Radiant Logistics, Inc.
Q1 2017 Earnings Call Transcript

Published: 12 Nov 2016

[Operator:]

This afternoon, Bohn Crain, Radiant Logistics' Founder and CEO and Radiant's Chief Financial Officer, Todd Macomber, will discuss Financial Results for the Company's First Fiscal Quarter Ended September 30, 2016. Following their comments, we will open the call to questions. This conference is scheduled for 30 minutes. This conference call may include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Company has based these forward-looking statements on its current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about the Company that may cause the Company's actual results or achievements to be materially different from the results or achievements expressed or implied by such forward-looking statements. While it is impossible to identify all the factors that may cause the Company's actual results or achievements to differ materially from those set-forth in our forward-looking statements, such factors include those that have in the past, and may in the future, be identified in the Company's SEC filings and other public announcements, which are available on Radiant Web site at www.radiantdelivers.com. In addition, past results are not necessarily an indication of future performance. Now, I'd like to pass the call over to Radiant's Founder and CEO, Bohn Crain.

[Bohn Crain:]

Thanks, David, and good afternoon, and thanks everyone for joining on today's call. We’re pleased to report another solid quarter with adjusted EBITDA of $7.3 million on revenues of a $195.1 million, and net revenue of $49 million, in what's generally been recognized as a top economic environment. Excluding the impact of On Time Express, we’re quite pleased with the general resiliency of our broader business and how we’ve been able to respond to the softness in our U.S. brokerage operations. On a comparable year-over-year basis, revenues were down $20.4 million or 9.5%. Forwarding revenues were down $11.4 million or 7.5%, but driven principally by a decrease of $6 million in year-over-year revenues at On Time Express, along with the overall reduction in the price of fuel, which is generally a pass-through item. Brokerage revenues were down $8.7 million, driven principally by the impacts of excess capacity and related margin pressures of the current market environment, particularly in our U.S. operations. On a comparable year-over-year basis, net revenues were relatively flat, down $1.7 million or 3.4%. Net revenues would have improved $0.3 million for the comparable prior year period, excluding a decrease of $1.3 million attributable to On Time Express, and a decrease of $0.7 million attributed to softness in U.S. brokerage operations. On a comparable year-over-year basis, adjusted EBITDA was down $0.9 million or 10.5%. Adjusted EBITDA would have improved $0.7 million for the comparable year-over-year period, excluding a decrease of $0.9 million attributable to On Time Express, and a decrease of $0.7 million attributable to the U.S. brokerage operations. Sequential quarterly comparisons are much better with revenues up $11.5 million or 6.3%; net revenues of $49 million, up $2.5 million or 5.4%; and adjusted EBITDA, up $1.9 million or 35.2%, over the quarter ended June 30, 2016. In our opinion, it's just a matter of time before capacity tightens and the U.S. brokerage markets return to more normalized levels, which should improve our overall results. In the meantime, we continue to focus on continuous improvement of our existing business through our ongoing investment in technology and our cross-sell initiatives between our forwarding and brokerage operations. Over the short term, our progress with the SBA integration will unlock meaningful cost synergies in the second half of fiscal 2017, and our cross-sell initiatives continue to gain traction. In addition, year-over-year comparisons will become easier without the drag of On Time Express in future reporting periods. Taking a longer term view, it is also important to remember that we continue to enjoy a 10-year first-to-market advantage in executing our multi-brand strategy in consolidating agent-based forwarding networks. We believe we are uniquely positioned to support further consolidation in the marketplace, and our ongoing investment in technology will give us the scalable back-office infrastructure to support a much larger enterprise going forward. This is our opportunity over the longer term. At the same time, we also recognize that in this current freight environment, the equity markets have failed, in our opinion, to recognize the benefits of our growth strategy, as well as our strategic, operating, and financial accomplishments. Over the short-term, we believe this creates an opportunity for us to make use of our previously announced share repurchase program and buy our stock at very attractive prices. Over the longer term, we are confident that a continued patient and diligent focus on our service offerings and growth objectives will ultimately be rewarded by the financial marketplace. With that, I'll now turn it over to Todd to walk us through our detailed financial results, and then we'll open it up for some Q&A.

