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 second fiscal quarter and six months ended December 31, 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 meanings of the Securities Act of 1933 and the Securities Exchange Act of 1934. The company has based these forward-looking statements on its current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about the company that may cause the company's actual results or achievement to be materially different from the results or achievements expressed or implied by such forward-looking statements. While it is possible to identify all 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's 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.

Thanks, Matthew. Good afternoon, everyone, and thank you for joining in on today's call. We don't have flowers or chocolates to offer today on Valentine's, but we do have some very good news to share, as we continued our trend with another quarter of record financial results for the December quarter. We posted record revenues of $332.8 million, up $114 million or 52.1%; record net revenues of $71.6 million, up $16.3 million or 29.5%; record net income attributable to Radiant of $6.9 million, up $3.1 million or 81.6%; record adjusted net income of $12.3 million, up $3.7 million or 43%; and record adjusted EBITDA of $17.3 million, up $4.8 million or 38.4%. In addition, we also saw improvement in our adjusted EBITDA margin, which increased 140 basis points to a record 24.1%, up from 22.7% in 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 changing market dynamics and support our customers in this capacity-constrained market. In addition, we delivered these record results while working through the challenges presented by our previously disclosed ransomware event that occurred on December 8. Also note that these record results reflect only a one-month contribution from Navegate given the fact that we did not complete the transaction until November 30. With offices in the Twin Cities in Chicago as well as Shanghai, the Navegate platform itself represents an exciting new opportunity for the Radiant network and the end customers that we serve. In addition to solidifying our presence in Shanghai, Navegate also strengthens our international service offering, particularly in the areas of customs brokerage, ocean forwarding and drayage services and brings with it a proprietary technology platform to facilitate global trade management. These new global trade management capabilities will be made available to the entire Radiant network to provide our customers with purchase order and vendor management tools that unlock SKU-level visibility from the manufacturing floor in Asia through final delivery here in the U.S. With both the enhanced service offerings and proprietary technology, we believe we will further differentiate ourselves in the marketplace and be even better positioned to provide additional support for both current and prospective customers. In addition to progress on the acquisition front, we also continue to put capital to work in our stock buyback program and have now purchased $6.3 million in stock through the six months ended December 31, 2021. As we previously discussed, we believe that our current share price does not accurately reflect Radiant’s intrinsic value or long-term growth prospects, and we expect to continue to deploy our capital through a combination of strategic acquisitions and stock buybacks. It is also worth pointing out that the record results that we've delivered over each of these last several quarters have been fueled almost exclusively by organic growth. Looking forward, 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 have built here at Radiant. At the same time, we have begun to thoughtfully relever our balance sheet and through a combination of strategic acquisitions and stock buybacks, we believe we are creating meaningful intrinsic value for shareholders that has yet to be recognized in our stock price. 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 three and six months ended December 31, 2021. For the three months ended December 31, 2021, we reported net income attributable to Radiant Logistics of $6.948 million on $332.8 million of revenues or $0.14 per basic and fully diluted share. Please note that this quarter included approximately $750,000 of expense related to the cyber event disclosed in December. For the three months ended December 31, 2020, we reported net income attributable to Radiant Logistics of $3.812 million on $218.8 million of revenues or $0.08 per basic and $0.07 per fully diluted share. This represents an increase of approximately $3.136 million of net income over the comparable prior year period or 82.3%. For adjusted net income, we reported $12.317 million for the three months ended December 31, 2021, compared to adjusted net income of $8.642 million for the three months ended December 31, 2020. This represents an increase of approximately $3.675 million or approximately 42.5%. For adjusted EBITDA, we reported $17.251 million for the three months ended December 31, 2021, compared to adjusted EBITDA of $12.531 million for the three months ended December 31, 2020. This represents an increase of approximately $4.720 million or approximately 37.7%. Moving along to the six-month results. For the six months ended December 31, 2021, we reported net income attributable to Radiant Logistics of $14.027 million on $618.9 million of revenues or $0.28 per basic and fully diluted share. Please note, this period also included the $750,000 expense related to the cyber event disclosed in December. The six months ended December 31, 2020, we reported net income attributable to Radiant Logistics of $6.900 million on $394.7 million of revenues or $0.14 per basic and fully diluted share. This represents an increase of approximately $7.127 million over the prior comparable year period or approximately 103.3%. For adjusted net income, we reported $22.879 million for the six months ended December 31, 2021, compared to adjusted net income of $15.159 million for the six months ended December 31, 2020. This represents an increase of approximately $7.720 million or approximately 50.9%. For adjusted EBITDA, we reported $31.798 million for the six months ended December 31, 2021 compared to adjusted EBITDA of $21.753 million for the six months ended December 31, 2020. This represents an increase of approximately $10.045 million or approximately 46.2%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.

