10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2024


☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-35392

RADIANT LOGISTICS, INC.

(Exact name of registrant as specified in its charter)

    Delaware

    04-3625550

    (State or other jurisdiction 
of incorporation or organization)

    (I.R.S. Employer
Identification No.)

    Triton Tower Two
700 S Renton Village Place, Seventh Floor
Renton, Washington 98057

   

    (Address of principal executive offices) (Zip Code)

   

    (425) 462-1094

   

    (Registrant’s telephone number, including area code)

   

N/A

    (Former name, former address, and former fiscal year, if changed since last report)
 
Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value	RLGT	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 46,915,415 shares outstanding of the registrant’s common stock as of November 4, 2024.

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RADIANT LOGISTICS, INC.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Balance Sheets as of September 30, 2024 and June 30, 2024	3

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended September 30, 2024 and 2023	4

	Condensed Consolidated Statements of Changes in Equity for the Three Months Ended September 30, 2024 and 2023	5

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2024 and 2023	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29

Item 4.	Controls and Procedures	30

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 6.	Exhibits	33

Signatures		34

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RADIANT LOGISTICS, INC.

Condensed Consolidated Balance Sheets


	September 30,			June 30,
(In thousands, except share and per share data)	2024			2024
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,448		$	24,874
Accounts receivable, net of allowance of $2,060 and $2,103, respectively		122,159			118,016
Contract assets		7,388			7,615
Income tax receivable		3,521			3,133
Prepaid expenses and other current assets		14,243			10,567
Total current assets		157,759			164,205

Property, technology, and equipment, net		25,720			25,558

Goodwill		98,505			93,043
Intangible assets, net		41,593			34,943
Operating lease right-of-use assets		48,301			49,850
Deposits and other assets		3,380			3,586
Total other long-term assets		191,779			181,422
Total assets	$	375,258		$	371,185

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	73,686		$	73,558
Operating partner commissions payable		11,901			13,291
Accrued expenses		8,853			8,948
Current portion of operating lease liabilities		12,146			11,629
Current portion of finance lease liabilities		641			643
Current portion of contingent consideration		475			455
Other current liabilities		954			1,927
Total current liabilities		108,656			110,451

Notes payable		200			—
Operating lease liabilities, net of current portion		42,943			45,026
Finance lease liabilities, net of current portion		511			677
Contingent consideration, net of current portion		9,190			4,710
Deferred tax liabilities		1,053			812
Other long-term liabilities		217			—
Total long-term liabilities		54,114			51,225
Total liabilities		162,770			161,676

Commitments and contingencies (Note 15)

Equity:
Common stock, $0.001 par value, 100,000,000 shares authorized; 52,009,812 and 51,844,249 shares issued, and 46,845,146 and 46,808,943 shares outstanding, respectively		33			33
Additional paid-in capital		110,464			110,763
Treasury stock, at cost, 5,164,666 and 5,035,306 shares, respectively		(31,874	)		(31,166	)
Retained earnings		136,654			133,278
Accumulated other comprehensive loss		(2,906	)		(3,546	)
Total Radiant Logistics, Inc. stockholders’ equity		212,371			209,362
Non-controlling interest		117			147
Total equity		212,488			209,509
Total liabilities and equity	$	375,258		$	371,185

The accompanying notes are an integral part of these condensed consolidated financial statements.

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RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)


	Three Months Ended September 30,
(In thousands, except share and per share data)	2024			2023
Revenues	$	203,565		$	210,797

Operating expenses:
Cost of transportation and other services		146,011			149,973
Operating partner commissions		18,801			23,782
Personnel costs		19,623			19,627
Selling, general and administrative expenses		10,321			9,475
Depreciation and amortization		4,805			4,525
Change in fair value of contingent consideration		200			(246	)
Total operating expenses		199,761			207,136

Income from operations		3,804			3,661

Other income (expense):
Interest income		465			585
Interest expense		(237	)		(302	)
Foreign currency transaction gain (loss)		(62	)		96
Change in fair value of interest rate swap contracts		(440	)		(202	)
Other		1,039			27
Total other income		765			204

Income before income taxes		4,569			3,865

Income tax expense		(1,145	)		(1,014	)

Net income		3,424			2,851
Less: net income attributable to non-controlling interest		(48	)		(229	)

Net income attributable to Radiant Logistics, Inc.	$	3,376		$	2,622

Other comprehensive income:
Foreign currency translation gain (loss)		640			(1,128	)
Comprehensive income	$	4,064		$	1,723

Income per share:
Basic	$	0.07		$	0.06
Diluted	$	0.07		$	0.05

Weighted average common shares outstanding:
Basic		46,721,238			47,297,957
Diluted		48,585,811			49,076,185

The accompanying notes are an integral part of these condensed consolidated financial statements.

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RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Changes in Equity

Three Months Ended September 30, 2024

(unaudited)


	RADIANT LOGISTICS, INC. STOCKHOLDERS’ EQUITY
	Common Stock					Additional Paid-in			Treasury			Retained		Accumulated Other Comprehensive			Total Radiant Logistics, Inc. Stockholders’			Non- Controlling			Total
(In thousands, except share and per share data)	Shares			Amount		Capital			Stock			Earnings		Loss			Equity			Interest			Equity
Balance as of June 30, 2024		46,808,943		$	33	$	110,763		$	(31,166	)	$	133,278	$	(3,546	)	$	209,362		$	147		$	209,509
Repurchase of common stock		(129,360	)		—		—			(708	)		—		—			(708	)		—			(708	)
Issuance of common stock upon vesting of restricted stock units, net of taxes withheld and paid		143,036			—		(41	)		—			—		—			(41	)		—			(41	)
Issuance of common stock upon exercise of stock options, net of taxes withheld and paid		22,527			—		(421	)		—			—		—			(421	)		—			(421	)
Distribution to non-controlling interest		—			—		—			—			—		—			—			(78	)		(78	)
Share-based compensation		—			—		163			—			—		—			163			—			163
Net income		—			—		—			—			3,376		—			3,376			48			3,424
Other comprehensive income		—			—		—			—			—		640			640			—			640
Balance as of September 30, 2024		46,845,146		$	33	$	110,464		$	(31,874	)	$	136,654	$	(2,906	)	$	212,371		$	117		$	212,488

The accompanying notes are an integral part of these condensed consolidated financial statements.

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RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Changes in Equity (continued)

Three Months Ended September 30, 2023

(unaudited)


	RADIANT LOGISTICS, INC. STOCKHOLDERS’ EQUITY
	Common Stock					Additional Paid-in			Treasury			Retained		Accumulated Other Comprehensive			Total Radiant Logistics, Inc. Stockholders’			Non- Controlling		Total
(In thousands, except share and per share data)	Shares			Amount		Capital			Stock			Earnings		Loss			Equity			Interest		Equity
Balance as of June 30, 2023		47,294,529		$	33	$	108,516		$	(27,067	)	$	125,593	$	(2,205	)	$	204,870		$	226	$	205,096
Repurchase of common stock		(35,349	)		—		—			(230	)		—		—			(230	)		—		(230	)
Issuance of common stock upon vesting of restricted stock units, net of taxes withheld and paid		127,868			—		(331	)		—			—		—			(331	)		—		(331	)
Issuance of common stock upon exercise of stock options, net of taxes withheld and paid		1,933			—		—			—			—		—			—			—		—
Share-based compensation		—			—		881			—			—		—			881			—		881
Net income		—			—		—			—			2,622		—			2,622			229		2,851
Other comprehensive loss		—			—		—			—			—		(1,128	)		(1,128	)		—		(1,128	)
Balance as of September 30, 2023		47,388,981		$	33	$	109,066		$	(27,297	)	$	128,215	$	(3,333	)	$	206,684		$	455	$	207,139

The accompanying notes are an integral part of these condensed consolidated financial statements

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RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Three Months Ended September 30,
(In thousands)	2024			2023
OPERATING ACTIVITIES:
Net income	$	3,424		$	2,851
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Share-based compensation		163			881
Amortization of intangible assets		2,807			2,643
Depreciation and amortization of property, technology, and equipment		1,998			1,882
Deferred income tax expense (benefit)		239			(348	)
Amortization of debt issuance costs		100			124
Change in fair value of contingent consideration		200			(246	)
Change in fair value of interest rate swap contracts		440			202
Other		13			151
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable		(1,595	)		9,760
Contract assets		234			(305	)
Income tax receivable		(366	)		(863	)
Prepaid expenses, deposits, and other assets		(3,574	)		2,502
Operating lease right-of-use assets		2,771			2,944
Accounts payable		(708	)		(4,091	)
Operating partner commissions payable		(1,391	)		(4,118	)
Accrued expenses and other liabilities		(1,725	)		298
Operating lease liabilities		(2,825	)		(2,908	)
Payment of contingent consideration		—			(3,473	)
Net cash provided by operating activities		205			7,886


INVESTING ACTIVITIES:
Acquisition, net of cash acquired		(11,444	)		—
Purchases of property, technology, and equipment		(2,059	)		(2,473	)
Proceeds from sale of property, technology, and equipment		30			4
Net cash used for investing activities		(13,473	)		(2,469	)

FINANCING ACTIVITIES:
Proceeds from revolving credit facility		5,200			—
Repayment of revolving credit facility		(5,000	)		—
Payments of debt issuance costs		—			(106	)
Repayments of notes payable and finance lease liabilities		(168	)		(1,312	)
Repurchases of common stock		(708	)		(230	)
Distribution to non-controlling interest		(78	)		—
Proceeds from exercise of stock options		8			2
Payments of employee tax withholdings related to restricted stock units and stock options		(470	)		(333	)
Net cash used for financing activities		(1,216	)		(1,979	)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash		58			(41	)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(14,426	)		3,397
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD		24,874			33,062

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$	10,448		$	36,459

RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents	$	10,448		$	35,867
Restricted cash		—			592
Total cash, cash equivalents, and restricted cash	$	10,448		$	36,459

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid	$	542		$	2,253
Interest paid	$	156		$	180

The accompanying notes are an integral part of these condensed consolidated financial statements.

