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, We'll 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 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 Radian'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 Transcon 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 U.S. negotiations around trade and tariffs, and estimate that approximately 25 to 30 percent 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 the surge in global trade as these tariff disputes are brought to rest and are encouraged by the de-escalation of U.S. 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 U.S. 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 sheet 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 Transcon Shipping, the conversion of our Pennsylvania-based strategic operating partner, USA Logistics and USA Carriers, which is being combined with our existing Radian 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 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. With that, I'll now turn it over to Todd Maycombe, our CFO, to walk us through our detailed financial results, and then we'll open it up for some Q&A.

Thanks, Vaughn, 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 31st, 2025. For the three months ended March 31st, 2025, we reported net income attributable to Radiant Logistics of $2,541,000 on $214 million of revenues for five cents per basic and fully diluted share. For the three months ended March 31st, 2024, we reported a net loss attributable to Radiant Logistics of $703,000 on $184.6 million of revenue or two cents per basic and fully diluted share. This represents an improvement of approximately $3,244,000 of net income over the comparable prior year period. For adjusted net income, we reported $6,881,000 for the three months ended March 31, 2025, compared to adjusted net income of $3,586,000 for the three months ended March 31, 2024. This represents an increase of approximately $3,295,000, or approximately 91.9%. For adjusted EBITDA, we reported $9,398,000 for the three months ended March 31, 2025, compared to adjusted EBITDA of $5,208,000 for the three months ended March 31, 2024. This represents an increase of approximately $4,190,000, or approximately 80.5 percent. Moving along to the nine-month results, for the nine months ended March 31st, 2025, we reported net income attributable to Radian Logistics of $12,384,000 on 682.1 million of revenues, or 26 cents per basic and 25 cents per fully diluted share. The nine months ended March 31, 2024, reported net income attributable to Radiant Logistics of $2,904,000 on $596.4 million of revenues for $0.06 per basic and fully diluted share. This represents an increase of approximately $9,480,000 over the comparable prior year period, or 326.4%. For adjusted net income, we reported $25,459,000 for the nine months ended March 31st, 2025, compared to adjusted net income of $15,632,000 for the nine months ended March 31st, 2024. This represents an increase of approximately $9,827,000 or approximately 62.9%. For adjusted EBITDA, we reported $30,866,000 for the nine months ended March 31st, 2025, compared to adjusted EBITDA of $22,083,000 for the nine months ended March 31st, 2024. This represents an increase of approximately $8,783,000, or approximately 39.8%. With that, I will turn the call over to our moderator, to facilitate any 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 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue, and you may press star 2 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 Cowan. 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? And kind of given your commentary on the bullwhip effect, could you talk about maybe kind of the puts and takes into the June quarter?

It's certainly a little early into the June quarter to have a lot of, you know, to be able to get at that,

with any granularity.

We certainly saw 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. kind of early indications for April were that, you know, kind of 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, you know, every day things are shifting around. So it's quite fluid right now. And while we certainly have a fair amount of our business, you know, involved in the support of global trade, it also, you know, these challenges create opportunities. Kind of one of our taglines is, you know, never waste a good, you know, chaos here. Or don't let chaos go to waste in terms of the opportunities that it's creating for us to support you know, our partners in navigating kind of the current environment. So, you know, we would expect, you know, whatever near-term impacts that we will experience, you know, we're pretty optimistic that over time we will kind of more than offset that, you know, through the following surge that's sure to come, you know, 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 what 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 that, the quarter ended June, you know, should be solved. I would expect it to be solved.

In terms of... Yeah, 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?

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

Yeah, I mean, Canada performed better than I anticipated, I'll put it that way. And we have had, I mean, some of the files were down on account, like for the international, but the margin characteristics were, 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 is given all the tariff news. I mean, 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 X 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, manufacturing 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 The steamship lines have blank sailings and they reposition ships 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 trailing 12-month international numbers, much of that 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 particularly interested to see how things progress in and around trade and tariffs and what kind of happened over the weekend, which I 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, Todd. You bet. Thanks.

Thank you. Once again, ladies and gentlemen, if you do have any questions, please press star 1 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 gross margin, was affected 25 to 30%. 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% could have been 30 or 31%? What exactly did you mean when you said AGP 25 to 30% was affected? I was saying 25 to 30% of our gross margin is associated with international trade. Okay, so not necessarily that the number could have been 25 or 30% higher, it's just that's how much of your freight was, okay, touched by it. Okay, thank you. Yeah, and part of how you should also interpret that, or you shouldn't necessarily interpret that as necessarily exposure to the downside, right? That, you know, 25 to 30% of our business is an opportunity to engage, you know, 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 through the Navigate transaction. And that team has just been extraordinarily busy on a consultative basis, you know, trying to help customers kind of figure out whether to zig or zag in the context of the information that keeps flowing. And, you know, 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 play 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 here. I know it's only been a day since we heard about, you know, the thaw in U.S., China here. But, you know, 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, you know, 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 unfought by this change? I don't know. That's a good question. You know, 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, you know, ultimately, certainly not abandoning China, but diversifying to Southeast Asia and India and Mexico or other locations. And I just don't think that, you know, 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 genie's out of the bottle or the conversation's already been started. You know, I don't think you can kind of put the bullet back into the gun and continue to mix metaphors. So, you know, I think this is, we're just kind of continuing along, you know, the journey. But, you know, honestly, I take even kind of a broader approach point of view personally, which is, which of these strategies are going to survive the Trump administration? Because I expect that I and Radiant's going to be here long after Trump's gone, and I just don't, you know, I fail to see how some of this stuff is really going to be durable. So we're trying not to be, you know, too affected. I mean, we were all, obviously we're all affected you know, 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, notwithstanding 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. You know, what I would tell you is, you know, we have a little exposure to the Canadian dollar based on what's happening, you know, based upon our business up there. Outside of that, most of our business is conducted in U.S. dollars. Now, that's not to say, you know, I can't sit here today and tell you what the landed cost, you know, of a particular widget is. you know, the sensitivity of the landed cost of a widget based upon the exchange rate relative to the pound. 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 feeling 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. We still don't have great visibility to 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 expecting softness in the June quarter.

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

That's what we think.

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 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 into a combination of agent station conversions, 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 of Radiant Logistics. 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.