Earnings Call Transcript - RLGT Q1 2026

Operator, Operator

Good afternoon. Welcome to Radiant Logistics, Inc. financial discussion for the first fiscal quarter ended September 30, 2025. 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, 2025. 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 factors which 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.

Bohn Crain, CEO

Thank you. Good afternoon, everyone, and thank you for joining us on today's call. Notwithstanding the difficult freight environment, we delivered another quarter of solid financial results, generating $6.8 million in adjusted EBITDA for our fiscal quarter ended September 30, 2025. Excluding the impact of an unusual and one-time $1.3 million bad debt expense related to the First Brands bankruptcy, adjusted EBITDA would have been $8.1 million. While much of the growth in our transportation revenues from the quarter came through our acquisition efforts, we are seeing interesting organic growth opportunities in connection with our contract logistics, custom services, and emerging technology services offerings. We are early in our journey, but we are particularly excited about the prospects of Navegate, our proprietary global trade management and collaboration platform. Navegate represents a meaningful differentiator for us in the marketplace and supports both domestic and international shipments by aggregating and organizing supply chain data to deliver enhanced visibility, automation, and faster decision-making. With streamlined deployment measured in weeks, not months or years, our customers can quickly reduce costs, optimize routing, and improve buying and routing decisions. We believe the speed to market and ease of deployment represents a clear competitive advantage and that Navegate will serve as a meaningful catalyst for organic growth as we introduce the technology to our current and prospective customers in the coming quarters. As previously discussed, we believe our durable business model, diverse service offering, disciplined approach to capital allocation, and low leverage continues to serve us well. We remain virtually debt-free with net debt of approximately $2 million as of September 30, relative to our $200 million credit facility, and are on track with our continued efforts to deliver profitable growth through a combination of organic and acquisition initiatives while thoughtfully re-levering our balance sheet through a combination of strategic operating partner conversions, synergistic tuck-in acquisitions, and stock buybacks. In this regard, in September, we achieved a significant milestone with our acquisition of Mexico-based Weport. Mexico is an important market for us, and in addition to supporting Radiant's legacy and prospective customers across Mexico. With respect to our stock buyback program, we acquired $0.8 million of our stock through the three months ended September 30, 2025, and another $2.8 million of our stock subsequent to September 30 and through November 7, 2025. Looking ahead, we expect to continue our balanced approach to capital allocation through a combination of agent station conversions, synergistic tuck-in acquisitions, and stock buybacks while at the same time looking to invest in incremental sales resources with attention given to our deployment of the Navegate technology. 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.

Todd Macomber, CFO

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, 2025. For the three months ended September 30, 2025, we reported net income attributable to Radiant Logistics of $1.293 million on $226.7 million of revenues or $0.03 per basic and fully diluted share. For the three months ended September 30, 2024, we reported net income attributable to Radiant Logistics of $3.376 million on $203.6 million of revenues or $0.07 per basic and fully diluted share. This represents a decrease of approximately $2.083 million of net income over the comparable prior year period or 61.7%. For adjusted net income, we reported $4.467 million for the three months ended September 30, 2025, compared to adjusted net income of $7.883 million for the three months ended September 30, 2024. This represents a decrease of approximately $3.416 million, or approximately 43.3%. For adjusted EBITDA, we reported $6.797 million for the three months ended September 30, 2025, compared to adjusted EBITDA of $9.452 million for the three months ended September 30, 2024. This represents a decrease of approximately $2.655 million, or 28.1%. The current quarter largely mirrored trends that we saw in Q4 2025 as we've had persistent headwinds with the challenging freight market. Excluding the $1.3 million bad debt charge related to First Brands, adjusted EBITDA would have been $8.1 million, modestly exceeding the $7.9 million reported in Q4 of 2025. With that, I will turn the call over to our moderator to facilitate any Q&A from our callers.

Operator, Operator

Your first question is coming from Jason Seidl from TD Cowen.

Jason Seidl, Analyst

Two quick things. One, more of a longer-term thing. How should we think about Navegate in terms of how deployed it is currently, how quickly you could get it out to your customer base? And how many customers in total do you think ultimately need to have it? Is it 100%? Is it 75%? And then I have some follow-ups.

Bohn Crain, CEO

Yes, thank you, Jason. As I mentioned, we are still in the early stages with Navegate. When we acquired Navegate, previously known as North Star, it had some intriguing technology we now call Navegate or GTM for Global Trade Management. There are several legacy Navegate customers using the technology, and for the past 1.5 years, we have been working on integrating GTM with our core technology stack, which is known as SAP. We have been connecting these systems to utilize our 100-plus operating locations across the country as virtual sales organizations, allowing us to engage with current and potential customers to showcase the features and functionalities. Initially, upon acquiring Navegate, the technology supported mostly ocean import business, but we have adapted it to also support both international and domestic services. We are in the midst of a significant deployment focusing primarily on domestic transportation and shipping along with a comprehensive vendor management strategy for our entire supplier base. This technology is not a one-size-fits-all solution; not all of our customers will necessarily need access to its full capabilities. However, for customers eager to partner and manage their supply chain effectively, I believe there’s no one else in the market, even among our major competitors, who can offer something quite like this. Furthermore, a key aspect for Radiant has been to meet people where they are, whether that's through our agency stations or whether they choose to become company-owned stores. This also applies to our customers and how they prefer to engage with us regarding this technology. We are ready to sell the technology individually as a fourth-party logistics provider managing our customers’ freight under one umbrella, regardless of whether we manage all their freight, or we can offer the technology as part of the shipments we handle. We aim to be flexible and leverage our reach to present this exciting new offering in the marketplace. In addition, I anticipate making incremental investments in our sales resources to stimulate interest and accelerate the adoption of the technology moving forward. The freight tech or SaaS solutions are constantly evolving, and we are excited about the potential of having a distinctive differentiator in the marketplace that can effectively engage our customers and prospects.

