# RADIANT LOGISTICS, INC (RLGT) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from RADIANT LOGISTICS, INC's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1171155/000095017024105991/rlgt-20240630.htm
Accession: 0000950170-24-105991
Filing date: 2024-09-12
Report date: 2024-06-30
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/RLGT/
All MD&A years: /company/RLGT/mda/
Previous year: /company/RLGT/mda/fy2023/ (FY 2023)
Next year: /company/RLGT/mda/fy2025/ (FY 2025)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and result of operations should be read in conjunction with the consolidated financial statements and the related notes and other information included elsewhere in this report.

Overview

We operate as a leading third-party logistics company, providing technology-enabled global transportation and value-added logistics solutions primarily in the United States and Canada. We service a large, broad, and diversified account base consisting of consumer goods, food and beverage, electronics and high-tech, aviation and automotive, military and government, and manufacturing and retail customers, which is supported by an extensive network of operating locations across North America as well as an integrated international service partner network located in other key markets around the globe. The Company provides these services through a multi-brand network, which includes over 100 operating locations. Included in these operating locations are a number of independent agents, who are also referred to as “strategic operating partners,” that operate exclusively on the Company's behalf, and approximately 30 Company-owned offices. As the operator of a third-party logistics business, the Company has a vast carrier network of asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in its carrier network. We believe shippers value our services because we are able to objectively arrange the most efficient and cost-effective means, type and provider of transportation service without undue influence caused by the ownership of transportation assets. In addition, our minimal investment in physical assets affords us the opportunity for a higher return on invested capital and net cash flows than our asset-based competitors.

Through our operating locations across North America, we offer domestic, international air and ocean freight forwarding services and freight brokerage services, including truckload services, LTL services, and intermodal services, which is the movement of freight in trailers or containers by combination of truck and rail. Our primary business operations involve arranging the shipment, on behalf of our customers, of materials, products, equipment and other goods that are generally larger than shipments handled by integrated carriers of primarily small parcels, such as FedEx, DHL and UPS. Our services include arranging and monitoring all aspects of material flow activity utilizing advanced information technology systems. We also provide other value-added logistics services, including MM&D, CHB and GTM solutions to complement our core transportation service offering.

The Company expects to grow its business organically and by completing acquisitions of other companies with complementary geographical and logistics service offerings. The Company’s organic growth strategy will continue to focus on strengthening existing and expanding new customer relationships leveraging the benefit of the Company’s technology platform, while continuing its efforts on the organic build-out of the Company’s network of strategic operating partner locations. In addition, as the Company continues to grow and scale its business, the Company believes that it is creating density in its trade lanes, which creates opportunities for the Company to more efficiently source and manage its transportation capacity.

In addition to its focus on organic growth, the Company will continue to search for acquisition candidates that bring critical mass from a geographic and purchasing power standpoint, along with providing complementary service offerings to the current platform. As the Company continues to grow and scale its business, it also remains focused on leveraging its back-office infrastructure and technology systems to drive productivity improvement across the organization.

Impact of Notable External Conditions

The global economic and trade environments remain uncertain, including inflation, geopolitical tensions and changes in consumer behavior could have a negative impact on our business and financial results.

Performance Metrics

Our principal source of income is derived from freight forwarding and freight brokerage services we provide to our customers. As a third-party logistics provider, we arrange for the shipment of our customers’ freight from point of origin to point of destination. Generally, we quote our customers a turnkey cost for the movement of their freight. Our price quote will often depend upon the customer’s time-definite needs (first day through fifth day delivery), special handling needs (heavy equipment, delicate items, environmentally sensitive goods, electronic components, etc.), and the means of transport (motor carrier, air, ocean or rail). In turn, we assume the responsibility for arranging and paying for the underlying means of transportation.

Our transportation revenue represents the total dollar value of services we sell to our customers. Our cost of transportation includes direct costs of transportation, including motor carrier, air, ocean, and rail services. Our adjusted gross profit, a non-GAAP financial measure, is gross revenue less the direct cost of transportation and other services (excluding depreciation and amortization, which are reported separately), and is the primary indicator of our ability to source, add value, and resell services provided by third-parties, and is considered by management to be a key performance measure. Adjusted gross profit percentage is adjusted gross profit as a percent of our total revenue. In addition, management believes measuring its operating costs as a function of adjusted gross profit provides a useful

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metric, as our ability to control costs as a function of adjusted gross profit directly impacts operating results. We believe that these provide investors with meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

Our operating results will be affected as acquisitions occur. Since acquisitions are recorded using the acquisition method of accounting for business combinations, our financial statements will only include the results of operations and cash flows of acquired companies for periods subsequent to the date of acquisition.

