Radiant Logistics, Inc. — FY2022 Form 10-K Summary
Period: Fiscal year ended June 30, 2022; comparisons are to fiscal 2021, as restated. The annual report was filed February 27, 2023. Radiant is a non-asset-based third-party logistics provider operating primarily in the United States and Canada, with freight forwarding, freight brokerage, and value-added logistics services.
Key financial metrics
Amounts are in millions of U.S. dollars unless noted.
| Metric | FY2022 | FY2021, restated | Change |
|---|---|---|---|
| Revenue | $1,459.4 | $899.8 | +62.2% |
| GAAP gross profit | $293.5 | $209.4 | +40.1% |
| GAAP gross margin | 20.1% | 23.3% | Down 3.2 percentage points |
| Adjusted gross profit (non-GAAP) | $306.3 | $221.4 | +38.3% |
| Adjusted gross profit margin (non-GAAP) | 21.0% | 24.6% | Down 3.6 percentage points |
| Operating income | $58.6 | $26.2 | +123.7% |
| Net income attributable to Radiant | $44.5 | $23.1 | +92.4% |
| Diluted earnings per share | $0.88 | $0.45 | — |
| Adjusted EBITDA (non-GAAP) | $80.9 | $49.0 | +65.1% |
| Cash from operating activities | $24.9 | $14.1 | +$10.8 |
- Growth and margins: Revenue growth reflected higher transportation prices and surcharges, increased shipment volumes, charter activity, and seven months of Navegate results. Transportation adjusted gross profit rose to $280.8 million, but its margin fell to 19.9% from 23.2%, principally because of tight capacity, fuel surcharges, lower-margin charter business, and Navegate’s mix. Value-added services revenue increased 48.2% to $44.9 million; its adjusted gross profit margin declined to 56.8% from 65.9%, partly due to Canadian warehouse startup costs.
- Expenses and earnings: Operating expenses increased to $247.7 million from $195.2 million, including higher personnel and SG&A costs and acquisition-related amortization. FY2021 other income included $6.0 million from forgiveness of PPP loans; FY2022 included a $1.8 million gain from changes in interest-rate swap fair value.
- Cash flow and investment: Operating cash flow was $24.9 million. Investing activities used $45.7 million, including $38.4 million paid for Navegate and $7.5 million for property, technology, and equipment. Financing activities provided $28.9 million. Cash and cash equivalents were $24.4 million at year-end. Operating cash flow less purchases of property, technology, and equipment was approximately $17.4 million, before acquisitions.
- Liquidity and debt: Current assets were $289.3 million and current liabilities $187.7 million, a current ratio of approximately 1.54. At June 30, 2022, notes payable totaled $71.3 million, including $62.5 million drawn on the then-existing revolver and $8.9 million in Canadian term loans. The company reported compliance with debt covenants. In August 2022, it replaced the $150 million revolver with a five-year $200 million facility, including a $75 million acquisition accordion. The new facility has leverage and interest-coverage covenants.
- Balance sheet: Total assets were $497.4 million, total liabilities $302.8 million, and equity $194.6 million. Contract assets, principally estimated revenue on in-transit shipments not yet invoiced, were $61.2 million, up from $45.0 million.
Material changes versus the prior comparable period
- FY2021 and the quarterly periods in FY2021 and FY2022 were restated for errors in the timing and completeness of estimated in-transit revenue and associated transportation costs. For FY2021, revenue increased by $10.7 million on restatement and net income by $0.2 million; the restatement did not change reported operating cash flow.
- The December 2021 acquisition of Navegate contributed $92.4 million of revenue for the seven months included in FY2022. The company also acquired Cascade after year-end, on October 1, 2022.
- Repurchases totaled 1.62 million shares for $11.3 million in FY2022, compared with 0.27 million shares for $1.9 million in FY2021.
- Operating cash flow improved, but receivables and contract assets remained significant uses of working capital; the company attributed the cash-flow increase partly to higher net income and vendor payables.
Outlook, commentary, risks, and unusual items
- The filing provides no quantified revenue or earnings guidance. Management expects to pursue organic growth and acquisitions, improve productivity, and integrate operating and financial systems. It expected to spend $4 million to $5 million on technology enhancements in FY2023.
- Management cited inflation, higher fuel and carrier costs, tight transportation capacity, supply-chain disruption, economic and freight-volume cycles, COVID-19 uncertainty, seasonality, and foreign-exchange exposure as risks. Higher carrier prices may pressure margins if not passed through to customers.
- Restatement and controls: Management concluded disclosure controls and internal control over financial reporting were ineffective at June 30, 2022. The material weakness in revenue recording and processing remained unremediated, with further remediation planned during FY2023. The independent auditor gave an unqualified opinion on the financial statements but concluded internal control over financial reporting was ineffective because of the material weakness.
- Cybersecurity incident: A December 2021 ransomware event disrupted systems and operations, caused lost revenue that was not quantified, and resulted in $0.7 million of reported costs. The company confirmed data extraction involving customer and employee information; potential claims, regulatory inquiries, and insurance recovery remained uncertainties.
- Financing and filing status: The filing states the restatement delayed reporting to lenders and that the company obtained a waiver for delivery of audited statements. It also reported that delayed SEC filings made it temporarily ineligible to use Form S-3 to register securities until it met the stated current-filer requirements.
- Other items: Rebranding certain trade names shortened their useful lives and accelerated amortization beginning in June 2022 and continuing into FY2023. Estimated contingent consideration was $5.5 million at year-end. No potentially material legal proceedings were reported as of June 30, 2022.
Most important facts for investors to verify
- Review the restated annual and quarterly financial statements, including the revenue and cost accrual methodology and the related balance-sheet adjustments; rely on this filing rather than previously issued reports for affected periods.
- Track whether the revenue-control material weakness is remediated, and whether subsequent filings are timely and reliable.
- Assess the quality of contract assets and receivables, including whether in-transit estimates convert to invoices and collections as expected.
- Monitor post-acquisition performance and integration of Navegate and Cascade, and compare realized margins and cash generation with acquisition assumptions.
- Confirm revolver borrowings, covenant headroom, interest costs, and liquidity under the August 2022 credit facility.
- Follow the financial, legal, regulatory, and customer consequences of the ransomware event and any insurance recovery.