[Todd Macomber:]

Thanks, Bohn, and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income and adjusted EBITDA for the three-months ended September 30, 2016. Quarterly net income results; for the three months ended September 30, 2016, we reported net income attributable to common stockholders of $1,351,000 on a $195.1 million of revenues or $0.03 per basic and fully diluted share; which includes $476,000 of transition and lease termination cost; a $250,000 charge on change in contingent consideration; and approximately $187,000 in acquisition related legal, accounting and other non-recurring costs, which were included in SG&A. For the three months ended September 30 2015, we reported a net loss attributable to common stockholders of $172,000 on $215.5 million of revenues or $0.00 per basic and fully diluted share. This represents an increase of approximately $1,523,000 million over the comparable prior year period. Quarterly adjusted net income results; for the three months ended September 30 2016, we reported adjusted net income attributable to common stockholders of $4,041,000. For the three months ended September 30, 2015, we reported adjusted net income attributable to common stock holders of $4,208,000. This represents a decrease of approximately $167,000, or approximately 4%. When looking at the adjusted EBITDA; we reported adjusted EBITDA of $7,345,000 for the three months ended September 30, 2016 compared to adjusted EBITDA of $8,184,000 for the three months ended September 30, 2015. This represents a decrease of $859,000 or approximately 10.5%. When adding back transition costs associated with SBA's back-office, this represents an additional $455,000. Adjusted EBITDA would have been $7,780,000 for the period ending September 30, 2016 versus $8,824,000 for the period ending September 30, 2015. The 2015 number also includes transition costs of $640,000, but overall, this represents a decrease of $1,044,000 or 11.8%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.

[Operator:]

Thank you. At this time, we'll be conducting a question-and-answer session [Operator Instructions]. Our first question is from Jason Seidl from Cowen. Please proceed with your question.

[Matt Frankel:]

Hi, guys. It's actually Matt Frankel on for Jason this evening. How are you?

[Bohn Crain:]

Good. How are you?

[Matt Frankel:]

Okay, thanks. I’ve got a few questions for you, first just high level and topical. But when you saw last night that Trump is going to be taking the White House in a few months. Is there thought process over the next several months -- next several years to change the way you think about investing in the business? And I specifically mean now they’re seeding obviously an important thing for you guys given your geographical Canadian U.S. exposure, obviously even political trade been pointing. I mean does it make you look more globally, does it make you think you need to invest further in the U.S., and reduce that international -- I'm just curious what your thoughts are?

[Bohn Crain:]

If we think about the components of our business as it sits today, and through international air and ocean freight forwarding, that's a couple of $100 million at most. So, in the scheme of things, we're obviously much more heavily focused on the U.S. marketplace and then to a lesser extent Canada and Mexico. Our approach has been and remains focused on trying to build out a, A and hopefully B premier North America centric 3PL, and in that context supporting our customers globally. But we’re really have been deploying our capital and our attention has been focused on servicing customers here in the U.S. We continue to see Canada, in particular, as a very important market and trading partner for us with a lots of cross-sell opportunities. I think it's the second biggest domestic market for us behind California as we think about this kind of GDP within given markets. There is a huge trading partner for the U.S. And I'm going to try to stay away from the politics of Clinton versus Trump. But of all the issues facing our country, I don't think our trade with Canada would be at the top of the shopping list of places to focus their attention. So, we are -- our game plan is really unchanged. Here on the eve the election, obviously, we’ll be responsive as necessary should that be required based upon the actions of our President. But I am personally not expecting it to have much of effect about how we think about our opportunity, and our underlying long-term strategy.

[Matt Frankel:]

Second thing is you mentioned the cross-selling in the release and in your comments. Can you quantify at all and quantify it versus where you’ve been in the past several quarters? What percentages of your forwarding customers are starting to use the brokerage business and vice versa? Is there anything you can give us to give us an idea what that growth looks like?

