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 First Fiscal Quarter ended September 30, 2022 and Second Fiscal Quarter ended December 31, 2022. 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. 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, John. Good afternoon, everyone, and thank you for joining in on today’s call. First and foremost, I want to thank all of our loyal shareholders for being patient with us through this restatement process. It's fair to say that we've been battle-tested over these last few years, driven first by the pandemic and associated lockdowns of 2020. We were all reminded of the essential role of transportation and logistics in keeping our economy moving. For us, this translated into the opportunity to play an active role in the fight against COVID by delivering PPE, food and beverage, consumer goods, technology, and other essential products for our customers across North America and around the world. As the economy worked to recover from those initial lockdowns, we faced a different set of challenges and opportunities as we helped our broader customer base bring their supply chains back online amid an extreme shortage of transportation capacity, soaring fuel prices, and port congestion. In December of 2021, we experienced a cyber event that created its own set of challenges. Ultimately, we were put through our paces with the now completed rigorous review and restatement process. I will leave the detailed review of the numbers to Todd, our Chief Financial Officer, later in the call. But ultimately, the numbers speak for themselves. In the face of some very difficult circumstances, we delivered some extraordinary results, generating over $80 million in EBITDA on $1.4 billion in revenues, and effectively paid off our bank debt along the way. We all know the cliché, that which doesn't kill you makes you stronger. But we've survived COVID, the cyber attack, and ultimately, we even survived the auditors, two sets. All kidding aside, as everyone digests the numbers, it's a fair point of discussion. Why in the world would the company pay its accountants and lawyers millions of dollars, run the risk of being delisted, and undergo the organizational brain damage to restate our financial statements for what amounted to $0.01 per share, particularly in light of the fact that the company was doing so well? Well, the answer is not by choice, I can assure you. Restatements come in different flavors. In our case, the impact on our financial results was very small, and the need for the restatement in the first place was very subjective, in my opinion. As disclosed in our public filings, the restatement related to our accounting for in-transit revenues and the application of ASC 606. ASC 606 is a relatively new accounting pronouncement that provides the guidelines for recognizing revenue. In the transportation industry, we historically recognized revenue on delivery date. That was until ASC 606 changed the rules of the game, requiring companies to begin recognizing revenue on a percentage completion basis. These new guidelines became effective in 2018 and require considerable use of estimates in terms of expected margins and transit times, as these important inputs are not generally known until a shipment is ultimately delivered. These estimated in-transit revenues map to the face of our balance sheet as a contract asset. It is this individual line item that became ground zero for our restatement. Given the financial gearings of our agent base business model, even a $10 million to $20 million swing in estimated revenue in relation to our $1.4 billion in revenue really doesn't have much of an effect on net income, EBITDA, or even working capital for that matter. Even so, the auditors concluded that the misstatement of contract asset could be viewed as material to the reader of our financial statements, and therefore required that we adopt their judgment as our own and restate our financial statements. So why were in-transit revenues off in the first place? As previously mentioned, accounting for in-transit revenues requires considerable use of estimates in terms of expected margins and transit times, as these important inputs are not known until a shipment is ultimately delivered. During the restatement periods, we experienced the cyber event and unprecedented shipment volumes that were subject to extraordinary congestion at our U.S. ports. These two factors frustrated our ability to accurately estimate our in-transit revenues. Even so, we recognize the need to improve our accounting for in-transit revenues and have several initiatives underway to improve our process. And while this process was nothing short of mind-numbing, now that we have it behind us, we view it as a positive byproduct of our significant growth over these last several years and a testament to the strong work of our talented accounting and finance teams. Okay, so now hopefully that's enough on that topic. Let me turn my comments to the great progress we’re making on other fronts, in addition to our record results. In August of 2022, we took the opportunity to refresh and expand our $150 million senior credit facility with a $200 million facility. Given what is going on in the banking markets now, we are really happy to have a new facility in place and fully available. This facility provides us with continued financial flexibility to access capital support and accelerate our growth strategy, as well as the ability to repurchase the company’s stock should we choose. To that end, we continue to make good progress in our balanced approach to capital allocation through a combination of strategic acquisitions and stock buyback initiatives. In October of 2022, we completed the acquisition of our longtime strategic operating