Our GAAP-based net income will be affected by non-cash charges relating to the amortization of customer related intangible assets and other intangible assets attributable to completed acquisitions. Under applicable accounting standards, purchasers are required to allocate the total consideration in a business combination to the identified assets acquired and liabilities assumed based on their fair values at the time of acquisition. The excess of the consideration paid over the fair value of the identifiable net assets acquired is to be allocated to goodwill, which is tested at least annually for impairment. Applicable accounting standards require that we separately account for and value certain identifiable intangible assets based on the unique facts and circumstances of each acquisition. As a result of our acquisition strategy, our net income will include material non-cash charges relating to the amortization of customer related intangible assets and other intangible assets acquired in our acquisitions. Although these charges may increase as we complete more acquisitions, we believe we will be growing the value of our intangible assets (e.g., customer relationships). Thus, we believe that earnings before interest, taxes, depreciation and amortization, or EBITDA, is a useful financial measure for investors because it eliminates the effect of these non-cash costs and provides an important metric for our business.

EBITDA is a non-GAAP measure of income and does not include the effects of interest, taxes, and the “non-cash” effects of depreciation and amortization on long-term assets. Companies have some discretion as to which elements of depreciation and amortization are excluded in the EBITDA calculation. We exclude all depreciation charges related to property, technology, and equipment and all amortization charges (including amortization of leasehold improvements). We then further adjust EBITDA to exclude share-based compensation expense, changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, cybersecurity incident related costs, changes in fair value of interest rate swap contracts, restatement costs, transition and lease termination costs, foreign currency transaction gains and losses, litigation expenses unrelated to our core operations, and other non-cash charges. While management considers EBITDA and adjusted EBITDA useful in analyzing our results, it is not intended to replace any presentation included in our consolidated financial statements. The Company’s financial covenants with its lenders define an adjusted EBITDA as a key component of its covenant calculations. The Company’s ability to grow adjusted EBITDA is closely monitored by management as it’s directly tied to financial borrowing capacity and also is a frequent point of discussion with its investors as well as the Company’s earnings calls.

Our operating results are also subject to seasonal trends when measured on a quarterly basis. The impact of seasonality on our business will depend on numerous factors, including the markets in which we operate, holiday seasons, consumer demand, and economic conditions. Since our revenue is largely derived from customers whose shipments are dependent upon consumer demand and just-in-time production schedules, the timing of our revenue is often beyond our control. Factors such as shifting demand for retail goods and/or manufacturing production delays could unexpectedly affect the timing of our revenue. As we increase the scale of our operations, seasonal trends in one area of our business may be offset to an extent by opposite trends in another area. We cannot accurately predict the timing of these factors, nor can we accurately estimate the impact of any particular factor, and thus we can give no assurance any historical seasonal patterns will continue in future periods.

Critical Accounting Estimates

Accounting policies, methods and estimates are an integral part of the consolidated financial statements prepared by management and are based upon management’s current judgments. These judgments are normally based on knowledge and experience regarding past and current events and assumptions about future events. Certain accounting policies, methods and estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ from management’s current judgments. While there are a number of accounting policies, methods and estimates that affect our financial statements, the areas that are particularly significant include revenue recognition; the fair value of acquired assets and liabilities and the assessment of the recoverability of long-lived assets, goodwill and intangible assets; and fair value of contingent consideration.

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As a non-asset-based carrier, we do not generally own transportation assets. We do, however, own certain trailers and refrigerated trailers that we use in our business. We generate the majority of our transportation revenues by purchasing transportation services from direct (asset-based) carriers and reselling those services to our customers. We recognize revenue and the corresponding related costs in a manner that depicts the transfer of promised goods or services to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods and services. Our performance obligation is satisfied over time and recognized upon the transfer of control of the services over the requisite transit period as customers’ goods move from point of origin to point of destination. We determine the period to recognize revenue and the corresponding related costs based upon the actual departure date and delivery date, if available, or estimated delivery date if delivery has not occurred as of the reporting date. Certain shipments may require us to estimate revenue, in which case the average revenue per shipment, per mode of transportation is used. Determination of the estimated revenue, transit period and the percentage of completion of the shipment as of the reporting date requires management to make judgments that affect the timing and amount of revenue recognition. Macroeconomic conditions impacting the supply chain such as port delays, the labor force, as well as inflationary pressures can impact the actual results compared to our estimates. Revenue from CHB services is recognized upon completion of the service.

We perform an annual impairment test for goodwill as of April 1 of each year or more frequently if facts or circumstances indicate that the carrying amount may not be recoverable. We first have the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount, or to bypass the qualitative assessment and perform a quantitative assessment. As of April 1, 2024, we elected to bypass the qualitative assessment and perform a quantitative assessment where we determined the fair value of each reporting unit and compared the fair value to the reporting unit’s carrying amount.

Definite-lived intangible assets consist of customer related intangible assets, trade names and trademarks, licenses, developed technology, and non-compete agreements arising from the Company’s acquisitions and are amortized using the straight-line method over periods of up to 15 years.