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RADIANT LOGISTICS, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

(Dollars in thousands, except share and per share data)

NOTE 1 – THE COMPANY AND BASIS OF PRESENTATION

The Company

Radiant Logistics, Inc., and its consolidated subsidiaries (the “Company”), operates as a leading third-party logistics company, providing technology-enabled global transportation and value-added logistics solutions primarily in the United States and Canada. The Company services a large, broad and diversified account base across a range of industries and geographies, which is supported by 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. The Company provides 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 are also referred to as “strategic operating partners,” that operate exclusively on the Company’s behalf, and approximately 30 Company-owned locations. As the operator of a third-party logistics company, the Company has a vast carrier network of asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in its carrier network.

Through its operating locations across North America, the Company offers domestic and international air and ocean freight forwarding services and freight brokerage services, including truckload services, less than truckload services, and intermodal services, which is the movement of freight in trailers or containers by combination of truck and rail. The Company’s primary transportation services involve arranging shipments, on behalf of its 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, including arranging and monitoring all aspects of material flow activity utilizing advanced information technology systems. The Company also provides other value-added logistics services including materials management and distribution services (collectively, “materials management and distribution” or “MM&D” services), and customs house brokerage (“CHB”) services to complement its core transportation service offering.

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The Company’s management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

The interim period information included in this Quarterly Report on Form 10-Q reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of the Company’s management, necessary for a fair statement of the results of the respective interim periods. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a) Principles of Consolidation

The condensed consolidated financial statements include the accounts of Radiant Logistics, Inc. and its wholly-owned subsidiaries as well as a variable interest entity, Radiant Logistics Partners, LLC (“RLP”), which is 60% owned by Radiant Capital Partners, LLC (“RCP,” see Note 11), an entity owned by the Company’s Chief Executive Officer. All significant intercompany balances and transactions have been eliminated.

Non-controlling interest in the condensed consolidated balance sheets represents RCP’s proportionate share of equity in RLP. Net income (loss) of non-wholly-owned consolidated subsidiaries or variable interest entities is allocated to the Company and the holder(s) of the non-controlling interest in proportion to their percentage ownership interests.

b) Use of Estimates

The preparation of condensed consolidated financial statements and related disclosures in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that could differ from these estimates.

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c) Cash and Cash Equivalents

The Company maintains its cash in bank deposit accounts that may, at times, exceed federally insured limits. The Company has not experienced any losses in such accounts. Cash equivalents consist of highly liquid investments with original maturities of three months or less.

d) Restricted Cash

Restricted cash as of September 30, 2023 represented five months of interest payments on the Company’s senior secured loan held by the lender that are required to be set aside. There is no longer any restricted cash as the senior secured loan was repaid in full during fiscal year 2024. The Company combines unrestricted and restricted cash for presentation in the condensed consolidated statements of cash flows.

e) Accounts Receivable

Accounts receivable, which includes billed and unbilled amounts, are stated net of the allowance for expected credit losses and represents the net amount expected to be collected. The Company measures the expected credit losses on a collective (pool) basis based on the levels of delinquency (i.e., aging analysis) and applying an expected loss percentage rate to each pool when similar risk characteristics exist. The Company determines the allowance for expected credit losses by computing an expected loss percentage rate to each pool based upon its historical write-off experience, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. When specific customers are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately. Amounts for shipments delivered but unbilled were $22,773 and $22,908 as of September 30, 2024 and June 30, 2024, respectively.

Through a contractual arrangement, the Company records trade accounts receivable from revenue generated from independently owned strategic operating partners operating under various Company brands. Under these contracts, each strategic operating partner is responsible for some or all of the collection of its customer accounts receivable. To facilitate this arrangement, certain strategic operating partners are required to maintain a deposit with the Company for these receivables. The Company charges the respective strategic operating partner’s deposit account for any accounts receivable aged beyond 90 days along with any other amounts owed to the Company by strategic operating partners. If a deficit balance occurs in the strategic operating partners’ deposit account, these amounts are included as accounts receivable in the Company’s condensed consolidated financial statements. For those strategic operating partners not required to maintain a deposit, the Company may withhold all or a portion of future commissions payable to the strategic operating partner to satisfy any deficit balance. The Company expects to replenish any deficit balance through the future business operations of these strategic operating partners, or as these amounts are ultimately collected from these customers. However, to the extent any of these strategic operating partners were to cease operations or otherwise be unable to replenish these deficit amounts, the Company would be at risk of loss for any such amounts. Due to the nature and specific risk characteristics of these accounts, the Company evaluates these accounts separately in determining an allowance for expected credit losses.

The activity in the allowance for expected credit losses is as follows:


(In thousands)
Balance as of June 30, 2024	$	2,103
Write-offs		(425	)
Recoveries		113
Provision for expected credit losses		225
Foreign currency translation and other		44

Balance as of September 30, 2024	$	2,060

f) Property, Technology, and Equipment

Property, technology, and equipment is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the related assets. Upon retirement or other disposition of these assets, the cost and related accumulated depreciation and amortization are removed from the accounts and the resulting gain or loss, if any, is reflected in other income (expense). Expenditures for maintenance, repairs and renewals of minor items are expensed as incurred. Major renewals and improvements are capitalized.

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g) Goodwill

Goodwill represents the excess acquisition cost of an acquired entity over the estimated fair values assigned to the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but rather is reviewed for impairment annually as of April 1 of each year or more frequently if facts or circumstances indicate that its carrying amount may not be recoverable.

The Company has determined that there are two reporting units for the purpose of the goodwill impairment test. An entity first has the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, or to bypass the qualitative assessment and perform a quantitative assessment. The qualitative assessment evaluates various factors, such as macroeconomic conditions, industry and market conditions, cost factors, recent events, and financial trends that may impact the fair value of the reporting unit. If it is determined that the estimated fair value of the reporting unit is more-likely-than-not less than its carrying amount, including goodwill, a quantitative assessment is required. Otherwise, no further analysis is required.

If a quantitative assessment is performed, a reporting unit’s fair value is compared to its carrying amount. A reporting unit’s fair value is determined based upon consideration of various valuation methodologies, including the income approach, which utilizes projected future cash flows discounted at rates commensurate with the risks involved and the market approach, which utilizes multiples of current and future earnings based on a selection of guideline public companies. If the fair value of a reporting unit is less than its carrying amount, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized cannot exceed the total amount of goodwill allocated to that reporting unit.

As of September 30, 2024, management believes no impairment exists.

h) Long-Lived Assets

Long-lived assets, such as property, technology, and equipment, and definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable. If circumstances require a long-lived asset or asset group to be tested for possible impairment, the Company compares the undiscounted expected future cash flows to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent the carrying amount of the asset or asset group exceeds the fair value. Fair values of long-lived assets are determined through various techniques, such as applying probability weighted, expected present value calculations to the estimated future cash flows using assumptions a market participant would utilize or through the use of a third-party independent appraiser or valuation specialist.

Definite-lived intangible assets consist of customer related intangible assets, trade names and trademarks, licenses, developed technology, and non-compete agreements arising from the Company’s acquisitions. Customer related intangible assets and trademarks and trade names are amortized using the straight-line method over periods of up to 15 years, licenses are amortized using the straight-line method over ten years, developed technology is amortized using the straight-line method over five years, and non-compete agreements are amortized using the straight-line method over periods of up to five years.

i) Business Combinations

The Company accounts for business acquisitions using the acquisition method. The assets acquired and liabilities assumed in business combinations, including identifiable intangible assets, are recorded based upon their estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired is recorded as goodwill. Acquisition expenses are expensed as incurred. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed as of the acquisition date, the estimates are inherently uncertain and subject to refinement.

The fair values of intangible assets are generally estimated using a discounted cash flow approach with Level 3 inputs. The estimate of fair value of an intangible asset is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To estimate fair value, the Company generally uses risk-adjusted cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes the level and timing of cash flows appropriately reflects market participant assumptions.

For acquisitions that involve contingent consideration, the Company records a liability equal to the fair value of the contingent consideration obligation as of the acquisition date. The Company determines the acquisition date fair value of the contingent consideration based on the likelihood of paying the additional consideration. The fair value is generally estimated using projected future operating results and the corresponding future earn-out payments that can be earned upon the achievement of specified operating results and financial objectives by acquired companies using Level 3 inputs discounted to present value. These liabilities are measured quarterly at fair value, and any change in the fair value of the contingent consideration liability is recognized in the condensed consolidated statements of comprehensive income.

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During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in the condensed consolidated statements of comprehensive income.

j) Revenue Recognition

The Company recognizes revenue to depict the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods and services. The Company’s revenues are primarily from transportation services, which include providing for the arrangement of freight, both domestically and internationally, through modes of transportation, such as air freight, ocean freight, truckload, less than truckload, and intermodal. The Company generates its transportation services revenue by purchasing transportation from carriers and reselling those services to its customers.

