78
ANNUAL REPORT 2018
ANNUALREPORT
2018
A PLATFORM FOR GROWTHTo Our Shareholders:Over the past decade,Over the past decadewe have methodically worked to expand our network, extend our domestic and internationalservice offerings andenhance our back-officeinfrastructure, always withan eye towards profitable growth. We look back
on our accomplishments with a great sense of achievementand appreciation for the support of our customers, operatingpartners, carriers, shareholders and hard-working employees thathave come together to make Radiant one of the fastest growing transportation and logistics companies in North America.tics companies in North America.
Today we enjoy one of the most robust platforms in our industry;stry;providing domestic and international freight forwarding services,g servictruck and rail brokerage services and an array of other htruck and rail brokerage services and an array of other value-added supply chain manavalue-added supply chain management services from over 100 operating locations across North America, inclth America, including asignificant presence in Canada. As we continue to grow andow andscale the business, our multi-brand strategy has translated into ascale the business, our multi-brand strategy has traunique and differentiated platform from which to service our ende and differentiated platform from which to service our customers with better purchasing phasing power with our vendors, abest-in-class technology operating sy dbest-in-class technology operating systeystem and an extensiveglobal network of service partners to suppopport our customersglobal network of service p pport our customersaround the wund the world.
The heart of our growth strategy has been oThe heart of our growth strategy has been o bilit tour ability toh howth strategy hdifferentiate ourselves in the marketplacurselves in the marketplace by bringing new valuee by bringing newlves in the mves in the mato the agent based forwarding community: leveraginging our statusmunity: leveragy: leveraging ussed forwardias a public company to provide our strategic operating paras a public company to provide o g partneour strategic ope rtnersompany tocompanywith an opportunity to work as shareholders and share in with an opportunity to work as shareholders and shaldas shareholder e in theppopportunitvalue that they help create and providing a unique opportunityy help create and providing a unique opte and provid pportunitye opportuue that thein terms of succession planning ag and liquidity for logistics on planningning a for logistics in termentrepreneurs both internal and external to the Radiant network.xternal to the Radiant netwoentrepren oth interna th R dineurs both internal and external to the Radiant network.ternal to the Radiant netwop both inte l to the Radi
Fiscal 2018 itself represented another year of steady progress for year of steady progres2018 itself representedal 201018 i d another yRadiant. In a year that will be remembered for extreme capacitybered for extreme caa year that will bRadia e rewill be acityand pricing swings felt across our industry we were able tot bi f ltlt cross our industry, we were able tdustry, we were abs felt acroand pricing swwings fegs felt a tble to
opportunity ity todeliver solid financial results while e also takinfinancial resid fifinan sults while also taking the oppalso taking the oi l e opportuchnology inititiatiogy initiatiativesfocus on a number of strategic sales and techno sales and techna number of echnoloec l
which are expected to deliver organic growth and prodver organic gr productivityare expecwhich are expected to deliver organic v gh are ex itic groimprovement in fmproveimprovement in future periperiods.proveme
For the year ended June 30, 2018, Radended June ad8, Radiant reported net income diant reporteallocable to common stockholders of $8.1 me to comm rs of $8.1 million on $842.4 81 mmillion of revenues, or $0.17 per basic and $0illion per basic $0.16 per fully dilutedmillion of revenues, or $0.17 peron of re 17 pershare, including a one-time benefit of $2.4 mishare illion related toding a one-time benefit e-time bena re-measurement of deferred tax liabilities asent of s a result of theof deferred tax liaof de of the
d Juner ended Jurecently enacted Tax Cuts and Jobs Act. For tenacted r the year Cuts and Jobs year ende30, 2017, Radiant reported net income allocable to common 2017 llocable to commoeported net i ocable tostockholders of $2.8 million on $777.6 million of revenues, or 6 million of reve2.8 million 77.6 6 mil$0.06 per basic and fully diluted shashare.asic and ful h
On the sales front we continued to grow our industry verticalicalOn the sales front we continued to grow our indand field sales organizations over this past year and havesales organizations over this past year and hrecently deployed the Salesforce CRM (customer relationshipSalesforce CRM (customer relationmanagement) tool to help us better manage our growing salesbetter manage our growing pipeline. Through these efforts we are starting to see some reale are starting to see someprogress in driving organic growth and over the second half of h and over the second the year we were able to achieve double digit revenue growthwthe double digit revenuacross our forwarding, brokerage and valued added servicevice linesge and valued addof business.
