Radiant Logistics reports weaker results; acquisitions continue

Third-party logistics and multimodal transportation services provider Radiant Logistics Inc. (NYSE: RLGT) sees freight market trends that were positive on a year-over-year basis in December. However, the quarter as a whole came in 25% below the mark set in the year-ago period.

The Bellevue, Washington-based company reported that adjusted earnings per share (EPS) in its second fiscal quarter, which ended December 31, 2019 were 12 cents, 3 cents ahead of analysts’ forecasts.

“We are very pleased to report another quarter of solid financial results for the second quarter ended December 31, 2019, in what was generally recognized as a tough economic environment,” said Radiant founder and CEO Bohn Crain.

On the conference call, management said they’re “not really prepared to speak to January yet.”

Asked about the impact the coronavirus was having on demand, Crain said the company was seeing some slowdown in volumes, but noted that it was still too early to tell how much of the impact was due to the outbreak and how much was due to the annual Chinese New Year shutdown.

Crain added that he “wouldn’t be surprised” to see a boost in airfreight charters once supply chain managers are able to sort out the impact of the disruption. The thought is that some companies will look to catch up from the delays caused by the virus by switching freight from ocean to air.

Radiant reported a 23% year-over-year decline in total revenue to $202 million. Management said approximately $30 million of the decline was attributable to nonrecurring disaster relief project revenue from the year-ago period. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were 25% lower year-over-year at $9.4 million. The year-over-year impact of nonrecurring project revenue resulted in a $1.6 million decline in adjusted EBITDA.

Crain continued, “A number of factors contributed to difficult comparisons to our record results in the year-ago period, including (1) the nonrecurring disaster relief project work reported in the year-ago period, (2) our decision to exit certain lower margin business earlier in calendar 2019, and (3) general market softness associated with slower global trade and margin pressures on our brokerage operations associated with excess truck capacity that exists in the marketplace.”

Radiant’s Key Performance Indicators

In the earnings press release, the company announced the acquisition of two agency stations, Alexandria, Virginia-based Friedway Enterprises Inc. and Pittsburgh-based CIC2 Inc. Management didn’t provide details on the deals other than to say that the acquisitions included one of its largest agent stations and represent a meaningful incremental EBITDA opportunity as it rolls in the unit and no longer pays the station partner commissions.

Management said that they are continuing to pursue tuck-in acquisition opportunities and prefer to convert agency stations to company-owned stores as they typically present fewer integration headwinds and don’t garner the higher valuation multiples seen in larger deals.

Going forward, the company will look to allocate its free cash flow by funding small tuck-in acquisitions and repurchasing its shares. Radiant is currently operating at a roughly $40 million annual EBITDA run rate.

In a Feb. 4 press release, Radiant announced that its board authorized a repurchase of up to 5 million shares through the end of 2021, replacing the previous repurchase program.

“As we have previously discussed, we believe the current share price does not accurately reflect Radiant’s long-term growth prospects,” Crain concluded.

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