Good 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, 2024. 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 those 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, past results are not necessarily an indication of future performance. Now I'd like to pass the call over to Radiant's Founder and CEO, Bohn Crain.

Thank you. Good afternoon everyone and thank you for joining today's call. While the slower freight markets persist, we continue to deliver solid financial results and generated $9.5 million in adjusted EBITDA for the fiscal quarter ended September 30, 2024, which is generally in line with results from the comparable prior year period as well as our most recent previous quarter ended June 30, 2024. And although, we believe our industry will likely continue to face market headwinds into 2025, we do expect to benefit from project-type opportunities over the near term that should fortify our results while we wait for a more durable broad-based recovery. As previously discussed, we believe we are well positioned to navigate through these slower freight markets while we find our way back to more normalized market conditions. We continue to enjoy a strong balance sheet with approximately $10 million in cash on hand as of September 30, 2024, no meaningful debt, and a virtually untapped $200 million credit facility. 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 strategic operating partner conversions, strategic 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. We made good progress in this regard over this last quarter with the acquisition of Texas-based Foundation Logistics and the conversion of our Michigan-based strategic operating partner location, Focus Logistics, which is combining with our existing Radiant operations in Detroit. We believe these two transactions are representative of our broader pipeline of opportunities, which includes both greenfield acquisitions, i.e. companies not currently part of our network, as well as acquisition opportunities inherent in our agent-based forwarding network where we can support our current operating partners in their exit strategies. We look forward to providing further updates as we progress along these lines. With that, I'll now turn it over to Todd Macomber, our CFO, to walk us through our detailed financial results and then we'll open it up for Q&A.

Thanks, Bohn and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the three months ended September 30, 2024. For the three months ended September 30, 2024, we reported net income attributable to Radiant Logistics of $3,376,000 on $203.6 million of revenues or $0.07 per basic and fully diluted share, which includes a $1 million gain on litigation. For September 30, 2023, we reported net income attributable to Radiant Logistics of $2,622,000 on $210.8 million of revenues or $0.06 per basic and $0.05 per fully diluted share. This represents an increase of approximately $754,000 of net income over the comparable prior year period or 28.8%. For adjusted net income, we reported $7,883,000 for the three months ended September 30, 2024 compared to adjusted net income of $6,549,000 for the three months ended September 30, 2023. This represents an increase of approximately $1,334,000 or approximately 20.4%. For adjusted EBITDA, we reported $9,452,000 for three months ended September 30, 2024 compared to adjusted EBITDA of $9,167,000 for the three months ended September 30, 2023. This represents an increase of approximately $285,000 or 3.1%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.

Thank you very much. At this time, we will begin our question-and-answer session. Your first question is from Jason Seidl of TD Cowen. Jason, you may proceed.

Thank you, operator. A couple of quick questions here from my line. I guess number one, you talked a little bit about that pop-up work. Where did it come from? Is this being generated from the retail side or is this maybe storm related?

B is the answer to your question about storm-related issues. In previous quarters, we've had chances to respond to humanitarian and natural disaster situations. The hurricanes that affected the southeast are leading to a recurring revenue opportunity as these situations arise over time. It's important to note that there are still significant challenges in the marketplace for many transport companies. However, due to the diversity of our portfolio and the various areas we operate in, we are managing reasonably well in a difficult environment. We want to indicate that we expect a stronger-than-expected quarter ending in December. This is not necessarily indicative of our new run rate, but we anticipate some project-type business to come in during the fourth quarter, specifically for the quarter ending December 31, our fiscal Q2, which will help us perform well in the upcoming quarter.

That makes sense. The other thing, I was at a lunch with clients today and sort of expectations on the ocean side for pricing sort of came up. I wonder your thoughts because obviously, we were so high for so long with some exogenous events driving up some of the ocean pricing. What are your expectations as we look into 2025?

It's going to be interesting. I believe that near-term prices will remain fairly strong as people try to get ahead of potential tariffs and due to some activities in the Red Sea. In the near term, several factors will support prices, and capacity will remain relatively tight. However, it is still uncertain how sustainable this will be once we move past the tariff issues and hopefully see some stabilization in the Red Sea.

