This afternoon, Bohn Crain, Radiant Logistics Founder and CEO; and Radiant's Chief Financial Officer, Todd Macomber, will discuss financial results for the company's first fiscal quarter ended September 30, 2021. 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. In addition, the 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. The floor is yours.

Thank you. Good afternoon, everyone, and thank you for joining in on today's call. We are very pleased to continue our trend and report another quarter of record financial results for the September quarter. We posted record revenues of $286.1 million, up $110.2 million or 62.6%, record net revenues of $64.9 million, up $18.9 million or 41.1%, record net income of $7.1 million, up $4 million or 129%, record adjusted net income of $10.6 million, up $4.1 million or 63.1%; and record adjusted EBITDA of $14.5 million, up $5.3 million or 57.6%. In addition, we also saw improvement in our adjusted EBITDA margin, which increased 230 basis points to a record 22.4%, up from 20.1% for the comparable prior year period. These results reflect the benefit of our scalable non-asset-based business model, diversity of our service offerings, and our ability to quickly respond to the changing market dynamics. Not only are we continuing to see solid recovery in our legacy business, but we are winning meaningful new business across the platform in the U.S. and in Canada. In addition, we continue to deliver these record results while maintaining very low leverage on our balance sheet. As we previously discussed, we also believe that our current share price does not accurately reflect Radiant's intrinsic value or long-term growth prospects, particularly given our unlevered balance sheet, and therefore, represents an excellent investment opportunity for both the company and our shareholders. Although we always have a fairly narrow trading window in our first fiscal quarter, given the timing of our 10-K filings, we were able to continue our stock buyback efforts and purchased approximately $1.7 million of our stock during the quarter. We remain encouraged by our continued strong financial performance and the fact that we have now reported a record $54.1 million in adjusted EBITDA for the trailing 12 months ended September 30. Looking ahead, we believe we are well positioned to continue to support existing and new customers in what is proving to be a persistent capacity-constrained market. Hopefully, our continued strong performance and strong balance sheet will begin to register with investors as we remain optimistic about our prospects and opportunities to continue to deliver profitable growth. In the months ahead, we expect to continue to be active in our stock buyback activities and look forward to reactivating our acquisition efforts as the opportunity presents itself. 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 some Q&A.

Thanks, Bohn, and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the 3 months ended September 30, 2021. For the 3 months ended September 30, 2021, we reported net income attributable to Radiant Logistics of $7.79 million on $286.1 million of revenues or $0.14 per basic and fully diluted share. For the 3 months ended September 30, 2020, we reported net income attributable to Radiant Logistics of $3,088,000 on $175.9 million of revenues or $0.06 per basic and fully diluted share. This represents an increase of approximately $3,991,000 of net income over the comparable prior year period or 129.2%. For adjusted net income, we reported $10,559,000 for the 3 months ended September 30, 2021. For the 3 months ended September 30, 2020, we reported adjusted net income of $6,520,000. This represents an increase of approximately $4,039,000 or approximately 61.9%. For adjusted EBITDA, we reported $14,544,000 for the 3 months ended September 30, 2021, compared to adjusted EBITDA of $9,226,000 for the 3 months ended September 30, 2020. This represents an increase of $5,318,000 or approximately 57.6%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.

Your first question is coming from Mark Argento.

Yes, it was an incredibly strong quarter. Can you share if any specific areas of the business are performing exceptionally well? I understand that the strength appears to be broad-based, but any insights on where you're seeing additional growth would be appreciated.

I think it's been positive really across the board; virtually every category has seen good improvement. In terms of individual outperformers, from a modality standpoint, probably our ocean product has been the single biggest improvement with everything going on, all the constrained capacity for congestion. There's a lot of shippers out there scrambling to find capacity and, fortunately, we've been in a position to step in and get opportunities to support customers where they couldn't find capacity, allowing us to demonstrate some of our relationships in the marketplace to get things moving when sometimes they otherwise weren't getting service.

Great. Is that just some of your key relationships that you have? Or how are you guys able to kind of step in and provide that when it's such a tight market?

