Radiant Logistics, Inc. (RLGT) Q1 2027 Earnings Report, Transcript and Summary

This afternoon, Bohn Crain, Radiant Logistics Founder and CEO; and Radiant's Chief Financial Officer, Todd Macomber, will provide a general business update and discuss financial results for the company's first fiscal quarter ended September 30, 2026. Following their comments, we will open the call to questions. This conference is scheduled for 30 minutes. This conference call may include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The company has based these forward-looking statements on its current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about the company that may cause the company's actual results or achievements to be materially different from the results or achievements expressed or implied by such forward-looking statements. While it is impossible to identify all the factors that may cause the company's actual results or achievements to differ materially from those set forth in our forward-looking statements, such factors include those that have in the past and may in the future be identified in the company's SEC filings and other public announcements, which are available on the Radiant website at www.radiantdelivers.com. In addition, past results are not necessarily an indication of future performance. Now, I'd like to pass the call over to Radiant's Founder and CEO, Bohn Crain.

Thank you. Good afternoon, everyone, and thank you for joining in on today's call. We are pleased to report a solid start to fiscal 2027, delivering $12.2 million in adjusted EBITDA for our first fiscal quarter ended September 30, 2026. Our first fiscal quarter results were strong across the board, with revenue up 23.4%, adjusted gross profit up 15.3%, adjusted net income up 91.1%, adjusted EBITDA up 79.4% and adjusted EBITDA margin expanding 630 basis points, all measured against the comparable prior year period. Adjusted EBITDA grew significantly faster than adjusted gross profit, reflecting the operating leverage in our model, including lower SG&A as a percentage of adjusted gross profit, driven by the consolidation of our transportation management systems and the nonrecurrence of the $1.3 million credit loss related to the First Brands bankruptcy in the prior year period. Our year-over-year improvement was driven principally by our U.S. operations, where adjusted EBITDA more than doubled, with notable strength in our international airfreight, intermodal and over-the-road brokerage services. On the domestic side, we continue to be encouraged by our growing pipeline of prospective users of Navegate, our proprietary technology platform that provides customers with better visibility and tools to manage complex supply chains. We now have over 150 active customers on the platform, with one of our enterprise customers now actively managing over 1,500 vendors and who used the platform to book over 7,500 shipments during the quarter ended September 30. More broadly, capacity has continued to exit the North American truckload and intermodal markets through a combination of carrier attrition, tighter driver availability and the normalization of a fleet that had expanded aggressively in prior years. Tender rejections and other cyclical indicators remained well above balanced-market levels throughout the quarter and into the fall and contract rates have moved meaningfully higher year-over-year, even as seasonal softness and a shift of longer-haul freight towards intermodal caused spot rates to fluctuate. We view these developments as constructive for our domestic operations in general and our U.S. brokerage operations in particular, and we believe the intermodal shift plays to the strength of our bi-modal truck and intermodal offering at Radiant Road & Rail. If these trends continue, we believe they support a more broad-based and durable recovery for the domestic freight market. Also during the quarter, we extended our 2-decade track record of one of the industry's premier freight forwarding agent networks with our move into the truck brokerage and intermodal space with the launch of a new independent agent program at Radiant Road & Rail, which we did in August. This program brings the same value proposition that has long distinguished our freight forwarding business, access to our carrier network, technology platform, back-office infrastructure and a clear, structured path to build long-term equity value and built-in exit strategy, to a new population of logistics entrepreneurs. We're pleased with the early response to the program and see this as a meaningful new avenue of growth as we bring the Radiant model to an entirely new market, one in which a tighter capacity environment increases the value of the carrier access and purchasing power our platform provides. Building on this strategy, and effective October 1 of this year, we acquired the Dallas operations of Whitacre Logistics. We are keen to accelerate the growth of our bi-modal brokerage platform, and this transaction represents a tremendous opportunity to support the acquired account base with our robust technology platform and offer Radiant Road & Rail's current and prospective agent partners and customers an expanded service offering, including domestic and international forwarding, customs brokerage and a range of other value-added services. The international picture, while still shaped by a complex and evolving trade environment, continued to show improvement during our first fiscal quarter. Global trade flows continued to be influenced by 2 significant forces. The first is the ongoing disruption to traditional ocean shipping routes stemming from a restricted flow of commercial traffic through the Strait of Hormuz and continued Houthi activity affecting Red Sea and Suez Canal transits, which has kept capacity tight across key international trade lanes. Against that backdrop, ocean freight rates, which have risen sharply since the onset of the Middle East disruption in late February, held at elevated levels throughout the quarter as carriers maintained capacity discipline, a marked shift from the prolonged downturn in ocean pricing that preceded the current disruption. At the same time, elevated fuel prices and conflict-related rerouting have added cost pressure across air and ocean markets, and we continue to monitor the impact on our margins. Volatility of this kind increases the premium customers place on reliable capacity and experienced partners. The second is the ongoing transformation of the global tariff landscape, with U.S. trade policy sustaining a high degree of compliance complexity for shippers. With the temporary Section 122 surcharge having expired in July, Section 232 and 301 measures remaining in place and U.S. Customs and Border Protection phasing into its process for refunding IEEPA duties, shippers continue to adapt to rapidly changing requirements. This complexity, together with elevated IEEPA refund-related filing activity across the industry, has continued to drive demand for our customs brokerage expertise as customers rely on experienced partners to navigate an evolving tariff structure. More recently, escalating tariff actions between the U.S. and Canada, including U.S. tariffs imposed in late August and Canada's retaliatory measures that took effect on September 8 against the backdrop of an ongoing USMCA review, added a further layer of complexity for shippers moving goods across our shared borders. While it's early to gauge the full impact, we expect this cross-border dynamic to remain a source of demand for our customs brokerage and compliance capabilities and it may also create additional international air and ocean freight forwarding opportunities for our Canadian operations as shippers look to diversify away from cross-border trucking and rail. Notably, our airfreight performance continued to be up meaningfully during the quarter, driven in large part by our work in support of disaster relief following typhoon activities in the Western Pacific earlier this year. More broadly, global air cargo demand continued to grow during the quarter, even as elevated jet fuel prices and constrained Middle East capacity kept airfreight rates firm. We are entering this next phase of the cycle from a position of real financial strength. In August of this year, we completed an amended and restated $200 million senior credit facility, extending its maturity to 2031 and expanding our acquisition-focused accordion to $100 million and improving our price terms. And we also ended the quarter with no net debt. That capacity, together with our long-term strategy of growing organically where our network gives us an advantage and supplementing that growth through disciplined acquisitions, positions us well to build on the encouraging signs of a domestic freight recovery while continuing to help customers navigate a volatile global trade environment. With that, I'll turn it over to Todd Macomber, our CFO, to walk us through our detailed financial results, and then we'll open it up for Q&A.