Okay, understood. And you brought up tariffs. I mean, is there any feedback from your customers? Was there any pull forward in anticipation of a potential Trump victory? What should we sort of expect going forward?

Yes, I think generally speaking, there has been a kind of a pull forward, and we'll see how that plays out over time. But I do think part of what we're seeing not just us, but more broadly, is that people are hedging their bets a little bit. And again, who knows what part of all of that narrative is posturing versus something that's really going to be put into motion. We'll try to stay nimble and support our customers in responding to those dynamics, which I'm sure will be lively.

And want to get back to the quarter ending December here coming up. Given your project work, how should we think about EBITDA margins on a sequential basis?

I would expect margins to be down a little bit because of the nature of some of the project work we're doing, but on an absolute basis, our gross margin dollars should be going up. That's code for charters.

Fair enough, Bob. Well, listen, I don't want to take up all the questions. Let me turn it over to somebody else here. Appreciate the time, guys.

Thank you very much. Your next question is coming from Jeff Kauffman of Vertical Research Partners. Jeff, your line is live.

Congratulations. It sounds like some exciting opportunities in 4Q. So good luck with that. I had just two questions that Jason didn't ask. Number one, Todd, I think you mentioned a $1 million litigation gain. Was that in other income that explains the differential in other income?

Yes. That's exactly what that is. Correct.

And add back in our adjusted EBITDA number. So we backed that out in the numbers as presented.

Yes. Listen, some quarters are bad, some quarters are good. That's always nice to see. And then, could you help me understand? It looked like there was a big move downward in commissions this quarter relative to kind of the run rate it was at in previous quarters and a small jump in personnel cost. It looked a little too big to be explainable by, okay, well, we've bought in some agencies. I was just wondering, agency commissions seem to be down almost 700 basis points versus where it was running. So what was going on with the agency commission line?

I mean that well, obviously, it's a mix of product. And the other piece is, as we bring in, not only do we do the conversions, but in addition to that bringing in the other stations that were part of our network. For instance, Foundation is an example where we're bringing in the revenue and bringing in the cost of sales, and there's no commission paid. So those are the big drivers in the reduction in the overall commission expense.

And if I remember correctly, and maybe this would also be somewhat helpful to it. In the comparable year-ago period, one of our agency stations actually had some significant charters themselves. So there was some kind of non-recurring project charter type business at the agency level in the year-ago period. That would also help explain a part of that reconciliation that you're thinking to.

Okay. I realize it varies a bit from quarter to quarter. I'm trying to make sense of it. My interpretation is that if you're increasing charter activity in the fourth quarter, this might indicate a rise in performance, which relates to your observation about higher gross margin dollars and lower revenue or lower margin.

Yes, lower margin percentage.

Okay. And just one last question, if I can. So in terms of what you're seeing, I saw the commentary, hey, it's still a tough environment. We're holding in and doing everything we can while waiting for the turn. There's been some talk of green shoots in different industry segments or different parts of the supply chain this past quarter, maybe not enough to move the whole needle but encouraging nonetheless. Where would you say you're seeing more green shoots, whether it's a geography or a vertical or something like that?

I think we're definitely seeing kind of a tightening of capacity on the West Coast largely influenced by the ocean import activity that's going on. So I think we're definitely seeing a little bit of capacity tightening, which hasn't been part of the narrative for several quarters now. The real ultimate question, which we don't have a good answer for, is just the durability, whether this is going to be short-lived or whether this will be more sustainable. I'm hopeful that a more business-friendly tax environment will get corporate America investing and growing again and all that kind of stuff. But it's kind of way too early to start to draw conclusions about that. But if you lean just right, you can kind of see a path to hopefully that type of environment.

All right. Well, thanks so much and congratulations.

Thank you very much, Jeff. And the next question is coming from Mark Argento of Lake Street Capital. Mark, your line is live.

I wanted to follow up. Looks like you made a couple of incremental tuck-in acquisitions. You guys have done a handful this year. Looks like you're continuing at that pace. Any kind of incremental thoughts, Bohn about what you're seeing in the marketplace? What are you these guys are kind of getting to the point where it's just time to back it in or the value proposition is high? What's the thing that seems to be tipping these over for you?