I think it's a combination of both servicing our existing customers. But this market has created an opportunity for us to get engaged with new customers, new accounts that historically we have not serviced but we've had an opportunity to begin to work with in this market environment. So part of what we're doing is trying to make sure we do all we can to make sure that the customers stick with us after the fire fight, so to speak, in terms of sourcing capacity.

Great. And this last one on the buyback. Just remind us what you guys have left in terms of availability there?

I think we have quite a bit. If I remember correctly, we were authorized for up to 5 million shares.

Correct.

And we're fairly early into that. And I believe the existing program actually expires under its own terms as of the end of December, so we'll have to be refreshing.

Yes. I think the availability is the 3.8 million shares that are about left. So there's ample opportunity.

Great. Well, it's really impressive to see what you guys have been able to do given really tight situations out there in terms of availability. So keep up the good work and have hopefully a really good holiday as well.

Thanks, Mark.

Thank you, Mark.

Your next question is coming from David Kanen.

Congratulations. Great job.

Thank you.

Thanks, Kanen.

You're very welcome. So first question is on some of the new accounts that you've gotten into, new customers that were looking for excess capacity. Do you have a deliberate game plan to not only retain but to augment the potential relationship and business going forward? And if so, could you sketch that out for us a little bit some of the things that you're doing?

We are focusing on entering new accounts where initially we get some challenging business opportunities that previous providers have struggled with. This is a typical situation, and it's an opportunity for us to prove our worth. Engaging with customers and demonstrating our capabilities is crucial. We don't have a specific plan, but we aim to stay engaged, provide value, and enhance customer loyalty through our technology and reporting tools. We have a track record of getting results in demanding situations, such as our work with FEMA and PPE during the early days of COVID, which has helped us gain credibility and open up new business opportunities. This is simply another chapter in that ongoing story.

Understood. It reflects in the numbers. My next question is about the M&A landscape. Could you provide a general comment on the current multiples and where deals are trading regarding EBITDA if you manage to find the right partner?

I’m not sure how many potential sellers are on this call, so I’ll be cautious in my comments. However, it's clear that the market is still strong. We are considering stock buybacks as a capital allocation option alongside M&A, assessing the additional strategic value that M&A could bring to our efforts. To give you a broad perspective for this discussion, generally speaking, we would expect companies generating over $10 million in EBITDA to be trading at around 10 times earnings in a typical market. For companies with around $2 million in EBITDA, the expectation would be close to 5 times in a normal market. We could spend a considerable amount of time discussing what constitutes a normal market these days, as the current environment is quite complex for M&A. One thing is certain: this market is unusual in many ways at the moment. That said, our primary strategy remains balanced, focusing on both organic growth and acquisitions. We plan to pursue M&A through a three-pronged strategy. While I don't want to imply that we will never undertake a large transaction, that is not our main focus at this time. We are concentrating on smaller tuck-in acquisitions, such as converting existing agency stations into company-owned stores. For instance, last February, we acquired an agency station owner in Pittsburgh. We will continue to explore opportunities to convert existing agency stations when they are ready, as well as pursuing various incremental standalone opportunities that are available.

I appreciate your recognition of the value in our stock and your willingness to purchase it. I would like to express my hope that you could buy significantly more shares. For instance, at $8 a share, you're acquiring stock at a multiple of 7 times EBITDA, which is a considerable discount compared to your peers and the current M&A activities. This presents a great arbitrage opportunity and is highly beneficial. As an investor, I, along with others who feel the same, would be interested in purchasing. We manage fixed income portfolios and I would be inclined to offer a preferred investment, utilizing our cash. If an M&A opportunity arises and you need liquidity after committing to buy back common stock, I would be willing to provide funds at favorable terms, likely around 7% on a preferred that you can redeem once you start generating free cash flow again.

I've never negotiated a term sheet on an investor call, Dave, but I appreciate your offer.

Yes, I would be open to that, and I'm sure other investors would feel the same way. This is where the market is. We are quite active in fixed income. I'm speaking generally, and while this isn't a formal proposal, I appreciate your lightheartedness. If I evaluate this using around $57 million to $58 million of EBITDA, which you seem on track to meet or exceed, and then even factoring in the earn-outs as a contingent liability on the balance sheet with an enterprise value of $410 million, we are still looking at 7x EBITDA. So at $8, it appears to make sense. I believe some form of a tender could have a significant impact. That's just my opinion; not everyone may agree, but I think it could lead to a better outcome. I wanted to express that I would certainly consider investing in a preferred.

