Good day. This afternoon, Bohn Crain, Radiant Logistics' Founder and CEO; and Radiant Chief Financial Officer, Todd Macomber, will provide a general business update and discuss financial results for the company's third fiscal quarter and 9-month ended March 31, 2024. This conference is scheduled for 30 minutes. This conference may include forward-looking statements within the meaning of the Securities Act 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 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 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. Sir, the floor is yours.

Thank you. Good afternoon, everyone, and thank you for joining today's call. Our results for the quarter ended March 31, 2024, continue to reflect the difficult freight markets being experienced by the entire industry as well as our own operation. This extended period of weak freight demand combined with excess capacity continues to negatively impact not only our current results but also the year-over-year comparison to our record results for the prior year period. With that said, we saw a very difficult January and then steady improvements throughout the quarter, and we expect to report sequential quarterly improvement moving forward as markets find their way to more sustainable and normalized levels. Notwithstanding the tough year-over-year comparisons, we continue to deliver meaningfully positive results and have generated $22.1 million in adjusted EBITDA and $16 million in net cash for operations for the 9 months ended March 31, 2024. In addition, we continue to enjoy a strong balance sheet, finishing the quarter with approximately $31.2 million of cash on hand and nothing drawn on our $200 million credit facility. As previously discussed, we believe we are well-positioned to navigate through these slower freight markets as we find our way back to more normalized market conditions. At the same time, we remain focused on delivering profitable growth through a combination of organic and acquisition initiatives and thoughtfully relevering our balance sheet through a combination of agent station conversions, synergistic tuck-in acquisitions, and stock buybacks. Through this approach, we believe, over time, we will continue to deliver meaningful value for our shareholders, operating partners, and the end customers that we serve. In this regard, we're very excited about our recent agent station conversions with the acquisition of Daleray in October of 2023 and the Select businesses in February of 2024, which will combine to solidify our offering to support the cruise line industry in South Florida, along with our most recent acquisition of Minnesota-based Viking Worldwide in April of 2024. We launched Radiant in 2006 with the goal of partnering with logistics entrepreneurs who would benefit from our unique value proposition and the built-in exit strategy available to the entrepreneurs participating in our network. We believe these 3 transactions are representative of a broader pipeline of opportunities inherent in our agent-based network, and we look forward to supporting other strategic operating partners when they are ready to begin their transition from an agency to company-owned location. With that said, I'll now turn it over to Todd Macomber, our CFO, to walk through the details of our 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- and 9-months ended March 31, 2024. For the 3-months ended March 31, 2024, we reported a net loss attributable to Radiant Logistics of $703,000 on $184.6 million of revenues or $0.02 per basic and fully diluted share. For the 3 months ended March 31, 2023, we reported net income attributable to Radiant Logistics of $4.183 million on $244.2 million of revenues or $0.09 per basic and $0.08 per fully diluted share. This represents a decrease of approximately $4.886 million of net income over the comparable prior year period. For adjusted net income, we reported $3.586 million for the 3 months ended March 31, 2024, compared to adjusted net income of $8.221 million for the 3 months ended March 31, 2023. This represents a decrease of approximately $4.635 million or approximately 56.4%. For adjusted EBITDA, we reported $5.280 million for the 3 months ended March 31, 2024, compared to adjusted EBITDA of $11.560 million for the 3 months ended March 31, 2023. This represents a decrease of approximately $6.352 million or approximately 54.9%. Moving along to the 9 months. For the 9 months ended March 31, 2024, we reported net income attributable to Radiant Logistics of $2.904 million on $596.4 million of revenues or $0.06 per basic and fully diluted share. For the 9 months ended March 31, we reported net income attributable to Radiant Logistics of $17.452 million on $853.3 million of revenues or $0.36 per basic and $0.35 per fully diluted share. This represents a decrease of approximately $14.548 million over the comparable prior year period or 83.4%. For adjusted net income, we reported $15.632 million for the 9 months ended March 31, 2024, compared to adjusted net income of $32.845 million for the 9 months ended March 31, 2023. This represents a decrease of approximately $17.213 million or approximately 52.4%. For adjusted EBITDA, we reported $22.083 million for the 9 months ended March 31, 2024, compared to adjusted EBITDA of $46.434 million for the 9 months ended March 31, 2023. This represents a decrease of approximately $24.351 million or approximately 52.4%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our call.