[Bohn Crain:]

Not specifically on kind of hard quantified basis. But what I can tell you, as we are getting more and more opportunities to engage with our installed U.S customer base about the Canadian solution more and more opportunities to work across the Group, as well as we continue to gain some traction with our U.S. forwarding operation using the Wheels Clipper organization, and Canada as a capacity provider on the truck brokerage side. It's still small steps but its incrementally positive quarter-over-quarter. And we think that we'll continue to gain momentum.

[Matt Frankel:]

And next, during the quarter with [indiscernible] bankruptcy, I am curious we’ve heard from other forwarders other brokerage and 3PLs about the impact it had on their business. I am curious if there any way to quantify what [multiple speakers]?

[Bohn Crain:]

I would say negligible from our standpoint. If we think it on our international forwarding, it's significantly more air that ocean. And we -- although we have a few containers on the water tied up in the tangent situation, it was a very, very small in the scheme of things, very small.

[Operator:]

Our next question is from Marco Rodriguez with Stonegate Capital Partners.

[Marco Rodriguez:]

Hey good afternoon guys. Thank you for taking my questions. I was wondering Bohn if you could talk a little bit more about your acquisition strategy. Just kind of given the environment you’re operating in right now, I understand obviously your long-term strategy there to on-board additional assets, and then the structure that you've typically used on the earn-outs with some cash and equity. In terms of just where the valuations are first-off if you can kind of update us on the target. Your thoughts on whether given if some of these valuations look nice, whether you'd be interested in restructuring, if you will, that earn-out structure?

[Bohn Crain:]

So I guess I'll hop in, and I guess for the benefit of folks who may not have been with us from the beginning. Historically, we tried to structure our transactions using an earn-out structure. Our sweet spot has historically been acquisition candidates doing plus or minus $2 million in EBITDA. We would typically look to structure those transactions at a valuation multiple of plus or minus five-times. And then typically pay roughly 50% down, 50% structured over an earn-out over a term of plus or minus four or five years. So that’s historically where we have come from, and that remains our focus. We have, from time-to-time, looked at larger transactions and deviated from that structure in support of larger transactions, Wheels, in particular, was an example of that. I would say certainly our strong bias to stay true to that model. And one of the things I would point folks to as well in relation to this particular line of conversation is some of our more recent transactions included the acquisition of Phoenix Cartage in Philadelphia, the acquisition of Don Cameron & Associates in Minneapolis, and the acquisition of Highways and Skyways in Cincinnati. Each of those transactions was consistent with that model, and each of those transitions, or each of those business groups or stations have been performing very well, exceeding their earnings target thresholds. And so you’ll know in our financial statements, we actually had effectively record more expense in connection with the additional liabilities we had to book-up and connection with the estimated pay-offs based upon their performance. So, we’re happy that, for them and for us that they have been able to do so well as part of our organization. And we intend to stay true to the model. So there is nothing is happening in the market that would change my view that companies doing plus or minus $2 million of EBITDA would generally garner valuation multiple of approximately five-times. And as we move up the food chain, larger transactions -- we would expect to commend a slightly higher multiple and smaller transactions, likely a somewhat smaller multiple. So, I don’t know that anything has changed. We continue to be disciplined in our approach. And although, we will look at larger transactions from time-to-time, our real focus and kind of probability of the types of transactions we would do as much higher for the smaller tuck-in type acquisitions. And again for the benefit of the Group, we really think of our platform now as really having three on-ramps for acquisitions, our traditional reported platform supported out of Bellevue, U.S. brokerage platform, supported out of Chicago and a Canadian centric platform supported out of Toronto. So, we haven’t continued to look for M&A candidates that could be supported from each one of those sets of back-office infrastructure.

[Marco Rodriguez:]

Can you maybe talk a bit about the level of interest, perhaps you might have been seen out there from potential targets, I mean, are you seeing an increased level of them reaching out to you just given the environment? Or is it the same?

