Radiant Logistics, Inc. (RLGT) Earnings Call Transcript & Summary

[Audio Gap] 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 fiscal year ended June 30, 2026. 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.

Thank you. Good afternoon, everyone, and thank you for joining in on today's call. We are pleased to report another quarter of solid financial results, delivering $10.4 million in adjusted EBITDA for our fourth fiscal quarter ended June 30, 2026. The -- our fourth fiscal quarter results were strong across the board, with revenues up 18.5%, adjusted gross profit up 10.6%, adjusted net income, up 34.5% and adjusted EBITDA up 31.6% and adjusted EBITDA margin expanding 240 basis points, all measured against the comparable prior year period. . Our quarter-over-quarter improvement was driven principally by our U.S. forwarding operations and contribution across the board from both our domestic and international service offerings, including notable strength in our international airfreight operations. On the domestic side, Navigate is beginning to prove itself out as a catalyst for growth providing customers with better visibility and tools to manage complex supply chains with 1 of our enterprise customers now actively managing over 1,400 vendors using the platform. More broadly, capacity has continued to exit the North America truckload and intermodal markets through a combination of carrier attrition, tighter driver availability, and the normalization of a fleet that had expanded aggressively in prior years. Spot rates, tender rejections and other cyclical indicators moved higher through the spring and carried into our fourth quarter. While these market trends are not fully reflected in our results for the June quarter, we view these developments as constructive for our domestic operations in general and our U.S. brokerage operations in particular. If these trends continue, we believe they support a broad-based and durable recovery for the domestic freight market. Also during the quarter, we extended our 2-decade track record as 1 of the industry's premier freight forwarding agent networks into the truck brokerage and intermodal space with the launch of a new independent agent program at Radian Road and Rail. The program brings the same value proposition that has long distinguished our freight forwarding business, access to our carrier network, technology platform, back office infrastructure, and a clear structured path to build long-term equity value with a built-in action strategy to a new population of logistics entrepreneurs. We're pleased with the early response to the program and see this as a meaningful new avenue for organic growth as we bring the Radiant model to an entirely new market. The international picture while still shaped by a complex and evolving trade environment showed encouraging signs of improvement during the fourth fiscal quarter. Global trade flows continue to be influenced by 2 significant forces, the first is the ongoing disruption to traditional ocean shipping routes stemming from the closure of the strait of Hormuz and continue through the activity affecting Suez Canal transits, which have kept capacity tight across key international trade lines. Despite all of the complications impacting the ocean markets, we saw an encouraging uptick in ocean freight rates late in the quarter as carriers exercise continued capacity discipline, an early signal that the prolonged downturn in ocean pricing may be starting to stabilize. The second is the ongoing transformation of the global tariff landscape with U.S. trade policy sustaining a high degree of compliance complexity for shippers. This complexity together with a period of elevated EPA-related filing activity across the industry has continued to drive demand for our customs brokerage expertise as customers rely on [ experience ] partners to navigate the evolving tariff structure. More recently, escalating tariff action between the U.S. and Canada, including new retaliatory measures Canada put into effect in early September at a further layer of complexity for shippers moving goods across our border. While it's early to gauge the full impact, we expect this cross-border dynamic to remain a source of demand for our customers' brokerage and compliance capabilities and it may also create additional international air and ocean freight forwarding opportunities for our Canadian operations as shippers look to diversify away from cross-border trucking and rail. Notably, our airfreight performance was up meaningfully during the quarter, driven in large part by our work in support of disaster relief following [ typhoon ] activity in the Western Pacific earlier this year. We are entering this next phase of the cycle from a position of real financial strength. In August of 2026, we completed an amended and restated $200 million senior credit facility extending its maturity to 2031, expanding our acquisition focus [ according ] to $100 million and improving our pricing terms, and we enter fiscal 2027 with no net debt. That capacity, together with our long-term strategy for growing organically where our network gives us an advantage, and supplementing that growth through disciplined acquisitions positions us well to build on the encouraging though still early signs of a domestic freight recovery. 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 Q&A.

