Q2 2021 Radiant Logistics Inc Earnings Call

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Thanks for holding and we appreciate your time and patience. Please stay on the line and we'll be back and just a moment.

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Good afternoon, ladies and gentlemen, this afternoon tub and May Cumber Radians, Chief Financial Officer will discuss financial results for the company's second fiscal quarter ended in December 31, 2000 and 'twenty.

Following his comments, we will open the floor for 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.

Fortunately due to low these future 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 and are forward looking statements. Such factors include those that have and the past and me and the future be identified by the Companys SEC filings and other public announcements, which are available on the radiant website at www Dot radiant developed.

Radiant deliberate dotcom and addition past results and not necessarily an indication of future performance now.

And now I'd like to pass the call over to Radiant Chief Financial Officer, Todd Macomber.

Thank you.

Good afternoon, everyone and thank you for joining today's call.

And Fortunately bonds and available for the call as he is recovering from Covid, we expect him to make a full and complete recovery and look forward to seeing seeing him back and the office along with his continued leadership I have asked my colleague Arnold Goldstein Radians, Chief commercial officer to participate with me on this call.

We are very pleased to report another another quarter of solid financial results as we continue to navigate this unique environment.

We reported revenues of $218 8 million and net revenues of $55 3 million for the quarter ended December 31, 20 flow revenues were up about seven 7% or approximately $16 9 million, while net revenues were down slightly about one 1% or 600000.

Yeah.

Consistent with recent quarters through a number of cost savings and other strategic initiatives, we were able to manage our operating costs and posted impressive financial results for the three months ended December 31, 2020, we reported net income attributable to radiant logistics of $3 million $812000.

And $218 8 million of revenues or eight cents per basic and <unk> <unk> per fully diluted share, which also included a charge of $1 8 million per change and contingent consideration.

For the three months ended December 31, 2019, we reported net income attributable and radiant logistics of two and five.

$101 9 million of revenues or five cents per basic and fully diluted share. This represents an increase of approximately $1 million $225000 of net income over the comparable prior year period or 47, 4%.

For the three months ended December 31, 2020, we reported adjusted net income attributable to radiant logistics of $8 million $640000 compared to adjusted net income attributable.

Attributable to radiant logistics of 6.300 million.

For the three months ended December 31 2019.

This represents an increase of approximately $2.340 million or approximately 37, 1%.

We reported adjusted EBITDA of $12 million and 529000 and for the three months ended December 31, 2020, compared to adjusted EBITDA of $9 million $375000 for the three months ended December 31 2019.

This represents an increase of.

$3 million $154000 or approximately 33, 6%.

Moving on and the six month results.

For the six months ended December 31, 2020, we reported net income attributable to radiant logistics of 6 million and $900000 mm $394 7 million of revenues.

14th.

Per basic and fully diluted shares.

Six months ended December 31, 2019, we reported net income attributable to radiant logistics, a $5 million $822000 on $402 5 million of revenues or <unk> 12 per basic and <unk> 11 per fully diluted share. This represents an increase of approximately one.

$78000 over the comparable prior year period, or approximately 18, 5%.

For the six months ended December 31, 2020, we reported adjusted net income attributable to radiant logistics, a $15 million $160000 compared to adjusted net income attributable to ratio of 12 million and $783000 for the six months ended December 31 2019.

This represents an increase of approximately $2.377 million or approximately 18, 6%.

We reported adjusted EBITDA of 21 million and $756000 for the six months ended December 31, 2020, compared to adjusted EBITDA of $19.053 million for the six months ended December 31, and 2019 and.

This represents an increase of $2 million $703000 or approximately 14, 2%.

We have always managed our business with an eye towards net revenues and getting as many of those dollars to the bottom line and I'm pleased to report that our adjusted EBITDA margins were up 590 basis points for the current quarter to 22, 7% from $16 eight.

68% per the comparable prior year period.

Our balance sheet remains very strong.

Mining us with ample flexibility to capture opportunities should we choose to act, we have a war chest of dry powder with less than one turn of debt.

Our results continue to show that even through this pandemic, our non asset based variable cost model works, well, enabling us to maintain profitable growth and we're also able to report significantly improved adjusted EBITDA margins.

We continue to see a slow and steady improvement across many industry verticals that we serve even though this environment even in this environment of continued tight capacity.

With the diversity of our customers and service offerings, the strength of our balance sheet, our optimism surrounding the strengthening of the economy.

We're excited about what opportunities lie ahead for radiant.

We will continue to closely monitor our performance as well as the overall policy count.