partner, Cascade Enterprises of Minnesota. For the 18 months ending December 31, 2022, we purchased approximately $16 million of our stock at an average price of $6.64 per share. As of December 31, 2022, we have, for the first time in the company's history, even with the purchase of Cascade and the stock buybacks, no net debt with cash on hand of $62 million and total debt of only $53.7 million. Finally, our adjusted EBITDA for the trailing 12 months ending December 31, 2022, sits at $82.8 million. With the filing of these two most recent 10-Qs, we have now completed the process of bringing our filings current with the SEC. We are excited to be able to get back to leveraging 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. As we previously discussed, while we remain very optimistic about our prospects for fiscal '23 and beyond, we are definitely seeing signs of a slowing economy and expect operations to return to more normalized levels and growth rates in the coming quarters. We believe we are well-positioned with a durable, diverse service offering and a strong balance sheet to support our customers and continue to execute upon our broader strategic initiatives. With that said, I'll turn it over to Todd to walk us through our detailed financial results. Then we'll open it up for 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 12 months ended June 30, 2022. Additionally, we will provide financial results for the Q1 fiscal year '23 three months ended September 30, 2022, and the Q2 fiscal '23 financial results for the three and six months ended December 31, 2022. Q4 fiscal year '22 results are as follows. For the 12 months ended June 30, 2022, we reported net income attributable to Radiant Logistics of $44,464,000 on $1.46 billion of revenues, or $0.90 per basic and $0.88 per fully diluted share. For the 12 months ended June 30, 2021, we reported net income attributable to Radiant Logistics of $23,110,000 on $899.8 million of revenues, or $0.46 per basic and $0.45 per fully diluted share. This represents an increase of approximately $21,354,000 over the comparable prior year period, or 92.4%. For adjusted net income, we reported $58,246,000 for the 12 months ended June 30, 2022, compared to adjusted net income of $34,548,000 for the 12 months ended June 30, 2021. This represents an increase of approximately $23,698,000 or approximately 68.6%. For adjusted EBITDA, we reported $80,918,000 for the 12 months ended June 30, 2022 compared to adjusted EBITDA of $49,003,000 for the 12 months ended June 30, 2021. This represents an increase of $31,915,000 or approximately 65.1%. Moving along to Q1: For the three months ended September 30, 2022, we reported net income attributable to Radiant Logistics of $8,433,000 on $331 million of revenues, or $0.17 per basic and fully diluted share. For the three months ended September 30, 2021, we reported net income attributable to Radiant Logistics of $7,609,000 on $289.4 million of revenues, or $0.15 for basic and fully diluted share. This represents an increase of approximately $824,000 of net income over the comparable prior year period, or 10.8%. For adjusted net income, we reported $13,365,000 for the three months ended September 30, 2022, compared to adjusted net income of $11,090,000 for the three months ended September 30, 2021. This represents an increase of approximately $2,275,000 or approximately 20.5%. For adjusted EBITDA, we reported $18,515,000 for the three months ended September 30, 2022, compared to adjusted EBITDA of $15,247,000 for the three months ended September 30, 2021. This represents an increase of approximately $3,268,000 or approximately 21.4%. Moving along to Q2: For the three months ended December 31, 2022, we reported net income attributable to Radiant Logistics of $4,836,000 on $278.1 million of revenues, or $0.10 per basic and fully diluted share. For the three months ended December 31, 2021, we reported net income attributable to Radiant Logistics of $6,539,000 on $335.8 million of revenues, or $0.13 for basic and fully diluted share. This represents a decrease of approximately $1.7 million of net income over the comparable prior year period of 26%. For adjusted net income, we reported $10,497,000 for the three months ended December 31, 2022, compared to adjusted net income of $11,908,000 for the three months ended December 31, 2021. This represents a decrease of approximately $1.4 million or approximately 11.8%. For adjusted EBITDA, we reported $15,349,000 for the three months ended December 31, 2022 compared to adjusted EBITDA of $16,709,000 for the three months ended December 31, 2021. This represents a decrease of approximately $1.36 million or approximately 8.1%. Moving along to six-month results: For the six months ended December 31, 2022, we reported net income attributable to Radiant Logistics of $13,269,000 on $609.1 million of revenues, or $0.20 per basic and fully diluted share. For the six months ended December 31, 2021, we reported net income attributable to Radiant Logistics of $14,148,000 on $635.2 million of revenues, or $0.28 per basic and fully diluted share. This represents a decrease of approximately $879,000 over the comparable prior year period, or 6.2%. For adjusted net income, we reported $23,861,000 for the six months ended December 31, 2022, compared to adjusted net income of $23 million for the six months ended December 31, 2021. This represents an increase of approximately $860,000 or approximately 3.7%. For adjusted EBITDA, we reported $33,864,000 in the six months ended December 31, 2022, compared to adjusting EBITDA of $31,961,000 for the six months ended December 31, 2021. This represents an increase of approximately $1,903,000 or approximately 6%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.

