Participants

Bohn Crain; Chairman of the Board, Chief Executive Officer; Radiant Logistics Inc

Todd Macomber; Chief Financial Officer, Senior Vice President, Treasurer; Radiant Logistics Inc

Elliot Alper; Analyst; TD Cowen

Mark Argento; Analyst; Lake Street Capital Markets

Kevin Gainey; Analyst; Thompson Davis & Co

Jeff Kauffman; Analyst; Vertical Research Partners

Presentation

Operator

Greetings. Welcome to Radiant Logistics financial discussion for second fiscal quarter ended, December 31, 2024. 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 second fiscal quarter and six months ended December 31, 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.

Bohn Crain

Thanks, Paul. 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 $12 million in adjusted EBITDA for our second fiscal quarter ended December 31, 2024. These results are generally ahead of results from the comparable prior year period, as well as our most recent previous quarter ended September 30, 2024. We continue to take great pride in our work to support humanitarian and relief-related projects around the globe.
Our results this quarter reflect our support of a number of such projects, including chartering 49 flights to bring approximately 8 million units of IV fluid to the US as a result of the national shortages resulting from Hurricane Milton. Notwithstanding these strong results for the quarter, we do expect our future near-term results to continue to be challenged by market headwinds. Near-term results could also be further frustrated by the recently introduced tariffs with China, Mexico, and Canada, as we head into our slowest seasonal quarter ended March 31.
As previously discussed, we believe we are well positioned with the durable business model, diverse service offering, and strong balance sheet to navigate through these slower freight markets as we find our way back to more normalized market conditions. We continue to enjoy a strong balance sheet with approximately $20 million of cash on hand, no meaningful debt, and an untapped $200 million credit facility.
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 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 Texas-based, Foundation Logistics; the conversion of our Michigan-based strategic operating partner, Focus Logistics, which is combining with our existing Radiant operations in Detroit; and the acquisition of TCD Transportation in St. Louis, Missouri. We believe these three transactions are representative of our broader pipeline of opportunities, which includes both greenfield acquisitions, those 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.
We look forward to providing further updates as we continue to progress along these lines.
With that said, I'll now turn it over to Todd Macomber, our Chief Financial Officer, to walk us through our detailed 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 and adjusted EBITDA for the three and six months ended December 31, 2024.
For the three months ended December 31, 2024, we reported net income attributable to Radiant Logistics of $6.467 million on $264.5 million of revenues or $0.14 per basic and $0.13 per fully diluted share. For the three months ended December 31, 2023, we reported net income attributable to Radiant Logistics of $985,000 on $201 million of revenues or $0.02 per basic and fully diluted share. This represents an increase of approximately $5.482 million of net income over the comparable prior year period, or 556.5%.
For adjusted net income, we reported $10.695 million for the three months ended December 31, 2024, compared to adjusted net income of $5.496 million for the three months ended December 31, 2023. This represents an increase of approximately $5.199 million, or approximately 94.6%.
For adjusted EBITDA, we reported $12.016 million for the three months ended December 31, 2024, compared to adjusted EBITDA of $7.708 million for the three months ended December 31, 2023. This represents an increase of approximately $4.308 million, or approximately 55.9%.
For the six months ended December 31, 2024, we reported net income attributable to Radiant Logistics of $9.843 million on $468.1 million of revenues or $0.21 per basic and $0.20 per fully diluted share.
For the six months ended December 31, 2023, we reported net income attributable to Radiant Logistics of $3.607 million on $411.9 million of revenues or $0.08 per basic and $0.07 per fully diluted share. This represents an increase of approximately $6.236 million over the comparable prior year period or 172.9%.
Adjusted net income, we reported $18.578 million for the six months ended December 31, 2024, compared to adjusted net income of $12.046 million for the six months ended December 31, 2023. This represents an increase of approximately $6.532 million or approximately 54.2%.
For adjusted EBITDA, we reported $21.468 million for the six months ended December 31, 2024, compared to adjusted EBITDA of $16.874 million for the six months ended December 31, 2023. This represents an increase of approximately $4.594 million or approximately 27.2%.
With that, I will turn the call over to our moderator to facilitate any Q&A from our callers.

Question and Answer Session

Operator

(Operator Instructions) Elliot Alper, TD Cowen.

Elliot Alper

All right. This is Elliot on for Jason Seidl. Maybe just starting off, can you give more detail on maybe the outperformance in the December quarter? Was Milton the primary driver? Maybe anything else you saw unusual about peak season? I'm curious if you saw any pull forward in the market?

