Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This report contains “forward-looking statements” within the meaning set forth in United States securities laws and regulations – that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business, financial performance and financial condition, and often contain words such as “anticipate,” “believe,” “estimates,” “expect,” “future,” “intend,” “may,” “plan,” “see,” “seek,” “strategy,” or “will” or the negative thereof or any variation thereon or similar terminology or expressions. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. We have developed our forward-looking statements based on management’s beliefs and assumptions, which in turn rely upon information available to them at the time such statements were made. Such forward-looking statements reflect our current perspectives on our business, future performance, existing trends, and information as of the date of this report. These include, but are not limited to, our beliefs about future revenue and expense levels, growth rates, prospects related to our strategic initiatives and business strategies, along with express or implied assumptions about, among other things: our continued relationships with our strategic operating partners; the performance of our historic business, as well as the businesses we have recently acquired, at levels consistent with recent trends and reflective of the synergies we believe will be available to us as a result of such acquisitions; our ability to successfully integrate our recently acquired businesses; our ability to locate suitable acquisition opportunities and secure the financing necessary to complete such acquisitions; transportation costs remaining in-line with recent levels and expected trends; our ability to mitigate, to the best extent possible, our dependence on current management and certain larger strategic operating partners; our compliance with financial and other covenants under our indebtedness; the absence of any adverse laws or governmental regulations affecting the transportation industry in general, and our operations in particular; the impact of COVID-19 on our operations and financial results; the Company’s ongoing assessment of the ransomware incident, adverse legal, reputational and financial effects on the Company resulting from the ransomware incident or future cyber incidents and the effectiveness of the Company’s business continuity plans in response to cyber incidents, like the ransomware incident; and such other factors that may be identified from time to time in our Securities and Exchange Commission (“SEC”) filings and other public announcements, including those set forth under the caption “Risk Factors” in our Form 10-K for the year ended June 30, 2021 and this Form 10-Q. In addition, the global economic climate and additional or unforeseen effects from the COVID-19 pandemic amplify many of these risks. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Readers are cautioned not to place undue reliance on our forward-looking statements, as they speak only as of the date made. We disclaim any obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
The following discussion and analysis of our financial condition and result of operations should be read in conjunction with the condensed consolidated financial statements and the related notes and other information included elsewhere in this report.
Overview
We operate as a third-party logistics company, providing multi-modal transportation and logistics services primarily in the United States and Canada. We service a large and diversified account base consisting of consumer goods, food and beverage, manufacturing and retail customers, which we support from 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. We provide 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 we also refer to as our “strategic operating partners”, that operate exclusively on our behalf, and approximately 20 Company-owned offices. As a third-party logistics company, we have a vast carrier network of asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in our 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 materials management and distribution (“MM&D”) services, customs house brokerage (“CHB”) services and technology platforms to complement our core transportation service offering.
28
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 truck brokerage and intermodal service offerings, 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.
Ransomware Incident
As previously disclosed during the quarter ended December 31, 2021, the Company filed an 8-K on December 13, 2021, disclosing some of the Company’s systems were affected by a ransomware incident that encrypted information on its systems and disrupted customer and employee access to its applications and services. The Company immediately took steps to isolate the impact and prevent additional systems from being affected, including taking its network offline as a precaution. Promptly upon our detection of this incident, we initiated response and containment protocols and our security teams, supplemented by leading cyber defense firms, worked to remediate this incident. We notified law enforcement, contacted our customers to apprise them of the situation and will provide any notices that may be required by applicable law.
We undertook extensive efforts to identify, contain and recover from this incident quickly and securely. We systematically brought our information systems back online in a controlled, phased approach. Our teams worked to maintain our business operations and minimize the impact on our customers, operating partners, and employees.
The total ransomware incident related costs for the second quarter was approximately $0.8 million. These costs were primarily comprised various third-party consulting services including forensic experts, legal counsel, and other IT professional expenses including additional software. We maintain a variety of insurance policies, including cyber insurance and business interruption insurance that are expected to partially off-set the costs related to this incident.
We are making information technology investments in order to further strengthen our information security infrastructure. We engaged a leading cybersecurity defense firm that completed a forensics investigation of the ransomware incident, and we are taking appropriate actions in response to the findings. For example, in the short-term, we reset all credentials Company-wide and strengthened security tooling across our servers and workstations. In the long-term, we are continuing to advance the maturity and effectiveness of our information security resiliency strategy and capabilities. Our technology team has accelerated its roadmap to further strengthen the resiliency of our information security infrastructure across the Company that aims to enable us to detect, respond and recover more quickly from security and technical incidents. More specifically, we plan to take actions to improve our security monitoring capabilities and enhance the information security within the Company and stations.
COVID-19
The COVID-19 pandemic continues to have widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices. Federal and state governments have implemented measures to contain the virus including vaccination programs. Even as efforts to contain the pandemic have made progress, new variants of the virus may cause additional outbreaks. The COVID-19 pandemic has impacted and may continue to impact our business operations and financial results. Although some of the effects have lessened over time, there is substantial uncertainty in the nature and degree of its continued effects over time. As the world continues to respond to COVID-19, we are working to do our part by ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate.
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.
29
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 net transportation revenue (gross transportation revenue less the direct cost of transportation) 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. In addition, management believes measuring its operating costs as a function of net transportation revenue provides a useful metric, as our ability to control costs as a function of net transportation revenue directly impacts operating earnings.