[Bohn Crain:]

I think it's generally the same. I mean, one of the aspects of our network is our brand promise to support our operating partners with exit strategies and opportunities for liquidity. And so we’ll certainly have those types of conversation and opportunities from time-to-time. I think over the longer term, what's really interesting for us and really I guess under the category of eye on the price, we think there's going to be continued consolidation, particularly in the agent-based freight forwarding overtime. Some of the larger competing agent-based freight forwarding networks have been acquired by private equity firms. And we think over-time those investors and those platforms will be looking for groups to combine with. And we think given the combination of our 10 year first to market advantage in executing the multi-brand strategy; the breadth and depths of our leadership team; and the ongoing investments we're making in technology to build that infrastructure to be there to support those types of opportunities when and if they present themselves. I think that's the real en-game if you will that could really be exciting as we look into the future.

[Marco Rodriguez:]

And last quick question, when you're operating your business back going forward for the next few quarters, if you will; and you’ve called out some of the weakness; obviously, in the macro environment and in the brokerage business. If I could maybe get you to polish up that crystal ball what are your thoughts on when the brokerage business just turns back around or becomes a little bit more beneficial to you?

[Bohn Crain:]

I think it's not a question of if, but just a question of when. I think everybody is hearing about driving -- the asset based companies ultimately taking capacity out of the network; ELBs, the regulatory environment, the [technical difficulty] aspect of the truck drivers, all things ultimately are going to translate into tightening of capacity and prices moving upwards. How long that takes? I can't -- I'm not in a position to call that. But there seems to be some firming in the marketplace now, whether that's sustainable through peak or on the other side of peak, remains to be seen. But I do think, just fundamentally, it will revert. And we're looking forward to getting back on the other side of the stick.

[Operator:]

Our next question is from Mark Argento with Lake Street.

[Mark Argento:]

Maybe you could talk a little bit in terms of tuning off the last question in terms of -- if you've seen anything that makes you feel little better about the end-market. I know pricing, just on the trucking side, seems like maybe it's stabilized a little bit; demand hasn't really picked up a whole lot yet. But looks like that might be toughing as well. Any other anecdotal things you could point it to? And other areas of strength you're seeing within your book of business, any sectors or anything like that that you could point us to?

[Bohn Crain:]

Well I think what I was -- my comment would be that as we’ve had times to work with the Wheels Group and we live in that household on the other side of that acquisition. What we’ve really come to appreciate is the fact that our forwarding -- on the forwarding of the ledger, our business is typically more transactional in nature, and painting with a broad brush more of a cost plus type arrangement. Where on the brokerage side, that's typically more pattern freight more contractual, and has been more vulnerable to pricing compression that we've seen in the marketplace. So whereas depending on the conversation, people might typically describe a higher value on contractual business as opposed to transactional business, we certainly are living through a cycle where that transactional business has looked pretty good. And I guess in the broader context, Wheels and that contractual business is still a small relative component to our broader forwarding business, which has proven to be much more durable through the cycle than what we've experienced with Wheels.

[Mark Argento:]

And obviously, I know it's your commentary in the press release and on the call about your buyback. And looks like you guys were somewhat active in the quarter, and look to continue to be active. Do you guys have any specific parameters that you guys use in terms of when you think about the buyback? Or how should we think to that in terms of...

[Bohn Crain:]

No I think we certainly have lots of capacity to buy our stock. We, just philosophically, we look at the stock buyback not as a mechanism to try support our stock price, but an opportunity or a mechanism to opportunistically acquire our stock at prices that we view as attractive for our shareholders. So, when we do the buyback, we had to do it within windows. And so we got started but had a relatively short window where we could be active. And so, our next window will open up here later this week, and then will remain open through I guess what will December 31st, will be the next window in which we could put capital to work in the stock buyback, should we chose to.

[Operator:]

[Operator Instructions] Our next question is from Mike Vermut with Newland Capital.

[Mike Vermut:]

It does seem like price improving, it feels like we’ve hit a bottom and capacity shrinking. And two questions to that. One, how does that help build the On Time pipeline here, and gaining some of that freight back that was lost? And also does it make you feed-up on the acquisition front some of the tenants you've been looking at?

