RLGT - AMEX

Good afternoon. Welcome to Radiant Logistics' Inc.'s Financial Discussion for Fourth Fiscal Quarter and Year Ended June 30, 2025. 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, 2025. Following their comments, we will open the call to questions. This conference is scheduled for 30 minutes. This conference 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 Radiant's 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, Matthew. Good afternoon, everyone, and thank you for joining in on today's call. With the benefit of our diverse service offering and ongoing acquisition efforts, we continue to deliver solid financial results and generated $38.8 million in adjusted EBITDA for our fiscal year ended June 30, 2025, which is up $7.6 million and 24.4% relative to the prior year period. The year-over-year improvement in adjusted EBITDA was driven principally through our acquisition efforts. For the year ended June 30, 2025, our acquisitions generated $6 million in adjusted EBITDA, driven principally by our greenfield acquisitions of Seattle-based Cascade Transportation in June of '24, Houston-based Foundation Logistics and Services in September of '24, St. Louis-based TCB Transportation in December of '24 and Los Angeles-based Transcon shipping in March of '25, along with the conversion of our strategic operating partners, Miami-based Select Logistics in February of '24 and Philadelphia-based USA Logistics in April of '25. Notwithstanding these strong year-over-year results, we expect to continue to see some near-term volatility tied to the ebb and flow of the ongoing U.S. negotiations around trade and tariffs. In any event, we continue to believe that there will ultimately be a surge in global trade as these tariffs disputes are brought to rest. In the interim, we intend to remain nimble in response to any 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 for competitive advantage. As previously discussed, we believe we are well positioned with a durable business model, diverse service offering and strong balance sheet to navigate through a slower freight market. We continue to enjoy a strong balance sheet with approximately $23 million of cash on hand as of June 30 and only $20 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 relevering our balance sheet through a combination of strategic operating partner conversions, synergistic tuck-in acquisitions and stock buybacks. We made good progress in this regard over this last year, having completed 3 greenfield acquisitions and 3 strategic operating partner conversions in fiscal '25. In addition, earlier this month, we achieved a significant milestone with our acquisition of Mexico-based Weport. Mexico is an important market for us, and in addition to supporting Radiant's legacy and prospective customers across Mexico. Weport is well positioned to serve as a platform to help us continue to scale our North American footprint. We believe these transactions are representative of a 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 and look forward to providing further updates as we progress our acquisition efforts. 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, 2025. For the 3 months ended June 30, 2025, we reported net income attributable to Radiant Logistics for the quarter of $4.907 million on $220.6 million of revenues or $0.10 per basic and fully diluted share. 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. This represents an improvement of approximately $126,000 of net income over the comparable prior year period or 2.6%. Quarterly adjusted net income results. For adjusted net income, we reported $5.485 million for the 3 months ended June 30, 2025, compared to adjusted net income of $7.015 million for the 3 months ended June 30, 2024. This represents a decrease of approximately $1.530 million or approximately 21.3%. For adjusted EBITDA, we reported $7.890 million for the 3 months ended June 30, 2025, compared to adjusted EBITDA of $9.078 million for the 3 months ended June 30, 2024. This represents a decrease of approximately $1.188 million or approximately 13.1%. Moving on to the 12-month results. For the 12 months ended June 30, 2025, we reported net income attributable to Radiant Logistics of $17.291 million on $902.7 million of revenues or $0.37 per basic and $0.35 for fully diluted share. 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. This represents an increase of approximately $9.606 million over the comparable prior year period or 125%. For adjusted net income, we reported $30.944 million for the 12 months ended June 30, 2025 compared to adjusted net income of $22.647 million for the 12 months ended June 30, 2024. This represents an increase of approximately 8.297 million or approximately 36.6%. For adjusted EBITDA, we reported $38.756 million for the 12 months ended June 30, 2025, compared to adjusted EBITDA and of $31.160 million for the 12 months ended June 30, 2024. This represents an increase of approximately 7.596 million or approximately 24.4%. With that, I will turn the call over to our moderator to facilitate any Q&A from our callers.

[Operator Instructions] Your first question is coming from Elliot Alper from TD Cowen.

This is Elliot Alper on for Jason Seidl. Can you talk about the changing trade policy and how that's affected your business. I guess, maybe more specifically first on the Mexico side, given your recent acquisition of Weport?