Our operating results will be affected as acquisitions occur. Since all acquisitions are made 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.
Net revenues, a non-GAAP financial measure, is our total revenue minus our total cost of transportation and other services (excluding depreciation and amortization, which are reported separately) and net margin is net revenues as a percentage of our total revenue. We believe that these provide investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.
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 preferred stock dividends, interest, and taxes, and excludes 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 changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, transition and lease termination costs, foreign currency transaction gains and losses, share-based compensation expense, 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 condensed 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.
30
Results of Operations
Three months ended December 31, 2021 and 2020 (unaudited)
The following table summarizes revenues, cost of transportation and other services, and net revenues by reportable operating segments for the three months ended December 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2021
|
|
|
Three Months Ended December 31, 2020
|
|
(In thousands)
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
$
|
292,184
|
|
|
$
|
31,430
|
|
|
$
|
(963
|
)
|
|
$
|
322,651
|
|
|
$
|
188,763
|
|
|
$
|
23,454
|
|
|
$
|
(100
|
)
|
|
$
|
212,117
|
|
Value-added services
|
|
2,507
|
|
|
|
7,610
|
|
|
|
—
|
|
|
|
10,117
|
|
|
|
1,738
|
|
|
|
4,950
|
|
|
|
—
|
|
|
|
6,688
|
|
|
|
294,691
|
|
|
|
39,040
|
|
|
|
(963
|
)
|
|
|
332,768
|
|
|
|
190,501
|
|
|
|
28,404
|
|
|
|
(100
|
)
|
|
|
218,805
|
|
Cost of transportation and other services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
|
231,802
|
|
|
|
26,543
|
|
|
|
(963
|
)
|
|
|
257,382
|
|
|
|
142,229
|
|
|
|
19,231
|
|
|
|
(100
|
)
|
|
|
161,360
|
|
Value-added services
|
|
1,746
|
|
|
|
2,051
|
|
|
|
—
|
|
|
|
3,797
|
|
|
|
1,315
|
|
|
|
829
|
|
|
|
—
|
|
|
|
2,144
|
|
|
|
233,548
|
|
|
|
28,594
|
|
|
|
(963
|
)
|
|
|
261,179
|
|
|
|
143,544
|
|
|
|
20,060
|
|
|
|
(100
|
)
|
|
|
163,504
|
|
Net revenues (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
|
60,382
|
|
|
|
4,887
|
|
|
|
—
|
|
|
|
65,269
|
|
|
|
46,534
|
|
|
|
4,223
|
|
|
|
—
|
|
|
|
50,757
|
|
Value-added services
|
|
761
|
|
|
|
5,559
|
|
|
|
—
|
|
|
|
6,320
|
|
|
|
423
|
|
|
|
4,121
|
|
|
|
—
|
|
|
|
4,544
|
|
|
$
|
61,143
|
|
|
$
|
10,446
|
|
|
$
|
—
|
|
|
$
|
71,589
|
|
|
$
|
46,957
|
|
|
$
|
8,344
|
|
|
$
|
—
|
|
|
$
|
55,301
|
|
Net margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
|
20.7
|
%
|
|
|
15.5
|
%
|
|
N/A
|
|
|
|
20.2
|
%
|
|
|
24.7
|
%
|
|
|
18.0
|
%
|
|
N/A
|
|
|
|
23.9
|
%
|
Value-added services
|
|
30.4
|
%
|
|
|
73.0
|
%
|
|
N/A
|
|
|
|
62.5
|
%
|
|
|
24.3
|
%
|
|
|
83.3
|
%
|
|
N/A
|
|
|
|
67.9
|
%
|
(1) Net revenues are revenues net of cost of transportation and other services.
Transportation revenue was $322.7 million and $212.1 million for the three months ended December 31, 2021 and 2020, respectively. The increase of $110.5 million, or 52.1%, is primarily attributable to increased volume of business in general coupled with significant surcharges on ocean, and some rail and trucking lanes and the inclusion of one month of our recent acquisition of Navegate. Net transportation revenue was $65.3 million and $50.8 million for the three months ended December 31, 2021 and 2020, respectively. Net transportation margins decreased from 23.9% to 20.2%, primarily due to surcharges associated with purchased transportation due to the extremely tight capacity experienced in certain lane segments primarily associated with ocean, and some intermodal, and trucking lanes.
Value-added services revenue was $10.1 million and $6.7 million, for the three months ended December 31, 2021 and 2020, respectively. The increase of $3.4 million, or 51.3%, is primarily attributable to the increase in warehouse revenues and other value-added services from our Canada segment. Net value-added services revenue was $6.3 million for the three months ended December 31, 2021, compared to $4.5 million for the comparable prior year period. Net value-added services revenue margins decreased from 67.9% to 62.5%, primarily due to additional startup costs associated with moving to a new warehouse at our Coleraine facility associated with our Canadian operations.