Thanks, Bohn, and good afternoon, everyone. Today, we will be discussing the financial results, including adjusted net income and adjusted EBITDA for the 3 and 12 months ended June 30, 2026. For the 3 months ended June 30, 2026, we reported net income attributable to Radiant Logistics of [ $7.517 million ] on $261.4 million of revenues or $0.16 per basic and $0.15 per fully diluted share. For the 3 months ended June 30, [ 2025 ], we reported net income attributable to Radiant Logistics of [ $4.907 million ] on $220.6 million of revenue or $0.10 per basic and fully diluted share. This represents an increase of approximately [ $2.610 billion ] of net income over the comparable prior year period or [ 53.1 rent. ] For adjusted net income, we reported [ $7,373,000 ] for the 3 months ended June 30, 2026, compared to adjusted net income of [ $5.487 million ] for the 3 months ended June 30, 2025. This represents an increase of approximately [ $1,886,000 ] or approximately 34.5%. For adjusted EBITDA, we reported $1,362,000 for the 3 months ended June 30, 2026, compared to adjusted EBITDA of $7,886,000 for the 3 months ended June 30, 2025. This represents an increase of approximately $2,472,000 or approximately $31.6 million. Moving along to the full year numbers. For the 12 months ended June 30, 2026, we reported net income attributable to Radiant Logistics of $18,786,000 on $934.4 million of revenues or $0.40 per basic and $0.39 per fully diluted share. For the 12 months ended June 30, 2025, we reported net income attributable to Radiant Logistics of $17,291,000 on $902.7 million of revenues or $0.37 per basic and $0.35 per fully diluted share. This represents an increase of approximately $1,495,000 over the comparable prior year period or 8.7%. For adjusted net income, we reported $25,253,000 for the 12 months ended June 30, 2026, compared to adjusted net income of $30,944,000 for the 12 months ended June 30, 2025. This represents a decrease of approximately $691,000 or approximately 18.4%. For adjusted EBITDA, we reported $36,684,000, for the 12 months ended June 30, 2026 compared to adjusted EBITDA of $38,756,000 for the 12 months ended June 30, 2025. This represents a decrease of approximately $2,072,000 or approximately 5.4%. With that, I will turn the call over to our moderator to facilitate any Q&A from our callers.

[Operator Instructions] And your first question today is coming from Ryan Meyers from Lake Street Capital.

You guys noted in the prepared remarks that you've seen some improving metrics that were not fully reflected in the June quarter results. And maybe can you talk about what you've seen since quarter end and when you would think some of these trends will begin to show up more meaningfully in the financials?

Sure. So those comments were pointed directly at what we're seeing in the over-the-road truck brokerage and kind of related intermodal moves. So as capacities continue to come out of the market and fuel prices have gone higher, it's created incremental opportunities for our trust brokerage opportunity, and it's also created an environment where more and more shippers are looking to mode chip back to intermodal. And so both of those segments of the business, in particular, are kind of enjoying this current market environment. And I think it's going to continue for some time based upon everything that we see. So this kind of market pivot or evolution really didn't start happening until late May, early June. So we really in my mind, kind of only have 1 month of the good news of what's happening at road and rail in our fiscal year-end results. But we expect that to kind of continue to manifest here into or, I guess, what will be our quarter ended September and then on into subsequent quarters, depending how the market continues to evolve.

Okay. Got it. No, that's helpful. And then just thinking with fuel and energy prices, obviously, kind of top of mind here. Is there or just sort of remind us the risk between higher transportation cost and your guys' ability to be able to kind of pass those through to customers? And just kind of what you're seeing there and how we should think about the potential impact there?

Generally speaking, fuel is a pass-through. There may be modest lags between fuel fluctuation and when and how that gets passed through to the customer. But all in all, we're able to pass those increasing fuel cost onto the customers relatively quickly.

Your next question is coming from Jason Seidl from TD Cowen.

Yes. This is Elliot Alper on for Jason. Nice results in the quarter. You discussed some of these major shifts playing out in the market right now. Curious if we could get a bit more perspective on like how structural some of these are maybe how we should think about forwarding in the back half of the year. You've historically had some helpful commentary on China bookings and outlook there? And then maybe along those same lines, interesting comment on the cross-border opportunities with Canada. I appreciate anymore, context around kind of what you're seeing and how that play out.

No. So thanks for your question. So we have a very broad, diversified platform between our domestic and international forwarding and our over the brokerage and contract logistics capabilities and customs brokerage and the new technology. And in -- but I'm not sure if normal is the right word, but kind of thinking of the portfolio effect, I would say we're operating in an environment right now where most all of our businesses are actually kind of heading up into the right, which is encouraging. Now who knows based upon trade policy and the seedings tweets and what's going to happen in the Middle East, how some of these things change over time. But I think the general market sentiment, at least with respect to the domestic freight market, it's seeming like it's setting up to be a fairly durable longer run, if you will, and I guess, anecdotally, I would say we're due because we've been in an extended softer market for a number of years. And so it will be nice to see things getting back to some something that feels more normal. The international is just much harder to conclude on other than to say the steamship lines are doing a better and better job of managing capacity and doing big sailings to try to constrain the market and support price on Ocean free, which ultimately is helpful from a freight standpoint. And then I think there's also kind of an adjacent catalyst with it, that there's so much business going on in and around data centers and the capital moving towards data centers, but that's drawing on capacity and kind of tightening capacity broadly, including international airfreight. So I think there's a lot of kind of underlying trends that kind of set up for a longer more durable positive freight environment, certainly on the domestic side, but you don't have to lean too far to see it also setting up positively on the international side of things as well.