Thank you. At this time, we will be conducting a question-and-answer session. Our first question comes from Mark Argento with Lake Street. Please proceed.

Hi, Bohn. Hi, Todd. Good to hear you guys on a call and congrats on finally getting all that rigmarole behind you here. It was a long slog for you guys, but good to see the business continue to perform. I just wanted to drill down a little bit on some of your comments in particular. You had mentioned obviously the environment is normalizing here a little bit post-COVID, and just with the economy slowing down a little bit or hopefully slowing down a little bit, can you kind of just maybe give us a little more color on what kind of a more 'normalized' environment means for you guys in particular, both at the gross revenue level but also what's a good kind of thoughtful run rate EBITDA for your business today? The business has changed since 2019, 2020, 2021. You did $80 million last year in EBITDA, or last fiscal year, and a run rate that is even greater than that. But maybe if you could just point us around a little bit on what the new normal is.

It's becoming increasingly difficult to provide a clear answer. However, I will cautiously share my thoughts. Currently, there are numerous uncertainties in the marketplace, exacerbated by labor inflation that many are experiencing. My best estimate for a normalized run rate EBITDA would be in the range of $55 million to $60 million. I want to emphasize that the first half of calendar year 2023 might not reflect that run rate. Given the significant fluctuations we've observed, I would advise against assuming $15 million of EBITDA for the first and second quarters if you are modeling based on $60 million. While there are seasonal factors to consider, it's worth noting that we were in a period of unusually strong performance, and I believe the first half of this year may be marked by unusual weakness. Much has been reported about market conditions, including excess inventory that companies are trying to manage and a dip in international trade. Therefore, there is a distinction between estimating what you believe the normalized figure to be and predicting your results for the fiscal year ended 2023, which I am not ready to address. I hope this provides clarity regarding your question.

That's very helpful. And then when you guys are thinking through that a little bit, and that's obviously still an incredibly healthy clip and well above kind of where you were running before you even got into the pandemic environment. But obviously the stock, where it’s trading, we could talk reasons why broader market overhang, having to deal with the time to get the restates done, whatever it might be, cranking through you guys are in a net cash position. I know you've been active with the buyback. But do you ever think about potentially a dividend or any other types of opportunities either to crank up the buyback here a little bit more aggressively or institute a dividend? Because if you're generating, call it, $55 to $60 million, I know you're a taxpayer now, but you don't have any interest expense, it seems like you guys are a cash flow machine. So any further thoughts on what you're going to do with all that cash?