Bohn Crain

Sure. I'll take a crack at that. I think the conversation has to start with kind of the diversity of our service offering and the fact that we did have an opportunity to support a number of initiatives in and around Hurricane Milton. That was the real driver in the outperformance for the quarter. And we're appreciative for that opportunity. We tried to do our best to temper the press release itself, because it's still tough going out there and kind of this project activity is kind of helping us through the trough, but it's still kind of slow going.
I do think as you were alluding to, there was some -- a little bit of pull forward this quarter kind of in anticipation of tariffs. So we got a little bit of, what I would call, a modest bump there. But more broadly, it's pretty tough out there for us and our competitors, and we were just fortunate enough to have some pretty meaningful in terms of human impact, and ultimately, meaningful in terms of financial performance for us and around supporting the IV fluid project.

Elliot Alper

Okay. Great. And then I wanted to ask about the acquisition of TCB made in December. You talked about the strategic rationale of acquiring an intermodal marketing company, and maybe a ballpark of how we should think about the size of that business or maybe the margins versus your fixing business?

Bohn Crain

Yeah, sure. So this is a really a great question. Thank you for that. Just to kind of provide some foundational comments to my response. Back in 2015, we acquired another public company that was called Wheels Group, which we rebranded as Radiant Global Logistics Canada. Wheels itself had done some acquisitions that had acquired a company from ABF kind of back in the day that many people will know as Clipper Express. We ultimately rebranded Clipper Express as Radiant Road and Rail.
And we often refer to that as our US-based brokerage platform. And for us, that means both intermodal and truck brokerage. And so anecdotally, Radiant Road and Rail formerly known as Clipper Express is quite literally the oldest subsidiary in our consolidated group. It was incorporated in 1938, one of the original intermodal marketing companies.
But in any event, their core principal business was in the 53-foot space, and TCB brought an incremental competency to our intermodal offering around 40 foot. And then again, just for context, we've been working hard to build out a true bimodal service offering from our road and rail platform in Chicago to have a robust, over-the-road, and intermodal service offering. So we see a lot of potential revenue synergies to the onboarding of this, of TCB and they're a small but mighty player in the 40-foot space. And we're really excited to have them and the team as part of our organization moving forward.
And I think we've kind of stayed away from a lot of details around the precision of the purchase price and numbers. But I think, dimensionally, it's in $2 million to $3 million of incremental EBITDA contribution is what we would anticipate from that business.

Elliot Alper

Okay. Great. And then maybe just last one. There's been just a lot of news on tariffs changing by the day. Can you talk about your customs brokerage operation, kind of what you're seeing now or how shippers are reacting? Like, how big is that business? Or do you charge customers on how much they're speaking with their sales contact? Any color there would be helpful.

Bohn Crain

Sure. So there, again, I'll ground the conversation in our -- some of our prior acquisition activities. So we had historically been what I would characterize as dabbling in the customs brokerage space. But a few years back, we acquired a company called Navigate, which was principally an NVOCC and customs brokerage platform based in Minneapolis. And we've since rebranded that business as Radiant World Trade Services.
So we have a -- it's relatively small in the scheme of things, but an extraordinarily strong competency in the customers' brokerage space, both transactionally and just from an advisory standpoint, trying to help our customers understand and respond to the shifting sands of tariffs and the quickly evolving landscape in which we're all operating.
And I would be remiss and not also take the opportunity to talk about the technology that we acquired in connection with our acquisition of Navigate because we are very excited about what I'll call the bundled solution offering that we now enjoy to be able to provide a really robust collaboration platform for PO management, vendor management, customs brokerage and a really robust, holistic way that historically, we and most people kind of in our relative size don't kind of play in that way or that dimension.
And so we're very active. We are growing our customs brokerage, and we continue to try to cross-sell our customs brokerage capabilities into our other international clients. But I really and quite hopeful that over time, we'll have more and more to tell more and more of a story to tell around our technology platform, which we're kind of repositioning our branding as Navigate and the global trade management capabilities, inclusive of custom brokerage that will set inside that Navigate platform.
So that was a really broad answer to your customs brokerage question, but we're a meaningful player and we're definitely punching above our weight these days in and around that offering. And it's probably one of the most exciting threads and opportunities as we move forward and catalyst for growth for us.

Operator

(Operator Instructions) Mark Argento, Lake Street.

Mark Argento

Hey, Bohn. Hey, Todd. Just a quick one. If you could just help us think through a little bit have been pretty active on the M&A side, which is great and anticipating that will continue given the environment.
But if you can help maybe just size up a little bit, and you did that with the TCB acquisition, but just help us think about either gross -- or net revenue or adjusted EBITDA contributions from some of these acquisitions. And I know it's a little bit tough to frac tin it all down. But in this quarter, $12 million, was that same-store EBITDA contribution?
You could benefit a couple of million bucks for these acquisitions? Is it more? Is it less? Just trying to get a little bit of a feel for kind of organic versus acquisition type contribution.