In general, each shipment transaction or service order constitutes a separate contract with the customer. A performance obligation is created once a customer agreement with an agreed upon transaction price exists. The transaction price is typically fixed and not contingent upon the occurrence or non-occurrence of any other event. The transaction price is generally due 30 to 45 days from the date of invoice. The Company’s transportation transactions provide for the arrangement of the movement of freight to a customer’s agreed upon destination. The transportation services, including certain ancillary services, such as loading/unloading, freight insurance and customs clearance, that are provided to the customer represent a single performance obligation as the ancillary services are not distinct in the context of the contract and therefore combined with the performance obligation for transportation services. This performance obligation is satisfied over time and recognized in revenue upon the transfer of control of the services over the requisite transit period as the customer’s goods move from point of origin to point of destination. The Company determines the period to recognize revenue based upon the actual departure date and delivery date, if available, or estimated delivery date if delivery has not occurred as of the reporting date. Certain shipments may require the Company to estimate revenue, in which case the average revenue per shipment, per mode of transportation is used. Determination of the estimated revenue, transit period and the percentage of completion of the shipment as of the reporting date requires management to make judgments that affect the timing and amount of revenue recognition. The Company has determined that revenue recognition over the transit period provides a reasonable estimate of the transfer of services to its customers as it depicts the pattern of the Company’s performance under the contracts with its customers. The timing of revenue recognition, billings, cash collections, and allowance for expected credit losses results in billed and unbilled receivables. The Company receives the unconditional right to bill when shipments are delivered to their destination. The Company has elected to not disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied as of the end of the period as the Company’s contract with its transportation customers have an expected duration of one year or less. The corresponding direct costs of revenue, which primarily includes purchased transportation costs and commissions, have been expensed ratably as the goods are transferred to the customer.

The Company also provides MM&D services for its customers under contracts generally ranging from a few months to five years and include renewal provisions. These MM&D service contracts provide for inventory management, order fulfillment and warehousing of the customer’s product and arrangement of transportation of the customer’s product. The Company’s performance obligations are satisfied over time as the customers simultaneously receive and consume the services provided by the Company as it performs. Revenue is recognized in the amount for which the Company has the right to invoice the customer, as this amount corresponds directly with the value provided to the customer for the Company’s performance completed to date. The transaction price is based on the consideration specified in the contract with the customer and contains fixed and variable consideration. In general, the fixed consideration component of a contract represents reimbursement for facility and equipment costs incurred to satisfy the performance obligation and is recognized on a straight-line basis over the term of the contract. The variable consideration component is comprised of cost reimbursement per unit pricing for time and pricing for materials used and is determined based on cost plus a mark-up for hours of services provided and materials used and is recognized over time based on the level of activity volume.

Other services include primarily CHB services sold separately as a single performance obligation. The Company recognizes revenue from this performance obligation at a point in time, which is the completion of the services. Duties and taxes collected from the customer and paid to the customs agent on behalf of the customers are excluded from revenue.

The Company uses independent contractors and third-party carriers in the performance of its transportation services. The Company evaluates who controls the transportation services to determine whether its performance obligation is to transfer services to the customer or to arrange for services to be provided by another party. The Company determined it acts as the principal for its transportation services performance obligation since it is in control of establishing the prices for the specified services, managing all aspects of the shipments process and assuming the risk of loss for delivery and collection. Such transportation services revenue is presented on a gross basis in the condensed consolidated statements of comprehensive income.

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Contract Assets

Contract assets represent estimated amounts for which the Company has the right to consideration for transportation services related to the completed portion of in-transit shipments at period end, but for which it has not yet completed the performance obligations. Upon completion of the performance obligations, which can vary in duration based upon the mode of transportation, the balance is included in accounts receivable.

Operating Partner and Other Commissions

The Company enters into contractual arrangements with strategic operating partners that operate, on behalf of the Company, an office in a specific location that engages primarily in arranging, domestic and international, transportation services. In return, the strategic operating partner is compensated through the payment of sales commissions, which are based on individual shipments. The Company accrues the strategic operating partners’ commission obligation ratably as the goods are transferred to the customer.

The Company records employee sales commissions related to transportation services as an expense when incurred since the amortization period of such costs is less than one year.

k) Defined Contribution Savings Plan

The Company has an employee savings plan under which the Company provides safe harbor matching contributions. The Company’s contributions under the plan were $499 and $465 for the three months ended September 30, 2024 and 2023, respectively.

l) Income Taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company records a liability for unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Interest and penalties, if any, are recorded as a component of interest expense or other expense, respectively. Currently, the Company does not have any accruals for uncertain tax positions.

m) Share-Based Compensation

The Company grants restricted stock awards, restricted stock units, and stock options to certain directors, officers, and employees. The fair value of restricted stock awards is the market price of the Company’s common stock as of the grant date, and the fair value of each stock option grant is estimated as of the grant date using the Black-Scholes option pricing model. Determining the fair value of stock option awards at the grant date requires judgment about, among other things, stock volatility, the expected life of the award, and other inputs.

Share-based compensation is recorded over the requisite service period, generally defined as the vesting period. The Company records share-based compensation for service-based restricted stock awards and stock options on a straight-line basis over the requisite service period of the entire award. Certain restricted stock units also have performance-based conditions (“PSUs”) and will vest upon achievement of pre-established individual and Company performance goals as measured after a three-year period. Expense for PSUs is recognized over the service period based on the most probable outcome of performance conditions as of the reporting date. The Company accounts for forfeitures as they occur. The Company issues new shares of common stock to satisfy exercises and vesting of awards granted under its stock plans. Share-based compensation expense is reflected in personnel costs in the condensed consolidated statements of comprehensive income.

n) Basic and Diluted Income per Share Allocable to Common Stockholders

Basic income per common share is computed by dividing net income allocable to common stockholders by the weighted average number of common shares outstanding. Diluted income per common share is computed by dividing net income allocable to common stockholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding after giving effect to all potential dilutive securities, such as restricted stock units and stock options.

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o) Foreign Currency

For the Company’s foreign subsidiaries that prepare financial statements in currencies other than U.S. dollars, the local currency is the functional currency. All assets and liabilities are translated at period end exchange rates and all revenue and expenses are translated at the weighted average rates for the period. Translation adjustments are recorded in foreign currency translation in other comprehensive income. Gains and losses on transactions of monetary items denominated in a foreign currency are recognized within other income (expense) on the condensed consolidated statements of comprehensive income.

p) Leases

The Company determines if an arrangement is a lease at inception. Assets and obligations related to operating leases are included in operating lease right-of-use (“ROU”) assets; current portion of operating lease liabilities; and operating lease liabilities, net of current portion in the condensed consolidated balance sheets. Assets and obligations related to finance leases are included in property, technology, and equipment, net; current portion of finance lease liabilities; and finance lease liabilities, net of current portion in the condensed consolidated balance sheets.

ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the incremental borrowing rate based on the information available at commencement date is used in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. Lease terms may include options to extend or terminate the lease, which the Company has generally not included in its calculation of ROU assets or lease liabilities as it is not reasonably certain that the option will be exercised in the normal course of business.

For the Company’s lease agreements containing fixed payments for both lease and non-lease components, the Company accounts for the components as a single lease component, as permitted. For leases with an initial term of twelve months or less, the Company elected the exemption from recording ROU assets and lease liabilities for all leases that qualify, and records rent expense on a straight-line basis over the lease term. Expenses for these short-term leases for the three months ended September 30, 2024 and 2023 are insignificant.

Certain leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. Variable payments, to the extent they are not considered fixed, are expensed as incurred. Variable lease costs for the three months ended September 30, 2024 and 2023 are insignificant.

For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the ROU asset is recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term.

q) Derivatives

Derivative instruments are recognized as either assets or liabilities and measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.

For derivative instruments designated as cash flow hedges, gains and losses are initially reported as a component of other comprehensive income and subsequently recognized in earnings with the corresponding hedged item. Gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in earnings. As of September 30, 2024, the Company does not have any derivatives designated as hedges.

For derivative instruments that are not designated as hedges, gains and losses from changes in fair value of interest rate swap contracts are recognized in the condensed consolidated statements of comprehensive income.

r) Treasury Stock

The Company accounts for treasury stock under the cost method, and repurchases are reflected as reductions of stockholders’ equity at cost (see Note 10). As of September 30, 2024, there have been no reissuances of treasury stock.

s) Reclassification of Previously Issued Financial Statements

Certain amounts in the prior period have been reclassified in the condensed consolidated financial statements to conform to the current year presentation. There has been no impact on previously reported net income or stockholders’ equity from such reclassification.

t) Recent Accounting Guidance Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires greater disaggregation of information in a reporting entity’s effective tax rate reconciliation as well as

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disaggregation of income taxes paid by jurisdiction. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its income tax disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires more disaggregated expense information about a public entity’s reportable segments if the significant segment expenses are regularly provided to the chief operating decision-maker and included in each reported measure of segment profit or loss. Additionally, ASU 2023-07 allows public entities to disclose more than one measure of segment profit or loss used by the chief operating decision-maker. This ASU 2023-07 does not change the definition of a segment, the method of determining segments, or the criteria for aggregating operating segments into reportable segments. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024. The ASU should be adopted retrospectively as of the beginning of the earliest period presented. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-07 on its segment reporting disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires greater disaggregation of information about a reporting entity’s specific expense categories (including employee compensation, depreciation, and amortization) presented on the face of the statement of comprehensive income. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods in fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2024-03 on its disclosures.