We look forward to re engaging and acquisition opportunities and or stock buyback and we'll be communicating that information and opportunities.

With that I will now turn it over to our moderator to open it up for any Q&A.

Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask that while posing your question. Please pickup your handset if listening on speaker phone to provide optimum sound quality.

And once again, if you have any questions or comments. Please press star one on your phone. Please hold while we poll for questions.

Your first question is coming from Mark Argento Your line is live.

Hey, guys. This is John on for Mark and Thanks for taking my questions, Congrats and nice quarter and wishbone speedy recovery.

First one for me could you kind of Peel, the onion and dig into a little bit more some of the industry verticals, where you've seen the most strength and maybe give us an update on where the overall capacity environment and has trended so far and in 2021.

Sure.

A lot of it boy that.

A lot of it is going to be.

Government work, we've got we've had a fair amount of government work and a lot of consumer products have been our strongest verticals.

The overall the overall.

Tightening of the capacity I mean, I think that's going to be there for a little while I think things are starting to loosen up a little bit, but there's a lot of I'm sure you're aware a lot of ships out on the la Porte that are waiting to come in and so really.

And the freight going from the West Coast East has been pretty.

The capacity has been restricted.

And.

It's just going to take time to work through that.

No.

Okay.

And then second you called out and the clip the business and the press release and just wondering if you could dig into the Bakken and a little bit more and what are you seeing there.

And so.

And then and the growth trajectory, yes, yes clipper has been just doing phenomenal for us.

We've recently invested and another warehouse and they are they've done a bundling strategy and that's worked out really well they've got a nice pipeline and theyre, putting up a lot of points and the board.

And we're just tickled with how they're performing.

Continue to grow and I, just think there's a lot of opportunity for clipper there.

And we're really hitting on all cylinders.

And.

And.

Okay, and then last one for me when you think about the cost structure is that effectively bid and kind of normalized at this point and.

And you guys have been able to sort of run a pretty profitable business here, but when you look out into the next couple of quarters.

What is going to be.

The outlook for capital allocation and reinvest in the business.

Both internally as well as potentially some day.

Okay. Good questions, Yes, I would say the cost structure.

We did when Covid hit.

US along with everyone else right, everyone and tightened up their belt and.

So I would say that.

As it relates to personnel that we would see similar similar levels of personnel costs going forward, we did invest a little bit and some new salespeople, but by and large.

The overall run rate right now as far as personnel costs and.

That's where the majority of the cost savings, where there was some SG&A too but.

And I see those as kind of sticking with where they are currently.

As far as M&A.

It's a great question I mean, we're always looking.

As as.

We're very mindful, though at.

At the multiple that the stock is trading at and what we would have to pay.

Typically, we do and and earn out and.

We will pay half down and the rest through and earn out but really it.

It depends on the opportunity and what the multiple is and what the business opportunity brings accounts.

So we're looking at things right now.

But.

Until we move forward I mean, that's where we are right now at this point and to be honest I don't know all of the different bonds got.

And a number of contacts and he kind of brings me over the fence when I need to be so, but we do see that there will be opportunities and the future and we're excited for them.

Awesome. Thanks, guys congrats on the quarter. Thank you so much.

Thank you. Your next question is coming from David Campbell Your line is live.

Yes.

And thanks for taking my question.

251.

$291000 charge on the and the other other expense.

Robert last day, but can you.

Does that front, that's a negative expense that's actually a lease that's leasehold income from our space and we have that we ended up leasing out.

Okay, and you lost money on the lease.

It's a negative expense so it's income.

Right. So there's a negative expense right.

And you're on your lease situations, Okay. That's great.

And so.

The West Coast.

And Ed.

Ships waiting as you mentioned they come in.

And that normally.

And would get fixed and February when the Chinese new year starts.

And.

Any idea of what the situation looks like after Chinese new year is over.

You know, Dave and I guess, it's great question, I mean, I think part of the issue though is COVID-19.

My understanding is there's about 800 workers or there was few weeks ago that weren't able to be and the port terminals those ships, which is really causing a tremendous strain so <unk>.

<unk> is playing a big impact and.

I don't know what it is today, but there was an article a few weeks ago that came out and talked about that but I got to believe COVID-19 is still very much a significant impact.

And of our.

And it's impacting the ability to unload those ships, obviously it'll happen in time, but.

And I really don't have a whole lot of visibility maybe arnie if you want to and in addition to the Covid effect.

There's a significant and as you mentioned, David there is an imbalance and and equipment and so with all those ocean vessels sitting out in the port that obviously means that those containers sitting out there that are not gonna be offloaded, and then returned to Asia to be reloaded, and so the inventories and the volumes that are building up and and.