On the technology front we also continue to make meaningfulake meaningfulont we also contprogress on a number of strategic technology initiatives, including ogy initiatives, inmber of strateg(1) the continued expansion of our new SAP-based transportationw SAP-based tued expansiomanagement system (“SAP-TM”) that is now deployed in 7 of our ) that is now dement systemcompany owned locations and on track for deployment to our and on trackpany owcompany owned locations and on trmpany
r, (2) the recent launchunchstrategic operating partners later this year, (2) the recent lartners later strategof our newof our new customer portal which provides our customers omer porta withmers withonline booking and evenoking ang and event based tracking through dird rectgh directintegration with SAP-TM with futugration w with future phases of functionalityes of functi
at will include additional collaboratiothat will include adhat ratiooration, quoting, and a user ion, quengine, (3) the completioperated reporting engine, 3) the co pletion of our blue-printing
ernational air and efforts to operationalize interna d ocean functionality m, (4) the succeswithin our new SAP-TM platform, essful deployment
of our new back-office digitization technology tof our new back-office digitization to provideoptical character recognition and process automtical character recognition and mation solution
y processes witho r proc re to pato streamline our procure-to-pay processes witreamline our procure-to-pay th our carriers and(5) further progress on migrating our SAP produrther progress on migratin environmentoduction environmentto AmAmazon’s clouo Amazon’s cloud computing platform whicmazon’s cloud computin hich is also on track tooccur later this calendar yeaccur later this calendaar year which will gendar l give us cost effectiveaccess to the computing power, daaccess to the computacces wer, database storage and other abase storage and other
o help us scale and groto helality to hfunctionality to ow our business.grow oow our business.
year, we remain coms we head into the new yeAs we ommitted to our ear, we remain coyerofitable grolong-standing strategy tol owth through aeliver profitaby to del
acquisition growthcombination of orga h initiatives. We acquiorganic and abalance sheet, stronhave low leverage on our ba ng free cash flow, verage on our ba
and continue our disciplined search for acquid ti di i li uisition candidatesaand contin ned search for acqur discipline uisition cdi iontinue our discpect tothat br s to our current platformcritical mass to orm with respect tohat bring critica
geography, purchaasing power, and compphy, purchasin mplementary service geograpare patiently perofferings. We are iently persistent in the pursuit of this long-in the pursuit of this long-f
n which we believe, over term vision whterm vision er timever time, will deliver meaningfultime, will deliver meaneholders, our operae for shareholders, ovalue for perating partne nd the endartners and th
customers that we serve.custo
Thanks for your continued support and the opportThanks for your continued support aontinued support a rtunity torepresresent you at Radiant Logistics.ou at Radiant Logis
It’s the Network that Delivers!®
ainBohn H. Crainder, Chairman & CEOFounder,
FINANCIAL HIGHLIGHTS
5002001000.0 300 400 800
GROSS REVENUE (MILLIONS)
600 700 900 1000
‘18‘17‘16‘15‘14
842.4
777.6
782.6
502.7
349.1
12550250.0 75 100 200
NET REVENUE (MILLIONS)
150 175 225 250
‘18‘17‘16‘15‘14
202.4
194.6
186.7
123.7
99.2
251050.0 15 20 40
ADJUSTED EBITDA(1) (MILLIONS)
30 35 45 50
‘18‘17‘16‘15‘14
29.2
29.6
24.4
17.3
14.8
12.5%5.0%2.5%0.0 7.5% 10% 20%
ADJUSTED EBITDA MARGIN
15% 17.5% 22.5% 25%
‘18‘17‘16‘15‘14
14.4%
15.2%
13.1%
14.0%
14.9%
OUR OPERATIONS
Freight Forwarding Brokerage
Value Added Service (VAS)
NET REVENUE BY SERVICE OFFERING
Domestic International
FREIGHT FORWARDING NET REVENUES
Intermodal Truckload
Less-Than-Truckload
BROKERAGE NET REVENUES
Materials Management & Distribution (MM&D) Customs House Brokerage (CHB)
Consulting/Other
VALUE ADDED SERVICES NET REVENUES
RADIANT and its operating partners provide a unique and comprehensive service platform offering domestic and international freight forwarding, truck and rail brokerage and an array of value added supply chain management services primarily to customers in the United States and Canada who operate across North America and around the world.