The following table provides a reconciliation for the three months ended December 31, 2021 and 2020 of net revenues to gross profit, the most directly comparable GAAP measure:
|
|
|
|
|
|
|
|
(In thousands)
|
Three Months Ended December 31,
|
|
Reconciliation of net revenues to GAAP gross profit
|
2021
|
|
|
2020
|
|
Revenues
|
$
|
332,768
|
|
|
$
|
218,805
|
|
Cost of transportation and other services (exclusive of depreciation and
amortization, shown separately below)
|
|
(261,179
|
)
|
|
|
(163,504
|
)
|
Depreciation and amortization
|
|
(3,332
|
)
|
|
|
(2,946
|
)
|
GAAP gross profit
|
$
|
68,257
|
|
|
$
|
52,355
|
|
Depreciation and amortization
|
|
3,332
|
|
|
|
2,946
|
|
Net revenues
|
$
|
71,589
|
|
|
$
|
55,301
|
|
|
|
|
|
|
|
GAAP gross margin (GAAP gross profit as a percentage of revenues)
|
|
20.5
|
%
|
|
|
23.9
|
%
|
Net margin (net revenues as a percentage of revenues)
|
|
21.5
|
%
|
|
|
25.3
|
%
|
31
The following table compares condensed consolidated statements of comprehensive income data by reportable operating segments for the three months ended December 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2021
|
|
|
Three Months Ended December 31, 2020
|
|
(In thousands)
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
Net revenues (1)
|
$
|
61,143
|
|
|
$
|
10,446
|
|
|
$
|
—
|
|
|
$
|
71,589
|
|
|
$
|
46,957
|
|
|
$
|
8,344
|
|
|
$
|
—
|
|
|
$
|
55,301
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating partner commissions
|
|
31,049
|
|
|
|
—
|
|
|
|
—
|
|
|
|
31,049
|
|
|
|
24,036
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24,036
|
|
Personnel costs
|
|
12,611
|
|
|
|
3,994
|
|
|
|
83
|
|
|
|
16,688
|
|
|
|
9,297
|
|
|
|
3,199
|
|
|
|
1,239
|
|
|
|
13,735
|
|
Selling, general and administrative expenses
|
|
5,508
|
|
|
|
1,715
|
|
|
|
1,129
|
|
|
|
8,352
|
|
|
|
3,761
|
|
|
|
1,290
|
|
|
|
517
|
|
|
|
5,568
|
|
Depreciation and amortization
|
|
1,095
|
|
|
|
893
|
|
|
|
2,459
|
|
|
|
4,447
|
|
|
|
987
|
|
|
|
559
|
|
|
|
2,539
|
|
|
|
4,085
|
|
Change in fair value of contingent consideration
|
|
—
|
|
|
|
—
|
|
|
|
455
|
|
|
|
455
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,850
|
|
|
|
1,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
50,263
|
|
|
|
6,602
|
|
|
|
4,126
|
|
|
|
60,991
|
|
|
|
38,081
|
|
|
|
5,048
|
|
|
|
6,145
|
|
|
|
49,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
10,880
|
|
|
|
3,844
|
|
|
|
(4,126
|
)
|
|
|
10,598
|
|
|
|
8,876
|
|
|
|
3,296
|
|
|
|
(6,145
|
)
|
|
|
6,027
|
|
Other income (expense)
|
|
122
|
|
|
|
73
|
|
|
|
(1,123
|
)
|
|
|
(928
|
)
|
|
|
277
|
|
|
|
(179
|
)
|
|
|
(835
|
)
|
|
|
(737
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
11,002
|
|
|
|
3,917
|
|
|
|
(5,249
|
)
|
|
|
9,670
|
|
|
|
9,153
|
|
|
|
3,117
|
|
|
|
(6,980
|
)
|
|
|
5,290
|
|
Income tax benefit (expense)
|
|
—
|
|
|
|
—
|
|
|
|
(2,646
|
)
|
|
|
(2,646
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,402
|
)
|
|
|
(1,402
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
11,002
|
|
|
|
3,917
|
|
|
|
(7,895
|
)
|
|
|
7,024
|
|
|
|
9,153
|
|
|
|
3,117
|
|
|
|
(8,382
|
)
|
|
|
3,888
|
|
Less: net income attributable to non-controlling interest
|
|
(76
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(76
|
)
|
|
|
(76
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Radiant Logistics, Inc.
|
$
|
10,926
|
|
|
$
|
3,917
|
|
|
$
|
(7,895
|
)
|
|
$
|
6,948
|
|
|
$
|
9,077
|
|
|
$
|
3,117
|
|
|
$
|
(8,382
|
)
|
|
$
|
3,812
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2021
|
|
|
Three Months Ended December 31, 2020
|
|
Operating expenses as a percent of
net revenues (1):
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
Total
|
|
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
Total
|
|
Operating partner commissions
|
|
50.8
|
%
|
|
|
0.0
|
%
|
|
N/A
|
|
|
43.4
|
%
|
|
|
51.2
|
%
|
|
|
0.0
|
%
|
|
N/A
|
|
|
43.5
|
%
|
Personnel costs
|
|
20.6
|
%
|
|
|
38.2
|
%
|
|
N/A
|
|
|
23.3
|
%
|
|
|
19.8
|
%
|
|
|
38.3
|
%
|
|
N/A
|
|
|
24.8
|
%
|
Selling, general and administrative
expenses
|
|
9.0
|
%
|
|
|
16.4
|
%
|
|
N/A
|
|
|
11.7
|
%
|
|
|
8.0
|
%
|
|
|
15.5
|
%
|
|
N/A
|
|
|
10.1
|
%
|
Depreciation and amortization
|
|
1.8
|
%
|
|
|
8.5
|
%
|
|
N/A
|
|
|
6.2
|
%
|
|
|
2.1
|
%
|
|
|
6.7
|
%
|
|
N/A
|
|
|
7.4
|
%
|
(1) Net revenues are revenues net of cost of transportation and other services.