Bohn, Todd, just any kind of color on the environment right now. I know it continues to be a little tough out there. But have you seen any kind of green shoots out there? Any sectors that are maybe starting to perform a little better across the platform?

Mark, this is Bohn. I guess I would start by kind of reiterating the prepared remarks, which was January started off really slow. And we have seen kind of sequential, February was better than January, and March was better than February. And early indications, April is continuing to build on that trend. So I think we're effectively calling the bottom in terms of the slowness here. The quarter ended March is our seasonally slowest quarter as well. So we would expect prospective quarters to work their way back to more normalized levels. What I think, kind of our world is similar to others that might have participated in this call. International has been soft, but that seems to be improving. So we're seeing a little bit of light, I guess, in terms of the international or the performance of the international services within the solution set. Canada, which typically really shines bright, had its own struggles with the quarter ended March, but they're making meaningful progress there. Probably our most challenged area has been in the intermodal space. But even that, too, we're very optimistic about the trajectory of what we're doing in Chicago with our bimodal initiatives. And for those that might remember, we, on a greenfield basis, opened a truck brokerage capability in Kansas City, kind of in the wake of Yellow's bankruptcy, that we're pretty excited about. So we've got a number of things working. If anything, I think what I would emphasize is, notwithstanding the really tough market, we think we're in really good shape in terms of financial flexibility and no debt. And so we're continuing to lean into this whole environment and try to identify opportunities to take advantage of this market environment. Because while the numbers are not where anybody wants them to be, on a relative basis, we think we're in really good shape and excited to continue to execute our strategy. And we've done, as I had kind of telegraphed on some of our earlier calls, we see a big opportunity emerging in the conversion of our agent stations to company-owned stores. We've talked about the gray tail and kind of the inherent pipeline of tuck-in acquisitions that we would expect to come to us over time. And that's manifesting itself, and we're happy and proud to be able to support our operating partners when they're ready to do that for us, to kind of meet them at that intersection and support them in that transition. So everything is playing out kind of the way we would have hoped or expected. We're just unfortunately in this kind of global freight recession right now. But I'm pretty optimistic that the ultimate worst is behind us, and we'll be rebuilding here and have an opportunity to hopefully get some things done more strategically in an environment where a lot of people are handcuffed.

That's helpful. And then I know, obviously, the balance sheet is in great shape and happily so. But at the same time, any thoughts on incrementally getting a little more aggressive here? Or are you just kind of whatever comes to you, it comes to you and it is what it is at this point in terms of deploying capital?

Yes. Well, we've always been, or I like to view or think of ourselves as always being good kind of disciplined allocators of capital. So we've never chased deals, and we're not going to be chasing deals in this environment. But I think our view about valuation and structure works for us. I think the market is coming to us a little bit, if you will. So I think we'll have more of an opportunity to get things done in a way that makes sense to us in terms of value and structure. And we expect to be active in our stock buyback moving forward. We weren't particularly active this quarter, knowing that it was going to be a soft quarter and our stock is thinly traded. And we didn't want to step into it, if you will, so to speak. But as the trading window opens up and all that type of stuff, we would expect to be out there in the market beginning again to reengage in our buyback, continuing along the course we've been describing. It's kind of our baseline plan is a balanced approach of stock buybacks and the smaller tuck-in type of acquisitions. And if something larger comes along, we'll certainly look at it. But it'll have to meet these fundamental criteria that we consider when we think about how we're deploying our capital.

Maybe just to kind of delve a little bit deeper into the question about end markets. How are you, what are you guys hearing from maybe the manufacturing side or the retail side? Or what are you hearing from those customers as you kind of roll into the next quarter and maybe the back end of the year?