Thanks, Bohn, and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the 3 months ended September 30, 2026. For the 3 months ended September 30, 2026, we reported net income attributable to Radiant Logistics of $6,141,000 on $279.8 million of revenues, or $0.13 per basic and fully diluted share. For the 3 months ended September 30, 2025, we reported net income attributable to Radiant Logistics of $1,293,000 on $226.7 million of revenues, or $0.03 per basic and fully diluted share. This represents an increase of approximately $4,848,000 of net income over the comparable prior year period, or 374.9%. For adjusted net income, we reported $8,615,000 for the 3 months ended September 30, 2026, compared to adjusted net income of $4,467,000 for the 3 months ended September 30, 2025. This represents an increase of approximately $4,148,000, or approximately 92.9%. For adjusted EBITDA, we reported $12,180,000 for the 3 months ended September 30, 2026, compared to adjusted EBITDA of $6,797,000 for the 3 months ended September 30, 2025. This represents an increase of approximately $5,383,000, or approximately 79.2%. With that, I will turn the call over to our moderator to facilitate any Q&A from our callers.

[Operator Instructions] Our first question is coming from Jason Seidl of TD Cowen.

A couple of quick questions here. Bohn, I love the detail you're starting to give in Navegate and some numbers behind it. Maybe you can help us dive a little bit further here. You mentioned 7,500 shipments was done by 1 customer in the quarter. How about total shipments in the quarter? Can you give us an idea of that? And then maybe as Navegate stands right now, how much capacity does it have in terms of shipments for the quarter?

Yes. I'm not in a position to kind of give the broader volume count at this point, but we'll continue to expand the scope of what we talk about as we move forward in time. But I think the second part of your question just had to do more with kind of, was it capacity to serve more customers? Can you give it to me one more time?