Operating partner commissions increased $7.0 million, or 29.2%, to $31.0 million for the three months ended December 31, 2021. The increase is primarily due to increased net revenues generated from operating partner stations. As a percentage of net revenues, operating partner commissions decreased 9 basis points to 43.4% from 43.5% for the three months ended December 31, 2021 and 2020, respectively, as a result of a higher percentage of net revenues coming from company owned stores.
Personnel costs increased $3.0 million, or 21.5%, to $16.7 million for the three months ended December 31, 2021. The increase is primarily due to increased workforce due to increase in business and fully restored compensation in the current period compared to the prior year period, which had COVID-related responses with lower headcount and reduced compensation, and one month of Navegate. As a percentage of net revenues, personnel costs decreased 153 basis points to 23.3% from 24.8% for the three months ended December 31, 2021 and 2020, respectively.
Selling, general and administrative (“SG&A”) expenses increased $2.8 million, or 50.0%, to $8.4 million for the three months ended December 31, 2021. The increase is primarily due to additional IT expenses including cyber incident costs the Company incurred in its second quarter, increased bad debt costs, third party costs incurred related to the acquisition of Navegate, an overall increase in SG&A from Navegate being part of the consolidated results of the organization, and an increase in sales and travel expenses. As a percentage of net revenues, SG&A increased 160 basis points to 11.7% from 10.1% for the three months ended December 31, 2021 and 2020, respectively.
Depreciation and amortization costs were $4.4 million for the three months ended December 31, 2021 and $4.1 million for the three months ended December 31, 2020.
Our increase in net income is driven principally by increased net revenue, and partially offset by increased operating expenses compared to the comparable prior year period.
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.
32
The following table provides a reconciliation for the three months ended December 31, 2021 and 2020 of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2021
|
|
|
Three Months Ended December 31, 2020
|
|
(In thousands)
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
Net income (loss) attributable to Radiant Logistics, Inc.
|
$
|
10,926
|
|
|
$
|
3,917
|
|
|
$
|
(7,895
|
)
|
|
$
|
6,948
|
|
|
$
|
9,077
|
|
|
$
|
3,117
|
|
|
$
|
(8,382
|
)
|
|
$
|
3,812
|
|
Income tax expense
|
|
—
|
|
|
|
—
|
|
|
|
2,646
|
|
|
|
2,646
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,402
|
|
|
|
1,402
|
|
Depreciation and amortization
|
|
1,095
|
|
|
|
893
|
|
|
|
2,459
|
|
|
|
4,447
|
|
|
|
987
|
|
|
|
559
|
|
|
|
2,539
|
|
|
|
4,085
|
|
Net interest expense
|
|
—
|
|
|
|
—
|
|
|
|
745
|
|
|
|
745
|
|
|
|
—
|
|
|
|
—
|
|
|
|
725
|
|
|
|
725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
12,021
|
|
|
|
4,810
|
|
|
|
(2,045
|
)
|
|
|
14,786
|
|
|
|
10,064
|
|
|
|
3,676
|
|
|
|
(3,716
|
)
|
|
|
10,024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
369
|
|
|
|
53
|
|
|
|
—
|
|
|
|
422
|
|
|
|
129
|
|
|
|
65
|
|
|
|
133
|
|
|
|
327
|
|
Change in fair value of contingent consideration
|
|
—
|
|
|
|
—
|
|
|
|
455
|
|
|
|
455
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,850
|
|
|
|
1,850
|
|
Acquisition related costs
|
|
—
|
|
|
|
—
|
|
|
|
396
|
|
|
|
396
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
1
|
|
Ransomware incident related costs (recovery), net
|
|
—
|
|
|
|
—
|
|
|
|
751
|
|
|
|
751
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Litigation costs
|
|
—
|
|
|
|
—
|
|
|
|
167
|
|
|
|
167
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26
|
|
|
|
26
|
|
Change in fair value of interest rate swap contracts
|
|
—
|
|
|
|
—
|
|
|
|
378
|
|
|
|
378
|
|
|
|
—
|
|
|
|
—
|
|
|
|
110
|
|
|
|
110
|
|
Foreign exchange loss (gain)
|
|
(124
|
)
|
|
|
20
|
|
|
|
—
|
|
|
|
(104
|
)
|
|
|
14
|
|
|
|
179
|
|
|
|
—
|
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
12,266
|
|
|
$
|
4,883
|
|
|
$
|
102
|
|
|
$
|
17,251
|
|
|
$
|
10,207
|
|
|
$
|
3,920
|
|
|
$
|
(1,596
|
)
|
|
$
|
12,531
|
|
Adjusted EBITDA as a % of net revenues (1)
|
|
20.1
|
%
|
|
|
46.7
|
%
|
|
N/A
|
|
|
|
24.1
|
%
|
|
|
21.7
|
%
|
|
|
47.0
|
%
|
|
N/A
|
|
|
|
22.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net revenues are revenues net of cost of transportation and other services.
Adjusted EBITDA increased $4.8 million, or 37.7% to $17.3 million for the quarter ended December 31, 2021.