I guess I'll go first and then Todd can add in as appropriate. As has historically been the case when we're in these types of environments, we're certainly not losing customers. Our customers have just been shipping less in this environment. There was a lot of talk historically about COVID, safety stocks, and excess inventories and kind of chewing through those inventories. And so as we think about kind of the international component, I think that is effectively playing out, and we're starting to see some increased volumes and opportunities at the margin on our international shipments. Some of the global conflict going on has acted at least as a temporary catalyst on price in terms of ocean and air freight that we're enjoying at the same time. The underlying trend of near-shoring and what's going on in Mexico continues to play out and remains a very interesting kind of area of growth and opportunity for everyone as we spend a fair amount of time talking about how to support our current and prospective customers that have historically sourced from China and how they're diversifying their sourcing strategies. But some of the slowest markets to recover for those that have been on some of our prior calls, the cruise line is certainly coming back, and trade shows are coming back quite strongly. So those are definitely some positives. We continue to do a lot of what I'll call retail store rollouts, kind of big distributions to the big box retailers, some of our underlying customers that are vendors to those big box retailers. That business is, I wouldn't say red hot, but it's certainly still there and moving along nicely. We do a fair amount of work in kind of high-value servers, kind of the high-tech space, moving servers around here in the U.S. and around the world for some of our accounts. That continues to do well. Our humanitarian aid disaster relief continues to see opportunities given what's going on in the world environment. So those are some areas or themes that we observed within our own business.

Yes. That all sounds really good. Maybe you can also, at least what we've heard is there's been a lot more pushback from a pricing standpoint, at least in the entire transportation industry. And I'm wondering if you guys are encountering that as well, when it comes to your service offerings, that people are pushing back on pricing.

Well, I think, for the benefit of the listeners, I think what you're describing is we've been in an environment where kind of the pendulum of power has shifted to the customer, and they've been doing their best to extract the best pricing they can out of the carrier base. But I think the pushback is coming because there’s effectively nothing left to give from the asset-based guys. To kind of build on that concept a little bit further, as a non-asset-based 3PL, when the asset-based guys have excess capacity sitting idle, they effectively begin to offer service at irrational, unsustainable pricing because they've incurred costs, and they would rather keep their fleets rolling than sitting idle. That environment is a very tough one for everybody, but including the non-asset-based guys because the asset-based carriers are effectively taking as much freight as they can. So there's not as much left over to enjoy for the non-asset-based players. If we look at that over time, the kind of this window in the freight cycle is a very small window in time within what I would call a normal rate cycle. You hear a lot of people talking about an elongated recovery because this window is taking longer than usual to work its way through. There's obviously a lot of contributing factors to this. When COVID was happening and there were such rich margins to be enjoyed by the transports, everyone out was investing in capacity. And then we know what happens at the end of that cycle, which we're working through now.

Yes. I'll echo that. I mean, we're seeing increases in domestic and international incrementally per quarter. And with those, I'm looking specifically at our net margins, it’s volume. The volumes are starting to pick up. At some point in time, obviously, we'll get back to more of that equilibrium and that whole scenario that Bohn's describing will hopefully be behind us. So I think that will change in hopefully next quarter, here, this quarter we're in. And the dynamics of what you're discussing, I believe will be back to a more normal healthy environment for everyone.

So I wanted to sort of get an idea about Q4, given just how slow Q3 started. Can you sort of walk us through EBITDA per month so we can get a better feel of what the run rate is as we head into the quarter here?

No. We're not going to get that granular in terms of the depth of our numbers. I think that would be problematic in terms of just disclosures. I don't have to turn around and issue an 8-K on the back side of this call.

All right. So let me ask you this. So were you guys profitable on an EBITDA basis in January?

Yes.

Okay. That's fair enough. Also, how should we think about the current mix between your international air business and your more domestic stuff versus, and your ocean as well? I'm just curious where you guys ended the quarter on a mix basis.

I'll let Todd hop in because I'm painting with a broad brush. Historically, our core business is a domestic time-definite freight forward. So again, painting with a really broad brush. If we're normally a $1 billion revenue company, maybe $350 million or $400 million might be international. Then we could kind of peel that apart between air and ocean. But the more significant piece of the pie is on domestic. When I say domestic, I'm including North America, so I'm including our Canadian business and Canadian cross-border and our Mexico and Mexico cross-border business as kind of domestic. The international being true international, air and ocean, kind of coming to North America.

I agree with what you're saying.

Certainly, historically, we were, as we thought about international, we were much more airfreight than ocean freight. Then during COVID, we ended up doing a fair amount of ocean during the peaks of COVID, given all the constraints and everyone looking for space. So that was a little bit anomalous, kind of the spike in ocean during the height of COVID. But you would expect us to be more heavily leaning towards airfreight than ocean freight in terms of margin contribution.

Okay. So as I think about the additional capacity coming on in the ocean space, you guys are going to be less impacted than your typical freight forwarder might be?