We review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life of a long-lived asset is less than its carrying amount, the asset is considered to be impaired. Impairment losses are measured as the amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, we estimate fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the asset. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

The Company has contingent obligations to transfer cash payments and/or equity shares to former shareholders of acquired operations in conjunction with certain acquisitions if specified operating results and financial objectives are met over their stated earn-out period. The Company uses projected future financial results based on recent and historical data to value the anticipated future earn-out payments. To calculate fair value, the future earn-out payments were then discounted using Level 3 inputs.

Results of Operations

Fiscal year ended June 30, 2024, compared to fiscal year ended June 30, 2023

The following table summarizes revenues, cost of transportation and other services, and adjusted gross profit by reportable operating segments for the fiscal years ended June 30, 2024 and 2023:

[[GREPCENT_TABLE]]
[["","Year Ended June 30, 2024","","","Year Ended June 30, 2023"],["(In thousands)","United States","","","Canada","","","Corporate/ Eliminations","","","Total","","","United States","","","Canada","","","Corporate/ Eliminations","","","Total"],["Revenues"],["Transportation","$","670,169","","","$","83,320","","","$","(241",")","","$","753,248","","","$","923,039","","","$","110,225","","","$","(385",")","","$","1,032,879"],["Value-added services","","13,786","","","","35,436","","","","\u2014","","","","49,222","","","","14,458","","","","38,149","","","","\u2014","","","","52,607"],["","","683,955","","","","118,756","","","","(241",")","","","802,470","","","","937,497","","","","148,374","","","","(385",")","","","1,085,486"],["Cost of transportation and other services"],["Transportation","","481,492","","","","63,090","","","","(241",")","","","544,341","","","","692,578","","","","86,471","","","","(385",")","","","778,664"],["Value-added services","","5,924","","","","15,682","","","","\u2014","","","","21,606","","","","5,545","","","","17,437","","","","\u2014","","","","22,982"],["","","487,416","","","","78,772","","","","(241",")","","","565,947","","","","698,123","","","","103,908","","","","(385",")","","","801,646"],["Adjusted gross profit (1)"],["Transportation","","188,677","","","","20,230","","","","\u2014","","","","208,907","","","","230,461","","","","23,754","","","","\u2014","","","","254,215"],["Value-added services","","7,862","","","","19,754","","","","\u2014","","","","27,616","","","","8,913","","","","20,712","","","","\u2014","","","","29,625"],["","$","196,539","","","$","39,984","","","$","\u2014","","","$","236,523","","","$","239,374","","","$","44,466","","","$","\u2014","","","$","283,840"],["Adjusted gross profit percentage"],["Transportation","","28.2","%","","","24.3","%","","N/A","","","","27.7","%","","","25.0","%","","","21.6","%","","N/A","","","","24.6","%"],["Value-added services","","57.0","%","","","55.7","%","","N/A","","","","56.1","%","","","61.6","%","","","54.3","%","","N/A","","","","56.3","%"]]
[[/GREPCENT_TABLE]]

(1)
Adjusted gross profit is revenues less the cost of transportation and other services.

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Transportation revenue was $753.2 million and $1,032.9 million for the fiscal years ended June 30, 2024 and 2023, respectively. The decrease of $279.7 million, or 27.1%, is primarily attributable to a significant decrease in international and ocean rates, lower volumes for all transportation modes, and an overall decrease in charter business as compared to the comparable prior year period. Adjusted transportation gross profit was $208.9 million and $254.2 million for the fiscal years ended June 30, 2024 and 2023, respectively. Adjusted transportation gross profit percentage increased from 24.6% to 27.7%, primarily due to a higher mix of domestic shipments, which have higher gross profit margin characteristics than ocean and charter shipments.

Value-added services revenue was $49.2 million and $52.6 million for the fiscal years ended June 30, 2024 and 2023, respectively. Adjusted value-added services gross profit was $27.6 million and $29.6 million for the fiscal years ended June 30, 2024 and 2023, respectively. Adjusted value-added services gross profit percentage was relatively flat, decreasing slightly from 56.3% to 56.1%.

The following table provides a reconciliation for the fiscal years ended June 30, 2024 and 2023 of adjusted gross profit to gross profit, the most directly comparable GAAP measure:

[[GREPCENT_TABLE]]
[["(In thousands)","Year Ended June 30,"],["Reconciliation of adjusted gross profit to GAAP gross profit","2024","","","2023"],["Revenues","$","802,470","","","$","1,085,486"],["Cost of transportation and other services (exclusive of depreciation and amortization, shown separately below)","","(565,947",")","","","(801,646",")"],["Depreciation and amortization","","(13,055",")","","","(13,621",")"],["GAAP gross profit","$","223,468","","","$","270,219"],["Depreciation and amortization","","13,055","","","","13,621"],["Adjusted gross profit","$","236,523","","","$","283,840"],["GAAP gross profit percentage","","27.8","%","","","24.9","%"],["Adjusted gross profit percentage","","29.5","%","","","26.1","%"]]
[[/GREPCENT_TABLE]]

The following table compares consolidated statements of comprehensive income data by reportable operating segments for the fiscal years ended June 30, 2024 and 2023:

[[GREPCENT_TABLE]]
[["","Year Ended June 30, 2024","","","Year Ended June 30, 2023"],["(In thousands)","United States","","","Canada","","","Corporate/ Eliminations","","","Total","","","United States","","","Canada","","","Corporate/ Eliminations","","","Total"],["Adjusted gross profit (1)","$","196,539","","","$","39,984","","","$","\u2014","","","$","236,523","","","$","239,374","","","$","44,466","","","$","\u2014","","","$","283,840"],["Operating expenses:"],["Operating partner commissions","","92,668","","","","\u2014","","","","\u2014","","","","92,668","","","","115,605","","","","\u2014","","","","\u2014","","","","115,605"],["Personnel costs","","52,957","","","","19,270","","","","5,985","","","","78,212","","","","55,624","","","","17,953","","","","5,935","","","","79,512"],["Selling, general and administrative expenses","","23,526","","","","8,222","","","","6,952","","","","38,700","","","","22,553","","","","8,474","","","","7,521","","","","38,548"],["Depreciation and amortization","","3,670","","","","3,948","","","","10,477","","","","18,095","","","","4,072","","","","3,335","","","","15,293","","","","22,700"],["Change in fair value of contingent consideration","","\u2014","","","","\u2014","","","","(450",")","","","(450",")","","","\u2014","","","","\u2014","","","","(646",")","","","(646",")"],["Total operating expenses","","172,821","","","","31,440","","","","22,964","","","","227,225","","","","197,854","","","","29,762","","","","28,103","","","","255,719"],["Income (loss) from operations","","23,718","","","","8,544","","","","(22,964",")","","","9,298","","","","41,520","","","","14,704","","","","(28,103",")","","","28,121"],["Other income (expense)","","148","","","","194","","","","80","","","","422","","","","599","","","","332","","","","(1,506",")","","","(575",")"],["Income (loss) before income taxes","","23,866","","","","8,738","","","","(22,884",")","","","9,720","","","","42,119","","","","15,036","","","","(29,609",")","","","27,546"],["Income tax expense","","\u2014","","","","\u2014","","","","(1,523",")","","","(1,523",")","","","\u2014","","","","\u2014","","","","(6,305",")","","","(6,305",")"],["Net income (loss)","","23,866","","","","8,738","","","","(24,407",")","","","8,197","","","","42,119","","","","15,036","","","","(35,914",")","","","21,241"],["Less: net income attributable to non- controlling interest","","(512",")","","","\u2014","","","","\u2014","","","","(512",")","","","(646",")","","","\u2014","","","","\u2014","","","","(646",")"],["Net income (loss) attributable to Radiant Logistics, Inc.","$","23,354","","","$","8,738","","","$","(24,407",")","","$","7,685","","","$","41,473","","","$","15,036","","","$","(35,914",")","","$","20,595"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Year Ended June 30, 2024","","","Year Ended June 30, 2023"],["Operating expenses as a percent of adjusted gross profit (1):","United States","","","Canada","","","Corporate/ Eliminations","","Total","","","United States","","","Canada","","","Corporate/ Eliminations","","Total"],["Operating partner commissions","","47.1","%","","","0.0","%","","N/A","","","39.2","%","","","48.3","%","","","0.0","%","","N/A","","","40.7","%"],["Personnel costs","","26.9","%","","","48.2","%","","N/A","","","33.1","%","","","23.2","%","","","40.4","%","","N/A","","","28.0","%"],["Selling, general and administrative expenses","","12.0","%","","","20.6","%","","N/A","","","16.4","%","","","9.4","%","","","19.1","%","","N/A","","","13.6","%"],["Depreciation and amortization","","1.9","%","","","9.9","%","","N/A","","","7.7","%","","","1.7","%","","","7.5","%","","N/A","","","8.0","%"]]
[[/GREPCENT_TABLE]]

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(1)
Adjusted gross profit is revenues less the cost of transportation and other services.

Operating partner commissions decreased $22.9 million, or 19.8%, to $92.7 million for the fiscal year ended June 30, 2024. The decrease in commissions is primarily due to a reduction of adjusted gross profit generated from our strategic operating partners, lower freight volumes, and the conversions of strategic operating partners to Company-owned locations who earned commissions in the comparable prior year period. As a percentage of adjusted gross profit, operating partner commissions decreased 155 basis points to 39.2% from 40.7% for the fiscal years ended June 30, 2024 and 2023, as a result of a lower percentage of gross margin generated from strategic operating partners.

Personnel costs decreased $1.3 million, or 1.6%, to $78.2 million for the fiscal year ended June 30, 2024. The decrease is primarily due to lower headcount in certain locations, decreases in sales commissions and bonuses, partially offset by the increase in headcount from acquisitions of strategic operating partners and a new brokerage location. As a percentage of adjusted gross profit, personnel costs increased 505 basis points to 33.1% from 28.0% for the fiscal years ended June 30, 2024 and 2023, respectively.