33
Six months ended December 31, 2021 and 2020 (unaudited)
The following table summarizes revenues, cost of transportation and other services, and net revenues by reportable operating segments for the six months ended December 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31, 2021
|
|
|
Six Months Ended December 31, 2020
|
|
(In thousands)
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
$
|
539,825
|
|
|
$
|
60,763
|
|
|
$
|
(981
|
)
|
|
$
|
599,607
|
|
|
$
|
341,224
|
|
|
$
|
40,977
|
|
|
$
|
(244
|
)
|
|
$
|
381,957
|
|
Value-added services
|
|
5,221
|
|
|
|
14,056
|
|
|
|
—
|
|
|
|
19,277
|
|
|
|
4,042
|
|
|
|
8,683
|
|
|
|
—
|
|
|
|
12,725
|
|
|
|
545,046
|
|
|
|
74,819
|
|
|
|
(981
|
)
|
|
|
618,884
|
|
|
|
345,266
|
|
|
|
49,660
|
|
|
|
(244
|
)
|
|
|
394,682
|
|
Cost of transportation and other services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
|
424,966
|
|
|
|
51,432
|
|
|
|
(981
|
)
|
|
|
475,417
|
|
|
|
256,254
|
|
|
|
33,095
|
|
|
|
(244
|
)
|
|
|
289,105
|
|
Value-added services
|
|
3,492
|
|
|
|
3,502
|
|
|
|
—
|
|
|
|
6,994
|
|
|
|
3,091
|
|
|
|
1,220
|
|
|
|
—
|
|
|
|
4,311
|
|
|
|
428,458
|
|
|
|
54,934
|
|
|
|
(981
|
)
|
|
|
482,411
|
|
|
|
259,345
|
|
|
|
34,315
|
|
|
|
(244
|
)
|
|
|
293,416
|
|
Net revenues (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
|
114,859
|
|
|
|
9,331
|
|
|
|
—
|
|
|
|
124,190
|
|
|
|
84,970
|
|
|
|
7,882
|
|
|
|
—
|
|
|
|
92,852
|
|
Value-added services
|
|
1,729
|
|
|
|
10,554
|
|
|
|
—
|
|
|
|
12,283
|
|
|
|
951
|
|
|
|
7,463
|
|
|
|
—
|
|
|
|
8,414
|
|
|
$
|
116,588
|
|
|
$
|
19,885
|
|
|
$
|
—
|
|
|
$
|
136,473
|
|
|
$
|
85,921
|
|
|
$
|
15,345
|
|
|
$
|
—
|
|
|
$
|
101,266
|
|
Net margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation
|
|
21.3
|
%
|
|
|
15.4
|
%
|
|
N/A
|
|
|
|
20.7
|
%
|
|
|
24.9
|
%
|
|
|
19.2
|
%
|
|
N/A
|
|
|
|
24.3
|
%
|
Value-added services
|
|
33.1
|
%
|
|
|
75.1
|
%
|
|
N/A
|
|
|
|
63.7
|
%
|
|
|
23.5
|
%
|
|
|
85.9
|
%
|
|
N/A
|
|
|
|
66.1
|
%
|
(1) Net revenues are revenues net of cost of transportation and other services.
Transportation revenue was $599.6 million and $382.0 million for the six months ended December 31, 2021 and 2020, respectively. The increase of $217.6 million, or 57.0%, is primarily attributable to increased volume of business in general coupled with significant surcharges on ocean and additionally some rail and trucking lanes. Net transportation revenue was $124.2 million and $92.9 million for the six months ended December 31, 2021 and 2020, respectively. Net transportation margins decreased from 24.3% to 20.7%, primarily due to the surcharges associated with the extremely tight capacity experienced in certain modes of transportation, most notably ocean.
Value-added services revenue was $19.3 million and $12.7 million, for the six months ended December 31, 2021 and 2020, respectively. The increase of $6.6 million, or 51.5%, is primarily attributable to the increase in warehouse revenues and other value-added services from our Canada segment. Net value-added services revenue was $12.3 million for the six months ended December 31, 2021, compared to $8.4 million for the comparable prior year period. Net value-added services revenue margins decreased from 66.1% to 63.7%, primarily due to additional startup costs associated with a moving to a new warehouse at our Coleraine facility in Canada.