[Bohn Crain:]

Give me that question one more time Mike.

[Mark Argento:]

I was wondering, how is it going refilling that On Time pipeline with the freight that was lost? And then also on the acquisition front, feeding-up some of the -- you’ve been talking to some of these agents to speed-up the process them.

[Bohn Crain:]

So I’ll take the second one first. I think what you’re meaning about is converting agent stations to company owned stores and quote-on-quote speeding up that prospect. And the short answer is no. I mean, we are happy to support our agent stations as agent stations. And we’re not out there twisting anyone’s arms to sell to us before they’re ready to. And so, our general approach has been we want to meet our partners wherever they want to be met. So, as long as they’re happy being independent, we’re happy to support them as independence. And when and if they want to convert then we’re happy to engage them in that conversation. But we really try to be supportive of what they’re trying to accomplish in that regard. And then candidly, all things being equal, we would be interested in on-boarding agent stations that are currently part of the network back in to what we’re doing here. That would be incremental or more incremental to us than converting an existing agent station. With respect to On Time, we certainly have turned the corner with that operation in Phoenix. It’s making money now. But it’s going to take some time to replace what was the earnings power of that business. With that said, it was profitable through the quarter and into September of ’15, and so we saw that in the comparative year-over-year results. But it in fact began losing money in the quarter, in the December of ’15. So, we’re going to get a good, or we should give a good lift relative to comparable year-over-year results for On Time in the future quarters. And, at the same time, we actually have begun to run some dedicated line-haul in support of that particular business that we lost, that actually has started again. But it’s a small piece of what was reference by that historical book of business. I think our larger opportunity isn’t so much and reconstituting what was On Time. I think the bigger opportunity is really leveraging the competency that we enjoy in Canada, and what Wheels is doing there, and how we can bring that to our install customer base and help them with their cross-border in and out of Canada.

[Mark Argento:]

And one more question I had. Can you talk a little bit about purchasing power and economies of scale that you’re hopefully starting to put through the network and offer to different agents. And whether it’s on the broker side, on the boarding side, and some of the synergies that you're finding are available?

[Bohn Crain:]

I think at this point, given our size and scale, we are at the top of the food chain in our relative purchasing power relative to our comps. So I don't know that there's a lot of incremental improvement. I mean, we're always working with our carriers and trying to find ways to improve on things. But I don't know that there's a big incremental step function left in that process. Having said that, as we on-board, either individual stations or companies that are smaller than we are, those organizations will get a lift, or we would expect those groups to get a lift and stepping up to what we've got.

[Operator:]

Our next question is from Carson Anderson with [indiscernible] Capital.

[Unidentified Analyst:]

I got a couple of quick questions for you. You mentioned the weakness in the brokerage, and all that. And are you mostly talking about truck brokerage here or customs brokerage?

[Bohn Crain:]

Well, that’s a good question, let me clarify that. In our world when we talk about brokerage, we're really talking about both intermodal as well as truck brokerage. And so, with prices coming down on the truck side a big piece of the pressure has actually been in the intermodal segment; competing for the marginal freight that can move truck or rail, as well as in this environment a lot of the customers have effectively put the business out for RFP. And we find ourselves competing more-and-more with asset-based truckers who have excess capacity and are trying to hold onto their drivers and keep their fleet active. So, that's the dynamic we're really speaking to, and that's real. But ultimately, I don't think it's enduring, and we expect some reversions on that here in future quarters.

[Unidentified Analyst:]

That leads me to my next question, Todd, mentioned three months revenue in this particular quarter. Net revenue was about $195 million, if I heard correctly?

[Todd Macomber:]

Correct.

[Unidentified Analyst:]

And when you report net revenue, is that also net or pass-throughs like custom duty and fuel, for instance?

[Todd Macomber:]

Yes, it is.