Very helpful. And maybe just staying on the air freight side of the business. I mean we've heard some commentary about pull forward. Curious if you have any comments on that and then you guys called out some of the disaster relief business that fell in the quarter. Any way to size that up just to think about maybe the back half of the calendar year?

We don't want to get into too much detail on it. candidly, for competitive reasons, but it was certainly meaningful on the air freight side. But even without it, we still would have been up year-over-year. So it wasn't -- it did tip the results, but it's certainly kind of contributed to the improvement on the on the disaster relief as it relates to the broader international airfreight than what's going on. It's -- Ocean has been the more challenging mode up until recently and the more traditionally kind of West Coast imports drive the market in terms of demand and pricing. And that kind of demand or call on capacity has softened more recently because of trades and tariffs and some of those things. But that seems to be beginning to behave a little more what we would expect. And so time will tell. But again, I think we're seem to be finding our way back to more normal footing in terms of the broader marketplace.

Right. Okay. And then -- maybe just on the Navigate Nice to see some of that adoption you called out with customers on your platform. I guess, is this something that's being braced into customer agreements now? Or can you speak to maybe how in the future you guys think about pricing this offering at a high level or any way to frame up maybe the margin opportunity, maybe looking a year or 2.

Yes, I'm not sure I'll do it quite that way, but let me try to be as responsive to your question as I can. And that is we want to meet our customers where they want to be met. And what I mean by that is some customers might say, we love the solution. We want you to effectively embed that cost and our cost of transportation. We might have other customers that say, we want to be effectively built for the technology separately. So in some cases, the tech might effectively map into our value-added services in other cases and more often the case, it's embedded as part of our transportation margin more broadly. . So I think of it as making of us basically providing a higher value solution to our customers making our -- I don't necessarily think of it as more margin. I think of it as winning more customers, making our customers stickier and hopefully, really Navigate really representing a catalyst for growth that hasn't been part of Radiant's historical narrative. I think we have a value proposition that's relatively unique to the marketplace and certainly new to Radiant and our ability to support larger customers with more complex supply chain, helping them manage their vendors and then those vendors representing warm leads to turn those vendors into incremental customers themselves is a really interesting intersection that we find ourselves in.

[Operator Instructions] Our next question is coming from Jeff Kauffman from Citizens Bank.

Well, first of all, congratulations on a real solid quarter. It was terrific to see. Just a couple of questions. So how should we be thinking about revenue growth rate as we head into 2027? And the reason I ask is with tariffs and seasonality gets jumping all over the place, but we were kind of at a flat revenue growth rate on the year-to-date through the third quarter and then up almost 19% in the fourth quarter, and you did call out a lot of typhoon-related activity, which has been a little more than normal this year, even though typhoons do occur every year. But just in terms of thinking about the right way to think about kind of where the business is growing as we head into '27, we really shouldn't take that 19% growth rate and kind of straight line that out. How should we be thinking about that?

Well, we like to underpromise and overdeliver, Jeff. So keep that modeling relatively modest, and we'll continue to outperform. It will be interesting to tell -- well, I guess, first, I would reframe it just a little bit because as you know, we like to think about growth in our gross margin dollars rather than absolute growth in our top line revenue. And that does a couple of things relative to the question you're asking, which is kind of neutralizes fuel and what's happening in fuel because as we talked about earlier with some of this Q&A, kind of, what's happening in fuel can also drive those numbers with really not much of a net gross margin impact because fuel is a pass-through. So I'm still not going to give you a very crisp answer, but I would -- I would kind of move you down the income statement a little further to the gross margin line item, the top line revenue to help field that question.

Yes. No, I just -- you called out the typhoons as a driver of revenue growth on the international side. So I was just trying to figure out kind of what's the right way to think about growth for your business right now.

I could speak a little bit to it. I mean if you look at our organic was up about 8%. And we are seeing things improve overall in the market. I think it's going to -- it will uptick from that. Bohn mentioned, we were seeing things late in the latter part of the quarter. that trends into -- segues right into Q1. So it's -- things are looking good, let's put it that way. We can't give you an exact number or anything, but it's definitely at a stronger trend than what we've been seeing in the past.

Okay. And then Todd, while I got you. Fourth quarter tax rate is always a little wonky, right? Because that's kind of the catch-up in neutralizers year. But in your pro forma to get to the adjusted, you were using a 24.5% rate, the actual rate was a little closer to 4% this quarter. And I know quarters are always a little bit wonky, but what was the primary driver of the difference between...

Yes. That was the One Big Beautiful Bill where it allowed us beginning in January, and we really kind of captured that in the Q4 to take items that were previously capitalized as far as internal software. And so basically, that was a true-up that occurred with the -- when we go to the provision on a quarterly thing, it's estimated, of course, we're using the projections and when we get to the year-end and we do the actual -- the entire thing. We go through a deeper dive. But that was the driver. It was basically taking previously capitalized expenses that we were allowed to include in the tax returns. So it -- so it was basically lower in the Q4 purely for that reason.