Yes, exactly. So in other words, how much can you scale Navegate from here?

Yes. We believe it's very scalable and continue to kind of build out kind of the back office in support of that. And we have a fairly robust sales pipeline that we're working. As a quick reminder, when we acquired this business, part of the idea that drew us to it was the ability to take this technology and activate our existing customer base with the tech as well as new customers. So it took us some time to get Navegate integrated into our underlying TMS, which we now have done. And so we're kind of very much on the front end of engaging with customers. But again, I'm not going to get into specific customer name, but this customer that's growing so much with us had been a longtime customer that we were doing just a little bit of business with. And as we kind of went through the QBR, heard some of the things, some of the challenges they were trying to solve, we introduced them to Navegate. And they took it and ran with it. And we think that there will be a number of customers kind of right in our own backyard, so to speak, that with the benefit of Navegate, we can really grow and scale. So what we might have historically thought of as being a small customer for us can become a real meaningful contributor to our own portfolio as well as winning incremental new business with what we believe is really differentiated tech.

Well, it certainly looks like it's going well for you so far. If I could shift a little bit to sort of your freight forwarding business. Some of your competitors out there were talking about demand in the quarter being driven by some of the hyperscalers. I guess maybe you could talk a little bit about that and what you guys kind of expect going forward here in the next quarter.

Sure. We have certainly some exposure to the data center work and people in and around that ecosystem. It's not a big driver in our business, but we are certainly participating in it through probably more than 10 accounts, but it's not our anchor business or the driver in what we're doing right now is not data center work. But more broadly, I think what's going on in and around data centers is part of the demand that kind of the rest of the freight is competing for, so to speak. And it is a very vibrant subsector of what's going on in the tech space, and everything you read would suggest it will continue to be so. And so we're getting a little bit, but we could always use a little more.

Yes, can't we all? I wanted to switch over a little bit to the acquisition side. Maybe you could tell us a little bit about Whitacre and the percentage of business they have split between intermodal and pure truck brokerage, and then I have a follow-up question.

Sure. So Whitacre, the Dallas operations that we acquired were not large. I'll just leave it at smaller than a breadbox for a technical term. So it was small, but it was really interesting. Gary Whitacre is a longtime recognized entrepreneur in our industry, and we were really pleased to have the opportunity to partner with him in Dallas. And it really, as a precursor to acquiring the Dallas operations, which were principally intermodal in operation, they had a few agents, which were actually the first couple of agents that we onboarded as we kind of got ourselves organized for the Dallas transaction. And so it was really just a first step, so to speak, in us activating the agent model in the truck brokerage and intermodal space. But literally within hours of the press release, we started receiving kind of reverse inquiries from folks interested to understand kind of more about what we're doing and have a number of interesting opportunities in flight that kind of in furtherance of that strategy.

That's good color, Bohn. And then lastly, you guys expanded the accordion up to $100 million. Is this sort of a signal that you might be open to some larger acquisitions? I'm just curious.

Yes, I think the short answer is yes. You've been here from the beginning almost, Jason.

A long time.

Yes, you can really appreciate that for the longest time, our stock traded at just a substantial discount to fair value, which really kept us focused on much, much smaller acquisitions and stock buybacks. But we're starting to get a little better valuation of our own stock in the marketplace, which I believe is well-deserved. But a byproduct of that is it creates an environment that would allow us to do larger deals. So while I still think our bread and butter will likely be smaller, call it plus or minus $2 million EBITDA-type tuck-ins and making good on our brand promise to support our agent stations and conversions, if we found a larger deal, should we choose, we can go play in those arenas where historically we really didn't. I would offer it's still the same financial discipline, but we're just going to have the ability to move upmarket.

Bohn, I appreciate the time as always, and nice quarter.

Our next question is coming from Jeff Kauffman of Citizens Bank.

And Bohn, congratulations. Terrific-looking quarter. And a lot of good things happening. I was just kind of curious your view on the bigger picture with the Democratic sweep we've had in the House and the Senate. Things might change longer term, probably not so much short term, but do you think this has any potential impact to USMCA and maybe some of the business you're doing with Canada and Mexico? And then have you thought internally about what this may or may not mean for domestic or global trade? Because I know with all of the -- and you mentioned in your release, right, with the change in 122, 232, 301, it's creating a lot of business for customs. Do you see that environment potentially shifting with the election or no?

