Radiant pushes value creation for shareholders as freight market bottoms

As the freight market searches for a bottom, management from Radiant Logistics expressed optimism around future prospects Wednesday, noting the company has never been in better financial shape.

Radiant (NYSE: RLGT) reported adjusted earnings per share of 17 cents for its 2023 fiscal third quarter ended March 31. The result was 15 cents lower year over year (y/y) but ahead of consensus estimates, which ranged from 11 cents to 16 cents.

Revenue in the period was nearly half the year-ago mark at $244 million. Backing out purchased transportation expenses, net revenue, or adjusted gross profit, was down just 20% y/y to $67 million.

The Renton, Washington-based 3PL experienced weak demand trends across its platform but noted that its ocean freight forwarding and intermodal and truck brokerage offerings have seen the biggest declines.

“The confluence of shippers continuing to manage through elevated inventories, reduced imports and slowing economic growth is having a cascading effect across virtually every mode of transportation where the balance of supply and demand has shifted from a tight market a year ago to one that is now oversupplied,” said Bohn Crain, founder and CEO, in a news release.

However, he told analysts on a Wednesday evening call that this cycle is likely “at or near a bottom.”

The company generated adjusted earnings before interest, taxes, depreciation and amortization of $11.6 million, a 49% y/y decline. Management said a normalized run rate for adjusted EBITDA should be between $50 million and $60 million moving forward.

“Are our numbers down … on a comparative y/y basis? Yes, and they’re down significantly,” Crain said.

But he pointed to results being significantly higher than they were in the same period of 2019 (when it reported adjusted EBITDA of $8.4 million), the last March-ended quarter before the pandemic. Additionally, he noted the company has a much stronger balance sheet — a net cash position of $17 million — which provides it numerous opportunities.

“If this is the bad, well that’s pretty good for Radiant,” Crain said.

Crain said the company will use half of its future free cash flow, and potentially take on some leverage, to continue to buy back stock. The other half will go toward acquisitions and converting its agent stations into company stores.

“I’m not aware of any other plus or minus $60-million-EBITDA-run-rate, non-asset-based 3PLs that you can buy [for] plus or minus a six-times [EBITDA] multiple with no integration risk,” Crain said. “Buying back our stock is just a great option.”

Radiant generated $76 million in cash flow from operations in the first nine months of its current fiscal year.

The company repurchased $5 million in stock during the nine-month period ended March 31. Since the end of the quarter, it bought back an additional $4.2 million, including transaction costs.

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