[Unidentified Analyst:]

Yes, I thought as much. Bohn, you also mentioned, couple of other questions, had questions about the stock buyback program. And I guess my question is with the stock currently somewhere below three, I saw, today it had a little pop. But when you -- Bohn, $5 a share as you well know there is a lot of institutions that by their own charter are not allowed to invest in stocks below $5 a share. And also at your current market cap, are you worried about some of those private equity guys out there, thinking that maybe they should be running the show?

[Bohn Crain:]

No, I think for better or worse, we come from a world where we have more typically been unloved, unappreciated, and under-followed right. So we’re accustom to taking a view as to what activities and work we need to do to create long-term shareholder value; and overtime, that value gets recognized. Unfortunately, it's linear. And so you really got to believe in what you're doing. But at least, historically, what our experience has been; we make progress, we make progress, we make progress; and then the cumulative weight of the evidence ultimately becomes undeniable and the value will unlock; and there will be a bit of stair-step function as we go. You make a very good point. Though, that I certainly want to acknowledge. And the way that I understand it is that, certainly, what I’ll call the plus or minus $200 million market cap can become a threshold where investors may or not be able to play because of their charter liquidity issues, what have you. And so, when the whole sector got caught-up and the XPO -- what I’ll call the XPO downdraft, the whole sector got taken down a few notches. But for us, it was the even more meaningful because we had a lot of people get involved when our market cap was, whatever it was $250 million or $300 million, but when that market reset happened; adding to your point and in fact took our market cap down below this conceptual $200 million market cap threshold. So there is a couple of ways to look at it. One way is it creates a potential inefficiency -- further inefficiencies in the marketplace in terms of valuing our stock, and more opportunities for stock-buyback or people who believe in what we’re doing, and think that ultimately that value is going to get unlocked one way or another. But there are certainly people who would be involved in our stock who currently aren’t because of our relevant market cap, no question.

[Unidentified Analyst:]

One last real quick question, I was kind of wondering in your generation of, let's say; forwarding business here in the United States, and say the inbound brokerage business. I’ve looked quite a numbers of times on your Web site, and I do understand why there are limitations. Why you put on your Web site for good reason. But I am just wondering in terms of -- I always felt in terms of building a company; you can look at trade lanes; you can look at overseas opportunities in terms of agents and/or acquisitions. And I am wondering what is really the strength or weakness of your foreign agent's network. Are all the individual stations working with their old settled networks, say, the guy in Cincinnati versus somebody in Minneapolis, or Seattle? Or do you have a common front and network...?

[Bohn Crain:]

We’ve got -- I think, it’s fair to say we have a little bit of both. What I would tell you is, in my opinion, we have one of the strongest most competent international network of any of the agent based forwarding networks. As background, I don’t know if you remember, but one of our early acquisitions was Adcom. Adcom was a founding member of one of the international network groups, called the WCA, World Cargo Alliance. So through Adcom, we’ve been involved in that organization effectively from the beginning. That’s a group of over 3,000 members. We’ve been recognized as a North American partner of the year within that group on several different occasions. On one occasion, we were actually recognized as the global partner of the year within that group. And we’ve done a really good job of positioning ourselves as, what you would think of as the one stop shop; for North America, a North America solution with a very rich and robust network with a single-point of financial settlement; for international quarters all over the world, who need to interact with the U.S. And so that’s been a very solid and candidly differentiating aspect of our business that we’ve been very proud of. And as we bring new partners to our network, we will certainly support them and their any relationships they can bring to the table, as well as we can point them to some of our existing relationships that we have. But ultimately, I think of us as being the repository of everyone’s relationships; whether it’s a career relationship or a customer relationship, or international partner relationship that we can effectively serve back for the benefit of the network. And that’s been our approach. Now, along the arithmetic, several years ago, we created and maintained a rep -- talking about, it’s effectively a rep office in Hong Kong. And so we certainly have a presence in Hong Kong, in particular, with the thought of overtime aggregating or creating a conduit through which we could channel a lot of our international business as those opportunities present themselves. And that’s been growing too. So we’re taking a little bit of a hybrid approach. While at the same time, as we think about our M&A activities, we really -- when we think about going offshore and what that means in terms of complexity of financing and management, and Sarbanes-Oxley and all of those other things. We think the highest and best use of deploying our capital is acquiring-in customer relationships and the decisions makers here in the U.S.

