Radiant Logistics Inc (RLGT) 2010 Q4 法說會逐字稿

Greetings, ladies and gentlemen. This afternoon, Bohn Crain, Radiant Logistics' Chairman and CEO, will discuss financial results for the Company's fourth fiscal quarter and fiscal year-end June 30, 2010. Following his 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 meanings of the Securities -- Act of 1933 and the Securities Exchange Act of 1934.

The Company has based their forward-looking statements on the 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, or 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 will turn the -- pass the call over to Radiant Chairman and CEO, Bohn Crain.

Thanks, Jade. Good afternoon, everyone, and thank you for joining in on today's call. As we anticipated, the operating leverage available through our scalable, non-asset based business model is beginning to show itself, as the economy improves. While the sustainability of this upward trend in the economy remains unclear, we believe we remain well positioned to be the to drive profitable growth, with an ability to aggressively manage our cost structure, and our efforts to continue to bring value to the agent-based forwarding community, leveraging our status as a public Company to provide our partners with an opportunity to share in the value that they help create, providing a robust platform, in terms of people process and technology, which is translating a into better purchasing power with our vendors, and more sophisticated e-business solutions for our customers. And offering the opportunity, in terms of succession, planning, and liquidity for our station owners.

This approach has made us unique in the marketplace, and has been key to our ability to grow, even through this down market. For the quarter ended June 30, 2010, we posted revenues of $40.7 million, an improvement of $8.3 million, or 25.8% over the comparable prior year period. For the quarter ended June 30, we also reported $1.4 million in adjusted EBITDA, an improvement of $670,000, or 98 -- excuse me -- 91.8% over the comparable prior year period. For the fiscal year ended June 30, 2010, we also reported record revenues of $146 million, an improvement of $9.7 million or 7.1%, compared to $137 million in revenues for the year ended June 30, 2009. This positive trend also continued, in terms of profitability, as we reported $4.246 million in adjusted EBITDA for the year ended June 30, 2010, an improvement of $569,000, or a 15.5% improvement over the comparable prior year period.

Behind these record results, are the resilient men and women that have responded to this uncertain economic environment, with a fierce pride of ownership, and sense of urgency to deliver for our customers. We're proud to count them as partners, and many of them as shareholders, and we look forward to continuing to work with them to build on these record results. As we move into our new fiscal year, our three-pronged strategy for profitable growth remains unchanged. We're focused on providing continuous improvement to our existing network, participants, in terms of technology, buy rates and enhanced service offerings, building upon the success of our organic growth initiative by on-boarding additional agent stations, and opportunistically pursuing acquisition opportunities that can leverage our platform.

As many of you know, our business is traditionally subject to the seasonal impact of global trade, weaker in the quarter ended March, improving modestly through June, and then picking up steam in the September and December quarters, in support of the holiday season. Well, so much for tradition. The recession, and it's impact on supply chain strategies is disrupting some of these traditional patterns. It is hard to say with any confidence, whether the economy is headed up, or down, or sideways. Was the quarter ended June 30 an anomaly, a one-time bounce as customers pushed to replenish inventories, or was June representative of the new floor?

Candidly, our crystal ball is cloudy. Actually, I was taught to only worry about those things that you can control, and to leave the rest to others. And certainly, on a tactical basis, we're not going to worry about the economy. Instead, we're going to focus on the things we can control, our cost structure, and execution of our growth strategy, and supporting our customers to the best of our ability. Our organic expansion efforts continue to deliver positive results, and in August of this year, we welcomed a new station in St. Louis. We are also in conversations with a number of additional candidates, which look promising in the relatively near term. We also remain active on the acquisition front, and are in due diligence on a number of potential acquisition opportunities that could further accelerate our growth.

I will now shift my comments to our financial results, and then we will open it up for Q&A. Today we will be discussing our financial results for our fourth fiscal quarter and year ended June 30, 2010. As we discuss our financial results, in addition to a discussion on reported net income, we also provide financial metrics, in terms of EBITDA. EBITDA is an important metric for us for a couple of reasons. First, we believe EBITDA is a useful measure, with respect to understanding our earnings trends, without the impact of certain non-cash charges associated with purchase accounting, and the amortization of acquired customer relationship assets. And EBITDA is used by our creditors, in assessing debt to note covenant compliance.

