Radiant Logistics, Inc.

and welcome to the Radiant Logistics third quarter fiscal year 2025 earnings call. At this time all participants are on a listen only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. This afternoon, Bon Crane, Radiant Logistics founder and Chief Executive Officer and Radiant's Chief Financial Officer Todd McCumber will provide a general business update and discuss financial results for the company's third fiscal quarter and nine months ended March 31st 2025. 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 meanings 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 in the past and may in the future be identified in the company's SEC filings and other public announcements that are available on the Radiant website at .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, Bon Crane. Sir, the floor is yours.

Thank you. Good afternoon everyone and thank you for joining in on today's call. With the benefit of our diverse service offering, we continue to deliver solid financial results and generated $9.4 million in adjusted EBITDA for our third fiscal quarter ended March 31, 2025, which is up $4.2 million and just over 80% relative to the comparable prior year period. The comparable year over year improvement in adjusted EBITDA was driven through a combination of improvements in our base business operations along with contributions from our recent acquisitions. For the quarter ended March 31, our legacy US operations generated $1.5 million in incremental adjusted EBITDA, while our legacy Canadian operations generated $0.5 million in incremental adjusted EBITDA. An additional $2 million in adjusted EBITDA for the quarter ended March is driven principally by our Greenfield acquisitions of Seattle-based Cascade transportations from June of 2024, Houston-based Foundation Logistics and Services from our September 24 acquisition, St. Louis-based TCB transportation from our December 2024 acquisition, and Los Angeles-based Transcom shipping from our March 25 acquisition. Along with the conversion of our strategic operating partner, Miami-based Select Logistics in February of 2024. Notwithstanding the strong results for the quarter ended March 31, we are expecting some near-term volatility in our results tied to the ebb and flow of the ongoing US negotiations around trade and tariffs. An estimate that approximately 25 to 30% of our gross margins for the March quarter would have been impacted by the recently announced tariffs. With that said, we also expect that any near-term slowdown will likely result in a corresponding bullwhip effect with a surge in global trade as these tariff disputes are brought to rest and are encouraged by the de-escalation of US and China trade tensions that have occurred over the weekend. In any event, we intend to remain nimble in our response to tariff announcements by the US administration and continue to support our customers in navigating these quickly evolving markets and executing thoughtful supply chain strategies to provide our customers with competitive advantage. As previously discussed, we believe we are well positioned with a durable business model, diverse service offering, and strong balance sheets to navigate through a slower freight market. We continue to enjoy a strong balance sheet with approximately 19 million of cash on hand as of March 31 and only 15 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. 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. We made good progress in this regard over this last quarter with the acquisition of California-based Transcom shipping, the conversion of our Pennsylvania-based strategic operating partner USA Logistics and USA Carriers, which is being combined with our existing Radiant Operations in Philadelphia, and the conversion of our Texas-based strategic operating partner Universal Logistics, which is being combined with our existing Radiant Operation in Houston. We believe these three transactions are representative of our broader pipeline of opportunities, which includes both green-filled 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. With that, I'll now turn it over to Todd Maycomb for our CFO to walk us through our detailed financial results, and then we'll open it up for some Q&A.

Thanks, Paul, and good afternoon, everyone. Today we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the three and nine months ended March 31, 2025. For the three months ended March 31, 2025, we reported net income attributable to Radiant Logistics of ,541,000 on $214 million of revenues, or $0.05 per basic and fully diluted share. For the three months ended March 31, 2024, we reported a net loss attributable to Radiant Logistics of $703,000 on $184.6 million of revenue, or $0.02 per basic and fully diluted share. This represents an improvement of approximately ,244,000 of net income over the comparable prior year period. For adjusted net income, we reported ,881,000 for the three months ended March 31, 2025, compared to adjusted net income of ,586,000 for the three months ended March 31, 2024. This represents an increase of approximately ,295,000, or approximately 91.9%. For adjusted EBITDA, we reported ,398,000 for the three months ended March 31, 2025, compared to adjusted EBITDA of ,208,000 for the three months ended March 31, 2024. This represents an increase of approximately ,190,000, or approximately 80.5%. Moving along to the nine-month results, for the nine months ended March 31, 2025, we reported net income attributable to Radiant Logistics of ,384,000 on $682.1 million of revenues, or $0.26 per basic and $0.25 per fully diluted share. The nine months ended March 31, 2024, we reported net income attributable to Radiant Logistics of ,904,000 on $596.4 million of revenues, or $0.06 per basic and fully diluted share. This represents an increase of approximately ,480,000 over the comparable prior year period, or 326.4%. For adjusted net income, we reported ,459,000 for the nine months ended March 31, 2025, compared to adjusted net income of ,632,000 for the nine months ended March 31, 2024. This represents an increase of approximately ,827,000, or approximately 62.9%. For adjusted EBITDA, we reported ,866,000 for the nine months ended March 31, 2025, compared to adjusted EBITDA of ,083,000 for the nine months ended March 31, 2024. This represents an increase of approximately ,783,000, or approximately 39.8%. With that, I will turn the call over to our moderator to facilitate the Q&A from our callers.

Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question key, and you may press star two if you would 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. Thank you. Our first question is coming from Elliot Alper with Cowen. Your line is live.

Hey, great. Thank you. This is Elliot on for Jason Seidel. Can you elaborate more on what drove the outperformance of the base business this quarter? Kind of given your commentary on the bullwhip effect, could you talk about maybe the puts and takes into the June quarter?

It's certainly a little early into the June quarter to be able to

see some slowing or beginning to see some slowing in

some of the international trade volumes in response to all the trade tensions that are going on. But we'll see how long that lasts in the scheme of things. And it's kind of early indications for April or that kind of the, candidly, the business was doing better than I was expecting it to or kind of that we're not being as heavily impacted as I thought we might be. But it's certainly kind of early in the process and it seems like every day things are shifting around. So it's quite fluid right now. And while we certainly have a fair amount of our business involved in the support of global trade, it also, these challenges, trade opportunities, kind of one of our taglines is never waste a good chaos here. And don't let the chaos go to waste in terms of the opportunities that it's creating for us to support our partners in navigating kind of the current environment. So we would expect whatever near-term impacts that we will experience, we're pretty optimistic that over time we will kind of more than offset that through the following surge that's sure to come as folks begin to reset their supply chains. At the same time, as I think you're familiar, we do have a fairly good-sized presence in Canada and Mexico and kind of those markets have been kind of quasi-beneficiaries of some of these trade dynamics as shippers are kind of working to kind of navigate within the constraints of these, what hope to be, are proving to be interim tariffs. So while there's a lot of uncertainty, you know, I think at the end of the day we're going to be better than okay, I think. But having said the quarter ended June,

you know, should be soft. I would expect it to be soft.

Yeah, and this is maybe just looking back at the March quarter. I mean, came above kind of where we were coming out for the estimates. So I guess anything to call out there? Was it broad-based strength or any pockets of outperformance you saw?

And God's got some of the details there that he's looking at.

Yeah, I mean, you know, I mean, it's just, yeah, Canada performed better than we had that I anticipated, I'll put it that way. You know, and we have had, you know, I mean, some of the files were down on account, like for the international, but the margin characteristics you know, per file were up, you know, so it was really broad-based, you know, and then factoring in the acquisitions that, you know, that we ended up getting done, you know, also helped contribute to

the overall increase in the quarter. Makes sense. Thanks. And then

you've

historically had some

good insights into bookings out of Asia. This has given all the tariff notes. I'm curious about any trends you've seen evolve through April and maybe how you're expecting shippers to react in anything out of Asia bookings you're seeing. Just these last few days would be helpful.

Well, you know, we all woke up to the same news you did this morning, right? So it's, you know, I think it's a little early to start calling it out, but in terms of how folks will ultimately respond, but basically, Ocean Imports, ex-China had come to a virtual standstill most recently, but again, I think it's going to be very short-lived, but time will tell, right? But there had been so much kind of movement in terms of trying to find alternative sources or diverting, you know, you know, mania farad sharing sites to Southeast Asia or otherwise where this, you know, certain things have been set in motion that'll have to run its course. So, you know, I think it'll, there's been some level of kind of damage done that will have to kind of run its course. And then we'll see kind of how quickly things kind of revert back to some semblance of normal. I'm sure you're aware a number of the steamship lines, you know, have blank sailings and then repositioned ships, you know, kind of in anticipation of the slower volumes. So it's a little bit of a firefight out there. I guess another call out that I would make to just give a little bit more color is that before some of our most recent transactions, the majority of our international business was actually comes to us through our agency stations. And so this will be less affected on a net basis than you might otherwise expect because our historical kind of comes through our international agent locations. With that said, our most recent acquisition of Transcon in particular is focused heavily on ocean imports and out of Asia and kind of the Trans-Pacific trade. So we're, you know, particularly interested to see how things progress, you know, in and around trade and tariffs and what kind of happened over the weekend, which I, you know, I came in early this morning and tweaked the press release a little bit kind of in connection with kind of this very recent news, which we view, you know, all as positive and hopefully constructive to

kind of getting things moving forward again. Thank you, Bob. Thank you, Tom. You bet.

Thanks. Thank you. Once again, ladies and gentlemen, if you do have any questions, please press star one on your telephone keypad. Our next question is coming from Jeff Kaufman with Vertical Research Partners. Your line is live. Thank you very much. Hey, congratulations, guys.