I appreciate that there are differing opinions on tenders, with some people strongly in favor and others less enthusiastic. However, there is a broad consensus that our stock is undervalued, and we acknowledge this fact. While it can be frustrating, it also presents an opportunity. We've started investing our capital and plan to continue doing so, possibly at a larger scale than recently. Initially, we were active in our stock buyback program but had to pause due to COVID and the PPP loans. When we resumed, we only had about ten days in this quarter for buybacks due to the timing of the quarter. We were aggressive in buying as much stock as we could during that allowed window. We will continue to allocate our capital wisely while maintaining financial flexibility for M&A opportunities, fulfilling our brand promise to our partners, and ensuring we have reserves to navigate any unexpected market events.

Well thank you on the context of the buyback and I thought it was only 10 days. That's helpful and I wish continued success.

Thank you.

Your next question is coming from Elliot Alper.

Maybe on the freight forwarding side and specifically ocean and air services. I guess given the tight capacity, how are you and your customers thinking about their supply chain differently? And have you seen any real shift in behavior over the past several months in this year?

Well, capacity is tight. I mean everything is a firefight right now. And what traditionally were easy moves, and I'm talking internationally air and ocean right now, capacity is just tight. So we're having to kind of consistently and perpetually interrogate the market to find capacity literally box by box for the benefit of our customers. And it's certainly an interesting landscape. It wasn't long ago, people talked about this environment is kind of beginning to revert to a norm around Chinese New Year. And that conversation and the narrative has shifted. I think everybody sees this going deep into next year, deep into calendar '22. So the market remains super tight. Obviously, people are looking to divert into airfreight away from ocean, where the price points of their products will allow that and kind of service line requirements. But there's no immediate end in sight and capacity remains tight. So in some of the new vaccine mandate dynamics that just is going to put even further constraints on drivers and seats potentially, depending on how all that plays out. And we can go right down the road, chassis, drayage, there's virtually no segment of the supply chain that's not under a fair amount of stress right now. So that creates its challenges. But at the same time, it also creates an opportunity for us to be really helpful to the customers that we serve.

Yes, definitely. So I guess slightly differently, as new customers come online and come on to the platform, I guess, what are the biggest reasons that they're coming to Radiant?

I believe that currently, those who can source capacity have an advantage because there is more freight available than capacity. If you can secure capacity, you can draw in the freight. A key strategy for us is to provide capacity for our partners when they need it, which is essential. While they are with us, we ensure that they are introduced to the strength of our technology platform and the skills of our teams, to help build a foundation for a long-term relationship that extends beyond the current market conditions. We are certainly witnessing this as we grow not only our transactional business but also in Canada and some of our warehousing and longer-term contractual opportunities, which are also flourishing. It is difficult to pinpoint any weak areas, apart from cruise lines, which unfortunately seem to be the last sector to recover; everything else is performing well. We understand that we cannot expect this situation to continue indefinitely, but it does not seem to be coming to an end soon.

Congrats on the quarter.

Thanks.

Your next question is coming from Jeff Kauffman.

Vertical Research Partners. Well, first of all, congratulations. Just terrific number. Bohn, when you look out at the environment, I mean it's just crazy out there right now, and that's showing up in the net revenue margins, right? So eventually, we know that those are going to normalize. But do you feel that there's parts of the world where brokers or forwarders are over-earning and that will normalize at some point in time? Or do you feel like we're at this new threshold where these prices sustain and the demand sustains?

Well, I think everybody is over earning, but Radiant, I think ours is going to be.

I guess you would say ocean is probably the biggest one.

Yes, the container rates are exceptionally high, leading to some ocean lines earning more than they ever have in their history. This market is certainly unusual. We hope it will return to a more typical state, but I don't believe it will go back to what it was like before COVID. Capacity is too tight, and there are several fundamental trends that are here to stay. It appears that resetting these supply chains will take much longer than any of us anticipated. In a more traditional cyclical market, rates would rise, and asset-based companies would overinvest in their trade lanes, causing prices to drop again. However, in the current situation, if a trucker wants to take advantage of the market and add another truck, they face challenges like not being able to obtain the parts needed to manufacture the truck, as well as difficulties finding a driver. Many of the traditional methods we consider for balancing supply and demand dynamics are struggling. As a result, the adjustment period will likely be much longer than we expected.