Jason Seidl, Analyst

No, that makes sense. Now how many quarters do you think it will take to have a noticeable impact on the P&L?

Bohn Crain, CEO

I think within the next couple of quarters, we're going to be able to talk about incremental organic growth that we have earned through this differentiated offering. But I think it's going to be a long and exciting journey in terms of onboarding customers. This isn't like we're going to cap out and 18 months and hit peak. I think this is going to be a long journey with a differentiated offering. Hopefully, we can make a lot of progress with it.

Jason Seidl, Analyst

Well, I think in future calls, it would help if you can put some numbers around the adoption of the technology for us. That definitely would be very helpful. Bohn, getting back to sort of the near-term macro. Obviously, it's a difficult freight environment. But how should we be thinking about the current quarter? So the roll from September to October to November, what are your clients telling you to expect on the peak side of things? And how should we think about the current quarter?

Bohn Crain, CEO

I mean, I think it continues to be a relatively difficult market out there, particularly for the international business and all the vagaries of tariffs and what's coming and going and how customers are trying to manage through that. We do seem to be seeing some early signs of improvements and kind of over-the-road stock brokerage pricing. Thankfully, we don't have a lot of exposure to long-term contracts in the over-the-road space. So we're hoping to see a little improvement in terms of the performance of our own brokerage operations. How sustainable that will be, time will tell. Given all of the CDL and other kind of mandates that have been coming out, I think there needs to be some market rationalization on the capacity side of things. Some of those initiatives are helping that along a little bit. I think we'll see a little improvement there. Some of these ancillary services, I think core trans is going to continue to kind of muddle along. At the same time, as I alluded to in the prepared comments, the value-added services, whether it's contract logistics and warehousing or incremental opportunities on the customs brokerage side with the elimination of the de minimis rule or what we're doing on the tech side is going to help mitigate some of these challenges that I think are going to persist into 2026.

Jason Seidl, Analyst

Okay. That makes sense. On the warehousing side, we've been hearing that some of the warehousing pricing is getting a little bit more challenged as some of the COVID builds come online. What are you guys seeing out there?

Bohn Crain, CEO

Most of our warehousing is currently located in Canada, which has benefited from certain tariff dynamics as shippers look to mitigate or defer their impacts. There has been significant incremental opportunity in Canada and Mexico as shippers navigate these tariffs. We are optimistic about the contract logistics opportunities in Canada and Mexico. At this time, we do not have much significant warehouse exposure in our U.S. operations.

Jason Seidl, Analyst

Okay. That's helpful. Well, you know what, TD, we love the Canadian.

Operator, Operator

Your next question is coming from Jeff Kauffman from Vertical Research Partners.

Jeffrey Kauffman, Analyst

Jason asked a number of my questions, but I'm going to ask them a little differently. You talked about what's going on in the truck markets. You've got the recent airworthiness directive taking some MD-11s out of the international movement space. You've got spot rates that are making it a little challenging domestically. Where is this making a difference for you? And where is it not really affecting Radiant?

Bohn Crain, CEO

I believe we are making progress, but we are in a similar situation as everyone else dealing with these challenges. We are not immune to the market difficulties that most others are experiencing. While we may have slightly less retail exposure compared to some competitors, we still share concerns about ocean rates and tariff dynamics. Overall, we are facing the same issues as everyone else, but perhaps with slightly less exposure to retail and somewhat more involvement in the government sector, which I see as a positive.

Jeffrey Kauffman, Analyst

Well, I was going to ask about that with the shutdown, which was mostly after the quarter. But was that anything that affected your business? Or was the business that you did largely immune to anything that happened?

Bohn Crain, CEO

We're starting to see some effects, but I believe these will be short-lived compared to the broader macro situation. I'm hopeful that the government shutdown will be resolved in the coming days or weeks. However, addressing the larger issues related to tariffs, demand, and capacity will take much longer to sort out.

Jeffrey Kauffman, Analyst

All right. And then just a follow-up on Navegate because this is an exciting deployment that you're doing. And I apologize if you feel that you've answered this already. But once this rolls out, 12 months from now, you talked about improved buying, improved routing. What types of things are you going to be able to do that you couldn't do 12 months ago?