Certainly. Ladies and gentlemen, the floor is now open for questions. Your first question is coming from Jason Seidl from Cowen. Your line is live.

Hey operator. Thank you. Bohn and Todd, congrats on a very strong quarter. I have a couple of questions. One, could you give us an update on the ransomware? Should we expect any impact here in Q1? If so, how much? I guess the second question I would ask is Navegate, to help us out in terms of modeling it on a quarterly basis. Is there any special seasonality we should think about? And what sort of growth levels are you looking for in 2022? And then I have a follow-up question sort of on the overall market.

Okay. So, I guess, we'll take them one at a time here. So, first, relative to the cyber event itself, that is largely behind us now at this point in terms of any incremental cost. So, I mean there might be some small costs that could come, but it should be really immaterial and nowhere in the magnitude of plus or minus $750,000 that we accrued into the quarter into December. So it was a challenging time, but that is largely behind us at this point in time to the cyber event itself. The second was Navegate. We're still early into the process in terms of integration. I don't believe we're expecting significant seasonality. I mean, as I think we would expect, we would be modestly slower in the quarter ended March and then continuing to build over the calendar year, like a lot of the traditional business is. So pretty standard in that form. So I don't think there's anything unique we need to do in terms of modeling as it relates to seasonality. It's a little early.

They can grow off the numbers?

I am. Particularly, it's early days in terms of our integration, but the technology itself we're really excited about in terms of kind of detailed PO management SKU-level tool that is particularly relevant in today's environment with all of the frustrated supply chains and everybody's appetite for increased visibility to what's happening not only on the water but on the manufacturing floor. With the global challenges as COVID and managing workforces, et cetera, there's just a heightened interest in that type of visibility. And while historically, we could always provide shipment-level visibility, we've never been able to offer back to our customer base this PO-level, SKU-level, in-transit visibility. So we think it's going to be really powerful and kind of an incremental opportunity within our installed customer base as well as just an opportunity to go out and further differentiate ourselves in the marketplace and win new customers. So it's – we always look for transactions that we think we can value and structure in a way that makes sense relative to our own trading multiples. And for the Navegate transaction, we certainly achieved that, but we have this real nugget that we perceive in the technology set that was embedded within the business that we're excited to kind of bring to market in a more robust way.

It seems like it's going to be a good one, Bohn. Wanted to – my third and final one here. You talked a little bit about organic growth. Clearly, we see the revenue side. But maybe you could parse out sort of the shipment growth that we're seeing because there's been a lot of positive noise on the pricing front, given just sort of the global congested supply chains and what's going on with ocean rates and air rates and trucking rates is just across the board. So how has the organic shipment growth been for you across your different business lines?

I think, generally speaking, it's been really positive. I mean, obviously, we've got increased rates. But in this environment, it's really created an opportunity for us to open up relationships with new customers who are craving capacity. So effectively, if you have capacity, you have opportunities. So the opportunity to accelerate engagement with customers and new customers around capacity has been very interesting for us. And it's been kind of a continuing theme as we've continued to grow up, but just the size and sophistication of the customers that we have an opportunity to serve continues to increase. And kind of back to some of the technology angles of some of these conversations, I think that's only going to continue to increase.

And Bohn, would you put it in sort of the low single-digit, mid-single-digit, upper single-digit growth rates in terms of the shipments?

There's always a bit of a tricky question when we start thinking about mix in terms of modalities. However, we continue to focus on baseline organic growth regarding our gross margin dollars, which we estimate conservatively in the 4% to 6% range. Additionally, we expect to benefit from our scalable back office and see an expansion in EBITDA growth, resulting in more dollars going to the bottom line as a function of gross margin. Thus, we would consider that in the 8% to 12% target. So, 4% to 6% and 8% to 12%.

8% to 12%. All right. Very helpful, Bohn. Thank you for the time as always. And again, congrats on the quarter.

Thank you.

Thank you. Your next question is coming from Jeff Kauffman from Vertical Research Partners. Your line is live.

Thank you very much. Congratulations.

Thank you.

Thank you.

So a couple of questions. A big jump in the tax rate this quarter, almost 300 basis points. So is that kind of a one-time deal? Is something different as a result of Navegate being on board? Was it related to some of the one-time items? Could you give us some guidance on taxes in the quarter and then tax rate for the year?

The tax rate for the year has undergone a recent assessment, which took place over the weekend. The rate we are currently recording will likely be the rate moving forward. We found that Navegate incurred higher state income taxes than Radiant as a whole, which slightly altered the overall tax mix.