[Unidentified Analyst:]

Right, I understand that clearly, without being through pointed about it here. But the reality of the WCA that you mentioned isn’t that that in fact, there are not any exclusive arrangements. And let’s say an agent in Shanghai that might be looking for somebody in Seattle, he might send no three or four different request for quotation to you guys, and somebody else and somebody else, and in the end they're always looking for the best price.

[Bohn Crain:]

We've got to earn our business, in price and service every day.

[Unidentified Analyst:]

I do think that's the reality of that organization. And my recommendation for you guys would be to look hard at what you just mentioned in some real key entry points, i.e. Hong Kong for sure would be one; Singapore is perhaps another one; to in the not too distant future to control your own destiny, so to speak. Yes, maybe offline some other time, I'd like to talk to you about that, because I've done a lot of work in that area. I'm not looking to be involved in that, but I would love to...

[Bohn Crain:]

I appreciate that.

[Unidentified Analyst:]

Some thoughts on this, I've done a lot of work in that area, and obviously run a public international company. Anyways, thank you for your time. You've answered certainly all my questions, and sorry to drag it on here.

[Bohn Crain:]

All right, thanks very much.

[Operator:]

Our next question is from Gerry Heffernan with Linde Hansen & Company.

[Gerry Heffernan:]

I’d like to ask a couple of questions, if I could. Trying to take things from our last conference call, back on the 13th of September and bring us forth to where we are today. We spend a lot of time speaking back to about technology, the transition to the full SAP system. And I kind of came away with the impression that what we're really going to slow down M&A activity, because we have to concentrate more on technology. Whatever reason, I'm not hearing that so much in this call. Can you just address that topic?

[Bohn Crain:]

So, again let’s level set for folks who may not be familiar with some of the points you're referencing. So we've -- historically, our IT platform was really comprised of SAP, from an accounting standpoint, that's been integrated into CargoWise, the third-party TMS of CargoWise on the forwarding side of the house. And then when we acquired Wheels, Wheels had some of it's -- had different sets of technology, both for accounting and their individual TMS applications. So, we have been working diligently to -- on a technology path to ultimately sunset CargoWise and migrate off of CargoWise. And we have selected SAPs, TMS as the target platform that we're moving to. And in support of that, that required that we upgrade the underlying accounting platform in SAP, which as referred we were on an older version where we have moved to what’s referred to as ECC. And in connection with completing that upgrade, that's effectively what allowed us, or got us in a position, to begin the integration or transition of SBAs back-office operations. So we have the SBA network operating on its legacy transportation management system now integrated into SAP from a back office stand point. So we effectively have begun the process of, what I'll call, running of the tail, which is collecting all the receivables and paying all the payables that were instantiated and SBA’s legacy accounting system. That cut-over occurred, effective October 1. So that's kind of one aspect of just kind of bring everyone currently aware in the process of what we would call the realization effort of that SAP TM. And as we get that live and activated, which we expect begin to really role that out in calendar 2017, in the first-half of calendar 2017, we’ll begin to roll that out and have the opportunity to begin to sunset CargoWise on the forwarding side of the house. So, that's kind of level sets where we are today. Now to reconcile that back to your question about M&A. And again I'll hit on the point again. We really -- and this is an old sound-bite, but I'll call on it again. When we think about our opportunity to grow, we don’t really view ourselves as limited by access to capital. We don't view ourselves limited by good acquisition candidates. Our real limiting factor is the rate, at which we can on-board, integrate, and digest the things that we do acquire. Pre-Wheels, we only have one platform, which was the freight forwarding platform here in Bellevue. So with the acquisition of Wheels, we really find ourselves with three on-ramps; the platform here in Bellevue; the platform in Chicago; and the platform in Toronto. So, while is it true, we don't have a lot of bandwidth to do incremental M&A opportunities in the forwarding vertical that would put further demands on the CargoWise TM. We certainly could do other forwarding M&A leaving people on their legacy TMs on an interim basis, while integrating them into SAP. And then we have lots of capacity and bandwidth to do additional M&A, either supported out of Chicago on the brokerage side or Canadian centric M&A out of Toronto. So we're working hard. And you're absolutely right. We’re spending an extra ordinary amount of time and energy on progressing our technology initiatives and platform. While at the same time, we're continuing to cultivate the M&A opportunities, particularly on the brokerage side of the house.