Selling, general and administrative (“SG&A”) expenses increased $0.2 million, or 0.4%, to $38.7 million for the fiscal year ended June 30, 2024. As a percentage of adjusted gross profit, SG&A increased 278 basis points to 16.4% from 13.6% for the fiscal years ended June 30, 2024 and 2023, respectively.

Depreciation and amortization costs decreased $4.6 million, or 20.3%, to $18.1 million for the fiscal year ended June 30, 2024. The decrease is attributable to the accelerated amortization of intangible assets in the comparable prior year period resulting from the rebranding of certain trade names. As a percentage of adjusted gross profit, depreciation and amortization decreased 35 basis points to 7.7% from 8.0% for the fiscal years ended June 30, 2024 and 2023, respectively.

Change in fair value of contingent consideration was a gain of $0.5 million for the fiscal year ended June 30, 2024, compared to a gain of $0.6 million for the fiscal year ended June 30, 2023. The change in each fiscal year is principally attributable to a change in management’s estimates of future earn-out payments through the remainder of the respective earn-out periods.

Net other income (expense) increased $1.0 million, or 173.4%, from an expense of $0.6 million for the fiscal year ended June 30, 2023 to income of $0.4 million for the fiscal year ended June 30, 2024.

Our change in net income is driven by decreased adjusted gross profit, increased operating expenses, and decreased income taxes compared to the prior fiscal year.

Our future financial results may be impacted by amortization of intangible assets resulting from acquisitions as well as gains or losses from changes in fair value of contingent consideration that are difficult to predict.

The following table provides a reconciliation for the fiscal years ended June 30, 2024 and 2023 of adjusted EBITDA to net income, the most directly comparable GAAP measure:

[[GREPCENT_TABLE]]
[["","Year Ended June 30, 2024","","","Year Ended June 30, 2023"],["(In thousands)","United States","","","Canada","","","Corporate/ Eliminations","","","Total","","","United States","","","Canada","","","Corporate/ Eliminations","","","Total"],["Net income (loss) attributable to Radiant Logistics, Inc.","$","23,354","","","$","8,738","","","$","(24,407",")","","$","7,685","","","$","41,473","","","$","15,036","","","$","(35,914",")","","$","20,595"],["Income tax expense","","\u2014","","","","\u2014","","","","1,523","","","","1,523","","","","\u2014","","","","\u2014","","","","6,305","","","","6,305"],["Depreciation and amortization (1)","","4,127","","","","3,948","","","","10,477","","","","18,552","","","","4,529","","","","3,335","","","","15,293","","","","23,157"],["Net interest expense","","\u2014","","","","\u2014","","","","(1,277",")","","","(1,277",")","","","\u2014","","","","\u2014","","","","1,889","","","","1,889"],["EBITDA","","27,481","","","","12,686","","","","(13,684",")","","","26,483","","","","46,002","","","","18,371","","","","(12,427",")","","","51,946"],["Share-based compensation","","1,268","","","","266","","","","1,077","","","","2,611","","","","1,091","","","","224","","","","1,188","","","","2,503"],["Change in fair value of contingent consideration","","\u2014","","","","\u2014","","","","(450",")","","","(450",")","","","\u2014","","","","\u2014","","","","(646",")","","","(646",")"],["Acquisition related costs","","\u2014","","","","\u2014","","","","526","","","","526","","","","\u2014","","","","\u2014","","","","185","","","","185"],["Cybersecurity event","","\u2014","","","","\u2014","","","","266","","","","266","","","","\u2014","","","","\u2014","","","","6","","","","6"],["Litigation costs","","\u2014","","","","\u2014","","","","594","","","","594","","","","\u2014","","","","\u2014","","","","1,208","","","","1,208"],["Transition, lease termination, and other costs","","\u2014","","","","76","","","","\u2014","","","","76","","","","30","","","","\u2014","","","","\u2014","","","","30"],["Change in fair value of interest rate swap contracts","","\u2014","","","","\u2014","","","","1,197","","","","1,197","","","","\u2014","","","","\u2014","","","","(383",")","","","(383",")"],["Restatement costs","","\u2014","","","","\u2014","","","","\u2014","","","","\u2014","","","","\u2014","","","","\u2014","","","","1,544","","","","1,544"],["Foreign currency transaction gain","","(66",")","","","(77",")","","","\u2014","","","","(143",")","","","(429",")","","","(326",")","","","\u2014","","","","(755",")"],["Adjusted EBITDA","$","28,683","","","$","12,951","","","$","(10,474",")","","$","31,160","","","$","46,694","","","$","18,269","","","$","(9,325",")","","$","55,638"],["Adjusted EBITDA as a % of adjusted gross profit (2)","","14.6","%","","","32.4","%","","N/A","","","","13.2","%","","","19.5","%","","","41.1","%","","N/A","","","","19.6","%"]]
[[/GREPCENT_TABLE]]

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(1)
Depreciation and amortization for the purposes of calculating adjusted EBITDA, a non-GAAP financial measure, includes depreciation expense recognized on certain computer software as a service.