Bohn Crain, CEO

I believe there are a couple of important points to make. Firstly, the technology is now actionable. It's important to note that Navegate has been developing and refining this technology since the early 1980s. This isn't just a trendy new concept fueled by AI, but rather a robust technology that has been utilized for a long time, primarily focusing on international operations. We have enhanced it, and it is now ready to support various applications; this will be a significant moment for us since we couldn't effectively sell it to customers until we integrated our go-to-market strategy with SAP. We were unable to fully operationalize it until now. We've evolved the product into a more comprehensive tool that caters to both domestic and international needs. For those looking to manage their vendors and transportation expenses, we have a compelling solution. A key aspect is that as we onboard customers and help them manage their suppliers, those suppliers gain access to the tool, which can create additional opportunities for them as well. We are optimistic that this will invigorate our pipeline and expand our opportunities in our go-to-market approach.

Operator, Operator

Your next question is coming from Mark Argento from Lake Street.

Mark Argento, Analyst

Just a couple of quick ones. I just wanted to get any updated thinking around the Weport acquisition. You've had it in-house for a couple of months. I also want to touch on the First Brands bankruptcy. It looks like you wrote down $1.3 million. Do you think there's an opportunity to claw that back at some point? That would be helpful.

Bohn Crain, CEO

Sure. We're just into the Weport acquisition, but we're really excited to have been able to get that transaction done. Mexico is overtaking China as the U.S.'s #1 trading partner. We have a lot of existing customers who continue to diversify away from China, either to Southeast Asia or other locations, doing more and more in Mexico. We wanted to augment our presence in Mexico to support our existing customer base and get in a position to support incremental customers with everything going on in Mexico. We're focused on continuing to build out our footprint here in North America, emphasizing North America. Historically, we've been strong in the U.S. and Canada, but we've had a modest presence in Mexico. The Weport transaction really solidifies our capabilities across all of North America. For those who have been with us a while, we've been on the border doing cross-border for some time, but we've never had a meaningful international air and ocean capability in Mexico that Weport now brings us. Regarding First Brands, candidly, that caught us by surprise, and I haven't followed it closely, but it looks like that a lot of people got affected in a big way with First Brands. We're obviously not happy to take that $1.3 million charge that we encountered. We're exploring when and if it would make sense to support them on a post-petition basis in the bankruptcy, but we don't have clarity yet on whether that would make sense. The fact that a lot of other people got impacted doesn't make it feel any better. However, we don't believe this incident reflects a broader risk across our customer portfolio. This was a one-off unique situation tied to what appears to have been unusual activities within First Brands.

Operator, Operator

Your next question is coming from Mike Vermut from Newland Capital.

Michael Vermut, Analyst

Great execution in this market. Question for you. Are there any use cases that you have for Navegate that you can discuss how you're deploying it? Does it increase the size of the customer target for us? Are these larger customers that we can be targeting now? Is it a broader market we're looking at? How does it change the TAM for the company?

Bohn Crain, CEO

So it's a delicate question. We have some great case studies that we can't talk about yet because we don't have 'permission,' but we would be hard-pressed to find me talking as bullishly about anything prior to Navegate than I am about what I think it represents as an opportunity set for us. Can I provide specific names? No, not yet. But I hope in time, we'll have an opportunity to share some details. To your second question, yes, not to the exclusion of smaller shippers, but I think this gives us an opportunity to bring new value to larger shippers with complex supply chains. They have struggled to solve challenges, and we can provide new tools to help them manage those initiatives, which I anticipate will bring significant value. As we onboard customers managing their suppliers, those suppliers get exposure to the tool and create incremental opportunities from their perspective as well. We're hopeful that this is going to light up a new approach for how we think about our pipeline, opportunity set, and go-to-market strategy.

Michael Vermut, Analyst

Excellent. And then into my next question. It's incredible to look at what you've done to this company over the past 10 years, right? The acquisitions, the value created, the balance sheet strength, the debt paydown, and cash generation. It’s a different company than we were 10 years ago. Yet the valuation on the company is the same, if not less, because we've repurchased shares along the way.

Bohn Crain, CEO

I was going to tease you for not mentioning the stock buybacks, and we've been buying back our stock. We recognize that the valuation is lower than it was 10 years ago while the value created is significant.

Michael Vermut, Analyst

I feel that you've realized this here. Our buyback has increased at these levels. Should we assume that if we maintain this position, you will utilize the buyback, possibly even more than in the past?

Bohn Crain, CEO

Yes. We never want to commit to magnitudes, and we value our financial flexibility. But the short version is we expect to continue to be active in our stock buybacks at these types of price points. We think it’s a great use of capital. We’ll continue to be there where we see obvious value. We look at many deals, and I can tell you, I'm not aware of any other company of our size that you can buy at our implied multiple.

Operator, Operator

Thank you. That concludes our Q&A session. I'll now hand the conference back to Bohn Crain for closing remarks. Please go ahead.

Bohn Crain, CEO

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 re-lever our balance sheet through a combination of agent station conversions, synergistic tuck-in acquisitions, and stock buybacks. Through our multi-pronged approach, we believe we will continue to create meaningful value for our shareholders, operating partners, and the end customers that we serve. Thanks for your listening and your support for Radiant Logistics.

Operator, Operator

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