NOTE 3 – REVENUE

A summary of the Company’s gross revenues disaggregated by major service lines and geographic markets (reportable segments), and timing of revenue recognition are as follows:


	Three Months Ended September 30, 2024
(In thousands)	United States		Canada		Corporate/ Eliminations			Total
Major service lines:
Transportation services	$	172,878	$	19,003	$	(62	)	$	191,819
Value-added services (1)		3,937		7,809		—			11,746
Total	$	176,815	$	26,812	$	(62	)	$	203,565

Timing of revenue recognition:
Services transferred over time	$	175,092	$	26,777	$	(62	)	$	201,807
Services transferred at a point in time		1,723		35		—			1,758
Total	$	176,815	$	26,812	$	(62	)	$	203,565


	Three Months Ended September 30, 2023
(In thousands)	United States		Canada		Corporate/ Eliminations			Total
Major service lines:
Transportation services	$	176,823	$	21,183	$	(37	)	$	197,969
Value-added services (1)		3,454		9,374		—			12,828
Total	$	180,277	$	30,557	$	(37	)	$	210,797

Timing of revenue recognition:
Services transferred over time	$	178,641	$	30,533	$	(37	)	$	209,137
Services transferred at a point in time		1,636		24		—			1,660
Total	$	180,277	$	30,557	$	(37	)	$	210,797

(1)

Value-added services include MM&D, CHB, GTM, and other services.

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NOTE 4 – EARNINGS PER SHARE

The computations of the numerator and denominator of basic and diluted income per share are as follows:


	Three Months Ended September 30,
(In thousands, except share data)	2024		2023
Numerator:
Net income attributable to Radiant Logistics, Inc.	$	3,376	$	2,622

Denominator:
Weighted average common shares outstanding, basic		46,721,238		47,297,957
Dilutive effect of share-based awards		1,864,573		1,778,228

Weighted average common shares outstanding, diluted		48,585,811		49,076,185

Potentially dilutive common shares excluded		110,000		100,000

NOTE 5 – LEASES

The Company has finance leases for equipment, and operating leases for office space, warehouse space, and other equipment with lease terms expiring at various dates through December 2033.

The Company has a lease commitment that has been executed but not yet commenced. The undiscounted future lease payments total $21,415 and are excluded from the tables below.

The components of lease expense are as follows:


	Three Months Ended September 30,
(In thousands)	2024		2023
Operating lease cost	$	3,518	$	3,719

Finance leases:
Amortization of leased assets		151		208
Interest on lease liabilities		17		20

Total finance lease cost	$	168	$	228

Supplemental cash flow information related to leases are as follows:


	Three Months Ended September 30,
(In thousands)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	2,830	$	3,683
Operating cash flows paid for interest portion of finance leases		17		20
Financing cash flows paid for principal portion of finance leases		158		151

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	796	$	9

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Supplemental balance sheet information related to leases are as follows:


	September 30,			June 30,
(In thousands)	2024			2024
Operating leases:
Operating lease right-of-use assets	$	48,301		$	49,850

Current portion of operating lease liabilities		12,146			11,629
Operating lease liabilities, net of current portion		42,943			45,026

Total operating lease liabilities	$	55,089		$	56,655

Finance leases:
Property, technology, and equipment, net	$	1,073		$	1,236

Current portion of finance lease liabilities		641			643
Finance lease liabilities, net of current portion		511			677

Total finance lease liabilities	$	1,152		$	1,320

Weighted average remaining lease term:
Operating leases	5.5 years			5.7 years
Finance leases	3.2 years			3.3 years

Weighted average discount rate:
Operating leases		5.56	%		5.52	%
Finance leases		5.72	%		5.62	%

As of September 30, 2024, maturities of lease liabilities for each of the next five fiscal years ending June 30 and thereafter are as follows:


(In thousands)	Operating			Finance
2025 (remaining)	$	11,185		$	518
2026		13,690			338
2027		12,290			116
2028		7,864			102
2029		4,811			91
Thereafter		15,492			111

Total lease payments		65,332			1,276

Less imputed interest		(10,243	)		(124	)

Total lease liabilities	$	55,089		$	1,152

NOTE 6 – PROPERTY, TECHNOLOGY, AND EQUIPMENT


		September 30,			June 30,
(In thousands)	Useful Life	2024			2024
Computer software	3 − 5 years	$	28,415		$	28,165
Office and warehouse equipment	3 − 15 years		17,364			16,275
Leasehold improvements	(1)		11,733			11,170
Trailers and related equipment	3 − 15 years		6,963			6,946
Computer equipment	3 − 5 years		5,553			5,240
Furniture and fixtures	3 − 15 years		2,002			1,836

Property, technology, and equipment			72,030			69,632
Less: accumulated depreciation and amortization			(46,310	)		(44,074	)

Property, technology, and equipment, net		$	25,720		$	25,558

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(1)

The cost is amortized over the shorter of the lease term or useful life.

Depreciation and amortization expenses related to property, technology, and equipment were $1,998 and $1,882 for the three months ended September 30, 2024 and 2023, respectively.

NOTE 7 – GOODWILL AND INTANGIBLE ASSETS

Goodwill

Changes in the carrying amount of goodwill are as follows:


(In thousands)
Balance as of June 30, 2024	$	93,043
Acquisition		5,237
Foreign currency translation gain		225

Balance as of September 30, 2024	$	98,505

Intangible Assets

Intangible assets consist of the following:


	September 30, 2024
(In thousands)	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer related	9.0 years	$	135,225	$	(98,062	)	$	37,163
Trade names and trademarks	6.4 years		15,440		(13,011	)		2,429
Developed technology	2.2 years		4,091		(2,318	)		1,773
Licenses	2.5 years		769		(577	)		192
Covenants not to compete	0.3 years		889		(853	)		36

		$	156,414	$	(114,821	)	$	41,593


	June 30, 2024
(In thousands)	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Customer related	8.5 years	$	125,552	$	(95,383	)	$	30,169
Trade names and trademarks	6.6 years		15,382		(12,857	)		2,525
Developed technology	2.4 years		4,091		(2,114	)		1,977
Licenses	2.7 years		760		(551	)		209
Covenants not to compete	0.6 years		1,433		(1,370	)		63

		$	147,218	$	(112,275	)	$	34,943

Amortization expense amounted to $2,807 and $2,643 for the three months ended September 30, 2024 and 2023, respectively. Future amortization expense for each of the next five fiscal years ending June 30 are as follows:


(In thousands)
2025 (remaining)	$	7,056
2026		5,277
2027		4,701
2028		4,078
2029		3,494

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NOTE 8 – NOTES PAYABLE

Revolving Credit Facility

The Company entered into a $200,000 syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated as of August 5, 2022, and amended as of September 27, 2023. The Revolving Credit Facility is segregated into two tranches, a $150,000 tranche that may be loaned in U.S. Dollars and a $50,000 tranche that may be loaned in either U.S. Dollars or Canadian Dollars. The Revolving Credit Facility includes a $75,000 accordion feature to support future acquisition opportunities. The Revolving Credit Facility was entered into with Bank of America, N.A. and BMO Capital Markets Corp. as joint book runners and joint lead arrangers, Bank of America, N.A. as Administrative Agent, Swingline Lender and Letter of Credit Issuer, Bank of Montreal as syndication agent, KeyBank National Association and MUFG Union Bank, N.A. as co-documentation agents and Bank of America, N. A., Bank of Montreal, KeyBank National Association, MUFG Union Bank, N.A. and Washington Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as “Lenders”).

The Revolving Credit Facility matures on August 5, 2027 and is collateralized by a first-priority security interest in the accounts receivable and other assets of the Company and its guarantors. Borrowings in U.S. Dollars accrue interest (at the Company’s option) at a) the Lenders’ base rate plus 0.50% to 1.50%; b) Term Secured Overnight Financing Rate (“SOFR”) plus 1.40% to 2.40%; or c) Term SOFR Daily Floating Rate plus 1.40% to 2.40%. Borrowings in Canadian Dollars accrue interest (at the Company’s option) at a) Term Canadian Overnight Repo Rate Average (“CORRA”) plus 0.29547% to 0.32138% depending on the term, plus 1.40% to 2.40%; or b) Daily Simple CORRA plus 0.29547% plus 1.40% to 2.40%. Rates are adjusted based on the Company’s consolidated net leverage ratio. The Company’s U.S. and Canadian subsidiaries are guarantors of the Revolving Credit Facility. As of September 30, 2024, the one-month SOFR was 4.85%.

For borrowings under the Revolving Credit Facility, the Company is subject to the maximum consolidated net leverage ratio of 3.00 and minimum consolidated interest coverage ratio of 3.00. 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.

Borrowings outstanding on the Revolving Credit Facility were $200 as of September 30, 2024. There were no borrowing outstanding as of June 30, 2024. As of September 30, 2024, the Company was in compliance with its covenants.

NOTE 9 – DERIVATIVES

All derivatives are recognized on the Company’s condensed consolidated balance sheets at their fair values and consist of interest rate swap contracts as of September 30, 2024 and June 30, 2024. On March 20, 2020, and effective April 17, 2020, the Company entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows at one-month LIBOR for a $20,000 notional amount, for fixed interest cash outflows at 0.635%. On April 1, 2020, and effective April 2, 2020, the Company entered into an interest rate swap contract with Bank of America to trade the variable interest cash inflows at one-month LIBOR for a $10,000 notional amount, for fixed interest cash outflows at 0.5865%. Both interest rate swap contracts mature and terminate on March 13, 2025.