I'm not envisioning that we would move to a dividend. I think we'll, as we kind of alluded to, get back to our core business strategy, which we've been kind of taken off task somewhat by this restatement process unfortunately. So that would manifest itself as continuing to look for acquisitions that are more likely to be tuck-in type acquisitions and doing our stock buyback, taking a balanced approach to both. One of the early theses for Radiant was providing exit strategies for our agent stations and kind of the built-in pipeline of potential tuck-in acquisitions of our agent stations, that opportunity remains very real and vibrant. I think one of the trends we're expecting to find is ultimately an acceleration of conversion of agency stations to company-owned stores, because people aren't getting any younger. It's good to have financial flexibility and not to be over-levered because of all of the uncertainties. Had we been super aggressive in a buyback during this restatement period, that could have gotten a lot more uncomfortable. And believe me, it was uncomfortable enough as it was. So normalized leverage around 2.5x, trying to get back to our knitting of taking our free cash flows, notionally putting half of that to work on the buyback and half of it to work on transactions that we believe are accretive and of strategic value.

That's super helpful. Again, good to hear from you guys. Look forward to see how things play out here moving forward, but congrats on the great execution.

We're just happy you're here on the other end of the phone to talk to us. It's good to be here.

Next question comes from Jeff Kauffman with Vertical Research. Please proceed.

Thank you very much and congratulations on getting to the other side of the mountain here.

Thanks, Jeff.

So two questions if I can. First one is I'm sure that between lawyers and consultants, accountants, etc., there's been a lot of expenses, maybe a little bit more billable hours than would normally be the case. Is this running through SG&A? I noticed a big step up from a run rate of about $7 million.

Yes.

Okay. So it's been running about $2 million to $3 million extra per quarter, and that should start to go down now that this is done.

Correct. I estimate that the total cost of the restatement is between $2.5 million and $3 million. I want to clarify that this is not a quarterly amount. Some of the invoices have sometimes been delayed, and there hasn't been strong enthusiasm regarding them.

All right, so let me recast that. In the third quarter a year ago, we went from a run rate of about $7.5 million per quarter, maybe low $7s to up to a run rate of about $10 million a quarter. And that run rate is coming down a little. But it stayed up around $40 million a year from $28 million a year where it was running. So you're saying only $3 million of that might be related to this? What would the other $7 million or $8 million be?

We can discuss this after the call. I would need to look into it further.

A part of it will be the incremental acquisitions we’ve done, so you'll have Navegate there, and our acquisition of Cascade will be two component parts.

Okay, well that's what I was fishing for there. Thank you.

I'm just trying to remember. I don't think that line item includes personnel costs, as those are accounted for separately.

Right. We got commissions, we got personnel, and then we got SG&A. Okay. Now that we have numbers, I get a chance to go through the numbers. That's all. Okay, so second question. Bohn, obviously, a lot of things are changing. And you alluded to it in your comments. We're getting back to normalization. You alluded to some of the specific headwinds that we're facing over the next six to nine months that are going to drag that down. But I'd love to hear a little more specificity if you could talk about maybe regions of the world or different industry groups where you're seeing. Just give us a better feel for where things might actually be getting better and maybe where things are getting worse where it might not be as obvious as the retail inventory correction.

Our core business, particularly domestic boarding, has been performing strongly, both in company-owned and agency stores. This trend has continued, making it a reliable aspect of our operations. Canada has also shown positive results so far, especially as we bundle contract logistics with our core transportation services, which has been beneficial. Harry and his team are excelling in this area. We do have some involvement in intermodal and truck brokerage through our rebranded Clipper, now known as Radiant Road & Rail. However, this segment has faced challenges, similar to C.H. Robinson, due to a slower economy where asset-based companies are securing more freight than usual. Consequently, brokerages are experiencing difficulties right now, but we believe that as supply and demand balance out, the situation will improve. The most significant challenges have come from international trade, particularly in ocean freight, which has sharply declined compared to the previous highs experienced with ocean carriers in the Transpacific trade. This slowdown has been exacerbated by the resurgence of COVID in China and their extended New Year holidays, affecting manufacturing activity. However, we are beginning to see some signs of recovery, what you might call green shoots, in that area, and we hope it will lead to a more favorable situation for all of us in the near future.