(2)
Adjusted gross profit is revenues less the cost of transportation and other services.

Adjusted EBITDA decreased $24.4 million, or 44.0% to $31.2 million for the fiscal year ended June 30, 2024.

Liquidity and Capital Resources

Generally, our primary sources of liquidity are cash generated from operating activities and borrowings under our Revolving Credit Facility, as described below. These sources also fund a portion of our capital expenditures and contractual contingent consideration obligations. Our level of cash and financing capabilities along with cash flows from operations have historically been sufficient to meet our operating and capital needs. As of June 30, 2024, we have $24.9 million in unrestricted cash and cash equivalents on hand to serve as adequate working capital.

Fiscal year ended June 30, 2024 compared to fiscal year ended June 30, 2023

Net cash provided by operating activities was $17.3 million and $97.9 million for the fiscal years ended June 30, 2024 and 2023, respectively. The cash provided primarily consisted of net income adjusted for depreciation and amortization and changes in accounts receivable, contract assets, accounts payable, income taxes, and accrued expenses and other liabilities.

Net cash used for investing activities was $15.2 million and $10.7 million for the fiscal years ended June 30, 2024 and 2023, respectively. Cash paid for acquisitions were $6.8 million and $3.3 million for the fiscal years ended June 30, 2024 and 2023, respectively. Cash paid for purchases of property, technology, and equipment were $8.6 million and $7.6 million for the fiscal years ended June 30, 2024 and 2023, respectively.

Net cash used for financing activities was $10.2 million and $80.2 million for the fiscal years ended June 30, 2024 and 2023, respectively. Net repayments of the Revolving Credit Facility were $62.5 million for the fiscal year ended June 30, 2023. Payments of debt issuance costs were $0.1 million and $0.9 million for the fiscal year ended June 30, 2024 and 2023, respectively. Repayments of notes payable and finance lease liabilities were $4.8 million and $5.0 million for the fiscal years ended June 30, 2024 and 2023, respectively. Repurchases of common stock were $4.1 million and $11.1 million for the fiscal years ended June 30, 2024 and 2023, respectively. Payments of contingent consideration as a financing activity was $0.3 million for the fiscal year ended June 30, 2024. Distributions to non-controlling interest were $0.6 million for each of the fiscal years ended June 30, 2024 and 2023. Proceeds from exercises of stock options were less than $0.1 million and $0.3 million for the fiscal years ended June 30, 2024 and 2023, respectively. Payments of employee tax withholdings related to restricted stock units and stock options were $0.4 million and $0.5 million for the fiscal years ended June 30, 2024 and 2023, respectively.

Working Capital

We believe that our current working capital, anticipated cash flow from operations, and access to financing through the Revolving Credit Facility are adequate for funding existing operations for the next twelve months.

Acquisitions

We have not made any material acquisitions in the last two fiscal years.

Technology

A primary component of our business strategy is to provide robust and advanced technology offerings to our customers, while providing advanced technology to our operations, strategic operating partners and management. To accomplish this, we have historically continuously developed and enhanced our technology platform to align with current and future business requirements, and we expect to continue to do so in the foreseeable future. During the fiscal year ended June 30, 2024, we capitalized approximately $1.0 million on technology enhancements and software systems in order to increase our operating efficiency and improve technology offerings. We expect to spend between $2.0 million and $3.0 million during the fiscal year ended June 30, 2025 in order to continue enhancing our technology platform, which we expect will include elements focused on customer facing, vendor facing, and user facing tools and systems that will be integrated into our existing platform and support our continued growth.

Revolving Credit Facility

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The Company entered into a $200 million syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated as of August 5, 2022, and amended as of September 27, 2023. The Revolving Credit Facility is segregated into two tranches, a $150 million tranche that may be loaned in U.S. Dollars and a $50 million tranche that may be loaned in either U.S. Dollars or Canadian Dollars. The Revolving Credit Facility includes a $75 million accordion feature to support future acquisition opportunities. The Revolving Credit Facility was entered into with Bank of America, N.A. and BMO Capital Markets Corp. as joint book runners and joint lead arrangers, Bank of America, N.A. as Administrative Agent, Swingline Lender and Letter of Credit Issuer, Bank of Montreal as syndication agent, KeyBank National Association and MUFG Union Bank, N.A. as co-documentation agents and Bank of America, N.A., Bank of Montreal, KeyBank National Association, MUFG Union Bank, N.A. and Washington Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as “Lenders”).