Thank you. Your next question is coming from Mark Argento from Lake Street. Your line is live.

Hi, everyone. Congratulations on a strong quarter, and I'm sorry to hear about the Minnesota state tax rates. I have some familiarity with them. But anyway, great job on a solid quarter. Clearly, you are gaining momentum.

Your next question is coming from...

So we have just lost the last two people.

It seems like I got cut off.

Your next question is from Mike Vermut from Newland Capital. Your line is live.

Hey, guys. How are you doing?

How are you doing, Mike?

Yeah.

Thank you. First of all, I want to say it's phenomenal. When we started investing in Radiant years ago, you would have never believed we would be where we are today. It's incredible. Considering everything, it's amazing that our stock price is relatively the same while we're earning five times what we used to. I commend you all for that. A lot has happened competitively in the last few months in our sector. One of your largest competitors announced last week that Maersk acquired Pilot, and from what I can see, they paid over 14 times EBITDA. We're trading under six, currently around 5.5. How do you balance that when looking at the situation, and what do you see happening in the competitive landscape? We are the only public logistics company in that space; there are a few others privately owned. Maersk paid an impressive price for Pilot. How do you see things developing? What are your thoughts on this? If we were given that multiple, we would be at $23 right now. There seems to be a significant disconnect here. I'm curious about your perspective.

There are many factors to consider here. Firstly, Maersk and other shipping companies have gathered significant cash due to current ocean pricing. Additionally, I believe they also acquired LF Fong, indicating they might continue pursuing acquisitions. Therefore, it seems like consolidation will persist. As for us, we are focused on enhancing shareholder value and executing our strategy, but we haven't received the recognition we desire, which is frustrating but also presents opportunities. We have started working on stock buybacks, having spent nearly $7 million in the first half of this year. It's a challenging situation. When we began this journey, our share price was $0.44, and we've fluctuated since then. I firmly believe we are executing a strategy that is generating substantial intrinsic value, although for a variety of reasons, this isn't currently reflected in our stock price. This is somewhat typical for smaller public transport companies. Even larger ones, like Echo, which positioned themselves well as a technology-oriented 3PL, eventually opted to go private. We need to consider all available options for moving forward. Currently, we see ample opportunity to enhance shareholder value, though how and when that might happen is uncertain. We are committed to our strategy and achieving outstanding results, and we hope that ultimately, this will lead to an increase in our stock price. Additionally, there is a considerable amount of capital in the private equity sector, and they are actively seeking to acquire businesses. This availability of options is something we have to keep in mind as we navigate this environment.

Excellent job, everyone. The acquisition looks fantastic and the earnings are impressive. Considering what you faced in the quarter, I can't recall a public logistics company without assets trading at these levels with your level of organic growth. Congratulations. Eventually, this will unlock value, but great work and keep it going into 2022.

Thank you.

Thank you. Your next question is coming from David Kanen from Kanen Wealth Management. Your line is live.

Hi, good afternoon, guys. Congratulations. Great job.

Thank you.

So, first question is what is the leverage what is your comfort level in terms of leverage ratio versus EBITDA?

I think probably the short answer to that is probably two and a half times is where we would think the normalized leverage ratio, what we would target. Our existing credit facilities provide for three times and can flex up to 3.25 times kind of under our existing framework. So, plus or minus and a half times would probably be how we view that.

We have a lot of potential for growth. My question is, if the stock continues to trade below six times, around five and a half times EBITDA, are you more likely to use your capital for buybacks or mergers and acquisitions given that many other stocks are trading at higher multiples? By the way, Navegate did a great job. I'm on board with those deals anytime. So, how would you respond to that?

Yes. I believe we need to maintain a balanced approach. We will keep assessing the market for synergistic and attractive acquisitions that align with the interests of both our shareholders and the network. The decision-making process will partially depend on how these opportunities compare to buying back our own stock. Historically, we've followed a multipronged strategy, utilizing a mix of stock buybacks along with smaller tuck-in acquisitions. This is our foundational plan when considering capital allocation.

Okay. Regarding the impact from the ransomware attack, you've estimated it to be around $750,000. My question is whether the adjusted EPS includes the $750,000 or not.

Yes, it does. In the press release, if you look at the last page, you'll find a reconciliation that shows the $750,000 is added back in both adjusted EBITDA and adjusted net income.

Okay. And then what was the approximate net revenue number that we lost from the ransomware attack? I'm sure I could back into it using your EBITDA margin, but...

You can't really determine a specific net revenue impact from that number. We are certain that there may have been a small amount of revenue lost during the process, but not a significant amount. To clarify, we continued to serve our customers throughout this time. Some shipments were delayed or moved slowly, but we don't believe that any considerable top-line revenue was lost in relation to our overall financials. The $750,000 represents the third-party costs we incurred for bringing in a team to handle the cyber event.