For the three months ended June 30, 2010, we reported net income of $844,000 on $40.7 million of revenue, or $0.03 per basic and fully diluted share, including a nonrecurring gain of $135,000 on extinguishment of debt. For the three months ended June 30, 2009, the Company had reported a net loss of $57,000 on $32.4 million of revenues. For the year ended June 30, 2010, we reported net income of $1.959 million on $146.7 million in revenues, as $0.06 per basic and fully diluted share, and included $854,000 in nonrecurring gains. For the year ended June 30, 2009, we reported a net loss of $9.730 million on $137 million of revenue, or a net loss of $0.28 per basic and fully diluted share, which included the non-cash charge of $11.4 million for the impairment of goodwill, back in 2009.

To highlight some of these nonrecurring items for you quickly, in June of 2010, we recognized a gain of $135,000 related to payments made to the former shareholder of Adcom, in satisfaction of integration and earn-out obligations, payable in Company stock, that were ultimately paid in cash at a discount. In March of 2010, we recognized the benefit of $364,000 resulting from a refund of overpayments made to the state of Washington, in connection with business and occupancy taxes. In 2009, we also recognized a gain of approximately $355,000, as a result of the favorable resolution of the Adcom arbitration, which dealt with the value of working capital balances acquired in connection with that transaction. And then, of course, in December of 2008, we had reported the non-cash charge of $11.4 million for the impairment of goodwill.

On an EBITDA basis, we reported adjusted EBITDA of $1.4 million for the three months ended June 30, 2010, which excludes the nonrecurring gain, compared to adjusted EBITDA of $730,000 for the three months ended June 30, 2009. Again, that was an increase of $670,000, and 91.8% over the comparable prior year period. We also reported adjusted EBITDA, which excludes the nonrecurring items of $4.246 million for the year ended June 30, 2010, compared to adjusted EBITDA of $3.677 million, a 15.5% improvement over the comparable prior year period. A reconciliation of our adjusted EBITDA to the most directly comparable GAAP measures, is available at the end of our earnings release. As part of that release, we also provided our initial guidance for fiscal 2011, and are projecting $4.5 million on adjusted EBITDA, on $158 million in top line revenues. This is before considering the impact of any future acquisitions, new agent stations, or any further improvement in the general economic climate.

I would draw your attention -- in the press release, in terms of the financial outlook. We had a typographical error in our line item for depreciation expense, which should of been I believe, $1.118 million. So the number that are presented didn't quite put -- but the net income and adjusted EBITDA numbers are correct. And the adjusted -- excuse me -- the amortization and depreciation line item was incorrect. But the $4.5 million number is the correct number, which we're providing as our initial guidance for 2011.

With respect to our credit facility, with Bank of America, we only have about $5.5 million drawn against our $20 million credit facility -- enjoy a fair amount of financial flexibility to pursue acquisitions, should the right opportunity present itself. I guess one final comment I'll make, I would like to update you on the significant progress we have made with respect to our stock buy-back program. As you may remember, this program was initially launched in May of 2009, and authorized us to purchase up to five million shares of our stock.

To date, we have purchased approximately 4.5 million shares into treasury, at a total cost of about $1.3 million, which is an average purchase price of about $0.28 per share. Based on our current 30 million shares outstanding, our guidance of $4.5 million in EBITDA, and our $5.5 million in bank debt, this would equate to a valuation multiple of approximately three times our projected earnings power, in terms of the valuations that we were able to affect these stock buybacks at. We believe this represents exceptional value for our share holders, and it is our intention to continue to be a buyer at these levels. So with that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.

Thank you.

(Operator Instructions). Our first question comes from Howard Halpern from Taglich Brothers. Please pose your question.

Congratulations on the quarter and full-year. Great -- .

Thank you very much.

I guess, first question, -- the outlook, that include the St. Louis station?

Yes, it does.

Okay. And you talked about maybe bringing on additional stations. Where would you like to see yourself, to be able to fill in, in the country?

Well, there are several locations that are areas of interest for us, where we don't -- just don't have a presence to date. St. Louis was one. That had been on our list so, we were happy to welcome that group. San Diego is another area where we -- we don't have a presence today. That's an interesting market for us, as well as a few other locations in the southeast. As well as in the northeast are some additional areas, where we just don't have a presence.