The following table provides a reconciliation for the six months ended December 31, 2021 and 2020 of net revenues to gross profit, the most directly comparable GAAP measure:
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
Six Months Ended December 31,
|
|
Reconciliation of net revenues to GAAP gross profit
|
|
|
|
|
2021
|
|
|
2020
|
|
Revenues
|
|
|
|
|
$
|
618,884
|
|
|
$
|
394,682
|
|
Cost of transportation and other services (exclusive of depreciation and
amortization, shown separately below)
|
|
|
|
|
|
(482,411
|
)
|
|
|
(293,416
|
)
|
Depreciation and amortization
|
|
|
|
|
|
(6,331
|
)
|
|
|
(5,889
|
)
|
GAAP gross profit
|
|
|
|
|
$
|
130,142
|
|
|
$
|
95,377
|
|
Depreciation and amortization
|
|
|
|
|
|
6,331
|
|
|
|
5,889
|
|
Net revenues
|
|
|
|
|
$
|
136,473
|
|
|
$
|
101,266
|
|
|
|
|
|
|
|
|
|
|
|
GAAP gross margin (GAAP gross profit as a percentage of revenues)
|
|
|
|
|
|
21.0
|
%
|
|
|
24.2
|
%
|
Net margin (net revenues as a percentage of revenues)
|
|
|
|
|
|
22.1
|
%
|
|
|
25.7
|
%
|
34
The following table compares condensed consolidated statements of comprehensive income data by reportable operating segments for the six months ended December 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31, 2021
|
|
|
Six Months Ended December 31, 2020
|
|
(In thousands)
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
Net revenues (1)
|
$
|
116,588
|
|
|
$
|
19,885
|
|
|
$
|
—
|
|
|
$
|
136,473
|
|
|
$
|
85,921
|
|
|
$
|
15,345
|
|
|
$
|
—
|
|
|
$
|
101,266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating partner commissions
|
|
59,514
|
|
|
|
—
|
|
|
|
—
|
|
|
|
59,514
|
|
|
|
42,625
|
|
|
|
—
|
|
|
|
—
|
|
|
|
42,625
|
|
Personnel costs
|
|
23,488
|
|
|
|
7,773
|
|
|
|
1,043
|
|
|
|
32,304
|
|
|
|
18,225
|
|
|
|
6,372
|
|
|
|
1,915
|
|
|
|
26,512
|
|
Selling, general and administrative expenses
|
|
9,662
|
|
|
|
3,167
|
|
|
|
2,314
|
|
|
|
15,143
|
|
|
|
7,501
|
|
|
|
2,359
|
|
|
|
1,364
|
|
|
|
11,224
|
|
Depreciation and amortization
|
|
2,030
|
|
|
|
1,691
|
|
|
|
4,981
|
|
|
|
8,702
|
|
|
|
2,076
|
|
|
|
1,087
|
|
|
|
5,080
|
|
|
|
8,243
|
|
Change in fair value of contingent consideration
|
|
—
|
|
|
|
—
|
|
|
|
455
|
|
|
|
455
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,850
|
|
|
|
1,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
94,694
|
|
|
|
12,631
|
|
|
|
8,793
|
|
|
|
116,118
|
|
|
|
70,427
|
|
|
|
9,818
|
|
|
|
10,209
|
|
|
|
90,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
21,894
|
|
|
|
7,254
|
|
|
|
(8,793
|
)
|
|
|
20,355
|
|
|
|
15,494
|
|
|
|
5,527
|
|
|
|
(10,209
|
)
|
|
|
10,812
|
|
Other income (expense)
|
|
321
|
|
|
|
162
|
|
|
|
(1,775
|
)
|
|
|
(1,292
|
)
|
|
|
492
|
|
|
|
(282
|
)
|
|
|
(1,426
|
)
|
|
|
(1,216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
22,215
|
|
|
|
7,416
|
|
|
|
(10,568
|
)
|
|
|
19,063
|
|
|
|
15,986
|
|
|
|
5,245
|
|
|
|
(11,635
|
)
|
|
|
9,596
|
|
Income tax expense
|
|
—
|
|
|
|
—
|
|
|
|
(4,874
|
)
|
|
|
(4,874
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,479
|
)
|
|
|
(2,479
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
22,215
|
|
|
|
7,416
|
|
|
|
(15,442
|
)
|
|
|
14,189
|
|
|
|
15,986
|
|
|
|
5,245
|
|
|
|
(14,114
|
)
|
|
|
7,117
|
|
Less: net income attributable to non-
controlling interest
|
|
(162
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(162
|
)
|
|
|
(217
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(217
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Radiant Logistics, Inc.
|
$
|
22,053
|
|
|
$
|
7,416
|
|
|
$
|
(15,442
|
)
|
|
$
|
14,027
|
|
|
$
|
15,769
|
|
|
$
|
5,245
|
|
|
$
|
(14,114
|
)
|
|
$
|
6,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31, 2021
|
|
|
Six Months Ended December 31, 2020
|
|
Operating expenses as a percent of
net revenues (1):
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
Total
|
|
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
Total
|
|
Operating partner commissions
|
|
51.0
|
%
|
|
|
0.0
|
%
|
|
N/A
|
|
|
43.6
|
%
|
|
|
49.6
|
%
|
|
|
0.0
|
%
|
|
N/A
|
|
|
42.1
|
%
|
Personnel costs
|
|
20.1
|
%
|
|
|
39.1
|
%
|
|
N/A
|
|
|
23.7
|
%
|
|
|
21.2
|
%
|
|
|
41.5
|
%
|
|
N/A
|
|
|
26.2
|
%
|
Selling, general and administrative
expenses
|
|
8.3
|
%
|
|
|
15.9
|
%
|
|
N/A
|
|
|
11.1
|
%
|
|
|
8.7
|
%
|
|
|
15.4
|
%
|
|
N/A
|
|
|
11.1
|
%
|
Depreciation and amortization
|
|
1.7
|
%
|
|
|
8.5
|
%
|
|
N/A
|
|
|
6.4
|
%
|
|
|
2.4
|
%
|
|
|
7.1
|
%
|
|
N/A
|
|
|
8.1
|
%
|
(1) Net revenues are revenues net of cost of transportation and other services.
