Radiant(RLGT) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company generated $9,400,000 in adjusted EBITDA for the third fiscal quarter, an increase of $4,200,000 or over 80% compared to the prior year period [4] - Net income attributable to Radiant Logistics for the three months ended March 31, 2025, was $2,541,000 on revenues of $214,000,000, representing an improvement of approximately $3,244,000 over the comparable prior year period [9] - Adjusted net income for the three months ended March 31, 2025, was $6,881,000, an increase of approximately $3,295,000 or about 91.9% compared to the same period in 2024 [10] - For the nine months ended March 31, 2025, net income was $12,384,000 on revenues of $682,100,000, an increase of approximately $9,480,000 or 326.4% compared to the prior year [11] Business Line Data and Key Metrics Changes - Legacy US operations contributed $1,500,000 in incremental adjusted EBITDA, while legacy Canadian operations contributed $500,000 for the quarter ended March 31 [4] - The company reported an additional $2,000,000 in adjusted EBITDA driven by recent acquisitions, including Cascade Transportation, Foundation Logistics, TCB Transportation, and TransCon Shipping [5] Market Data and Key Metrics Changes - Approximately 25% to 30% of the company's gross margins for March were impacted by recently announced tariffs, indicating a significant exposure to international trade dynamics [5][30] - The company noted that international trade volumes were beginning to slow due to trade tensions, but early indications for April suggested better-than-expected performance [17] Company Strategy and Development Direction - The company aims to deliver profitable growth through a combination of organic and acquisition initiatives while maintaining a strong balance sheet [7] - Recent acquisitions and strategic operating partner conversions are part of the company's broader pipeline of opportunities, focusing on both greenfield acquisitions and supporting current operating partners [8] - The company remains optimistic about leveraging its technology and global network to create value for shareholders and customers [48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about navigating through a slower freight market, citing a strong balance sheet with $19,000,000 in cash and only $15,000,000 drawn on a $200,000,000 credit facility [7] - The company anticipates some near-term volatility but expects a surge in global trade as tariff disputes are resolved [5] - Management indicated that traditional seasonality may not apply in the current environment, expecting softness in the June quarter [43] Other Important Information - The company has a robust customs brokerage capability and a PO management platform to assist customers in navigating trade challenges [32] - The removal of the $800 de minimis rule is expected to create more opportunities for the company as it positions itself to support businesses affected by this change [34] Q&A Session Summary Question: What drove the outperformance of the base business this quarter? - Management noted that while there was some slowing in international trade volumes, early indications for April showed better-than-expected performance, and the company is optimistic about offsetting near-term impacts with future surges in trade [17][18] Question: Can you elaborate on the gross margin impact from tariffs? - Management clarified that 25% to 30% of gross margin is associated with international trade, indicating exposure but also opportunities to engage with customers [30][32] Question: How do you see the impact of currency fluctuations? - Management stated that most of the business is conducted in US dollars, with limited exposure to the Canadian dollar, leaving currency impacts to economists [40] Question: What is the outlook for the fourth fiscal quarter? - Management expects softness in the June quarter and does not anticipate it being the second strongest quarter, citing uncertainty in the operating environment [43]