Okay. And then what's impressive is the organic growth in the quarter. Could you give us a sense as to what the drivers were? Was it new customers? Was it growth within existing customers? Was it one particular vertical or just sort of just completely dispersed?

I would say it was really broad-based. The guys in Canada continue to do an extraordinary job in their bundling strategy. We saw great growth in the forwarding business, a fair amount of that coming in the ocean product line. And then Clipper itself is seeing really positive results kind of across the board within their business, with probably the temperature control business leading the way within the work that they do.

Bohn, this is the first time I've heard you mention the previous statement about the significant amount of private equity money available. The suggestion is that perhaps someone is exploring opportunities with you. Can you elaborate on that? Are you receiving any inquiries?

No, I want to clarify that no one is exploring the possibility of acquiring us. I sometimes get asked if we are in the process of selling our business, and I can definitely say that we are not. We are very committed to what we do, and we are not considering selling ourselves.

Okay. Well, good luck next quarter. Keep up the great work, and we hope you guys accelerate the buyback in the absence of accretive M&A and take advantage of this opportunity of the disrespect the market is showing to the stock. Thank you.

All right. Thanks, Dave.

Thank you. Your next question is coming from Jeff Kauffman from Vertical Research Partners. Your line is live.

Hey. Round two.

Hey, sorry for that. I hope you have some quarters handy to keep playing the game.

Yes, I’m calling from one of those old phones, I guess. Sorry about that.

I think it might have been on our end, so I apologize.

It’s okay. A lot of questions have been asked, and I'm glad no one is considering going private tomorrow. Let me focus on some other topics. Many businesses that reported this quarter mentioned that Omicron impacted their operations more than anticipated in January and even into early February. Absenteeism increased, affecting not only their businesses but also those of their customers. I was curious if Omicron impacted your business at all, or if the Canadian trucker protest affected your operations in Canada. Are there any unusual factors we should consider as we look ahead to third quarter forecasting?

Yes, it seems like we are facing both recurring and non-recurring challenges. The factors you mentioned, such as Omicron and border issues, are impacting everyone. Ultimately, it's the people on the ground who are managing to keep things running despite these challenges. This requires significant effort from everyone involved. We are feeling the strain, but everyone is stepping up to meet the demands. It's not just us; many are struggling with workforce shortages due to inflation, illness, and quarantine related to Omicron. Everyone is short-staffed and handling more responsibilities than usual while waiting for employees to return as they recover. There has indeed been a notable increase in absenteeism due to Omicron. Fortunately, most people are not requiring hospitalization; they tend to be out for a few days and then return. We're managing the situation as effectively as we can, just like everyone else.

Hey, Jeff, regarding Canada, that's a great question. Canada has managed to navigate through the situation. As you know, trucking has been largely shut down, but they have shifted to using rail for transport across the border. It's about tactically addressing the issue, and so far, they have been able to handle it.

That’s great to hear.

It certainly impacts them and presents a challenge for sure. Hopefully, all that is getting resolved soon. I think it's starting to lighten up based on what I saw in the news. But yes, it's ongoing for now.

Todd, we got cut off. I was following up your tax comment because you have mentioned things are different now with Navegate.

Jeff, we're going to have to cut you off again, you start asking tax rate question.

Well, I'm just wondering, what's the right way to think about it going forward?

I think everything has been clarified after discussions with our tax advisors over the past few days. Looking at Radiant overall, we benefit from not having to pay state taxes in many locations due to the lack of Nexus. However, Navegate is primarily based in Minnesota and also has operations in Chicago, which means they are subject to state income taxes. We have examined the overall rates closely, and I believe the rates we have for this quarter will remain stable unless there is another acquisition. This is the most accurate rate to consider for now, barring any further acquisitions.

All right. Well, since I ask about tax rate twice, I guess, I should stop. So thank you very much.

You bet.

Thanks Jeff.

Thank you. There are no further questions in the queue. I’ll now hand the conference back to our host for closing remarks. Please go ahead.

Thanks. 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 have here at Radiant. At the same time, we've begun to thoughtfully relever our balance sheet and through a combination of strategic acquisitions and stock buybacks, we believe we are creating meaningful intrinsic value for our shareholders that is yet to be recognized in our stock price. Through this multi-pronged approach of organic growth, acquisition and stock buybacks, we believe we will continue to create meaningful value for our shareholders, operating partners and the end customers that we serve. Thanks for listening and your support of Radiant Logistics.

Thank you. Ladies and gentlemen, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.