Operating partner commissions increased $16.9 million, or 39.6%, to $59.5 million for the six months ended December 31, 2021. The increase is primarily due to increased net revenues generated from operating partner stations. As a percentage of net revenues, operating partner commissions increased 152 basis points to 43.6% from 42.1% for the six months ended December 31, 2021 and 2020, respectively, as a result of a higher percentage of net revenues coming from operating partner locations over the prior year period.
Personnel costs increased $5.8 million, or 21.8%, to $32.3 million for the six months ended December 31, 2021. The increase is primarily due to increased workforce due to increase in business and fully restored compensation in the current period compared to the prior year period had COVID-related responses with lower headcount and reduced compensation, and one month of Navegate. As a percentage of net revenues, personnel costs decreased 251 basis points to 23.7% from 26.2% for the six months ended December 31, 2021 and 2020, respectively.
Selling, general and administrative (“SG&A”) expenses increased $3.9 million, or 34.9%, to $15.1 million for the six months ended December 31, 2021. The increase is primarily attributable to increased technology spend including costs incurred surrounding a ransomware incident, which represented $0.8 million for the six months ended December 31, 2021. These costs were primarily comprised various third-party consulting services including forensic experts, legal counsel, and other IT professional expenses including additional software. Additional increases in costs were, increased bad debt costs, increased professional services, and increased travel. As a percentage of net revenues, SG&A increased 1 basis points to 11.1% from 11.1% for the six months ended December 31, 2021 and 2020, respectively.
Depreciation and amortization costs were $8.7 million for the six months ended December 31, 2021 and $8.2 million for the six months ended December 31, 2020.
Our increase in net income is driven principally by increased net revenue, and partially offset by increased operating expenses compared to the comparable prior year period.
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.
35
The following table provides a reconciliation for the six months ended December 31, 2021 and 2020 of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31, 2021
|
|
|
Six Months Ended December 31, 2020
|
|
(In thousands)
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
|
United
States
|
|
|
Canada
|
|
|
Corporate/
Eliminations
|
|
|
Total
|
|
Net income (loss) attributable to Radiant Logistics, Inc.
|
$
|
22,053
|
|
|
$
|
7,416
|
|
|
$
|
(15,442
|
)
|
|
$
|
14,027
|
|
|
$
|
15,769
|
|
|
$
|
5,245
|
|
|
$
|
(14,114
|
)
|
|
$
|
6,900
|
|
Income tax expense
|
|
—
|
|
|
|
—
|
|
|
|
4,874
|
|
|
|
4,874
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,479
|
|
|
|
2,479
|
|
Depreciation and amortization
|
|
2,030
|
|
|
|
1,691
|
|
|
|
4,981
|
|
|
|
8,702
|
|
|
|
2,076
|
|
|
|
1,087
|
|
|
|
5,080
|
|
|
|
8,243
|
|
Net interest expense
|
|
—
|
|
|
|
—
|
|
|
|
1,351
|
|
|
|
1,351
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,296
|
|
|
|
1,296
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
24,083
|
|
|
|
9,107
|
|
|
|
(4,236
|
)
|
|
|
28,954
|
|
|
|
17,845
|
|
|
|
6,332
|
|
|
|
(5,259
|
)
|
|
|
18,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
|
|
556
|
|
|
|
119
|
|
|
|
97
|
|
|
|
772
|
|
|
|
90
|
|
|
|
118
|
|
|
|
263
|
|
|
|
471
|
|
Change in fair value of contingent consideration
|
|
—
|
|
|
|
—
|
|
|
|
455
|
|
|
|
455
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,850
|
|
|
|
1,850
|
|
Acquisition related costs
|
|
—
|
|
|
|
—
|
|
|
|
496
|
|
|
|
496
|
|
|
|
—
|
|
|
|
—
|
|
|
|
35
|
|
|
|
35
|
|
Ransomware incident related costs (recovery), net
|
|
—
|
|
|
|
—
|
|
|
|
751
|
|
|
|
751
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Litigation costs
|
|
—
|
|
|
|
—
|
|
|
|
321
|
|
|
|
321
|
|
|
|
—
|
|
|
|
—
|
|
|
|
177
|
|
|
|
177
|
|
Change in fair value of interest rate swap contracts
|
|
—
|
|
|
|
—
|
|
|
|
424
|
|
|
|
424
|
|
|
|
—
|
|
|
|
—
|
|
|
|
130
|
|
|
|
130
|
|
Foreign currency transaction loss (gain)
|
|
(306
|
)
|
|
|
(69
|
)
|
|
|
—
|
|
|
|
(375
|
)
|
|
|
(109
|
)
|
|
|
281
|
|
|
|
—
|
|
|
|
172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
$
|
24,333
|
|
|
$
|
9,157
|
|
|
$
|
(1,692
|
)
|
|
$
|
31,798
|
|
|
$
|
17,826
|
|
|
$
|
6,731
|
|
|
$
|
(2,804
|
)
|
|
$
|
21,753
|
|
Adjusted EBITDA as a % of net revenues (1)
|
|
20.9
|
%
|
|
|
46.0
|
%
|
|
N/A
|
|
|
|
23.3
|
%
|
|
|
20.7
|
%
|
|
|
43.9
|
%
|
|
N/A
|
|
|
|
21.5
|
%
|
(1) Net revenues are revenues net of cost of transportation and other services.
Adjusted EBITDA increased $10.0 million, or 46.2% to $31.8 million for the six months ended December 31, 2021.
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 December 31, 2021, we have $17.2 million in cash on hand to serve as adequate working capital.