Bohn Crain

Yeah, sure. So again, we got to -- as you described, we have to paint with a pretty broad brush here for a number of contributing factors. So I would start with when we acquire an agency station or convert an agency station, we really don't see any change at the revenue or gross margin line item because that business is already flowing through our financials.
We end up reducing commission expense paid out in kind of that difference, if you will, is what will flow through in terms of incremental EBITDA. So that's one of the areas where we talked about margin expansion, margin expansion defined as EBITDA divided by gross margin and kind of one of the byproducts of that -- those conversion efforts of agency stations. We've got a number of those recently, and we would anticipate back for those who have been following our story for a long time, the notion of the gray tail and kind of the aging of our strategic operating partners. We think that theme will continue and just continue to accelerate as we move forward.
So there's not going to be a kind of a lot of top line impact of that particular piece. I would say on kind of -- and so TCB is a little different because that's a greenfield acquisition. But quite literally, we only had one month of those activities in our December quarter. So we really haven't seen the flow-through effects of TCB in our financials yet as it relates to the December quarter.
And without getting in too much detail, I would say I want same-store basis, we were relatively flat candidly, best case flat. And some of this project opportunity really helped lift the numbers.
And I'll say it again for emphasis, that's why we were kind of caution as good as this is, and we're really grateful to have it. We don't want people to take this quarterly result and multiply it by four. And think that's our go-forward run rate, because it's going to be (inaudible) ahead, in particular, this March quarter seasonality, and tariffs, and everything else going on. So hopefully, that's at least somewhat responsive to your question.

Mark Argento

Yeah. No, it's done, the question to answer it a lot specificity, but that was very helpful. Yeah. I mean, on your past experiences with tariffs, and I know this is kind of a unique and somewhat unprecedented environment right now.
So it's hard to handicap with great precision, but what -- obviously, there was some pull forward, which you mentioned in the anticipation of potentially this happening. But how does this normally play out? Like there's a pull forward? And then there's a little bit of a normalization in the market? How do you guys kind of play the situation or at least try to handicap a little bit?

Bohn Crain

That's a tough one. I will give you kind of my perspective, but it's -- I think it's worth what you pay for it here, right? But at the end of the day, I think when tariffs get put into place, there will be some short-term disruptions as people try to respond and kind of reconfigure or adjust. Individually, within our own portfolio of customers, there could conceivably be some winners and losers within our own portfolio of customers and kind of what happens to the underlying products that they're making and how they are impacted to the good or the bad relative to the tariffs.
But at the end of the day, we just simply don't -- as a country, we simply don't have the manufacturing capability to support the consumption requirements of the US consumer. So even though prices may go up, somebody is still going to have to pay for them just by the laws of simple supply and demand.
So whether it comes -- continues to come from China or gets repositioned, it's coming from Vietnam and/or US and Canada, those trade flows are still going to have to happen albeit likely higher prices for consumers, but that's an entirely different conversation and kind of beyond the scope of this call. So I can't tell you what will or won't happen and what's posturing or is actually going to come to pass. But we and the rest of the industry will digest it and continue to move forward.

Mark Argento

Just one last one, I think I asked a question pretty much every time, so I'm going to do it again. But in terms of the environment on the M&A side, it seems like things remain robust. And is this kind of environment of uncertainty, is that what compels some of these conversations to turn into transactions? Or what do you foresee there?

Bohn Crain

Well, not necessarily that. I think for us, there's a number of things a foot, right? So we have our aging agent stations that just kind of biologically are raising their hands because they're aging out, we need to think about their own succession planning and exit strategies. And so we've been playing that as a long game for a very long time. And so that's just continuing to move forward.
So that is one thread of it. And then there's a -- certainly not all, but a good number of folks in our space were ultimately levered up at peak earnings and as the markets soften, they really found their balance sheets in disarray. So there's a lot of kind of what I would characterize as normal participants in the M&A space are somewhat sidelined right now while they try to figure out how to get their own balance sheets rightsized so that they could become actionable again.
So that's another piece of it, which has -- from my standpoint, we're still the same guys executing the same plan with the same discipline we always have been. It's just the market is kind of coming back to us because of some of these dynamics.
The part of the dynamic in the transactional space and you hear -- we and others have talked about it's kind of hard to transact on peak earnings and kind of understanding that and now are we in trough earnings and kind of working our way to some of those dynamics. But that's one of the precise reasons why we use earn-out structures and our deals and that we really try to structure to mitigate risk to make sure we don't ultimately overpay for the businesses that we acquire.
So we still have a lot of dry powder. We expect to continue to be very disciplined. But we're really executing the same playbook we were when we met 10 years ago, Mark.

