Radiant Logistics, Inc. (AMEX:RLGT) Q1 2024 Earnings Call Transcript

Radiant Logistics, Inc. (AMEX:RLGT) Q1 2024 Earnings Call Transcript November 9, 2023

Radiant Logistics, Inc. misses on earnings expectations. Reported EPS is $5.0E-5 EPS, expectations were $0.09.

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 first fiscal quarter ended September 30, 2023. 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, 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: Thanks, Angela. Good afternoon, everyone, and thank you for joining in on today’s call. Our results for the quarter ended September 30, 2023, continue to reflect the difficult freight markets being experienced by the entire industry as well as our own operations. The confluence of shippers continuing to manage through elevated inventories, reduced imports and slowing economic growth has had a cascading effect across virtually every mode of transportation. As in the prior quarter, these market conditions have negatively impacted not only our current results but also the year-over-year comparison to our record results for the prior year period. With that said, we remain optimistic that we’re at or near the bottom of the cycle and would expect markets to begin to find their way to more sustainable and normalized levels in coming quarters.

Notwithstanding the tough year-over-year comparisons, we’re very proud to report that we generated $9.2 million in adjusted EBITDA and almost $8 million in cash from operations for our quarter ended September 30. In addition, we continue to enjoy a strong balance sheet, finishing the quarter with approximately $36 million of cash on hand and nothing drawn on our $200 million credit facility. And as we detailed in our press release, we continue to allocate capital in support of our stock buyback program as well as converting our agent stations to company-owned stores as we did with our Daleray transaction in Florida. 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 believe our patience and discipline will be rewarded as market conditions become more conducive to our acquisition strategy, and we have ample dry powder to become more active on the acquisition front should the opportunity present itself. Looking ahead, we will 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, synergistic tuck-in acquisitions and stock buybacks. Through this approach, we will continue to scale our business, leveraging our best-in-class technology, our extensive global network, which we believe, over time, will continue to deliver meaningful value for our shareholders, operating partners and the end customers that we serve.

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: 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, 2023. For the three months ended September 30, 2023, we reported net income attributable to Radiant Logistics of $2.622 million on $210.8 million of revenues or $0.06 per basic and $0.05 per fully diluted share for the three months ended September 30, 2023. For September 30, 2022, we reported net income attributable to Radiant Logistics of $8.433 million on $331 million of revenues or $0.17 per basic and fully diluted share. This represents a decrease of approximately $5.811 million of net income over the comparable prior year period or 68.9%.

For adjusted net income, we reported $6.549 million for the three months ended September 30, 2023, compared to adjusted net income of $13.481 million for the three months ended September 30, 2022. This represents a decrease of approximately $6.932 million or 51%. For adjusted EBITDA, we reported $9.167 million for the three months ended September 30, 2023, compared to adjusted EBITDA of $18.669 million for the three months ended September 30, 2022. This represents a decrease of approximately $9.502 million or approximately 50.9%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.

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Q&A Session

Operator: [Operator Instructions] Our first question comes from Elliot Alper with TD Cowen. Please go ahead.

Elliot Alper: Great, thank you guys. This is Elliot on for Jason. I was hoping you could put some more context around the revenue decline sequentially in the quarter, maybe between the different business units. I know last quarter, you pointed to kind of a slight uptick on ocean bookings side. I guess how did that play out? And maybe what are you guys seeing on the ocean side of the business?

Bohn Crain: Thanks. So ocean remains soft for us, particularly as compared to a prior year period. I think for everybody what the narrative would suggest is there’s some modest uptick in imports and a little more activity on the West Coast. But on a comparative basis, it’s still down and I think is expected to be down for a good bit yet with blank sailings from the steamship lines and they’re under — while their coffers are full of cash, I think volumes are certainly down and they’ve got a lot of excess equipment at this point that they’ll have to figure out what to deal with kind of on that side of the equation. But we don’t see any, I think, meaningful increase in ocean near term. Call it, a muted peak might be a little bit of an understatement.

But with that said, we are seeing volumes come back ever so slowly or at least not continuing to decrease. Our kind of looking at it on a kind of division-by-division basis or kind of that type of conversation. Our kind of core forwarding operations continue to kind of carry the day as well as Canada and our operations up there continue to be meaningful contributors to what we’re doing, while our ocean and brokerage business, and brokerage, we would — again, just as a reminder, we define as both our intermodal and truck brokerage business. That’s obviously been soft in this market environment. Having said that, I would take a second to just give a little bit of a shout out to the progress we’re making in Kansas City with the truck brokerage team that we were able to onboard there kind of coming out of the wake of what went on Yellow, and we stood up a truck brokerage team in Kansas City.

And while that’s effectively an organic start for us, starting that business from a standing start, it’s kind of far out-ceding expectations in terms of their — kind of their growth and trajectory and path to profitability with the team that we’ve put in place there. So we’re really excited for that and what I would characterize as kind of expected incremental opportunities in the truck brokerage space. There’s a lot of chaos in the marketplace right now in the wake of Convoy and others who have recently gone down and others that are kind of expected, a rumor, to be under pressure. And so we’re seeing what opportunities may present themselves out of some of those dynamics as we move forward. So again, to recap, our core forwarding business along with the team in Canada continues to kind of lead the way for the organization.

And while our ocean and brokerage businesses are profitable, they could be a lot more profitable as the market gets better.

Elliot Alper: Yes. No, absolutely. And maybe going off on an earlier point, I know you guys do some LTL business. I mean can you talk about how that performed in the quarter. Maybe just your high-level thoughts on how some of the LTL consolidation affects your offering?

Bohn Crain: We don’t do a lot of, what I would call, pure deferred LTL more. Our LTL was more expedited time definite. So we weren’t necessarily impacted to the good or the bad around what’s going on and kind of within the LTL community. There’s, obviously were some clear winners and clear losers in connection with kind of Yellow and what happened there. So not a significant or meaningful kind of direct impact to us from what’s been going on in the LTL space.