So to your point, when we go back to normal, it's going to be a different normal?

Yes.

What kind of things are you being asked to do more by customers these days that you weren't being asked 12 months ago? Outside of please help me, I can't get things past the ports. But are there new industries, new services, new business lines that are coming to you as a result of what's going on?

I wouldn't necessarily categorize it as new business lines. We are quite diversified in terms of geography and service offerings. While there are certain areas where we have performed well, such as FEMA-related business and life sciences testing, our success spans a variety of sectors. A key theme we've discussed before is the idea of combining value-added services with our core transportation offerings. This can manifest in contract logistics, customs house brokerage, or enhanced technology solutions. This approach is fundamental to much of what we do, and it is proving effective.

Last question. If I heard you right, the 5 million share authorization expires at year-end, so you'll do what you can to opportunistically. But to buy additional shares after January, you would need a new authorization?

Yes, but that's relatively straightforward and effectively easily accomplished. We just have to kind of make a communication, get it out there. So there's no real hoops per se other than we just need to refresh our authorization to continue into the new year, which we fully expect to do.

Okay. Well congratulations, fantastic quarter.

Thanks, Jeff.

Your next question is coming from George Melas.

George Melas from MKH Management. I'm fairly new to the story, and I'd like to ask your question on sort of your corporate internal priorities, including things like the integration of USAP, TMS across your different lines of business, your investment in the Canada warehouses. Where are you putting your internal focus from an operational perspective and trying to make this continuously a better company?

Welcome to Radiant. We've been working on our strategy for a while now. In our early days, we pursued a lot of growth through acquisitions. Investors expressed their desire for organic growth, so over the past several years, we've concentrated on integrating our acquired businesses. In 2015, we acquired a public company called Wheels, which we rebranded as Radiant Canada. We've devoted time to ensure these acquisitions integrate well and create cross-selling opportunities throughout our organization. Recently, our primary focus has been on organic growth. We have been developing a vertical sales team and increasing our field sales resources to enhance organic growth across the business. This effort is starting to yield positive results. Additionally, we've invested time and energy into implementing SAP, which is progressing well and gaining traction. As we began to plan for new acquisitions, COVID hit, prompting us to pause those plans. Now that we are emerging from the pandemic, we are actively working to re-engage and rebuild our M&A pipeline. We also recognize the opportunity to buy back our own stock given its current trading levels. On a trailing 12-month basis, we have delivered $54 million of EBITDA, which is remarkable in the historical context of Radiant. This is notable alongside the fact that we effectively reduced our debt in 2015 and have not increased it since. We currently have a run rate EBITDA of around $55 million with less than one turn of debt on our balance sheet, trading at significant discounts compared to the market.

And do you see among your agents, do you see a fair amount of variation in terms of performance during the abnormal times? Or that's kind of this the tide lifts all boats?

I think of it as a portfolio effect. Individually, many of the stations are niche, but together they create a very diverse portfolio. At any given time, some will be performing well while others may not, with a mix of less successful stories and quite a few that are exceptionally successful. They vary in size as well, from large agent stations to very small micro agents that we support as part of our network.

Your last question is coming from Michael Vermut.

Those are good questions you've raised so far. First of all, I commend you. I've been saying these results aren't just about this quarter or the last quarter; they reflect the performance of the past 6 to 7 quarters, which has exceeded expectations. This is something we've been aiming for over the past 5 to 10 years, and you have successfully delivered on that. Looking back, we are earning about four times what we did three years ago, yet our stock price remains largely unchanged. I can do the math here. The previous speaker calculated a seven times return, while mine is around six times based on our run rate EBITDA. It's encouraging to see someone considering a preferred offering like that. I have a slightly different perspective on it.

He's on the 7%. I was looking for 6% from you, Mike.