Sure. It remains fluid, obviously, and there -- it's -- if it fits and starts, right? So initially, there were some pull forward with people trying to get ahead of tariffs, then there's little inventory builds up. There were some warehousing constraints with everybody trying to navigate various strategies around the tariffs including kind of bringing freight to U.S. adjacencies, whether that's Canada or Mexico. So there's -- it's -- it remains an interesting time. I think we're seeing definitely a continued shift or diversification away from China to Southeast Asia and markets like Mexico, we believe will continue to be a beneficiary of kind of the trade dynamic. I can't tell you kind of which way the wind will blow next, but it will remain volatile or I would expect that it will. And we're going to be there to support our customers through that process, while at the same time, continuing to build out and solidify our own presence across North America. for the longest time. We've been strong in the U.S. back in 2015, we acquired another public company, formerly known as Wheels that represented our platform in Canada, and so our opportunity to partner with Weport and the Mexico transaction is kind of a continuation along the theme and making good on our own kind of vision or aspirations to really have a robust kind of one-stop shop opportunity for North America on a more comprehensive basis and Weport represents that for us helping kind of complete our North American puzzle as we move forward.

Okay. Great. And then yes. So we've seen a lot of volatility on the imports this year. I guess, 2 different pull-forward events. We've also seen kind of more capacity in TEUs come online this year. I guess, how are you managing your business differently given all that's going on? And how are your customers managing their businesses differently?

Well, it's been an interesting time. It's harder for the customers to manage their supply chains just giving the -- given the volatility. So a lot of shippers have been just doing their best to by time in and around when they -- either getting in ahead of tariff effective dates or back to this idea of bringing freight either into Canada or Mexico while trying to decipher what's going to happen next or which commodities are going to be impacted and so on. So until there -- more announcements were made around various commodities or times for changes, it remains difficult. And then, of course, we've got the whole -- whether the tariffs are even legal, I guess, is coming before the Supreme Court. So needless to say, our and our competitors' customs brokerage operations are extremely active trying to keep up with kind of these uncertain times and doing what we can to support our customers through that journey.

Okay. That's helpful. And then maybe just 1 on the near term. So adjusted EBITDA was a bit [ below us ], specifically EBITDA margins. I guess anything to call out in the quarter, any pull forward or a lack thereof would be helpful.

Yes. I think it's more lack thereof. I think it's was more of a pull forward in earlier periods is what it was. And so like Bohn said, I mean, people pull forward and you build inventories and you burn through them and then you need to get back to bringing product in. So -- but that's what I was seeing. I think it's timing, right? And it's hard for us to really quantify when these things are going to change. But clearly, it's impacting us sometimes favorably and sometimes not. So in this particular quarter, I think there was less pull forward is what we saw. So that's -- it's nothing alarming but it's going to be expected, but it's hard for us to quantify exactly how things play out in the near term.

Your next question is coming from Mark Argento from Lake Street.

Just a quick follow-up on the last question in terms of EBITDA. I did notice, it looks like depreciation and amortization in the quarter was down like $3.6 million, running closer to $5 million a quarter. Obviously, that add-back wasn't there for us. What did you guys end up? Writing something down or what was [indiscernible]

No, no. As Bohn mentioned, in 2015, we did a pretty big acquisition, Wheels Group, and that was a 10-year life. And so basically, it's a substantial amortization associated with that acquisition that basically got to the end of its life. And so we -- so now the numbers you see for this quarter are going to be more baseline going forward. So it's purely that.

Got it. Just the Wheels deal fell off the amortization. Got it. That's helps. Yes. And just pivoting back, obviously, you guys have been super aggressive or active. I don't know if aggressive is the right word, but active on the M&A side and buying in. I mean a lot of these guys you're buying -- you're doing business, you're integrating, you've already -- they're already almost integrated effectively. Is there kind of a capacity limitation? Is there any reason you couldn't do 10 or 15 of these a year, I mean, not to get overzealous, but maybe just talk through how you're thinking about the pipeline and your ability to do more of this.