Certainly, because most people, when they say freight forwarder, they think international freight forwarding. The majority of our business is actually on the domestic part.

I mean, historically, our gross margins, 65% of it, if you go back to the prior year, was domestic. So that’s the and that will continue to be the absolute majority, the vast majority of our net margins.

Perfect. And Bohn, as I, you talked a little bit about the usage of cash, and I understand that it's going to be spread out depending upon where the market is. But at least for the near term, should we expect you guys to sort of just stay in that buyback and agent tuck-in mode? Because right now, given where your stock is trading, it might be just difficult to do any sort of other outside transaction for the multiple type?

I always want to choose my words carefully because I never say never, right? But certainly, we'll continue to look with a great deal of scrutiny around the multiples that we pay and the relative trade-offs relative to the stock buyback. We really look at that around every transaction. Certainly, that's what you described is definitely the baseline case and kind of what we would generally expect to happen. But I don't want to paint myself into a corner where if a transaction came along that we really felt was compelling, we would look at it. I don’t want to say anything on the call that would leave us at another conclusion than that.

So a lot of my questions have been answered. So let me go in a different direction. The last 2 years, from third quarter to fourth quarter, we've been dealing with this inventory destocking and what ended up being almost negative seasonality in a quarter that should be displaying more positive seasonality. Do you feel like that's going to be a little different this year? Like do you think we're past the worst of the storm and going to see more normal 3Q to 4Q seasonality? And then if you could just remind us because I don't think we've seen it in 3 years, what does normal 3Q to 4Q seasonality look like?

Yes. I mean, I personally, I think it's too early to tell, right? But I do think it's going to be much more normal. I mean we're seeing increases, tracking through tracking each month versus each quarter. As we mentioned earlier, April has been stronger than March, et cetera. Typically, our Q3 is our weakest quarter. We are fully expecting Q4 is going to be certainly much stronger than our existing Q3. So yes, I think it's, I think we're, what we saw in the past, I think that is, in my opinion, not going to, I mean, we'll be back to more of a normal Q4 increase over historical Q3.

All right. And I know there's not a cash flow statement in the release. But if I was looking for the first 9 months of the year at an unaudited cash flow statement, what would be my year-to-date use of cash on acquisitions and share repurchase?

So obviously, that is in the Q that should also be filed by now, but Todd is looking here to give you that number.

Yes. So share repurchases, Jeff, for the 9 months was a little bit over $3.1 million. That's what we purchased through for the 9 months ended March 31, 2024.

Okay. So all the shares really this quarter?

Yes. And then as you also asked about acquisitions and payments to acquire businesses for the 9 months was just under $2 million.

All right. So is there a certain, I know you're being opportunistic, and you're sitting on a powder keg of liquidity here for opportunities. But is there a certain cash level that you just don't want to go below, given the environment?

Not necessarily. I mean, I would answer, I'll come at that slightly differently, which is we would target probably plus or minus 2.5x funded debt to EBITDA in terms of leverage while leaving some cushion within our capacity. We would be comfortable up to 2.5x. So that's kind of an answer. But we would, only with the kind of benefit of the cash we generated through COVID are we sitting in a net cash positive position. Almost always to the history of the company, we've been a net borrower and had amounts outstanding under our credit facility. So it's not that we're not prepared to, we're not seeking or intentionally targeting some targeted level of cash. At the end of the day, we're looking more at what are we comfortably carrying as kind of a net debt position relative to our financial covenants and all that kind of stuff.

One last question, Todd, if I can. So shares outstanding started the year around 49 million, and I'm talking fiscal year. And currently, they're right around 47 million. So they're down about 2 million shares, but you've only repurchased 0.5 million shares. I think I know the answer. But can you help me understand what that other 1.5 million share difference is? And is it a situation where if you return to profit and the stock goes up $1 or $2, are we looking at 48 million to 49 million in shares as opposed to 46 million to 47 million? I'm just trying to model here.

So I'm sorry, let's see, so we've, yes, we start, well, the treasury shares were 4.3 million at the beginning of the year June 30, 2023. And so we have, yes, we purchased 500,000 shares. So our treasury shares are now 4.8 million.

Right. But the fully diluted shares finished the fiscal year at 49.1 million, and they're currently 47 million-ish. So that's a 2 million share difference in reported shares outstanding on 0.5 million shares repurchased. I'm just wondering...