The Company uses interest rate swaps for the management of interest rate risk exposure, as the interest rate swaps effectively convert a portion of the Company’s Revolving Credit Facility from a floating to a fixed rate. The interest rate swaps are agreements between the Company and Bank of America to pay, in the future, a fixed rate payment in exchange for Bank of America paying the Company a variable payment. The net payment obligation is based on the notional amount of the swap contracts and the prevailing market interest rates. The Company may terminate the swap contracts prior to their expiration, at which point a realized gain or loss would be recognized. The value of the Company’s commitment would increase or decrease based primarily on the extent to which interest rates move against the rate fixed for each swap. The derivative instruments had a total notional amount of $30,000 and a fair value of $592 and $1,032 recorded in deposits and other assets in the condensed consolidated balance sheets as of September 30, 2024 and June 30, 2024, respectively.

Neither interest rate swap contract is designated as a hedge, and gains and losses from changes in fair value are recognized in the condensed consolidated statements of comprehensive income. See Note 12 for discussion of fair value of the derivative instruments.

NOTE 10 – STOCKHOLDERS’ EQUITY

The Company is authorized to issue 5,000,000 shares of preferred stock, par value at $0.001 per share and 100,000,000 shares of common stock, $0.001 per share. No shares of preferred stock are issued or outstanding on September 30, 2024 or June 30, 2024.

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Common Stock

In December 2023, the Company’s board of directors authorized the repurchase of up to 5,000,000 shares of the Company’s common stock through December 31, 2025. In February 2022, the Company’s board of directors authorized the repurchase of up to 5,000,000 shares of the Company’s common stock through December 31, 2023. Under the stock repurchase programs, the Company is authorized to repurchase, from time to time, shares of its outstanding common stock in the open market at prevailing market prices or through privately negotiated transactions as permitted by securities laws and other legal requirements. The programs do not obligate the Company to repurchase any specific number of shares and could be suspended or terminated at any time without prior notice. Under these repurchase programs, the Company purchased 129,360 shares of its common stock at an average cost of $5.47 per share for an aggregate cost of $708, and 35,349 shares of its common stock at an average cost of $6.52 per share for an aggregate cost of $230 during the three months ended September 30, 2024 and 2023, respectively.

NOTE 11 – VARIABLE INTEREST ENTITY AND RELATED PARTY TRANSACTIONS

RLP is owned 40% by a wholly-owned subsidiary of the Company and 60% by RCP, a company for which the Chief Executive Officer of the Company is the sole member. RLP is a certified minority business enterprise that was formed for the purpose of providing the Company with a national accounts strategy to pursue corporate and government accounts with diversity initiatives. RCP’s ownership interest entitles it to 60% of the profits and distributable cash, if any, generated by RLP. The operations of RLP are intended to provide certain benefits to the Company, including expanding the scope of services offered by the Company and participating in supplier diversity programs not otherwise available to the Company. In the course of evaluating and approving the ownership structure, operations and economics emanating from RLP, a committee consisting of the independent Board members of the Company, considered, among other factors, the significant benefits provided to the Company through association with a minority business enterprise, particularly as many of the Company’s largest current and potential customers have a need for diversity offerings. In addition, the committee concluded that the economic relationship with RLP was on terms no less favorable to the Company than terms generally available from unaffiliated third parties.

Certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties are considered variable interest entities. The Company has power over significant activities of RLP including the fulfillment of its contracts and financing its operations. Additionally, the Company also pays expenses and collects receivables on behalf of RLP. Thus, the Company is the primary beneficiary, RLP qualifies as a variable interest entity, and RLP is consolidated in these condensed consolidated financial statements.

RLP recorded $80 and $382 in net income of which RCP’s distributable share was $48 and $229 for the three months ended September 30, 2024 and 2023, respectively. The non-controlling interest recorded as a reduction of net income available to common stockholders in the condensed consolidated statements of comprehensive income represents RCP’s distributive share.

NOTE 12 – FAIR VALUE MEASUREMENT

The accounting guidance for fair value, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants as of the reporting date. The framework for measuring fair value consists of a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The fair value measurement level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Assets and liabilities measured at fair value are based on one or more of the following three valuation techniques:

•

Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

•

Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost); and

•

Income approach: Techniques to convert future amounts to a single present amount based upon market expectations, including present value techniques, option pricing, and excess earning models.

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Items Measured at Fair Value on a Recurring Basis

The following table sets forth the Company’s financial assets (liabilities) measured at fair value on a recurring basis:


	Fair Value Measurements as of September 30, 2024
(In thousands)	Level 3			Total
Contingent consideration	$	(9,665	)	$	(9,665	)
Interest rate swap contracts (derivatives)		592			592

	Fair Value Measurements as of June 30, 2024
(In thousands)	Level 3			Total
Contingent consideration	$	(5,165	)	$	(5,165	)
Interest rate swap contracts (derivatives)		1,032			1,032

The following table provides a reconciliation of the financial assets (liabilities) measured at fair value using significant unobservable inputs (Level 3):


(In thousands)	Contingent Consideration			Interest Rate Swap Contracts (Derivatives)
Balance as of June 30, 2024	$	(5,165	)	$	1,032
Increase related to acquisition		(4,300	)		—
Change in fair value		(200	)		(440	)

Balance as of September 30, 2024	$	(9,665	)	$	592

The Company has contingent obligations to transfer cash payments to former shareholders of acquired operations in conjunction with certain acquisitions if specified operating results and financial objectives are met over their stated earn-out period. Contingent consideration is measured quarterly at fair value, and any change in the fair value of the contingent liability is included in the condensed consolidated statements of comprehensive income. The change in fair value in each period is principally attributable to a change in management’s estimates of future earn-out payments through the remainder of the earn-out periods.

The Company uses projected future financial results based on recent and historical data to value the anticipated future earn-out payments. To calculate fair value, the future earn-out payments were then discounted using Level 3 inputs. The Company has classified the contingent consideration as Level 3 due to the lack of relevant observable market data over fair value inputs. The Company believes the discount rate used to discount the earn-out payments reflects market participant assumptions. Changes in assumptions and operating results could have a significant impact on the earn-out amount up to a maximum of $19,775 through earn-out periods measured through January 2027.

As discussed in Note 9, derivative instruments are carried at fair value on the condensed consolidated balance sheets. The fair market value of interest rate swaps are determined using Level 3 unobservable inputs, specifically a pricing service proprietary to Bank of America.

Fair Value of Financial Instruments

The carrying amounts of the Company’s cash equivalents, receivables, contract assets, accounts payable, commissions payable, accrued expenses, and the income tax receivable and payable approximate the fair values due to the relatively short maturities of these instruments. The carrying amounts of the Company’s Revolving Credit Facility and notes payable would not differ significantly from fair value (based on Level 2 inputs) if recalculated based on current interest rates. During the three months ended September 30, 2024, there were no transfers of financial instruments between Levels 1, 2, and 3.

NOTE 13 – INCOME TAXES

The components of income tax expense are as follows:


	Three Months Ended September 30,
(In thousands)	2024		2023
Current income tax expense	$	906	$	1,362
Deferred income tax expense (benefit)		239		(348	)

Income tax expense	$	1,145	$	1,014

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The Company’s effective tax rates prior to discrete items for the three months ended September 30, 2024 and 2023 are higher than the U.S. federal statutory rates primarily due to the jurisdictional mix of income and state taxes. Income tax expense for the three months ended September 30, 2024 results in an effective tax rate of 25.78%, which is higher than the U.S. federal statutory rate due to jurisdictional mix of income and state taxes, and reduced by share-based compensation benefits, which is discretely recognized through the three months ended September 30, 2024 and is not a component of the Company’s annualized forecasted effective tax rate for the fiscal year ended June 30, 2025. The actual income tax through the three months ended September 30, 2023 was 27.68%, which was higher than the U.S. federal statutory rate due to jurisdictional mix of income and state taxes, and reduced by share-based compensation benefits, which was discretely recognized in the quarter and was not a component of the Company’s annualized forecasted effective tax rate. The Company does not have any uncertain tax positions.

NOTE 14 – SHARE-BASED COMPENSATION

The Radiant Logistics, Inc. 2021 Omnibus Incentive Plan (the “2021 plan”) permits the Company’s Audit and Executive Committee to grant share-based awards to eligible employees, non-employee directors, and consultants of the Company. The 2021 plan became effective immediately upon approval by the Company’s stockholders and will expire on November 16, 2031, unless terminated earlier by the Board. The 2021 plan replaced the 2012 Radiant Logistics, Inc. Stock Option and Performance Award Plan (the “2012 plan”). The remaining shares available for grant under the 2012 plan will roll over into the 2021 plan, and no new awards will be granted under the 2012 plan. The terms of the 2012 plan, as applicable, will continue to govern awards outstanding under the 2012 plan, until exercised, expired, paid or otherwise terminated or canceled. Other than the 2021 plan, there are no other equity compensation plans under which equity awards can be granted.

Restricted Stock Units

The Company recognized share-based compensation expense related to restricted stock units of $145 and $863 for the three months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the Company had approximately $5,168 of total unrecognized share-based compensation cost for restricted stock units expected to be recognized over a weighted average period of approximately 1.88 years.

The following table summarizes restricted stock unit activity:


	Number of Units			Weighted Average Grant Date Fair Value
Unvested balance as of June 30, 2024		1,553,127		$	6.63
Vested		(207,735	)		6.48
Granted		166,505			6.41

Unvested balance as of September 30, 2024		1,511,897		$	6.62

The table above includes a total of 870,252 restricted stock units with performance-based conditions as of September 30, 2024. These awards will vest upon achievement of pre-established individual and Company performance goals as measured after a three-year period.