I believe it involves several factors. Mark, you've been part of this journey for quite some time, and as our agency partners age and near retirement, the entire pipeline is evolving. Therefore, the increase in frequency of discussions is somewhat expected. We anticipate this trend will persist. We are currently engaged with multiple operational sites and are eager to assist them when they are ready to make deals. Another exciting aspect is our disciplined approach regarding valuation and structure over the years. Although we have always been open for business, there was a time when the market shifted away from us. Now, however, the market has returned in a way that enables us to close deals. We are particularly enthusiastic about this, especially since we have an unlevered balance sheet, while many of our competitors face challenges with their balance sheets and need to recapitalize. In my view, we can effectively double our EBITDA within our current capital structure. I think this message is beginning to resonate, which is contributing to the recent positive and hopefully lasting increase in our stock price.

All right. And just to refresh memory in terms of the general structure that you guys have is some upfront and then an earn-out, maybe just refresh me and the audience on that?

Yes. We would typically use an earn-out structure, almost exclusively using earn-outs in terms of our structure where we would value a business. For the benefit of the conversation, most of our transactions have been characterized as plus or minus $2 million EBITDA type transactions. We believe we can value and structure those in a way that is beneficial for everyone, which includes the use of earn-outs, ensuring that sellers continue to have skin in the game for several years post-closing to ensure the business continues to perform, which helps mitigate against overpaying for a business in cases of underperformance.

Thank you very much. Your next question is coming from Kevin Gainey from Thompson Davis. Kevin, your line is live.

Could you remind us how you responded to the initial round of tariffs that occurred during the first phase of that administration and how your customers reacted? What impact did that have on your business, and how might we anticipate similar effects moving forward?

Well, I think we saw a few things going on at the time. There was a natural pull forward where people tried to act before any tariffs were in effect. Whenever these events happen, there are winners and losers, and some particular products are subject to tariffs while others might not be. That needs to be part of the analysis. For those affected, they're going to try to create solutions and mitigate their exposures to the tariffs. It could result in getting products moved in advance of effective tariff dates or a reconfiguration of supply chains to avoid these exposures as well. Last time there was such a unique moment with post-COVID hangover and the tariffs coinciding. I'm not sure if what we might see next will reflect that exactly, as those conditions were so specific. Nevertheless, it will create challenges for shippers, and we'll be here to help as much as we can. I suspect there will be pressures on the West Coast ports in particular as they manage the volumes. I haven't heard much about it lately, but I would expect warehousing capacity to tighten again.

That makes a lot of sense. Maybe you could also talk a little bit about specific end markets, whether it be retail, consumer, maybe industrial or something along those lines, what you're hearing from them, especially entering peak season for the retailers?

Yes. I don't have much color to add on an individual industry vertical. I would say overall, the market remains pretty soft. Outside of e-commerce exposure, you don't hear many players out there being particularly confident, ourselves included. However, through our diversified portfolio, we have some opportunities to be involved with interesting project-type work. Even across traditionally steady markets like food and beverage and consumer packaged goods, those markets have shown to be soft at least through our lens.

I appreciate the color. And Todd, I know the queue will come out. I just wanted to see what you guys have for operating cash flow in the quarter so I could think about free cash flow, really trying to get the free cash flow.

Yes, I mean, overall cash flow, we spent a lot with the acquisitions, which was the biggest driver. The net cash from operations for the quarter was near breakeven. It was $205,000, and then we had big outflows with the acquisitions.

Makes sense. Appreciate the time, guys.

Thank you very much. Well, we appear to have reached the end of our question-and-answer session. I will now turn the call back over to Bohn for closing remarks.

Thank you. Let me close by saying 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 build on the great platform we've created here at Radiant. At the same time, we intend to thoughtfully relever our balance sheet and through a combination of agent station conversions, strategic tuck-in acquisitions, and stock buybacks, continue to create shareholder value. Through this multipronged approach, we believe we will continue to bring good value to our shareholders, operating partners, and the end customers that we serve. Thanks for listening and your support of Radiant Logistics.

Thank you very much. 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.