Yes. I think that dilution has to do with the fact there was a net loss in the quarter.

Well, I think it has more to do with out-of-the-money securities that wouldn't be counted in that share outstanding basis. Let me get to the point you're getting at.

Yes. Right. So I guess my question is in terms of modeling, if you swing to a profit, will that drive it back to 48.5 million shares? Or is it something more to do with stock price?

Well, yes, it'll drive it back. Obviously, we'll recast calculations. As those numbers change, it's going to impact the overall fully diluted shares of the calculation. So the answer is yes.

Okay. Congratulations. Hopefully, this environment gets better soon.

Thank you, Jeff. We appreciate your support.

A couple of quick ones for you. Obviously, a lot of your competitors are, we've seen a lot of reports, are hurting pretty bad right now. I believe some of your direct competitors do have a lot of leverage on that. They've been, I think the private equity zone. Have you seen any concern from their customers coming to you? Are you winning any new business? I guess what I'm getting at here is are we going to come out of this stronger than we went into this, forgetting about acquisitions, but just on the pure organic win basis?

Well, so I don't want to take advantage of the softball you're throwing out there to talk negatively about our competitors. So I'm going to stay neutral. We are in a good relative position. Everybody's got their own set of constraints and their own strategies to address those issues, and we're going to do all we can to take advantage of the opportunity sets that come our way. I can't, I don't know what financial flexibility some of those folks have to go recapitalize their balance sheets or whether it's going to cause some other types of opportunities; I don't know. And if I did, I wouldn't be in a position to say so anyway. But your observations aren't unfounded; we're kind of, candidly, we're kind of curious as well to see kind of what's going to happen out there because we're certainly not having a lot of fun in this market. But we're kind of top of class in my mind around the situation.

On that topic though, are you seeing more deals come to market? Not necessarily ones that we would want, but are there more distressed companies shopping themselves around that may or may not be of interest? Are you seeing more?

Absolutely, and candidly, particularly on the truck brokerage side. That's been a really tough place for folks. We've certainly heard and continue to hear that there's quite a few out there that are just going payroll to payroll, trying to live to fight another day. We've seen it underway, and I think we're not done with the constructive destruction that's got to take place in the trucking side of things, in particular, to return some more rational pricing to the marketplace.

Excellent. And then one last one for you. I know over the past couple of years, we had peak earnings, I don't remember what we did, $70 million, $80 million of EBITDA. Now we're down here. And you had always said forget about the ups and downs; they are normalized. It's somewhere between, let's say, $50 million and $60 million, I think you said, maybe, if I remember correctly, somewhere in that area. Is that still a good benchmark? In normal times, we should be in that range, and hopefully, everything that we're doing during the downturn, bringing in some of the agent, maybe some acquisitions, maybe that creeps up over time. But has anything changed in your mind regarding that normalized-type EBITDA run rate for the company?

No, I mean I think the only thing that's changed is just this, is the elongated nature of this slowdown. The time that it is taking us all collectively to get back to that normal is being extended beyond what people were expecting. But in terms of how we think about the business, the opportunity set, the strategies, our areas of focus, none of that has changed. But probably what has, not directly responsive to your question, but we were, in some respects, fortunate we didn't do a lot of acquisitions and pay higher multiples for businesses or go to a tender offer for a bunch of our stock at $6 and $7 a share or whatever it was at the time when we would get those questions from time to time. I'm really glad we didn't do those things. Because we were as cautious as we were, it just put us in a better situation or we're better positioned. Some people are kind of burning the furniture, and we're not doing that at all. We're continuing to invest in the business and continue to grow and focus on organic growth and salespeople and supporting our brand promise and supporting our agent stations and those conversions. So we are largely business as normal, notwithstanding the fact that this is a really tough market.

All right. Excellent. Well, we're happy with the balance sheet, happy with the continuation of positive cash generation. So it'll get better and you're doing a great job.

Thanks.

Thank you.

Thank you. That is our last question. I'd now like to turn it back to management for any 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've created here at Radiant. At the same time, we intend to thoughtfully relever our balance sheet through a combination of agent station conversions, synergistic tuck-in acquisitions, and stock buybacks. Through our multipronged approach of organic growth, acquisitions, and 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. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a wonderful day.