VP and CFO)
You want to give it a shot or...? Sure, yeah, yeah. I mean, you know, I mean, you know, it's hard to know the numbers, of course, you know, and, you know, we're just seeing quick sequential growth, quite honestly. You know, the Q3 was obviously weak, but we, you know, it's, you know, it, it's just I can't really speak to any particular thing in, you know, in particular, but we're seeing growth in the quarter as far as volume, and the pricing is coming up.
Elliot Alper (VP)
Got it. Okay. And then, you know, there's a lot of noise with the port 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 two, are you seeing kind of any customers shift freight ahead of the potential port strike on October first?
Todd Macomber (Senior VP and CFO)
Yes, I'll take a shot at that. So, I think the short answer is, yeah, we did see some pull forward, you know, a combination of global events, you know, risk of changeover in elections and potential tariffs. And, you know, 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. And so we're, you know, in the past several months, we've seen kind of additional pressure on the West Coast, which we view as a positive thing.
You know, ocean rates are up, as well as we're starting to see a little relief or 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.
Elliot Alper (VP)
Okay. And then, Bohn, I'm 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 was a report out this week suggesting both sides are, you know, pretty far apart on negotiations. Would love to hear your thoughts.
Bohn Crain (Founder, Chairman, and CEO)
... I wouldn't want to speculate on that. I would just, you know, to the extent that happens, you know, 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 you know, we'll be there to support our customers as best we can to the extent that happens.
Elliot Alper (VP)
Got it. All right. Thanks, guys.
Bohn Crain (Founder, Chairman, and CEO)
How's that for a non-answer answer?
Elliot Alper (VP)
Exactly. All right, appreciate it.
Operator (participant)
Okay, the next question comes from Kevin Gainey with Thompson Davis. Kevin, please proceed.
Kevin Gainey (Senior Research Analyst)
Good afternoon, Bohn and Todd. How's it going?
Bohn Crain (Founder, Chairman, and CEO)
Good, thanks.
Kevin Gainey (Senior Research Analyst)
Good, thank you.
Maybe we could start off looking a little bit forward as you think about entering fiscal year 2025. Maybe you guys can 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?
Bohn Crain (Founder, Chairman, and CEO)
You know, I think we. I'm gonna kind of point back to our last quarter. We, you know, 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. You know, and I think, at least in my mind, and we'll see how it plays out, but I think, you know, kind of this, you know, plus or minus, you know, 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 don't. I wouldn't say we're back to normal, but I, you know, whatever that means these days.
But kind of based upon what we are seeing, you know, 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 you know, but with that said, you know, we're not seeing some big, you know, catalyst that's gonna drive yet another step function-
Kevin Gainey (Senior Research Analyst)
Yeah
Bohn Crain (Founder, Chairman, and CEO)
... you know, increase. You know, I think everybody's grinding, right? And we're grinding right along with the best of them, you know, and trying to be thoughtful in our cost structure and making sure we're continuing to keep that aligned with, with the business opportunities, you know, that we see. You know, I would, I would pivot your question just slightly because I think it's so relevant to our, to our individual story. You know, 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, you know, doing our darndest to be active out there in the marketplace, most of them tuck-in acquisitions.
But we're, you know, open for business, and we're, you know, 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 into 2025.
Since you brought up the M&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.
Yeah, sure. So, I guess try to hit the first part of that question in terms of sellers' expectations. I don't know that 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, so it's easier to transact off of the trailing 12-month type numbers that we're seeing now, rather than, you know, before, kind of in the height of COVID and kind of the 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, don't get me wrong, we're not the only person out there active. There certainly are quite a few quite competent, healthy competitors, but in, 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. You know, it's been our long-standing brand promise to support our operating partners, you know, when and if they were ready for their own exit strategy. And what's the saying?
Father time waits for no man, right? So you know, everybody's getting a little older and just so that kind of opportunity set just continues to mature, literally and figuratively. And so we're gonna, you know, we would expect kind of the rate of that to continue, you know, as we move forward.
Kevin Gainey (Senior Research Analyst)
... 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 mean.
Bohn Crain (Founder, Chairman, and CEO)
Yeah, yeah. We're not in a position to get into too much detail, you know, on that for a number of reasons. But, you know, as we have natural disasters and kind of other opportunities into which, you know, there would be a response, we're, you know, our expectations is we'll be one of the first people that's, you know, that's called and given an opportunity to support, you know, to kind of support that opportunity.