Wow, that's a big question. We can always count on change, right? So I think it will always be shifting. But a lot of what we have done and continue to do is based upon a longer-term view of things. Without kind of getting into the -- or trying to avoid the politics as best I can. I've never -- I could be wrong at the end of the day, of course, but I've never thought some of these initiatives would be durable beyond this administration. And so we've been looking on the horizon and thinking about a world kind of reverting to more normalized global trade flows. And that may or may not happen, but that's just kind of my own personal view of things. So we would -- so I'm hopeful for some relief to the tariff dynamics, but I wouldn't necessarily expect much relief in the next 24 months, but I think ultimately, it will come.

Now, I'm just curious. I don't know all the details on how sausage gets made, but I know the view of the administration prior to the election was USMCA, we want it to become USMX and then USCA, right? USMX and USCA. Bilaterals instead of this trilateral trade agreement, but is that decision made by the administration, or is that decision made by Congress?

Wow, I slept through that part of civics class, so I'm going to have to defer on that one.

All right, fair enough. So revenues have been much higher than expected last few quarters because of what's going on in the global environment. Normally, we see a sequential uptick from 1Q to 2Q, with 4Q actually being the strongest quarter of the year. Is there any reason to believe that we wouldn't see that normal seasonality, or is there something going on that makes it a little different this time around?

Well, our seasonality has become muted over time. So sequential improvement, I would typically say yes, but it's become more modest, particularly as it relates to these last couple of quarters. What for us is, because we're a fiscal year, the quarter ended September and the quarter ended December, those are typically our stronger quarters, but not materially stronger one versus the other. It's smoothed out a little bit over time.

So Jeff, one thing that kind of muddies the waters is if we have significant charters, right, that happens in one quarter versus the other. So we do have a bit of that. We talked about that a little bit, how we had some that came in this quarter and we had a larger amount in the prior quarter. So that's obviously something that needs to be considered.

No, thanks, Todd. And then one final question. Congratulations on the customer expansion with Navegate. Can you help us understand, whether we think about it as revenue or profit, I know the benefit is transparency to the customer across the system, but from a company standpoint, as a customer moves over to Navegate, is there a revenue difference? Is there a margin difference? Or is it just we have this system that the customer loves and we want to get as many customers on it? But what is the benefit to the company of more customers moving on to Navegate?

Yes. Well, no, I think it'll take multiple forms, but I think ultimately, it will translate into incremental transportation volumes, right, and margin. So it is a tool or a resource or a differentiator that will encourage customers to want to do more business with us because of the value to them in doing so.

And again, congratulations.

[Operator Instructions] Our next question is coming from Ryan Meyers of Lake Street Capital.

Given the strong EBITDA during the quarter, how much of that do you think we should view as sustainable underlying earnings power versus benefit from disaster relief airfreight?

This is where I go, go, Todd, go.

Yes. I mean we typically don't quantify that, but the vast majority of this absolutely is baseline business. But that said, we do have these disaster relief things come in and do help us out. It lifted us, I'd say, more than $1 million, but less than $2 million. So it was a little bit of -- it helped out the quarter. So there you go.

Yes. No, that's helpful. And then on the Hormuz, Strait of Hormuz, if Hormuz and Red Sea routes reopen and ocean rates normalize, how does that change the outlook for your international business?

That will be interesting to see. I would assume we would see margin characteristics of ocean come down a bit, I would think.

Yes, I would think. Yes. And air would probably come down a bit, too. I think it would just open up the -- yes, I'm in line with Bohn. I think it would reduce both of those.

But hopefully, we'll get a lot of project business going back and rebuilding all the things that got destroyed.

Thank you very much. Well, we appear to have reached the end of our question-and-answer session, so I will now hand back over to the management team for any closing comments.

All right. Thank you. Let me close by saying that we remain optimistic about our prospects and opportunities to continue to leverage our best-in-class technology, robust North American footprint and extensive global network of service partners to continue to build on the great platform we've created here at Radiant. At the same time, we intend to thoughtfully relever our balance sheet through a combination of agent station conversions, synergistic tuck-in acquisitions and, given the opportunity, even some larger transactions. Through our multipronged approach, we believe we will continue to create meaningful value for our shareholders, operating partners and the end customers that we serve. Thanks for listening and your support of Radiant Logistics.

Thank you very much, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.