Stock Options

Stock options are granted at exercise prices equal to the fair value of the common stock at the date of the grant and have a term of ten years. Generally, grants vest 20% annually over a five-year period from the date of grant. The Company recognized share-based compensation expense related to stock options of $18 for each of the three months ended September 30, 2024 and 2023. As of September 30, 2024, the Company had approximately $119 of total unrecognized share-based compensation cost for stock options expected to be recognized over a weighted average period of approximately 1.67 years.

The following table summarizes stock option activity:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (In thousands)
Outstanding as of June 30, 2024		733,093		$	4.63		1.73	$	963
Exercised		(59,168	)		3.36		—		176

Outstanding as of September 30, 2024		673,925		$	4.74		1.61	$	1,242

Exercisable as of September 30, 2024		633,925		$	4.57		1.29	$	1,242

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NOTE 15 – COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company and its subsidiaries may be subject to legal actions and claims arising from contracts or other matters from time to time in the ordinary course of business. Management is not aware of any pending or threatened legal proceedings that are considered other than routine legal proceedings. The Company believes that the ultimate disposition or resolution of its routine legal proceedings, in the aggregate, are not material to its financial position, results of operations and liquidity.

On or about March 14, 2024, through its information technology systems monitoring tools, the Company detected what was determined to be the initial stages of a cybersecurity incident related to its Canadian operations. Upon detection, the Company immediately initiated its incident response and business continuity protocols and began taking measures to disrupt the unauthorized activity. As part of its process to address the incident, the Company proactively took measures to isolate its Canadian operations from the rest of its network and engaged the services of cybersecurity and forensics professionals to further assess, contain and remediate the incident. While the incident in combination with the Company’s security protocols caused service delays for customers in Canada, systems recovery efforts were promptly completed. The Company’s U.S. and other international operations continued without disruption throughout this process in all material respects.

Now that the investigation is complete, as of the date of this filing, the Company can confirm that the incident has not had a material impact on the Company’s overall operations, and the Company has determined that the incident did not materially impact the Company's financial conditions or results of operations. Although the Company acted promptly and as efficiently as possible, any unknowing failure of the Company to comply with data privacy or other laws and regulations related to this event could still result in claims, legal or regulatory proceedings, inquiries, or investigations.

Contingent Consideration and Earn-out Payments

The Company’s agreements with respect to previous acquisitions contain future consideration provisions, which provide for the selling equity owners to receive additional consideration if specified operating results and financial objectives are achieved in future periods. Earn-out payments are generally due annually on November 1st and 90 days following each anniversary of each respective acquisition.

The following table represents the estimated discounted earn-out payments to be paid in each of the following fiscal years ended June 30:


(In thousands)
2025 (remaining)	$	475
2026		3,560
2027		4,540
2028		1,090

Total	$	9,665

Other Contractual Commitments

As of September 30, 2024, the Company has $588 of non-cancelable contractual commitments related to warehouse equipment associated with an operating lease that has not yet commenced. The amounts are expected to be paid within one year.

NOTE 16 – OPERATING AND GEOGRAPHIC SEGMENT INFORMATION

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker or decision-making group in making decisions regarding allocation of resources and assessing performance. The Company’s chief operating decision-maker is the Chief Executive Officer. The Company has two operating and reportable segments: United States and Canada.

The Company evaluates the performance of the segments primarily based on their respective revenues and income from operations. In addition, the Company includes the costs of the Company’s executives, board of directors, professional services, such as legal and consulting, amortization of intangible assets, and certain other corporate costs associated with operating as a public company as Corporate.

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As of and for the Three Months Ended September 30, 2024						Corporate/
(In thousands)	United States		Canada			Eliminations			Total
Revenues	$	176,815	$	26,812		$	(62	)	$	203,565
Income (loss) from operations		9,198		833			(6,227	)		3,804
Other income (expense)		16		(39	)		788			765
Income (loss) before income taxes		9,214		794			(5,439	)		4,569
Depreciation and amortization		960		1,031			2,814			4,805
Total assets		273,627		101,631			—			375,258
Property, technology, and equipment, net		8,587		17,133			—			25,720
Goodwill		78,541		19,964			—			98,505

As of and for the Three Months Ended September 30, 2023						Corporate/
(In thousands)	United States		Canada			Eliminations			Total
Revenues	$	180,277	$	30,557		$	(37	)	$	210,797
Income (loss) from operations		7,672		1,982			(5,993	)		3,661
Other income		53		70			81			204
Income (loss) before income taxes		7,725		2,052			(5,912	)		3,865
Depreciation and amortization		925		956			2,644			4,525
Total assets		273,368		104,458			—			377,826
Property, technology, and equipment, net		10,160		15,316			—			25,476
Goodwill		68,823		19,886			—			88,709

NOTE 17 – BUSINESS COMBINATION

Fiscal Year 2025 Acquisitions

Effective September 1, 2024, the Company acquired Foundation Logistics & Services, LLC, a Humble, Texas based, privately held company that provides a full range of specialized transportation and logistics services for companies involved in the exploration, drilling, and production of oil and gas. The Company structured the transaction similar to its previous transactions, with a portion of the expected purchase price payable in subsequent periods based on the future performance of the acquired operation. Goodwill is recorded in the United States operating segment and is expected to be deductible for income tax purposes over a period of 15 years. Intangible assets acquired consist primarily of customer related intangible assets and have an estimated useful life of 10 years.

The preliminary fair value estimates for the assets acquired and liabilities assumed are based upon preliminary calculations and valuations. The estimates and assumptions are subject to change as additional information is obtained for the estimates during the measurement period (up to one year from the acquisition date). The primary estimates not yet finalized relate to identifiable intangible assets, working capital and contingent consideration.

NOTE 18 – SUBSEQUENT EVENTS

Fiscal Year 2025 Acquisition

Effective October 1, 2024, the Company acquired the assets and operations of Focus Logistics, Inc. (“Focus”), a privately held company with operations in Romulus, Michigan that has operated under the Company’s Service By Air brand since 2006. The Company structured the transaction similar to its previous transactions, with a portion of the expected purchase price payable in subsequent periods based on the future performance of the acquired operation. The Company’s existing operations in the Detroit, Michigan area will combine with Focus to solidify the Company’s offerings in the region.

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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; our ability to continue to respond to macroeconomic factors that have recently had a negative effect on worldwide freight markets; the impact of any health pandemic or environmental event on our operations and financial results; continued disruptions in the global supply chain; higher inflationary pressures particularly surrounding the costs of fuel, labor, and other components of our operations; potential adverse legal, reputational and financial effects on the Company resulting from the cybersecurity incident that we reported in March 2024 or future cyber incidents and the effectiveness of the Company’s business continuity plans in response to cyber incidents; the commercial, reputational and regulatory risks to our business that may arise as a consequence of our inability to remediate during fiscal year 2024 a material weakness in our internal controls over financial reporting, and the further risks that may arise should we be unable to remediate that material weakness during fiscal year 2025; and such other factors that may be identified from time to time in our U.S Securities and Exchange Commission (“SEC”) filings and other public announcements including those set forth under the caption “Risk Factors” in Part 1 Item 1A of our Form 10-K for the year ended June 30, 2024. 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.

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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

Radiant Logistics, Inc., and its consolidated subsidiaries (the “Company,” “we” or “us”), operates as a leading third-party logistics company, providing technology-enabled global transportation and value-added logistics solutions primarily in the United States and Canada. We service a large, broad, and diversified account base consisting of consumer goods, food and beverage, electronics and high-tech, aviation and automotive, military and government, and manufacturing and retail customers, which is supported by 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. The Company provides 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 are also referred to as “strategic operating partners,” that operate exclusively on the Company's behalf, and approximately 30 Company-owned locations. As the operator of a third-party logistics business, the Company has a vast carrier network of asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in its 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, less than truckload (“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, including 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 services (collectively, “materials management and distribution” or “MM&D” services), customs house brokerage (“CHB”) services and global trade management (“GTM”) services to complement our core transportation service offering.

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 technology platform, 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.

Impact of Notable External Conditions

The global economic and trade environments remain uncertain, including inflation, geopolitical tensions and changes in consumer behavior could have a negative impact on our business and financial results.

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.

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 adjusted gross profit, a non-GAAP financial measure, is gross revenue less the direct cost of transportation and other services (excluding depreciation and amortization, which are reported separately), and 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. Adjusted gross profit percentage is adjusted gross profit as a percent of our total revenue. In addition, management believes measuring its operating costs as a function of adjusted gross profit provides a useful metric, as our ability to control costs as a function of adjusted gross profit directly impacts operating results. We believe that these

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provide investors with meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

Our operating results will be affected as acquisitions occur. Since acquisitions are recorded 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.

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 interest, taxes, and 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 share-based compensation expense, changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, cybersecurity incident related costs, changes in fair value of interest rate swap contracts, transition and lease termination costs, foreign currency transaction gains and losses, 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.