Sure. We've always talked about kind of what are the constraints around acquisitions, and we really don't think it's a -- there's a true constraint on interesting acquisition candidates. And given our low leverage, we've got ample kind of capacity to do deals. So the ultimate constraint really becomes our ability to kind of integrate and digest the things that we acquire. And Mark, you'll remember, we've historically thought of having a couple of different platforms to support M&A. So we've historically had our U.S. forwarding operation platform. That's where you're seeing all of our Asia station conversions occurring. We also have our U.S. intermodal and truck brokerage platform in Chicago, where we're looking to do transactions, that's where we were able to do the TCB transaction from. And then we have our Canadian platform where we're always interested in exploring Canadian type opportunities. And now most recently with Weport, we'll will have yet a fourth -- I think of that as a fourth platform where we could explore kind of other potentially interesting opportunities. And from a Mexico standpoint, to continue to build out our capabilities in Mexico. And kind of coming back for the longest time, we've talked about our extreme low leverage on our balance sheet and as we kind of work our way back to a more normalized level. We have quite a bit of capacity within our existing capital structure to continue to grow, particularly when you consider kind of the free cash flow characteristics of the business, that's kind of part and parcel of what we're doing. So I like your choice of words. I really don't view us as being aggressive, but I do view us as being active. And I think kind of the overall market dynamics kind of point to arrow our way right now. So we're we're trying to lean into that opportunity and we're really excited about the things that we're doing as well as some other kind of organic initiatives that are pretty exciting that we're working towards.

And just a final one for me. In terms of the tariff situation and we're getting -- also getting closer to year-end here in the holidays and everything else going on. I mean is it -- are you starting to see any activity like if a country -- looks like they've come to terms with the administration. All of a sudden, you start to see things maybe moving around a little bit more and around those geographies or everybody is still playing a little bit of wait and see here, regardless of that we're 2.5 months or 3 months out from year-end?

Yes. Well, I think people are generally expecting and, I guess, I would call it a muted peak. I don't think we're going to see the traditional peak season that we might have otherwise. But we do have kind of these underlying thematics of kind of more freight being sourced out of Southeast Asia. I don't think that's going away. But the growth -- I can't say enough about the growth that has occurred and is expected to continue to occur in Mexico. And so I think it was really important for us to expand our presence not only for kind of new opportunities, but to support our own existing customer base as they themselves are diversifying more and more of their own supply chains kind of to a kind of a near sourcing type strategy.

Your next question is coming from Jeff Kauffman from Vertical Research Partners.

Congratulations, guys. Great year. Bohn, I'd like to go revisit your comment about getting a little bit more active and levering up. Do you have a particular target where you don't necessarily want to level up past a certain point as you relever the balance sheet and grow?

I think the short answer is, yes. I think for me, kind of a normalized target would be, call it, plus or minus 2.5x. That's not to say we might -- I mean who knows whether we'll get there. But at the same time, we might flex up a little bit more than that on a very temporary basis if we had the right type of transaction. But we certainly don't have any expectations to go lever up at 4x or 5x, like some of our CE sponsored competitors might.

Well, and you stepped up and acquired a Mexican operation at a time when the transborder tariff situation is a little bit unclear. Is this -- was that a special situation? Or are you seeing this more as an opportunity where, look, eventually, when you get these tariffs figured out and if we can find the right international partners, it makes sense.

Well, I think it was opportunistic. I also think it's the right international partners. But we all, myself included, have a tendency to think of the U.S. being the center of the world, but there's a big set of global commerce going on where we're not necessarily the center of. And there's an extraordinary amount of trade between China and Europe and Mexico. And Weport's international business really was virtually little, if any, cross-border business, it's true international air and ocean business from the Pacific and Europe. So we have, for a long time, been in the cross-border business independent of the Weport transaction. But what we really didn't have was a strong true international air and ocean capability as it relates to Mexico that we now enjoy by operation of the Weport transaction.

Okay. And just a couple of detailed questions for Todd, if I can. Todd, I think you answered an earlier question on the D&A, so there's a step down there and $3.6 million is kind of the right forward run rate we should be thinking about? Was that the answer?

Yes. I'd have to look at that closely but I think, if I remember correctly, we did the acquisition right at the beginning of the fourth quarter in 2015. I mean we're going back 10 years, right? So -- but I can validate that, but I'm pretty sure it was at the very beginning of the quarter. So I think what we've got -- we can circle back, but that's kind of my only question is, was there some within the quarter, which I don't think there really was. I think it really kind of fell off the Wheels transaction at the end of Q3. But I just want to [indiscernible]

Wheels -- so the Wheels came up at the end of Q3. Got it. So the way I think about, I guess '26 is, it's going to be about a $4 million drag on EBITDA in terms of the comparison, '26 over '25. Is that the right way to think about it?

For EBITDA, you're saying?

Yes.

