Radiant Logistics, Inc. (AMEX:RLGT) Q3 2024 Earnings Call Transcript

Radiant Logistics, Inc. (AMEX:RLGT) Q3 2024 Earnings Call Transcript May 11, 2024

Radiant Logistics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day. This afternoon, Bohn Crain, Radiant Logistics’ Founder and CEO; and Radiant Chief Financial Officer, Todd Macomber, will provide a general business update and discuss financial results for the company’s third fiscal quarter and 9-month ended March 31, 2024. [Operator Instructions] This conference is scheduled for 30 minutes. This conference may include forward-looking statements within the meaning of the Securities Act 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 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 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: Thank you. Good afternoon, everyone, and thank you for joining in on today’s call. Our results for the quarter ended March 31, 2024, continue to reflect the difficult freight markets being experienced by the entire industry as well as our own operation. This extended period of weak freight demand, combined with excess capacity, continues to negatively impact not only our current results but also the year-over-year comparison to our record results for prior year period. With that said, we saw a very difficult January and then steadily improvements throughout the quarter, and we expect to report sequential quarterly improvement moving forward as markets find their way to more sustainable and normalized levels. Notwithstanding the tough year-over-year comparisons, we continue to deliver meaningfully positive results and have generated $22.1 million in adjusted EBITDA and $16 million in net cash for operations for the 9 months ended March 31, 2024.

In addition, we continue to enjoy a strong balance sheet, finishing the quarter with approximately $31.2 million of cash on hand and nothing drawn on our $200 million 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, 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.

In this regard, we’re very excited about our recent agent station conversions with the acquisition of Daleray in October of 2023 and the Select businesses in February of 2024, which will combine to solidify our offering to support the cruise line industry in South Florida, along with our most recent acquisition of 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 the built-in exit strategy available to the entrepreneurs participating in our network. We believe these 3 transactions are representative of a broader pipeline of opportunities inherent in our agent-based network, and we look forward to supporting other strategic operating partners when they are ready to begin their transition from an agency to company-owned location.

With that said, I’ll now turn it over to Todd Macomber, our CFO, to walk through the details of our 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, adjusted EBITDA for the 3- and 9-month ended March 31, 2024. For the 3-month ended March 31, 2024, we reported a net loss attributable to Radiant Logistics of $703,000 on $184.6 million of revenues or $0.02 per basic and fully diluted share. For the 3 months ended March 31, 2023, we reported net income attributable to Radiant Logistics of $4.183 million on $244.2 million of revenues or $0.09 per basic and $0.08 per fully diluted share. This represents a decrease of approximately $4.886 million of net income over the comparable prior year period. For adjusted net income, we reported $3.586 million for the 3 months ended March 31, 2024, compared to adjusted net income of $8.221 million for the 3 months ended March 31, 2023.

This represents a decrease of approximately $4.635 million or approximately 56.4%. For adjusted EBITDA, we reported $5.280 million for the 3 months ended March 31, 2024, compared to adjusted EBITDA of $11.560 million for the 3 months ended March 31, 2023. This represents a decrease of approximately $6.352 million or approximately 54.9%. Moving along to the 9 months. For the 9 months ended March 31, 2024, we reported net income attributable to Radiant Logistics of $2.904 million on $596.4 million of revenues or $0.06 per basic and fully diluted share. For the 3 months ended March 31, we reported net income attributable to Radiant Logistics of $17.452 million on $853.3 million of revenues or $0.36 per basic and $0.35 per fully diluted share. This represents a decrease of approximately $14.548 million over the comparable prior year period or 83.4%.

For adjusted net income, we reported $15.632 million for the 9 months ended March 31, 2024, compared to adjusted net income of $32.845 million for the 9 months ended March 31, 2023. This represents a decrease of approximately $17.213 million or approximately 52.4%. For adjusted EBITDA, we reported $22.083 million for the 9 months ended March 31, 2024, compared to adjusted EBITDA of $46.434 million for the 9 months ended March 31, 2023. This represents a decrease of approximately $24.351 million or approximately 52.4%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our call.

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Q&A Session

Operator: [Operator Instructions] And our first question comes from Mark Argento from Lake Street Capital.

Mark Argento : Bohn, Todd, just any kind of color on the environment right now. I know it continues to be a little tough out there. But have you seen any kind of green shoots out there? Any sectors that are maybe starting to perform a little better across the platform?

Bohn Crain: Mark, this is Bohn. I guess I would start by kind of reiterating the prepared remarks, which was January started off really, really slow. And we have seen kind of sequential, February was better than January, and March was better than February. And kind of early indications, April is continuing to build on that trend. So I think we’re effectively calling the bottom in terms of the slowness here. Quarter ended March is our seasonally slowest quarter as well. So we would expect prospective quarters to worked their way back to more normalized levels. What I think, kind of our world is similar to other, to the others that calls that you might have participated in. The international has been soft, but that seems to be improving.