And then, I guess the other point that I would make is, given the fact that we operate multiple brands in the context of Airgroup and Adcom, it gives us additional flexibility where from time to time, we have the opportunity to -- to complement appear existing market with a new station, under a different brand in a given marketplace. And so, although we may have a presence in -- in a given market, that doesn't preclude us, given the right set of circumstances, to welcoming additional members to the network.

Okay. In terms of acquisitions, how has the landscape maybe changed in the past year?

Well, it has been interesting. I will tell you, we have simply put, kissed a lot of frogs, I think. We have been incredibly active, visiting with potential acquisition candidates. But the -- the stress of the economy has really put a lot of organizations in some difficult situations. And we found it difficult to find the acquisition candidates, whose earnings power reconciled with the valuation expectations of the sellers. And -- and fortunately for us, we haven't felt compelled to do anything crazy. And so, we're continuing to look for the right intersection between quality of acquisition candidates, and the integrity of their underlying businesses to -- to either perform in these environments, or for the environment -- or for the economy to improve such that these company's businesses earnings can grow to a level that will get the sellers closer to the valuations that they are looking for.

Okay. Also, in terms of your outlook on top line, do you think you're going to really get close to 50-50, in international and domestic?

I do over time. It is going to be a very -- I -- I wasn't quite sure how to kind of reduce some of this, into my prepared comments. But the -- kind of the year-over-year comps, as we go from 2009 to 2010 to 2011, are going to be, unusual. And we're still trying to get our own heads around, what all that is going to mean. And -- kind of -- with that as kind of background, my expectation is that we are going to continue to have some -- a real strong period from the July to December period, followed by some softening in the economy, at least on a comparable basis, as we go January to June of 2011.

And the reason that I say that is, I think that we had -- potentially an unusually strong last six months, as kind of a bounce-back from the recession. And so, we -- if we're wrong, we will do that much better. But we try to offer up what we believe to be a very conservative view of how the economy is going to respond here, over the next 12 months.

Okay. And one last question, I guess, about the leverage that you have created. You had I guess roughly about -- was it -- $10 million combined in personnel and SG&A costs. Can that -- I know there will be some probably increase -- but that is the general level that can support that close to $160 million in revenues?

Yes, if anything, I think -- I think the -- as we look in kind of the detailed line items of the P&L, I believe the personnel cost line item, is indicative of -- kind of the cost structure that we would anticipate in support of those higher levels. But I believe that our other SG&A line item costs is actually a little high. And the reason I say that is, we -- we had a fair amount of what will hopefully prove to be nonrecurring legal costs showing up in our other SG&A line item. So if you think about it, we were anticipating significant cost synergies associated with the Adcom transaction.

And those numbers show themselves on the personnel line item. But the question is, where are the cost synergies associated with the SG&A line item, from the Adcom transaction> And the answer is, they were there, but they were just offset by legal costs. And so, as we clear out some of these last remaining legal items, which, hopefully, will come to rest over -- by the -- in the next six months or so, I would anticipate. Then, I think you'll -- we'll see further improvement or further reduction on a reported basis, of our all-in costs at that SG&A line item.

Okay. Well, that sounds great. And just keep up the good work, and we'll cross our fingers about the economy.

All right. Thanks so much.

Okay.

Thank you.

(Operator Instructions).

We appear to have no further questions at this time.

All right. Well, let me close by saying, that we remain very excited with our progress, and prospects here at Radiant. We have made tremendous progress in executing our strategy, leveraging the Radiant platform to bring value to the agent forwarding community. And we remain very excited about the opportunity for continued organic growth, available through expansion of our network, and believe that we remain uniquely positioned to bring value to our network participants.

We believe we are executing the right strategy to deliver profitable growth, providing continuous improvement through our existing network participants in terms of technology, buy rates, and enhanced service offerings, building upon the success of our organic growth initiative by on-boarding additional agent stations, and opportunistically pursuing acquisition opportunities that can leverage our platform. We look forward to providing you with further updates as things develop. Thanks for listening in, and thanks for your interest in Radiant Logistics.

Thank you. This has concluded today's teleconference. You may disconnect your lines at this time. Thank you for your participation.