The Revolving Credit Facility has a term of five years and is collateralized by a first-priority security interest in the accounts receivable and other assets of the Company and the guarantors on a parity basis with the security interest held by Fiera Private Debt Fund IV LP and Fiera Private Debt Fund V LP described below. Borrowings in U.S. Dollars accrue interest (at the Company’s option) at a) the Lenders’ base rate plus 0.50% to 1.50%; b) Term Secured Overnight Financing Rate (“SOFR”) plus 1.40% to 2.40%; or c) Term SOFR Daily Floating Rate plus 1.40% to 2.40%. Borrowings in Canadian Dollars accrue interest (at the Company’s option) at a) Term Canadian Overnight Repo Rate Average (“CORRA”) plus 0.29547% to 0.32138% depending on the term, plus 1.40% to 2.40%; or b) Daily Simple CORRA plus 0.29547% plus 1.40% to 2.40%. Rates are adjusted based on the Company’s consolidated net leverage ratio. The Company’s U.S. and Canadian subsidiaries are guarantors of the Revolving Credit Facility.

For borrowings under the Revolving Credit Facility, the Company is subject to the maximum consolidated net leverage ratio of 3.00 and minimum consolidated interest coverage ratio of 3.00. Additional minimum availability requirements and financial covenants apply in the event the Company seeks to use advances under the Revolving Credit Facility to pursue acquisitions or repurchase its common stock.

As of June 30, 2024, there were no borrowings outstanding on the Revolving Credit Facility.

Senior Secured Loan

In connection with the Company’s acquisition of Radiant Canada, Radiant Canada obtained a CAD$29 million senior secured Canadian term loan from Fiera Private Debt Fund IV LP (“FPD IV” formerly, Integrated Private Debt Fund IV LP) pursuant to a CAD$29,000,000 Credit Facilities Loan Agreement. In connection with the Company’s acquisition of Lomas, Radiant Canada obtained a CAD$10 million senior secured Canadian term loan from Fiera Private Debt Fund V LP (formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000,000 Credit Facilities Loan Agreement. As of June 30, 2024, both term loans have been repaid in full.

For additional information regarding our indebtedness, see Note 8 to our consolidated financial statements.

Off Balance Sheet Arrangements

As of June 30, 2024, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, which had been established for the purpose of facilitating off‑balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Recent Accounting Guidance

The recent accounting guidance is discussed in Note 2 to the consolidated financial statements contained in this report.

Climate Change Effects

We recognize the importance of addressing climate-related risks and opportunities to ensure our business is resilient and sustainable for the future. In 2024, we completed a GHG emissions inventory for Scope 1 and Scope 2 sources. Our inventory was prepared in accordance with the GHG Protocol Corporate Accounting and Reporting Standard and aligns with the ISSB for climate-related disclosures. We are actively collecting data to expand our inventory and include upstream and downstream Scope 3 GHG emissions sources. Our comprehensive data set will inform future governance, strategy, risk management, and metrics and targets.

To test the resilience of our strategy, we will develop scenario analysis in alignment with the ISSB to stress test and improve our resiliency. As part of this effort, we actively engage with leaders across the Company to identify and discuss material climate-related risks and opportunities. Climate-related risks identified through this scenario analysis exercise will be incorporated into our Enterprise Risk Management (“ERM”) Framework.

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Throughout our risk assessment process, we also evaluate potential climate-related revenue opportunities that we are seeking to capture. These include helping customers manage increased complexity from carbon taxes and emissions reporting requirements; meeting the demand for decarbonized logistics services including intermodal and other eco-friendly transportation and logistics solutions.

We include below our preliminary climate disclosures based on our business model and assessment of materiality. We define materiality based on ISSB standards with a focus on financially-material topics. Our GHG emissions inventory will be available online at www.radiantdelivers.com.

As we continue our ESG journey, we have begun to map and link a range of environmental, social, and governance topics to the relevant voluntary disclosure frameworks, including ISSB (which now includes Sustainability Accounting Standards Board (“SASB”) and the Task Force on Climate-related Financial Disclosure (“TCFD”). By evaluating our non-asset-based business model against this voluntary framework, we are seeking to best align and progress in the area of climate, while also evaluating avenues for improvement in the areas of social initiatives and governance.