Net cash used in operating activities were $19.7 million for the six months ended December 31, 2021. Net cash provided by operating activities were $1.9 million for the six months ended December 31, 2020. The cash used or provided primarily consisted of net income adjusted for depreciation and amortization and changes in accounts receivable, contract assets, accounts payable, income taxes, operating partner commissions payable, and accrued and other liabilities. Cash flow from operating activities for the six months ended December 31, 2021 decreased by $21.6 million, compared with the same period in fiscal year 2021, primarily due to increased net income offset by net change in operating assets and liabilities.
Net cash used for investing activities were $38.9 million and $4.8 million for the six months ended December 31, 2021 and 2020, respectively. The primary use of cash was for business combination and purchases of property, technology, and equipment. During the six months ended December 31, 2021, cash paid for the acquisition of Navegate, Inc., net of the acquiree company's cash balance on the acquisition date, was $34.5 million. Cash paid for purchases of property, technology, and equipment were $4.5 million and $4.8 million for the six months ended December 31, 2021 and 2020, respectively. Proceeds from sale of property, technology, and equipment was $0.1 million for the six months ended December 31, 2021.
Net cash provided by financing activities was $60.7 million for the six months ended December 31, 2021. Net cash used for financing activities were $23.4 million for the six months ended December 31, 2020. Proceeds from the Revolving Credit Facility were $80.1 million while repayments of the Revolving Credit Facility were $9.6 million for the six months ended December 31, 2021. Repayment of the Revolving Credit Facility were $20.0 million for the six months ended December 31, 2020. Repayments of notes payable and finance lease liability were $2.5 million and $2.3 million for the six months ended December 31, 2021 and 2020, respectively. During the six months ended December 31, 2021, $0.2 million was received in exchange for issuance of common stock to former shareholders of Navegate, Inc. Financing cash outflows for contingent consideration were $1.1 million and $1.0 million for the six months ended December 31, 2021 and 2020. Distributions to non-controlling interest were $0.2 million and $0.9 million for the six months ended December 31, 2021 and 2020, respectively. Proceeds from exercise of stock options where $0.4 million and $1.2 million for the six months ended December 31, 2021 and 2020, respectively. Payments of employee tax withholdings related to vesting of restricted stock awards were $0.4 million and $0.3 million for the six months ended December 31, 2021 and 2020, respectively. Payments of employee tax withholdings related to the cashless exercise of stock option was $0.1 million for the six months ended December 31, 2020.
36
Revolving Credit Facility
The Company entered into a $150 million syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated as of March 13, 2020. On December 31, 2021, the borrowings outstanding on the Revolving Credit Facility was $85.5 million. The Revolving Credit Facility was entered into with Bank of America Securities, Inc. as sole book runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A as lender and documentation agent and Bank of America, N. A., KeyBank National Association and Washington Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as “Lenders”). This replaces the Company's $75 million facility dated June 14, 2017.
The Revolving Credit Facility has a term of five years, matures on March 13, 2025, and is collateralized by a first-priority security interest in the accounts receivable and other assets of the Company. Borrowings under the Revolving Credit Facility accrue interest (at the Company’s option), at the Lenders’ base rate plus 1.00% or LIBOR plus 2.00% and can be subsequently adjusted based on the Company’s consolidated leverage ratio under the facility at the Lenders’ base rate plus 1.00% to 1.75% or LIBOR plus 2.00% to 2.75%.
The Revolving Credit Facility includes a $50 million accordion feature to support future acquisition opportunities. For general borrowings under the Revolving Credit Facility, the Company is subject to the maximum consolidated leverage ratio of 3.00 and minimum consolidated fixed charge coverage ratio of 1.25. 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.
In conjunction with the Revolving Credit Facility, Radiant entered into two interest rate swap contracts. On March 20, 2020, and effective April 17, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows at one-month LIBOR for a $20 million notional amount, for fixed interest cash outflows at 0.635%. On April 1, 2020, and effective April 2, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade the variable interest cash inflows at one-month LIBOR for a $10 million notional amount, for fixed interest cash outflows at 0.5865%. Both interest rate swap contracts mature and terminate on March 13, 2025.
Senior Secured Loan
On April 2, 2015, Radiant Canada obtained a CAD$29.0 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 (the “FPD IV Loan Agreement”). The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on April 1, 2024 and accrues interest at a rate of 6.65% per annum. We made interest-only payments for the first twelve months and blended principal and interest payments through maturity. In connection with the loan, we paid an amount equal to five months of interest payments into a debt service reserve account controlled by FPD IV.
In connection with our acquisition of Lomas, Radiant Canada obtained a CAD$10.0 million senior secured Canadian term loan from Fiera Private Debt Fund V LP (“FPD V” formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000,000 Credit Facilities Loan Agreement (the “FPD V Loan Agreement,” and together with the FPD IV Loan Agreement, the “FPD Loan Agreements”). The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on June 1, 2024 and accrues interest at a rate of 6.65% per annum. The loan repayment consists of monthly blended principal and interest payments.
The loans may be prepaid in whole at any time upon providing at least 30 days prior written notice and paying the difference between (i) the present value of the loan interest and the principal payments foregone discounted at the Government of Canada Bond Yield for the term from the date of prepayment to the maturity date and (ii) the face value of the principal amount being prepaid.
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.