Asia and particular ours are significant and so I think it's fair to say that we would expect a peak sort of to continue on past Chinese new year.

Thank you and.

Can you just you mentioned government or government work as one of your stronger sectors of your business is that.

And in COVID-19 related as well.

The work so yes, so we are.

We are supporting government entities.

We're very vertically rights out through PMA down through D. O S. DHS HHS. So a number of the number of the government agencies most of that a lot of that is.

Covid relief related so it could be PPE and theres, some vaccine related activity as well as well as some manufacturing related too.

And our Covid COVID-19.

Covid support.

We also are very active and supporting the government through its through FEMA through a lot of the activities with the National Guard and other entities. So a very robust business for us.

And that's good because it all says apparently some weaknesses and other parts of your business.

Sure.

Which are related to the economy.

Retail sales et cetera.

Net trade shows cruise lines those are I mean at some point they will obviously come back and.

We can't wait for that to happen until then.

Yeah, well, you're doing a great job in the meantime.

Okay.

Uh huh.

Getting to this situation.

And we look forward to.

And good results and in the March and June quarters, when you'll have.

And.

Yeah, and more normal situation at least you will and as.

June quarter.

Thank you very much free or answers you bet. Thanks, David.

Thank you. Your next question is coming from Mike <unk>. Your line is live.

Hey, guys just want to say, a great quarter and bond, if you're listening or when you listen to what they get better soon.

Guys phenomenal job this quarter and really over the past.

Four quarters eight quarters.

Different company than it used to day.

How much would you say is that.

Business that shut down right now the cruise lines and that 20 per cent of the business and it's kind of no no not at all.

And now.

Yes, we really don't get into that level of granularity, it's not a huge amount.

And so I don't want to start throwing numbers out there with stuff that we don't typically report on.

Got it okay, it's not it's not.

Hey, <unk>, it's not huge I mean don't get me wrong, it'll be nice when it comes back and that will help.

Add to that Bob.

And in line of course, but it's not going to make.

And crazy.

Increase in the number and we've been very fortunate over the last few years to invest and and sales resources along vertical lines, which.

I'd like to say, we're great planning, but nobody plant that COVID-19, but.

Along the government and military life Science test logistics and <unk>.

<unk>, which is non government charitable organizations, which are.

And are moving cargo.

And try and bring this period, so other verticals like cruise line.

Not so much obviously, but there is opportunities within marine.

Marine spare parts and other areas that we're looking at.

Well as automotive is coming back now.

Excellent.

And now getting I know this question was asked before about capital allocation.

Trading.

I don't think Theres any non asset transport company out there trading like we are you know under 10 times, earning six times EBITDA.

Can you find any day any M&A out there that is either strategic enough or cheap enough to say that it's better than buying our stock right now.

And it really depends upon the multiple and.

And there is there are opportunities I mean, if we get if we look at a bigger business, we're going to pay we're going to be competing with the private equity guys and the multiple is going to go up so if we look at smaller ones.

Multiple comes down to something much more reasonable so.

I really can't say because.

But generally speaking that's what we see so we see a <unk>.

Our EBITDA business, we can get and the multiples and we really like.

And it doesn't mean, we won't look at something bigger, but we will certainly think twice and look at the allocation and where the company stock is free.

Vs.

Buying our own stock back, which has no integration risk so.

Very conscientious about that so.

And then what.

Yeah. When you when you look at it our evaluation.

And our stock has moved slightly but our valuation has actually come down.

So I guess that answers the question right there, it's hard to find anything of our size and diversity.

Even close to these valuations.

Yes, I agree and yet.

Yes, yes.

Guys, great job and great through this difficult time excellent execution. Thank.

Thank you so much thank you.

Thank you there are no further questions in the queue at this time once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone at this time please.

Totally poll for questions.

There are no further questions in the queue at this time.

Alright, let me close by saying, we remain very bullish on our prospects here at radiant and the scalable non asset based platform that we've built with the diversity of our customers and service offerings and the strength of our balance sheet, the scalability of our technology and extensive.

Carrier partner network.

We are certainly optimistic about the economy, its ultimate recovery and the opportunities and it will present for radiant.

At the same time, we remain patiently persistent and the pursuit of our vision to leverage our multi brand strategy and scalable back office infrastructure to support further consolidation in the marketplace, which we believe over time will continue to deliver meaningful value for our shareholders our operating partners.

<unk> and the end customers, we serve thanks for listening and your support of Radiant logistics.

Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.