[[GREPCENT_TABLE]]
[["Category Governance:","Disclose the organization\u2019s governance around climate-related risks and opportunities"],["Describe the Board\u2019s oversight of climate-related risks and opportunities.","Risk management is a strategic priority within the Company and responsibility for managing risk rests with management while the Committees and the Board provide oversight. We are committed to our responsibility to sustainability and climate-related matters and have undertaken to integrate this core value into our corporate governance. As part of this process, the Board of Directors has made ESG risks and opportunities a regular agenda item in quarterly meetings. An independent board member has been responsible for sustainability/ESG and has been spearheading this discussion since 2022."],["Describe management\u2019s role in assessing and managing climate-related risks and opportunities.","With the independent board member providing oversight, the ESG Steering Committee has been meeting to establish learning pathways for the organization, data collection processes and metrics, as well as a cadence of risk and opportunity assessment that engages with all leaders of senior management. The ESG Steering Committee is headed by our Vice President of Marketing and Communications, who serves as the management liaison and updates the CEO and Board of Directors on all ESG-related activities.We have further engaged the expertise of key members within the organization with the development of an ESG Task Force, which meets monthly to ensure our climate-related initiatives continue to align seamlessly with our business strategy and overarching corporate goals."],["Category Strategy:","Disclose the actual and potential impacts of climate-related risks and opportunities on the organization\u2019s businesses, strategy and financial planning"],["Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.","We began our initial assessment of climate-related risks and opportunities in 2022 and have continued to evaluate these throughout 2024. This process will continue as we identify and formalize those short, medium, and long-term risks and opportunities, with the understanding that this is a changing model that must account for a dynamic market.We believe our operations model is uniquely positioned to be both flexible and agile in making both these assessments and adjustments. We will continue to engage with our customers and vendors to ensure we are aware of developments in climate-related risks and opportunities and other sustainability measures. In doing so, we will look to manage policy change, technology updates, and market shifts, in addition to the physical risks of climate-related events or the fallout from such an event, as well as the ongoing reputational risks associated with the transportation industry.We will also continue to develop relationships with vendors and partners who share the core value that we are all responsible for climate-related challenges. As such, we will continue to align with partners who likewise seek to develop robust environmental initiatives within their own organization.We see our core commitment to our customers as a climate-related, emerging opportunity on multiple fronts:"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","\u2022Helping customers manage increased complexity from carbon taxes and emissions reporting requirements;\u2022Meeting the shifting demand for decarbonized logistics services including intermodal and other eco-friendly transportation and logistics solutions; and\u2022Supporting government agencies, NGOs and other partners."],["Describe the impact of climate-related risks and opportunities on the organization\u2019s businesses, strategy, and financial planning.","We do not anticipate risks associated with climate change to be material, due to our non-asset- based business model. However, we have flexibility that will enable us to adjust and respond accordingly where and when appropriate.We also seek to capture increased opportunities by further developing services that simplify the supply chains of our customers, support best practices in terms of partnerships with like-minded organizations, and enhance learning opportunities via climate-conscious industry groups and associations."],["Describe the resilience of the organization\u2019s strategy, taking into consideration different climate-related scenarios, including a 2\u00b0C or lower scenario.","We are developing our ERM Framework to include the identification, assessment and response to climate-related events. We will be developing scenario analysis to stress test and improve our resiliency."],["Category Risk Management:","Disclose the processes used by the organization to identify, assess and manage climate-related risks"],["Describe the organization\u2019s processes for identifying and assessing climate-related risks.","Climate-related risks are being identified and assessed by our ESG Steering Committee and will be considered with the Company\u2019s ERM Framework."],["Describe the organization\u2019s processes for managing climate-related risks.","Climate-related risks are reviewed and discussed initially via our ESG Steering Committee and moving forward in conjunction with our ESG Task Force. While discussed at the committee level, these risks will still be considered in conjunction with our ERM Framework at the Board level and with our overall Business Continuity Plan in mind."],["Describe how processes for identifying, assessing and managing climate-related risks are integrated into the organization\u2019s overall risk management.","Regarding day-to-day continuity, the ESG Steering Committee will have oversight for data acquisition, measurement and evaluation. The ESG Task Force will begin to monitor and discuss industry developments and change in climate-related areas, to ensure we have the most up to date information and developments at the field level. Finally, and as regards to overall risk in climate-related areas, the ESG Steering Committee will continue to report on at least a quarterly basis to both the CEO and the Board of Directors in these areas."],["Category Metrics & Targets:","Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities"],["Describe the organization\u2019s processes for identifying and assessing climate-related risks and disclose Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks.","While we are predominately a non-asset-based business, we recognize the impact that offices, warehouses and certain business lines contribute to the overall global carbon footprint (Scope 1 and 2 emissions). Likewise, we believe we have the responsibility to make positive choices in our own service providers who ultimately contribute to our own footprint (Scope 3 emissions). In 2024, we completed the data collection and GHG measurement process for our own Company-owned locations and published results of our GHG emissions inventory. Our future efforts are focused on expanding our analysis and understanding of Scope 3 emissions to ultimately build a complete picture of our GHG emissions, whilst making meaningful reduction targets for our emissions throughout.In the meantime, we have long been committed to sustainability programs. Many of these are well established across our organization and include: \u2022U.S. Environmental Protection Agency SmartWay partnership;"]]
[[/GREPCENT_TABLE]]

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[[GREPCENT_TABLE]]
[["","\u2022Technology Recycling Program;\u2022Public Transport Incentive Program for corporate employees;\u2022Power-Saving Automatic lights roll-out to reduce electricity consumption;\u2022Reduce, Re-use: water bottle filling stations to encourage multi-use containers, as well as the roll-out of compostable cutlery and plates at Company-owned locations, where available;\u2022Recycle: paper recycling program at our corporate headquarter; and\u2022Remote hybrid working options to reduce emissions from commuting."],["Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.","We are currently expanding our data collection and measurement to include upstream and downstream activities to provide a comprehensive understanding of our climate-related risks and opportunities. We intend to establish formal climate action targets to measure our performance against aligned with industry best practice and global sustainability goals."]]
[[/GREPCENT_TABLE]]