I was initially going to suggest a 2% or 3%, but I think that may not be appropriate. For a balance sheet and cash flow situation like ours, my estimate is that if we reach a $60 million to $55 million EBITDA run rate, we will have ample free cash flow to buy back stock. The real question isn't about funding; it's about how we can manage this. If our stock remains at its current level, I would purchase as many shares as possible. When you mention that a $10 million EBITDA company trades at 10 times earnings, and a $2 million company trades at 5 or 6 times, we are currently trading at 6 times for a $55 million to $60 million company. Clearly, we intend to utilize all available resources until our valuation normalizes, and we have a long way to go to achieve standard multiples. Looking at public companies, they trade at 15 to 20 times EBITDA. So, even a modest multiple of 10 suggests a $12 valuation. What I'm trying to convey is that we will be aggressively buying back shares. We need to consider whether there are acquisition opportunities that are truly beneficial and technologically advanced or if it’s better to first elevate our stock to a proper valuation since it’s still dramatically undervalued, and then look at acquisitions. Alternatively, can we effectively pursue both strategies and maintain robust organic growth while buying back a significant amount of our stock and making acquisitions?

I prefer option C in your multiple choice questions. Yes, we definitely believe that it is our responsibility to keep searching for opportunities that are highly synergistic and could significantly impact us and our platform. We have evaluated many deals and decided against pursuing numerous ones over the years. We're not going to halt our M&A efforts just because our stock price is undervalued. In fact, I genuinely expect that we will engage in both strategies, as there are companies that will meet our criteria and justify the use of our capital, aligning with our business strategy and helping us scale and grow. Simultaneously, we will continue to invest in buybacks. In short, I do not view these strategies as mutually exclusive or as a binary choice.

Excellent. I support an accelerated buyback. However, we should assume that if the stock remains at these levels, we will purchase as much as we can. I don't want to reveal too much, but I don't have any company in my portfolio or on my radar that compares to our balance sheet, growth, future outlook, and valuation. It’s a unique situation. Our stock price has not changed in five years, yet we are earning five times more and have a solid balance sheet. The goal, as I see it, is not to conduct a tender offer, but to buy as many shares as possible at these inflated levels.

We will be active in our stock buyback, that's our expectation.

I appreciate that. One final point: while many are acknowledging the exceptional conditions in the market and the achievements we've made at the company, including attracting new customers, Radiant has reached a new level despite some slowdowns. Our margins have improved slightly. Have we gained enough traction as a company? I'm interested in knowing about the types of customers we have and the sectors we are active in. Has the experience of the last two years fundamentally altered what Radiant represents?

I certainly believe that is the case. Even prior to COVID, we were starting to see opportunities to expand our reach in terms of the size and scale of the requests for proposals and new business opportunities we were invited to pursue, and that trend has continued. For the foreseeable future, we still view the classic middle market shipper as our primary customer, but that represents a vast universe with plenty of potential. The opportunities and deal flow have accelerated, and we anticipate that will continue. There is a lot more we can explore not only within the sectors we are currently involved in but also in several adjacent sectors that are appealing to us. I agree with everything you've mentioned and am very optimistic about our current position and trajectory. Sometimes I refer to our stock price, which has historically followed a certain pattern, but there are moments when we experience significant value unlocking as the cumulative evidence shows we are fulfilling our commitments and executing the right strategies effectively. To me, $54 million of TTM EBITDA significantly supports that argument. Ultimately, the market will determine our fate, and we will keep executing our strategy.

Excellent. Look, my hats off to you guys, the execution has been phenomenal through these times. And when you look at just the normalized to give you the lowest multiple in our sector puts us north of $12 and that's the lowest multiple. And it gives us an opportunity. You can look at this, yes, it's unbelievable that we're here, but it gives the company a really unique opportunity to change your capital structure permanently by retiring all these shares. So in the long run, this isn't a bad thing to be able to buy your stock at such an accretive level. So hats off to you guys and just keep up the great work.

Thanks, Mike. Appreciate it.

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

All right. Let me close by saying that 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, the strength of our balance sheet, the scalability of our technology, and our extensive carrier partner network, we are certainly optimistic about the continued economic recovery and the opportunities that it will present for Radiant. At the same time, we remain patiently persistent in 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, and the end customers that 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.