Radiant(US:RLGT)2023-05-11 00:01Financial Data and Key Metrics Changes - For the nine months ended March 31, 2023, the company reported net income of $17.45 million on revenues of $853.3 million, translating to $0.36 per basic and $0.35 per fully diluted share, a decrease of approximately $10.26 million or 37% compared to the same period last year [2] - For the three months ended March 31, 2023, net income was $4.18 million on revenues of $244.2 million, or $0.09 per basic and $0.08 per fully diluted share, reflecting a significant decrease from $13.57 million on $441.3 million of revenues in the same quarter last year, a decline of approximately 69.2% [24][43] - Adjusted net income for the three months ended March 31, 2023, was $8.22 million, down approximately 48.8% from $16.06 million in the prior year [25] - Adjusted EBITDA for the three months ended March 31, 2023, was $11.56 million, a decrease of approximately 48.8% from $22.57 million in the same quarter last year [25] Business Line Data and Key Metrics Changes - The core domestic forwarding services have remained durable, while smaller service lines such as ocean imports and intermodal operations have been significantly impacted by the current market conditions [40] - The company generated over $11 million in adjusted EBITDA during its historically slowest seasonal quarter, indicating resilience in a challenging environment [41] Market Data and Key Metrics Changes - The freight market has softened significantly, affecting year-over-year comparisons to record results from the previous year, but the current results still trend ahead of pre-pandemic levels [21][22] - The company believes it is at or near the bottom of the cycle, expecting markets to normalize over the remainder of 2023 [22] Company Strategy and Development Direction - The company plans to continue a balanced approach to capital allocation, focusing on agent station conversions, synergistic tuck-in acquisitions, and stock buybacks [23] - The management emphasizes a disciplined approach to acquisitions, avoiding high multiples and leveraging the balance sheet cautiously [83] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the volatility in the freight forwarding market and the challenges posed by excess inventory and a slowing economy [21][40] - There is cautious optimism regarding the normalization of the market, with expectations of a return to a more sustainable environment over time [70] Other Important Information - The company has generated over $76 million in cash from operations and remains virtually debt-free, with ongoing stock buyback programs totaling $9.2 million [11] Q&A Session Summary Question: What does the path to normalization look like as the company enters fiscal '24? - Management indicated that the normalized run rate of the business is expected to be in the $50 million to $60 million range as the market stabilizes [47] Question: How is the M&A pipeline looking? - The company is actively looking for acquisition opportunities, particularly in agent station conversions, which carry no integration risk [48][49] Question: How does the current freight market compare to 2019? - Management noted that the current market is challenging, but performance is still better than pre-pandemic levels, indicating resilience [77] Question: What is the company's view on pricing trends? - Management expressed a belief that pricing is beginning to bottom out, indicating potential for recovery [58] Question: How does the company view its balance sheet and cash flow? - The company is pleased with its disciplined approach to capital allocation, maintaining a strong balance sheet while generating significant cash flow [81]