And I guess when you're talking about the domestic business, green shoots, I remember during COVID, we were talking about how the trade show business and the cruise line business just wasn't there obviously, because we were all locked down. I'm seeing a lot of cruise ship commercials on TV, and it seems like Las Vegas and Orlando are pretty busy again. I'm assuming that's kind of a green shoot for you as well right now, or have we anniversaried that or is that still accelerating in your book?

That is, but even beyond that just our core time definite North America domestic footprint and all the business we do is doing pretty well.

Okay, great. Well, thank you for hosting this call and thank you for answering the questions.

You bet. Thanks, Jeff.

Up next, we have Jason Seidl with TD Cowen. Jason, please proceed.

Thanks, operator. Bohn, Todd, I think you guys could have played the Welcome Back, Kotter theme here. So I’m glad to have you back.

Damn, I wish I would have thought of that.

You got to call me next time. I'll give you some good theme music ideas. Just a couple quick questions on my end here. You talked about not having any net debt. That puts you in a very enviable position, but you don't want to have a net debt position for too long. So about how long between now until you get back to some of those 2x, 2.5x in terms of what you're comfortable with, and if there are no acquisitions out there in the marketplace that suit your needs, should we just assume that you use or maybe just buy back stock?

Yes.

Okay. That's fair enough. And the other thing, obviously the restatement, a very painful process for you guys, but did it uncover anything that you sort of needed to do in terms of increasing your financial controls? If so, what were those?

So I think the short answer is absolutely. We can always get better at what we do. The stress test of the volumes and delays identified areas where there was room for improvement. We're working on those. Getting into the specifics, it really gets down to interacting with all of our various operating locations and getting more engaged with the field to ensure they're giving us the right data inputs to better estimate our needs.

So I guess it's safe to say that, although painful coming out of this, you guys are stronger than when you went in?

Without a doubt, absolutely.

Perfect. Well, gentlemen those are my two there. Good to hear your voices again.

Good to hear yours too. Thanks, Jason.

The next question comes from Mike Vermut with Newland Capital. Please proceed.

Hi everyone, it's great to be done with all this. Hopefully, there are no more challenges ahead, and things get easier from here. Building on what others have mentioned, it's remarkable that we have such a strong net cash position and are coming off a significant EBITDA performance. Even when we normalize, our balance sheet sets us apart from others. Currently, we're at around 3.5x to 4x EBITDA, and perhaps around 5x EBITDA if normalized. Considering we are now near $5, which reflects where we were in 2015, we are at about the same EBITDA level but with a much stronger balance sheet. If we used, say, $50 million to buy back 20% of the company, we would still be under-leveraged. At what point do we recognize that this situation is too good to ignore, and consider accelerating our actions? The company is undervalued and if sellers want to divest, we should seize the opportunity. Would you consider accelerating buybacks at these levels?

It’s certainly on the table. I think we have to continue to evaluate the M&A pipeline and what we see out there. But I guess reinforcing my response to the earlier question, we're constantly looking to put our capital to work in the highest and best ways. If there's not better opportunities, then we can be more aggressive in the rate at which we do buybacks. It's unclear to me whether a tender gets us very far; perhaps it would. There are scenarios or other case studies out there where it helped in some cases, and in some cases nothing gets done other than you pay consultants millions of dollars to put your tender together. I'm not saying we wouldn't do it. It’s something that we will evaluate as part of our Board discussions. But even if we didn't, we have demonstrated our ability to make a good dent on a quarterly basis by just leaning into the stock and doing it on a quarterly basis during our trading windows.

Look, the one positive this is, at this point in time, you can make a huge dent in the capital structure. Right. And if others aren't willing to pay for this, then the company should. You guys have done an amazing job, the valuation is absurd for what you've done with the company, so congrats on everything.

All right. Thanks, Mike.

We have reached the end of the question-and-answer session, and I will now turn the call over to Bohn Crain for closing remarks.

Thank you. 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 expect to continue our balanced approach to capital allocation through a combination of strategic acquisitions and stock buybacks. Through this multipronged approach of organic growth, acquisitions, 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.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.