Results of Operations

Three months ended September 30, 2024 and 2023 (unaudited)

The following table summarizes revenues, cost of transportation and other services, and adjusted gross profit by reportable operating segments for the three months ended September 30, 2024 and 2023:


	Three Months Ended September 30, 2024												Three Months Ended September 30, 2023
(In thousands)	United States			Canada			Corporate/ Eliminations			Total			United States			Canada			Corporate/ Eliminations			Total
Revenues
Transportation	$	172,878		$	19,003		$	(62	)	$	191,819		$	176,823		$	21,183		$	(37	)	$	197,969
Value-added services		3,937			7,809			—			11,746			3,454			9,374			—			12,828
		176,815			26,812			(62	)		203,565			180,277			30,557			(37	)		210,797
Cost of transportation and other services
Transportation		126,499			14,599			(62	)		141,036			127,950			16,249			(37	)		144,162
Value-added services		1,553			3,422			—			4,975			1,532			4,279			—			5,811
		128,052			18,021			(62	)		146,011			129,482			20,528			(37	)		149,973
Adjusted gross profit (1)
Transportation		46,379			4,404			—			50,783			48,873			4,934			—			53,807
Value-added services		2,384			4,387			—			6,771			1,922			5,095			—			7,017
	$	48,763		$	8,791		$	—		$	57,554		$	50,795		$	10,029		$	—		$	60,824
Adjusted gross profit percentage
Transportation		26.8	%		23.2	%	N/A				26.5	%		27.6	%		23.3	%	N/A				27.2	%
Value-added services		60.6	%		56.2	%	N/A				57.6	%		55.6	%		54.4	%	N/A				54.7	%

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(1)

Adjusted gross profit is revenues less the cost of transportation and other services.

Transportation revenue was $191.8 million and $198.0 million for the three months ended September 30, 2024 and 2023, respectively. The decrease of $6.2 million, or 3.1% is due to the loss of a strategic operating partner offset by increases from several new acquisitions. Adjusted transportation gross profit was $50.8 million and $53.8 million for the three months ended September 30, 2024 and 2023, respectively. Net transportation margins decreased from 27.2% to 26.5%, primarily due to a higher mix of ocean shipments, which have lower gross profit margin characteristics than other modes of transportation.

Value-added services revenue was $11.7 million and $12.8 for the three months ended September 30, 2024 and 2023, respectively. The decrease is driven by lower volumes from certain customers compared to the prior year period. Adjusted value-added services gross profit was $6.8 million for the three months ended September 30, 2024, compared to $7.0 million for the comparable prior year period. Adjusted value-added services gross profit percentage increased from 54.7% to 57.6%.

The following table provides a reconciliation for the three months ended September 30, 2024 and 2023 of adjusted gross profit to gross profit, the most directly comparable GAAP measure:


(In thousands)	Three Months Ended September 30,
Reconciliation of adjusted gross profit to GAAP gross profit	2024			2023
Revenues	$	203,565		$	210,797
Cost of transportation and other services (exclusive of depreciation and amortization, shown separately below)		(146,011	)		(149,973	)
Depreciation and amortization		(3,488	)		(3,333	)
GAAP gross profit	$	54,066		$	57,491
Depreciation and amortization		3,488			3,333
Adjusted gross profit	$	57,554		$	60,824

GAAP gross profit percentage		26.6	%		27.3	%
Adjusted gross profit percentage		28.3	%		28.9	%

The following table compares condensed consolidated statements of comprehensive income data by reportable operating segments for the three months ended September 30, 2024 and 2023:


	Three Months Ended September 30, 2024												Three Months Ended September 30, 2023
(In thousands)	United States			Canada			Corporate/ Eliminations			Total			United States			Canada		Corporate/ Eliminations			Total
Adjusted gross profit (1)	$	48,763		$	8,791		$	—		$	57,554		$	50,795		$	10,029	$	—		$	60,824

Operating expenses:
Operating partner commissions		18,801			—			—			18,801			23,782			—		—			23,782
Personnel costs		13,554			4,757			1,312			19,623			13,126			4,955		1,546			19,627
Selling, general and administrative expenses		6,250			2,170			1,901			10,321			5,290			2,136		2,049			9,475
Depreciation and amortization		960			1,031			2,814			4,805			925			956		2,644			4,525
Change in fair value of contingent consideration		—			—			200			200			—			—		(246	)		(246	)

Total operating expenses		39,565			7,958			6,227			53,750			43,123			8,047		5,993			57,163

Income (loss) from operations		9,198			833			(6,227	)		3,804			7,672			1,982		(5,993	)		3,661
Other income (expense)		16			(39	)		788			765			53			70		81			204

Income (loss) before income taxes		9,214			794			(5,439	)		4,569			7,725			2,052		(5,912	)		3,865
Income tax expense		—			—			(1,145	)		(1,145	)		—			—		(1,014	)		(1,014	)

Net income (loss)		9,214			794			(6,584	)		3,424			7,725			2,052		(6,926	)		2,851
Less: Net income attributable to non- controlling interest		(48	)		—			—			(48	)		(229	)		—		—			(229	)

Net income (loss) attributable to Radiant Logistics, Inc.	$	9,166		$	794		$	(6,584	)	$	3,376		$	7,496		$	2,052	$	(6,926	)	$	2,622

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	Three Months Ended September 30, 2024										Three Months Ended September 30, 2023
Operating expenses as a percent of adjusted gross profit:	United States			Canada			Corporate/ Eliminations	Total			United States			Canada			Corporate/ Eliminations	Total
Operating partner commissions		38.6	%		0.0	%	N/A		32.7	%		46.8	%		0.0	%	N/A		39.1	%
Personnel costs		27.8	%		54.1	%	N/A		34.1	%		25.8	%		49.4	%	N/A		32.3	%
Selling, general and administrative expenses		12.8	%		24.7	%	N/A		17.9	%		10.4	%		21.3	%	N/A		15.6	%
Depreciation and amortization		2.0	%		11.7	%	N/A		8.3	%		1.8	%		9.5	%	N/A		7.4	%

(1)

Adjusted gross profit is revenues less the cost of transportation and other services.

Operating partner commissions decreased $5.0 million, or 20.9%, to $18.8 million for the three months ended September 30, 2024. The decrease is primarily due to a reduction of adjusted gross profit generated from our strategic operating partners, lower freight volumes, and the conversions of strategic operating partners to Company-owned locations who earned commissions in the comparable prior year period. As a percentage of adjusted gross profit, operating partner commissions decreased 643 basis points to 32.7% from 39.1% for the three months ended September 30, 2024 and 2023, respectively.

Personnel costs were flat at $19.6 million for the three months ended September 30, 2024 and 2023. As a percentage of adjusted gross profit, personnel costs increased 183 basis points to 34.1% from 32.3% for the three months ended September 30, 2024 and 2023, respectively.

Selling, general and administrative (“SG&A”) expenses increased $0.8 million, or 8.9%, to $10.3 million for the three months ended September 30, 2024. The increase is primarily due to increased technology spending, higher travel costs, increased credit losses, and additional facility costs due to recent acquisitions, partially offset by lower professional services fees and bank fees. As a percentage of adjusted gross profit, SG&A increased 235 basis points to 17.9% from 15.6% for the three months ended September 30, 2024 and 2023, respectively.

Depreciation and amortization costs increased $0.3 million, or 6.2%, to $4.8 million for the three months ended September 30, 2024. The increase is attributable to amortization of intangible assets from prior year acquisitions. As a percentage of adjusted gross profit, depreciation and amortization costs increased 91 basis points to 8.3% from 7.4% for the three months ended September 30, 2024 and 2023, respectively.

Our increase in net income is driven principally by decreased operating partner commissions, partially offset by decreased adjusted gross profit compared to the comparable prior year period.

Our future financial results may be impacted by amortization of intangible assets resulting from acquisitions, gains or losses from changes in fair value of contingent consideration, and changes in fair value of interest rate swap contracts, which are difficult to predict.

The following table provides a reconciliation for the three months ended September 30, 2024 and 2023 of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure:


	Three Months Ended September 30, 2024												Three Months Ended September 30, 2023
(In thousands)	United States			Canada			Corporate/ Eliminations			Total			United States			Canada			Corporate/ Eliminations			Total
Net income (loss) attributable to Radiant Logistics, Inc.		9,166			794			(6,584	)		3,376			7,496			2,052			(6,926	)		2,622

Income tax expense		—			—			1,145			1,145			—			—			1,014			1,014
Depreciation and amortization (1)		1,074			1,031			2,814			4,919			1,040			956			2,644			4,640
Net interest expense		—			—			(228	)		(228	)		—			—			(283	)		(283	)

EBITDA		10,240			1,825			(2,853	)		9,212			8,536			3,008			(3,551	)		7,993

Share-based compensation		91			42			30			163			383			73			425			881
Change in fair value of contingent consideration		—			—			200			200			—			—			(246	)		(246	)
Acquisition related costs		—			—			84			84			—			—			69			69
Litigation costs		—			—			291			291			—			—			364			364
Gain on litigation settlement		—			—			(1,000	)		(1,000	)		—			—			—			—
Change in fair value of interest rate swap contracts		—			—			440			440			—			—			202			202
Foreign currency transaction loss (gain)		22			40			—			62			(24	)		(72	)		—			(96	)

Adjusted EBITDA	$	10,353		$	1,907		$	(2,808	)	$	9,452		$	8,895		$	3,009		$	(2,737	)	$	9,167
Adjusted EBITDA as a % of adjusted gross profit (2)		21.2	%		21.7	%	N/A				16.4	%		17.5	%		30.0	%	N/A				15.1	%

(1)

Depreciation and amortization for the purposes of calculating adjusted EBITDA, a non-GAAP financial measure, includes depreciation expenses recognized on certain computer software as a service.

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(2)

Adjusted gross profit is revenues less the cost of transportation and other services.

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 September 30, 2024, we have $10.4 million in unrestricted cash on hand and access to a revolving credit facility to serve as adequate working capital.

