Radiant(RLGT) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2020, the company reported net income attributable to common stockholders of $53,000 on revenues of $177.2 million, a decrease from $2,932,000 on $206 million of revenues in Q3 2019, representing a decline of approximately $2,879,000 [20][21] - Adjusted net income for Q3 2020 was $3,965,000, down from $5,579,000 in Q3 2019, a decrease of approximately 28.9% [21] - Adjusted EBITDA for Q3 2020 was $6,057,000, compared to $8,437,000 in Q3 2019, a decrease of approximately 28.2% [22] - For the nine months ended March 31, 2020, net income was $5,875,000 on revenues of $579.7 million, down from $9,270,000 on $685.9 million in the same period of 2019, a decrease of approximately 36.6% [23][24] - Adjusted EBITDA for the nine months ended March 31, 2020, was $25,110,000, down from $29,749,000 in the prior year, a decrease of approximately 15.6% [24] Business Line Data and Key Metrics Changes - The company has a more significant focus on contract business rather than spot rates in its brokerage unit, with the Radiant Clipper business being predominantly intermodal [31] - The company has experienced varied performance across different segments, with some areas, such as food and beverage, performing better than others like tradeshow and cruise line services [28] Market Data and Key Metrics Changes - The company noted a significant contraction in demand due to the COVID-19 pandemic, impacting various sectors including airline, retail, and hospitality [10][12] - The company has been actively involved in delivering essential goods during the pandemic, which has somewhat mitigated the overall negative impact on its business [12][30] Company Strategy and Development Direction - The company shifted its focus to four key objectives during the pandemic: ensuring employee safety, maintaining supply chain continuity, protecting economic security, and mitigating the impacts of the economic slowdown [6][8] - The company has suspended acquisition opportunities and stock buyback programs while deferring discretionary technology investments to manage costs effectively [14][19] - The company aims to emerge from the pandemic as a stronger competitor by leveraging its non-asset-based business model and maintaining a disciplined capital allocation strategy [17][56] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty about the near-term recovery but noted that the economy will eventually rebound, creating opportunities for the company to support customers in revitalizing their supply chains [18][30] - The company anticipates that the adverse effects of COVID-19 will continue to impact financial results for the foreseeable future, but it remains optimistic about long-term prospects [17][30] Other Important Information - The company has implemented workforce reduction measures, including salary cuts and furloughs, to manage costs during the downturn [7][8] - The company has launched the Radiant Spark program to incentivize strategic operating partners to pursue new business while ensuring credit quality [43][45] Q&A Session Summary Question: How does the company expect the business to trend as the economy recovers? - Management indicated that while there are positive developments, visibility remains limited, and certain segments are performing better than others [27][28] Question: What is the mix of business between contract and transactional in the brokerage unit? - The company is more heavily weighted on the contract side, with intermodal business being predominant [31] Question: Has the downturn caused a reevaluation of the business mix going forward? - Management stated that the diversified nature of the business remains beneficial, and there are no intentions to abandon any segments [34] Question: What conditions would allow the company to resume M&A activities? - Management indicated that they would need to see improvements in the health of their underlying business and better visibility into market conditions [48] Question: What is the liquidity profile of the company? - The company has a cash flow-based credit facility with a limit based on EBITDA, allowing access to funds while maintaining financial discipline [51][53]