So we’re seeing a little bit of light, I guess, in terms of the international or the performance of the international services within the solution set. Canada, who typically is, really, really shine bright, had their own struggles with the quarter ended March, but they’re making meaningful progress there. Probably our, one of our most challenged areas has been in the intermodal space. But even that, too, we’re very optimistic of the trajectory of what we’re doing in Chicago with our bimodal initiatives. And for those that might remember, we, on a greenfield basis, opened a truck brokerage capability in Kansas City, kind of in the wake of Yellow’s bankruptcy, that we’re pretty excited about. So we’ve got a number of things working. If anything, I think what I would emphasize is, notwithstanding the really tough market, we think we’re in a really good shape in terms of financial flexibility and no debt.

And so we’re kind of continuing to lean into this whole environment and try to identify opportunities to take advantage of kind of in this market environment. Because while the numbers are not where anybody wants them to be, on a relative basis, we think we’re in really good shape and excited to continue to execute our strategy. And we’ve done, as I had kind of telegraphed on some of our earlier calls, we see a big opportunity emerging in the conversion of our agent stations to company-owned stores, we’ve all talked about kind of the gray tail and kind of the inherent pipeline of tuck-in acquisitions that we would expect to come to us over time. And that’s manifesting itself, and we’re happy and proud to be able to support our operating partners when they’re ready to do that for us to kind of meet them at that intersection and support them in that transition.

So everything is playing out kind of the way we would have hoped or expected. We’re just unfortunately in this kind of global freight recession right now. But I’m pretty optimistic that the kind of the ultimate worst is behind us, and we’ll kind of be rebuilding here and have an opportunity to hopefully get some things done kind of more strategically in an environment where a lot of people are handcuffed.

Mark Argento : That’s helpful. And then I know, obviously, the balance sheet is in great shape and happily so. But at the same time, any thoughts on incrementally getting a little more aggressive here? Or are you just kind of whatever comes to you, it comes to you and it is what it is at this point in terms of deploying capital?

Bohn Crain: Yes. Well, we’ve always been, or I like to view or think of ourselves as always being good kind of disciplined allocators of capital. So we’ve never chased deals, and we’re not going to be chasing deals in this environment. But I think kind of our view about kind of valuation and structure, that kind of work for us. I think the market is coming to us a little bit, if you will. So I think we’ll have more of an opportunity to get things done in a way that makes sense to us in terms of value and structure. And we expect to be active in our stock buyback moving forward. We weren’t particularly active this quarter, knowing that it was going to be a soft quarter and our stock is thinly traded. And we didn’t want to kind of step into it, if you will, so to speak.

But kind of, as the trading window opens up and all that type of stuff, we would expect to kind of be out there in the market beginning again to reengage in our buyback, so kind of continuing along the course we’ve been describing. It’s kind of our baseline plan is a balanced approach of stock buybacks and the smaller tuck-in type of acquisitions. And if something larger comes along, we’ll certainly look at it. But it’ll have to kind of meet these fundamental criteria that we look at as we think about how we’re deploying our capital.

Operator: Our next question comes from Kevin Gainey from Thompson, Davis.

Kevin Gainey: Maybe just to kind of delve a little bit deeper into the question about end markets. How are you, what are you guys hearing from maybe the manufacturing side or the retail side? Or what are you hearing from those customers as you kind of roll into the next quarter and maybe the back end of the year.

Bohn Crain: I guess I’ll go first and then Todd can add in as appropriate. The, as has historically been the case when we’re in these types of environments, we’re certainly not losing customers. Our customers have just been shipping less in this environment. There was a lot of talk historically about COVID, safety stocks and excess inventories and kind of chewing through those inventories. And so as we think about kind of the international component, I think that is effectively playing out and that we’re starting to see some increased volumes and opportunities at the margin on our international shipments. Some of the global conflict going on, that’s acted at least as a temporary catalyst on price in terms of ocean and air freight that we’re enjoying at the same time.

The underlying trend of near-shoring and what’s going on in Mexico continues to play out and remains a very interesting kind of area of growth and opportunity for everyone as we spend a fair amount of time talking about how to support our current and prospective customers that historically have sourced from China and how they’re, I mean no one’s abandoning China, but they’re diversifying their sourcing strategies, and we want to be able to support our current and prospective customers as they’re kind of executing against those diversification strategy. But some of the slowest markets to recover for those that have been on some of our prior calls, cruise line is certainly coming back, trade shows coming back quite strongly. So those are definitely some positives.