Mark Argento

Yeah. No, it's true. One final final. Anything on the buyback in the quarter?

Bohn Crain

No.

Todd Macomber

No. Not this quarter. We're too busy doing deals.

Operator

Kevin Gainey, Thompson Davis.

Kevin Gainey

Good quarter, guys. Maybe if you could kind of talk about how you're feeling about market conditions currently. I know you've kind of reiterated that they're still slow, but maybe compare it to how you guys felt this time last year.

Bohn Crain

And that's a lifetime ago. I would say I'm more bullish today. I mean we -- again, I'm going to say it again, business remains soft. It's going to be soft for us, I think, heading into 2025, not just for us but for our industry. I think it's going to be tough going near term.
But having said that, I've never been more bullish about kind of where we are in our relative kind of position or a relative place out there in the landscape and that were actionable and we have the financial flexibility. And we've got some -- as I alluded to, some really interesting things kind of in the tech stack world that we're bringing to market that we think are going to be a differentiator for us.
So it's going to be -- there's still going to be plenty of bumps and bruises as we get to 25 tariffs to the extent they brought into place, that's going to I think cause some further near-term kind of dislocation and confusion in the marketplace. But notwithstanding all of that, I think to answer your kind of fundamental question, I'm more bullish about the prospects for Radiant and kind of where we are in the cycle and all of those things that I feel really good.

Kevin Gainey

That's good to hear. Maybe also if we could talk a little bit about the competitive landscape and how you guys have seen your competitors. Have they -- in comparison to maybe again, last cycle, has there been more, I guess, like risk maturity from some competitors? Are they -- is everybody holding strong on pricing, whatever the kind of factors that they may decide on.

Bohn Crain

Yes. I'm not -- I mean, it certainly remains a very, very tough market out there. The shippers have been kind of more aggressive in their pricing expectations. But I don't -- I think we have -- and again, not just us, but I think as an industry, I think we've been going to bouncing along the bottom here for more than a couple of quarters at this point. And I see significantly more upside than downside in terms of where we go from here.
There are still probably -- at the end of the day, we -- this isn't directly related to the non-asset-based 3PL space. But within a broader context, we still need more capacity to come out of the marketplace, right? And it's been an ongoing conversation for the last year or so that there's quite a few asset-based transports that are really, really having a tough go and we need that to kind of further resolve itself to get better alignment between supply and demand and transportation capacity. And I think we're slowly getting there, but we still have a little ways to go.

Kevin Gainey

All right. And maybe one more, just on kind of the near-term outlook for Q1. If you could kind of talk about what you guys maybe saw in January or if there's anything that you may think has happened so far and what you think you could do for Q1.

Todd Macomber

I mean it's seasonally our slowest quarter, and it's -- I mean I think that we're starting to see a little uptick, but nothing -- it's going to play out, we believe, similar to last year. And like Bohn's saying, I'm looking at the numbers of what we posted for the month. And we're seeing some strength in some areas. Ocean is one, for instance.
But by and large, it's going to be a soft quarter. I think when we get to Q4, I think that's when things are going to hopefully start upticking the tariffs is really anybody's guess, right? That's the wildcard that I don't think we really know at this point, but that's what we're seeing. We're seeing it's going to be like Bohn's saying, it's -- we've got some headwinds compared to the sequentially.

Bohn Crain

Yes. But I would look to the year ago March quarter is more indicative of where we're likely to land.

Operator

Jeff Kauffman, Vertical Research Partners.

Jeff Kauffman

Well, first of all, congratulations. I apologize, I got on a little bit late, but did you talk at all about currency, how currency may or may not be impacting your market? And I know you got a big Canadian operation. How is that affecting as we think about first quarter comparison -- or first quarter, third quarter comparison, fourth quarter comparisons. Because we've had a lot of companies flag currency having a bigger impact, I think, than people expected.

Todd Macomber

Yes. It didn't have a huge -- I mean, it did impact is still going to be wrong, but I ran the numbers and it wasn't meaningful in regards to our -- when we retranslate it to US dollars and the EBITDA. So I'm just talking about this last quarter. So the numbers we reported, it wasn't anything. It definitely had a small impact as what I would say.

Operator

And that does conclude today's Q&A session. I would now like to hand the call back ton Bohn Crain for closing remarks.

Bohn Crain

All right. 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 and through a combination of agent station conversions, synergistic tuck-in acquisitions and stock buybacks.
Through our (inaudible) 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.

Operator

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.