Kevin Gainey (Senior Research Analyst)
Sounds like the place to be. Appreciate the time, guys.
Bohn Crain (Founder, Chairman, and CEO)
Yeah, you bet.
Operator (participant)
Once again, if you have a question or a comment, please indicate so by pressing star one on your touch tone phone. The next question comes from Jeff Kauffman with Vertical Research Partners. Please proceed.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Thank you very much. Hey, guys, congratulations.
Bohn Crain (Founder, Chairman, and CEO)
Hey, Jeff.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Terrific with the numbers.
Bohn Crain (Founder, Chairman, and CEO)
Thank you.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Just a couple quick questions. If I look at the six acquisitions you've made in the last 12 months, in aggregate, roughly how much EBITDA are we bringing in incrementally?
Bohn Crain (Founder, Chairman, and CEO)
That's a good question.
Todd Macomber (Senior VP and CFO)
That is a good question.
Bohn Crain (Founder, Chairman, and CEO)
You know 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 Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Mm-hmm.
Bohn Crain (Founder, Chairman, and CEO)
You know, Jeff, you've been following us so long, and I appreciate that, and there was a time when every transaction we did was material, and we had to disclose it and file an 8-K and pro formas.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Mm-hmm.
Bohn Crain (Founder, Chairman, and CEO)
And we had to kind of, you know, 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 lips zipped as best we can and tend to our business, and share the results as they occur.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Fair enough. I just thought maybe as a collective group, maybe I could get that answer. All right, go a different direction. Revenue's down about 11%. Operating partner commission's down about 20%. Why were commissions down so much more than revenues? Normally, those two are fairly close.
Bohn Crain (Founder, Chairman, and CEO)
There's some. Let me try that. Kind of two 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, we'll, you know, that would be kind of a natural thing that we would expect to see happening.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Okay, so if the agency commissions-
Todd Macomber (Senior VP and CFO)
Just a, yeah, just a quick reminder, right? So, you know, as we buy in 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&A costs, and the difference is kind of their incremental EBITDA that we would onboard into our consolidated results.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Okay. So a couple million dollars of that. That's fair. All right. Well, that's... Well, I guess one more. You know, Bohn, 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?
Bohn Crain (Founder, Chairman, and CEO)
It's, you know, it's kind of, you know, for us, you know, our fate goes as our customers' fate goes, right?
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Mm-hmm.
Bohn Crain (Founder, Chairman, and CEO)
So we need our customers conducting more business. We need, you know, more hard freight. You know, while the service economy is great, that doesn't create a lot of hard freight for us to move around. So, you know, we need, you know, hopefully an improving investment climate, where people are making investments, feel confident in their businesses.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Mm-hmm
Bohn Crain (Founder, Chairman, and CEO)
... and are making investments in hard freight. You know, I think we're largely behind kind of the old conversation of safety stocks and kind of excess inventory. 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, you know, than it is now. But so-
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
So the way we should think of the near term would be, you know, business moving forward, plus or minus acquisitions, until the world changes?
Bohn Crain (Founder, Chairman, and CEO)
I think that's right.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
Okay.
Bohn Crain (Founder, Chairman, and CEO)
but it may change.
Todd Macomber (Senior VP and CFO)
It may, it may change in November.
Bohn Crain (Founder, Chairman, and CEO)
Who knows?
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
You know, we're seeing slight upticks in volumes, Jeff, month-over-month, you know, but it's not, you know, for now, it's fairly. You know, I wouldn't say, like Bohn's saying, I mean, there's nothing, you know, 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. You know, that's been slowly increasing, too.
Todd Macomber (Senior VP and CFO)
Okay.
But it's going to take a while, like Bohn says, you know, before we get back to where, you know, to where we think it will ultimately land.
Jeff Kauffman (Partner and Transportation and Logistics Equity Research Analyst)
All right, guys. Well, that's all I have. Congratulations and thank you.
Bohn Crain (Founder, Chairman, and CEO)
Thank you.
Operator (participant)
Okay, we have no further questions in queue. I'd like to turn the floor back to Bohn Crain for any closing remarks.
Bohn Crain (Founder, Chairman, and CEO)
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 Radiant. At the same time, we intend to thoughtfully re-lever 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 Radiant Logistics.