Because the freight market searches for a bottom, management from Radiant Logistics expressed optimism around future prospects Wednesday, noting the corporate has never been in higher 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 12 months over 12 months (y/y) but ahead of consensus estimates, which ranged from 11 cents to 16 cents.
Revenue within 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 largest declines.
“The confluence of shippers continuing to administer 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 decent market a 12 months ago to 1 that’s now oversupplied,” said Bohn Crain, founder and CEO, in a news release.
Nevertheless, he told analysts on a Wednesday evening call that this cycle is probably going “at or near a bottom.”
The corporate 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 ought to be between $50 million and $60 million moving forward.
“Are our numbers down … on a comparative y/y basis? Yes, and so they’re down significantly,” Crain said.
But he pointed to results being significantly higher than they were in the identical period of 2019 (when it reported adjusted EBITDA of $8.4 million), the last March-ended quarter before the pandemic. Moreover, he noted the corporate has a much stronger balance sheet — a net money position of $17 million — which provides it quite a few opportunities.
“If that is the bad, well that’s pretty good for Radiant,” Crain said.
Crain said the corporate will use half of its future free money flow, and potentially tackle some leverage, to proceed to purchase back stock. The opposite half will go toward acquisitions and converting its agent stations into company stores.
“I’m not aware of another plus or minus $60-million-EBITDA-run-rate, non-asset-based 3PLs which you can buy [for] plus or minus a six-times [EBITDA] multiple with no integration risk,” Crain said. “Buying back our stock is just an important option.”
Radiant generated $76 million in money flow from operations in the primary nine months of its current fiscal 12 months.
The corporate repurchased $5 million in stock through the nine-month period ended March 31. Because the end of the quarter, it bought back a further $4.2 million, including transaction costs.
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