Radiant Logistics Inc
AMEX:RLGT
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Earnings Call Analysis
Summary
Q4-2024
Radiant Logistics experienced a notable quarter with net income rising by 52.1% year-over-year to $4.781 million, despite revenues falling to $206 million from $232.2 million. Adjusted net income climbed 8.6%, while adjusted EBITDA slightly declined by 1.4%. The company completed five acquisitions and supported a $4 million stock buyback, ending with $25 million in cash. Positive trends include a sequential improvement and an optimistic acquisition strategy, aiming for continued growth as markets stabilize. Expectations are for steady performance without immediate large catalysts, as Radiant remains acquisitive and focused on delivering shareholder value.
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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.
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 ended June 30, 2024 when compared to our third fiscal quarter ended March 31.
With net income up over 750%, 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 continue 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, '24. In addition, we continue to enjoy a strong balance sheet and after completing 5 tuck-in acquisitions and deploying over $4 million in support of our stock buyback program, we're able to finish the quarter with approximately $25 million of cash on hand and still 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 re-levering 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 3 agent station conversions over the course of fiscal '24 with the acquisition of Florida-based Daleray in October of '23, the Select businesses in February of '24, and Minnesota-based Viking Worldwide in April '24.
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 3 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. 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.
Thanks, Bohn, and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the 3 and 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 million on $206 million 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 million 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 million of net income over the comparable prior year period, or 52.1%.
Adjusted net income, we reported $7.015 million for the 3 months ended June 30, 2024, compared to adjusted net income of $6.457 million for 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 million for the 3 months ended June 30, 2024, compared to adjusted EBITDA of $9.208 million 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, for the 12 months ended June 30, 2024, we reported net income attributable to Radiant Logistics of $7.685 million on $802.5 million of revenues, or $0.16 per basic and fully diluted share. The 12 months ended June 30, 2023, we reported net income attributable to Radiant Logistics of $20.595 million on $1,085 million of revenues, or $0.43 per basic and $0.42 per fully diluted share. This represents a decrease of approximately $12.910 million of the comparable prior year period, or 62.7%.
For adjusted net income, we reported $22.647 million for the 12 months ended June 30, 2024, compared to adjusted net income of $39.301 million for the 12 months ended June 30, 2023. This represents a decrease of approximately $16.654 million, or approximately 42.4%.
For adjusted EBITDA, we reported $31.160 million for the 12 months ended June 30, 2024, compared to adjusted EBITDA of $55.638 million in the 12 months into June 30, 2023. This represents a decrease of approximately $24.478 million approximately 44%.
With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.
[Operator Instructions] The first question comes from Elliot Alper with TD Cowen.
This is Elliot on for Jason Seidl. Maybe just first starting on the quarter, EBITDA sequentially almost $4 million, I guess, above our expectations. Can you talk about maybe the drivers of the outperformance in the June quarter?
[ Want to ] give a shot or?
Sure. Yes, 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.
And then there's a lot of noise with port data we look at. I guess maybe a couple of questions here. But maybe 1, 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?
Yes, 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. 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 in 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.
And then Bohn, 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. I'd love to hear your thoughts.
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. [ All that ] for a non-answer answer.
The next question comes from Kevin Gainey with Thompson, Davis.
Maybe we could start off looking at a little bit of forward as you think about entering fiscal year '25. 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 '25?
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. 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. 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 darn just 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.
Since you brought up the M&A piece, maybe kind of 2 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?
Yes, 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 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 get me wrong, we're not the only person out there active. There certainly are quite a few quite competent healthy competitors, 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 longstanding brand promise to support our operating partners when and if they were ready for their own exit 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. And so we're going to -- we would expect kind of the rate of that to continue as we move forward.
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?
Yes, yes. And 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.
[Operator Instructions] The next question comes from Jeff Kauffman with Vertical Research Partners.
Congratulations, terrific with the numbers. Just a 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?
Good question.
That is a good question. I know we...
[ You know what? ] We have not disclosed that. And so I'm going to punt because of the fact that we have it, and I will respond this way. 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 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 lips zipped as best we can and tend to our business and share the results as they occur.
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%. Why were commissions down so much more than revenues? Normally those 2 are fairly close.
Well, there's some -- let me try that. It's kind of 2 things at play, right? So we had some significant kind of nonrecurring 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 are seeing is conversion of agency stations to company owned stores. So as we're buying in agency stations, we'll -- that would be kind of a natural thing that we would expect to see happening.
So if the agency commission...
And 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, 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 and do our consolidated results.
So a couple million dollars of that. That's fair. All right. Well, that's -- well, I guess 1 more. 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?
Well, it's kind of the -- 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. 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, but so that's...
The way we should think in the near-term would be business moving forward plus or minus acquisitions until the world changes?
I think that's right. But it may change in November, who knows?
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's like Bohn saying, I mean, there's nothing that's going to dramatically uptick it, but we are seeing strengthening. And on top of that, the revenue profile I'm seeing has been increased -- that's been slowly increasing too. But it does take a while, like Bohn says, before we get back to where we think it will ultimately land.
Well, that's all I have. Congratulations.
Okay. We have no further questions in queue. I'd like to turn the floor back to Bohn Crain for any closing remarks.
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 de-lever our balance sheet and through a combination of agent station conversions, synergistic 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.
This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.