Well, I mean, it's an add back, right? So it wouldn't...

I'm sorry, it's a benefit. Benefit.

Yes. So it will help -- well, it will help us for net income, right, but it will be -- it's kind of -- I think it wouldn't matter with EBITDA, correct?

Correct. And then just 2 other quick detailed questions. The contingent consideration add back, that was just kind of more of a one-timer, but these things happen every now and then we're just [indiscernible] consideration.

We have to evaluate all the time. We do that every quarter. And we've got some headwinds going on right now, and it's -- quite honestly, it's impossible for us to know where we're going to be 18 months from now. But we do our best and use our judgment to kind of true up where we think the overall contingent consideration liability, what it is today. And we're always adjusting, and sometimes we adjust up and we adjust down so we do...

So let me hop in 1 second. Jeff, for me, that kind of line item is really just a manifestation of our earn-out structure at work, right? Mitigate to ensure we don't overpay or underpay for the businesses that we're acquiring.

But overall, you'd rather be a payer of that contingent consideration because that would means the earn-out.

Of course. Yes. Overall, we would. But at the same time, if we have a benefit, which means we had overestimated the liability that we're needing to unwind. That is just kind of -- again, just kind of the earn-out structure at work to protect us from overpaying or to mitigate [ the losses ] because we would overpay.

And last question for Todd. Todd, I was expecting a 24% income tax rate this quarter. And I see in the detailed payables that you're saying that should be the effective tax rate. But taxes were in net add to that income. What happened with taxes this quarter?

Yes. That was a true-up basically with the end of the year. It's -- we -- when we went through all the calculations, the net-net was an actual benefit, slight benefit. And so that's -- it's over -- an overestimate in the prior period.

Okay. So that's just evening up an overpayment [indiscernible].

So yes. Yes. So I would not expect that going forward, right? I would use a normalized rate going forward, and this was just simply a true-up when we went through all the mechanics. So definitely we'll use this.

Your next question is coming from Mike Vermut from Newland Capital.

So our numbers have held up our result much better than most in our space, right? So hats off to you guys. It's been a very steady great results, and you've played a lot of offense during this downturn at a time where, I guess, most haven't. Most of kind of held back and haven't done the acquisitions that we have. So it's really laid the foundation for when I see for the future for when things start to pick up. Anyway to give us a look, you've brought all these new entities into the fold, what your customers are saying, new business wins that are out there? Just a sense of what it's going to look like over the next year, 2 years you see and how it's going to be additive to the business? We're one of the few that's actually gone out there and expanded in this time. So hats off to us. You've kept the balance sheet in perfect shape. Our numbers are great. Our cash flow is great. And I assume that our customers are loving what we're doing. It's just we haven't gotten that kind of view into it. If you could give us a little look as to what we should expect over the next year, 2 years with what we've brought in?

Yes. Thanks, Mike. That's a great question. We are really -- we've been talking a lot here internally recently about just getting kind of working towards a more unified sales organization because we've got so many tools in the toolbox, and we want to make sure that our sales organization is in the best position possible to kind of sell all of the products and services. So more so than ever, we're starting to see cross-sell opportunities and kind of really getting at kind of this notion of wallet share within customers and selling more services. And particularly, I'm just going to kind of reflect back on our acquisition of Navegate a few years ago. And if you'll remember, it had some really enhanced, some really interesting technology that we picked up as part of that transaction that is for all intents and purposes, a state-of-the-art market differentiating, what I'll call, collaboration platform that we really don't see anybody else in the marketplace, having something quite like what we have. And so we're on the front end of beginning to roll that out with customers, and we're getting some really positive feedback around that. So it's definitely early innings keeping with the baseball metaphor as we're approaching the end of the regular season. But we're really excited about the whole kind of our position on the field around technology and our technology set and how we think that's going to be a differentiator for us. moving forward.

Excellent. Yes. We've -- obviously, our valuation has been at a massive discount for years. And so the hope now is that people start to realize customers, I guess, acquisition targets and investors, what has been created here. So yes, hopefully, things like that on the technology side, on the new customers on the acquisitions, that starts to gel. It's been great when things have been really soft and it should be super as things expand. So hats off to you guys.

Thank you. That concludes our Q&A session. I will now hand the conference back to Radiant's Founder and CEO, Bohn Crain for closing remarks. Please go ahead.

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've created here at Radiant. At the same time, we intend to thoughtfully relever our balance sheet 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.