80.28%
12.51%
7.21%
$202.4 Million
70.23%
29.77%
$162.5 Million
30.64%
43.46%
25.9%
$25.3 Million
75.86%
15.03%
$14.6 Million
9.11%
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(1) Foreign exchange gains and losses for the current and prior periods have been included in the EBITDA reconciliation as a result of the increased volatility associated with foreign exchange gains and losses primarily due to our acquisition of Canada-based Wheels Group Inc.
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 technology and equipment, all amortization charges (including amortization of leasehold improvements), and other intangible assets. We then further adjust EBITDA to exclude changes in contingent consideration, expenses specifically attributable to acquisitions, severance and lease termination costs, foreign exchange gains and losses, extraordinary items, share-based compensation expense, non-recurring litigation expenses, and other non-cash charges. Adjusted EBITDA is then normalized by excluding non-recurring transition costs. While management considers EBITDA, adjusted EBITDA, and normalized adjusted EBITDA useful in analyzing our results, it is not intended to replace any presentation included in our consolidated financial statements.
CORPORATE HEADQUARTERS405 114th Avenue SE, Third FloorBellevue, WA 98004Tel: (800) 843-4784www.radiantdelivers.com
ANNUAL MEETINGNovember 14, 2018Corporate Headquarters
CORPORATE GOVERNANCECopies of the Company’s 2018 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statement and this Annual Report are available online at http://financials.radiantdelivers.com or to shareholders without charge upon written request to our Secretary at the Company’s principal address or by calling (800) 843-4784.
In addition, on the Company’s CorporateGovernance website at www.radiantdelivers.com/about,shareholders can view the Company’s Corporate Governance Principles, the Audit and
the Executive Oversight Committee Charter and the Company’s Code of Ethics. Copies of these documents are available to shareholders without charge upon written request to our Secretary at the Company’s principal address.
The Company is required to file as an Exhibit to its Form 10-K for each fiscal year certifications under the Sarbanes-Oxley Act signed by the Chief Executive Officer and the Chief Financial Officer. In addition, the Company is required to submit a certification signed by the Chief Executive Officer to the NYSE American within 30 days following the Annual Meeting of Shareholders. Copies of the certifications will be posted promptly upon filing.
COMMON STOCKListed on NYSE AmericanSymbol: RLGT
SHAREHOLDER RELATIONS CONTACTTodd MacomberChief Financial Officer(800) 843-4784
INVESTOR RELATIONS CONTACTJP DeenihanDirector of Marketing & [email protected](800) 843-4784
STOCK TRANSFER AGENTQuestions regarding stock holdings, certificate placement/transfer and address changes should be directed to:
Broadridge Corporate Issuer Solutions, Inc.1717 Arch StreetSTE 1300Philadelphia, PA 1910(855) 418-5054
ONLINE ANNUAL REPORThttp://radiantdelivers.com/about/financials
Reconciliation of Non-GAAP Financial MeasuresThe table below is provided to reconcile certain financial disclosures in the letter to Shareholders, page 1.(Dollars in Thousands)Year Ended June 30: 2018 2017 2016 2015 2014Net Income (Loss) Attributable to Radiant Logistics, Inc. 10,188$ 4,862$ (3,519)$ 5,874$ 5,118$ Taxes 73 3,673 (1,886) 2,017 3,082 Depreciation and Amortization 14,389 12,349 12,033 6,359 4,532 Net Interest Expense 3,075 2,497 4,872 1,856 1,187 EBITDA 27,725 23,381 11,500 16,106 13,919 Share-based Compensation 1,514 1,304 1,407 1,115 666 Lease Termination and Related Costs 176 566 2,545 611 –Foreign Exchange Loss (Gain) (1) 8 (222) (700) 739 27 Change in Contingent Consideration (1,176) 3,431 1,003 (3,921) (2,041) Expenses Specifically Attributable to Acquisitions 239 944 2,446 2,017 353 Litigation 346 177 1,066 601 615 Non-recurring Costs – 14 279 – –MM&D Start-up Costs 410 – – – –Loss on Impairment of Acquired Intangible Assets – – 3,680 – –Loss on Write-Off of Loan Fees – – 1,180 – 1,238 Adjusted EBITDA 29,242 29,595 24,406 17,268 14,777 Transition Costs – 1,539 2,408 158 –Normalized EBITDA 29,242$ 31,134$ 26,814$ 17,426$ 14,777$
THE RADIANT FAMILY OF BRANDS
®
WHEELS
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