Challenging quarter, solid results. A couple questions. I guess the first one, I just want to understand what you're saying when you say a gross margin was affected 25 to 30 percent. Is that implying that the AGP of 58 million could have been 70 or 80 million or is that more talking about the percentage of 27 percent could have been 30 or 31 percent? What exactly did you mean when you said AGP 25 to 30 percent was affected? No, I was saying 25 to 30 percent of our gross margin is associated with international trade. Okay, so not necessarily that the number could have been 25 or 30 percent higher. It's just that's how much of your freight was, okay, touched by it. Okay. Yeah. Thank you. That's... Yeah. And what was part of how you should also interpret that or you shouldn't necessarily interpret that as necessarily exposure to the downside, right? That's 25 to 30 percent of our business is an opportunity to engage on a real-time basis with our customers to try to kind of help them through the situation because we have... There certainly are aspects of this. So, Jeff, as you might remember, we have a customs brokerage capability and a fairly robust PO management collaboration platform called GTM that came to us to the Navigate transaction. And that team has just been extraordinarily busy on a consultative basis trying to help customers kind of figure out whether to zig or zag in the context of the information that keeps flowing. And one of the things we probably didn't focus on enough as I'm thinking about it is the removal of the kind of $800 de minimis. Historically, we really weren't active or didn't have much, if any, exposure to that parcel level direct to consumer e-commerce plate at all. Well, those businesses are getting crushed by that kind of change in the rule and going to, I think, ultimately kind of create more opportunities for us and companies like us because there's a lot of freight that's been moving by kind of international parcel type carriers that are not well positioned to support these trade flows outside of that de minimis relief. And so I think there's going to be kind of incremental opportunity for us around that particular change. So, Bon, I have a big picture question. I know it's only been a day since we heard about the thaw in US-China here. But having said that, there's some things that still are going to be impacted by this, even on the reduced level. So I'm just kind of curious in your mind. This isn't really a green light on everything. What do you think is still kind of frozen or stuck in the mud? And what kinds of business for your customers gets kind of unflogged by this change? I don't know. That's a good question. But before kind of the tariff discussion revealed itself, there was already a move afoot for people to continue to look critically at their supply chains and look to further diversify their sourcing strategies, ultimately, certainly not abandoning China, but diversifying to Southeast Asia and India and Mexico or other locations. And I just don't think that, I think this kind of volatility is just going to reinforce the continued pursuit of those strategies. So I think the kind of whatever metaphor you want to use, the genies out of the bottle or the conversations already been started. I don't think you can kind of put the bullet back into the gun and continue to mix metaphors. So I think this is, we're just kind of continuing along the journey. But honestly, I take even kind of a broader point of view personally, which is which of these strategies are going to survive the Trump administration? Because I expect that I and Radiant is going to be here long after Trump's gone. And I just don't, I fail to see how some of this stuff is really going to be durable. So we're trying not to be too affected. I mean, we were all, obviously we're all affected on the near term, but we're really trying to stay the course in terms of our fundamental strategies and not be swayed, if you will, by what ultimately are going to be kind of short-term phenomena. So you'll see we've continued to be kind of aggressive in our M&A activities. So we're still kind of executing the same strategies, not withstanding kind of the noise of tariffs. And then along those lines, currencies moved a lot in the last 90 or 100 days. How do you think the battlefield or the roadmap, whichever metaphor you want to roll with here, changes as a result of

the changes in the currency flows? I don't know.

I'll leave that to the economists. What I would tell you is we have a little exposure to the Canadian dollar based on what's happening, based upon our business up there. You know, outside of that, most of our business is conducted in US dollars. Now, that's not to say, you know, so I can't sit here today and tell you what the landed cost, you know, of a particular widget, you know, the sensitivity of the landed cost of a widget based upon the exchange rate relative to the pound. That's, we would have to have several bottles of wine to answer that question. Okay, well, I can't get your wine right now. But let me throw just one last one in. You did mention kind of a mucky fourth fiscal quarter here, and maybe a bullwhip sometime in the next fiscal year. But I think going into the release today, consensus was thinking that fourth quarter is normally a pretty strong quarter for you fundamentally. Maybe it'll be your second best quarter this year. Do you still feel that the fourth quarter might be the second best quarter this year? Would you kind of put the caveat that, you know, there's just so much we don't know, we can't still be thinking along those lines? I think traditional sensitivity or traditional seasonality is kind of out the window right now. You know, great visibility to what's, you know, or how quickly things are going to change, or how people are going to react to this news, or how durable this news is, or what tomorrow's tweet might be. So I would say,

at least for me, I'm, you know, I'm expecting softness in the June quarter. And

so I would not, so I guess to answer your question more precisely, I would not expect it to be our, June to be our second strongest quarter if I had to. But your feeling is that, yeah, well what you might lose in the June quarter at some point you recapture in fiscal 26. Right,

that's what we think.

Yeah.

Okay, great. Thank you so much.

Thank you. As we have no further questions on the line at this time, I would like to hand the call back over to Mr. Crane for any closing remarks.

Thank you. Let me close by saying that we remain optimistic about our prospects and opportunities to continue to leverage our -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 into a combination of agent-station convergence, strategic 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 Radiant. Thank you. Ladies and gentlemen, this concludes today's call. You may

disconnect your lines at this time, and we thank you for your participation.