Net cash provided by operating activities was $0.2 million and $7.9 million for the three months ended September 30, 2024 and 2023, respectively. The cash provided by operating activities primarily consisted of net income adjusted for depreciation and amortization, offset by changes in operating assets and liabilities. Cash flow from operating activities for the three months ended September 30, 2024 decreased by $7.7 million, compared with the same period in fiscal year 2024, primarily due to net changes in accounts receivable, prepaid expenses, accounts payable, and payments of contingent consideration.

Net cash used for investing activities was $13.5 million and $2.5 million for the three months ended September 30, 2024 and 2023, respectively. Cash paid for acquisition was $11.4 million for the three months ended September 30, 2024. Cash paid for purchases of property, technology, and equipment were $2.1 million and $2.5 million for the three months ended September 30, 2024 and 2023, respectively.

Net cash used for financing activities was $1.2 million and $2.0 million for the three months ended September 30, 2024 and 2023, respectively. Net borrowings under the Revolving Credit Facility were $0.2 for the three months ended September 30, 2024, compared to no net borrowings for the three months ended September 30, 2023. Payments of debt issuance costs were $0.1 million for the three months ended September 30, 2023. Repayments of notes payable and finance lease liabilities were $0.2 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively. Payments for repurchases of common stock were $0.7 million and $0.2 million for the three months ended September 30, 2024 and 2023, respectively. Distribution to non-controlling interest was $0.1 million for the three months ended September 30, 2024. Payments of employee tax withholdings related to restricted stock units and stock options were $0.5 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively.

Revolving Credit Facility

The Company entered into a $200 million syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated as of August 5, 2022, and amended as of September 27, 2023. The Revolving Credit Facility is segregated into two tranches, a $150 million tranche that may be loaned in U.S. Dollars and a $50 million tranche that may be loaned in either U.S. Dollars or Canadian Dollars. The Revolving Credit Facility includes a $75 million accordion feature to support future acquisition opportunities. The Revolving Credit Facility was entered into with Bank of America, N.A. and BMO Capital Markets Corp. as joint book runners and joint lead arrangers, Bank of America, N.A. as Administrative Agent, Swingline Lender and Letter of Credit Issuer, Bank of Montreal as syndication agent, KeyBank National Association and MUFG Union Bank, N.A. as co-documentation agents and Bank of America, N.A., Bank of Montreal, KeyBank National Association, MUFG Union Bank, N.A. and Washington Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as “Lenders”).

The Revolving Credit Facility matures on August 5, 2027 and is collateralized by a first-priority security interest in the accounts receivable and other assets of the Company and the guarantors. Borrowings in U.S. Dollars accrue interest (at the Company’s option) at a) the Lenders’ base rate plus 0.50% to 1.50%; b) Term Secured Overnight Financing Rate (“SOFR”) plus 1.40% to 2.40%; or c) Term SOFR Daily Floating Rate plus 1.40% to 2.40%. Borrowings in Canadian Dollars accrue interest (at the Company’s option) at a) Term Canadian Overnight Repo Rate Average (“CORRA”) plus 0.29547% to 0.32138% depending on the term, plus 1.40% to 2.40%; or b) Daily Simple CORRA plus 0.29547% plus 1.40% to 2.40%. Rates are adjusted based on the Company’s consolidated net leverage ratio. The Company’s U.S. and Canadian subsidiaries are guarantors of the Revolving Credit Facility.

As of September 30, 2024, borrowings outstanding on the Revolving Credit Facility were $0.2 million. The Company was in compliance with its covenants.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

We are exposed to market risks in the ordinary course of business. These risks are primarily related to foreign exchange risk. We have currency exposure arising from both sales and purchases denominated in foreign currencies, as well as intercompany transactions.

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Significant changes in exchange rates between foreign currencies in which we transact business and the U.S. dollar may adversely affect our results of operations and financial condition. Historically, we have not entered into any hedging activities, and, to the extent that we continue not to do so in the future, we may be vulnerable to the effects of currency exchange rate fluctuations. A portion of our business is conducted in Canada. If foreign exchange rates were 1.0% higher or lower, our net income for the three months ended September 30, 2024 would have changed by approximately $0.01 million.

We are also subject to risks related to an increase in interest rates. For every $1.0 million outstanding on our Revolving Credit Facility, we will incur approximately $0.05 million of interest expense. For every 1.0% increase in interest rates, our interest expense per $1.0 million in borrowings will increase by approximately $0.01 million.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

An evaluation of the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) as of September 30, 2024 was carried out by our management under the supervision and with the participation of our CEO and CFO. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were ineffective as of September 30, 2024 due to the existence of the material weakness in internal control over financial reporting described below.

Management believes that the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented, in accordance with U.S. GAAP.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control — Integrated Framework (2013).

Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures, which:

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the U.S., and that receipts and expenditures of the Company are being made only in accordance with authorization of our management and directors; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of September 30, 2024, we concluded that our internal control over financial reporting was not effective due to the material weakness discussed below. A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

Material Weakness over the Recording and Processing of Revenue Transactions and Remediation Progress

As of June 30, 2023, we concluded that a material weakness existed in our internal controls over financial reporting related to the recording and processing of revenues. As of September 30, 2024, remediation was ongoing. As such, as of September 30, 2024, we concluded that a material weakness still existed in our internal controls over financial reporting related to the recording and processing

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of revenues. Specifically, the controls as currently designed are not sufficient to prevent or detect a material misstatement in revenues as the design of the controls lack the level of precision necessary to ensure the completeness and accuracy of revenues.

During fiscal year 2024, management made significant progress designing and implementing a series of new, or enhanced existing controls aimed at mitigating risks associated with the accuracy, completeness, occurrence, and cut-off of reported revenue. This included a series of controls operating at various frequencies and levels of precision to detect material misstatements, including, among others:

•

Individual transactions meeting certain risk criteria are tested and analyzed for accuracy by comparing historical revenue and margin data, invoices, outstanding receivables, and payments. In some cases, inquiries and confirmation may be obtained from operators at individual locations;

•

Individual transactions are tested, on a sample basis, to ensure they are supported by carrier invoices, indicating legitimate shipments, and to the corresponding cash receipts;

•

Regional Vice Presidents review weekly and monthly revenue variances exceeding a set threshold, using historical data and inquiring or confirming with operators at individual locations when necessary;

•

Implementation of controls that verify, on a sample basis, actual departure and proof of delivery dates for selected transactions, ensuring the inputs to the revenue accrual are accurate;

•

Improved procedures and controls to enhance the granularity and precision over the month-end revenue accrual process;

•

Enhanced lookback procedures to test the accuracy of prior month-end revenue accruals; and

•

Performed additional review and analysis of unposted shipments to improve the accuracy of the revenue accrual.

As management has evaluated, designed and implemented the processes needed to remediate its internal controls weakness, it has done so in light of, among others: (a) the need to design and implement such processes in a manner that will not disrupt, to the best extent possible, the historic commercial processes that the Company has deployed across its network of Company-owned and strategic operating partner locations since its inception, and (b) management’s firm belief that, despite the material weakness in process and controls, the Company’s ultimate billing and collection processes continue to work on a commercially sound basis and the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q continue to fairly present, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented, in accordance with U.S. GAAP. No further errors requiring restatement have been identified.

Management believes that the suite of controls it has implemented or enhanced during fiscal year 2024 and 2025, which operate at various frequencies and levels of precision, will provide reasonable assurance that a potential material misstatement in revenue would be prevented or detected in a timely manner. That being said, while many of these new and enhanced controls had been in operation for much of fiscal year 2024; certain controls were implemented closer to year end, and the documentation supporting the performance of these controls can still be improved to demonstrate that the controls operate as they were designed for a sufficient period to conclude the controls are effective. We may also need to refine the underlying design and implementation as we continue to evaluate the manner in which they operate over a longer period before concluding that the material weakness has been resolved. Nevertheless, in recognition of the progress made during fiscal year 2024, and management’s resolve to address the remaining weakness, it is our goal to resolve the material weakness in fiscal year 2025.

Changes in Internal Control over Financial Reporting

Except for the remediation activities of the material weakness over the recording and processing of revenue transactions described above, there have not been any other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

There have been no material changes in the risk factors disclosed by us under Part I, Item 1A. Risk Factors contained in the Annual Report on Form 10-K for the fiscal year ended June 30, 2024.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In December 2023, the Company’s board of directors authorized the repurchase of up to 5,000,000 shares of the Company’s common stock through December 31, 2025. Under this repurchase program, the Company purchased the following shares of common stock during the three months ended September 30, 2024:


Issuer Purchases of Equity Securities
Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs
July 1 − 31, 2024		124,758	$	5.47		124,758		4,681,194
August 1 − 31, 2024		4,602		5.49		4,602		4,676,592
September 1 − 30, 2024		—		—		—		4,676,592

Total		129,360	$	5.47		129,360		4,676,592

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ITEM 6. EXHIBITS

     
    Incorporated by Reference

    Exhibit
Number

    Description

    Filed/Furnished Herewith

    Form

    Period Ending

    Exhibit Number

    Filing Date

     31.1

    Certification by Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

    X

     31.2

    Certification by Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

    X

     32.1

    Certification by the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

    X

    101.INS

    Inline XBRL Instance

    X

    101.SCH

    Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

    X

    104

    Cover Page Interactive Data (embedded within the Inline XBRL document)

    X

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		RADIANT LOGISTICS, INC.

Date: November 12, 2024		/s/ Bohn H. Crain
		Bohn H. Crain
		Chief Executive Officer
		(Principal Executive Officer)

Date: November 12, 2024		/s/ Todd E. Macomber
		Todd E. Macomber
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)