[Gerry Heffernan:]

Okay, thank you very much for addressing. That was very clear, and I appreciate that. And I know that you had a lot of question on M&A. And certainly, I am sure there are many investors who look at radiant with the idea of that being a big growth driver. Very excited to see that you’ve instituted, or started to activate it, I guess is proper word, the share repurchase program. Just a real quick question. And you indicated shares purchased up to September 30th coinciding with the time period of which this report. Have you done any repurchasing between October 1st, and today?

[Bohn Crain:]

No, and the fact is we can't, under the rules in the buyback program we’re limited by a number of things, certain percentages of shares trading per day but we also effectively have to affect these trades within the trading windows kind of prescribe. And so that’s why I made the point. Our next window, when we actually could be active, if we choose to, I think, begins on the second business day after this call and we’ll continue up to the end of our next period. So, starting on Friday up through December 31st, would be a window where we could be active in the market, should we chose to.

[Gerry Heffernan:]

Given the price that you’re buying at, the $270 million, or whatever it is. Let’s just say between $270 million and $290 million, where the stock has spent a fair amount of time in last couple of weeks. How do you see that price for your stock, as far as the valuation, the investment opportunity there versus what you’re seeing in M&A opportunities as we speak?

[Bohn Crain:]

Well, that’s the multi-billion dollar question, isn’t it right, so...

[Gerry Heffernan:]

It shouldn’t be similar if you give the information you guy have.

[Bohn Crain:]

Yes, but one of our biggest assets candidly is our action ability, right. It takes all. We spend an extraordinary amount of time and energy cultivating relationships and developing opportunities to support entrepreneurs when they’re ready to exit. And so, we ascribe a lot of value to that action ability. So, to the extent we deploy capital, and stock buybacks as an example, that diminishes our action ability. While at the same time, we’re not interested and getting bigger, just for the sake and getting bigger, we’re trying to create shareholder value. We’ve got a number of levers that we can do that, including the stock buyback. And then I think where you’re heading with some of your questions. The stock buyback is in some respect shooting fish in a barrel, but there is no integration risk; there is no technology risk; there is no risk of losing a customer, and all of those types of things. So all of those things factor into our own thinking about that we want to take a dollar and buyback stock. Or do we want to take the dollar and deploy it in kind of our underlying strategy. But what -- again, to kind of hit on the point, I made earlier. We really believe there is a lot of runway remaining for us in the strategy that we’re executing. And we know that, overtime, we will get rewarded for that work. I mean, in the early days, we were doing a lot of really great things and our stock didn’t move at all. But we got up every morning and put our pants-on and came into work knowing that overtime that as long as we were doing the right things, we would ultimately get recognized for that value. Now, unfortunately, the window in which we got fairly valued for that was a fairly short window. I guess that’s the glass half empty approach. But the other side of it was we were able to access the capital markets and de-lever, and do some pretty -- in hindsight the timing was pretty extraordinary in terms of the financial flexibility that it leaves us with, going forward. So, I don’t want to say anything or give anyone the impression one way or the other; whether we’re going to be active in our stock buyback, or not active in our stock buyback. Because if I buy it, candidly, I want to buy it on the cheap; I'm not trying to drive our stock price higher; I want to hang it around the rim and buy it, as low as you do, when you think about how you would buy the stock. So, I don't know if that...

[Gerry Heffernan:]

Yes. And if you could get that lower and then you think long-term then that's when it turns out to be a quick investment for you. One final item, if I could. I have mixed emotions about the whole idea of giving guidance. It did come up as a topic in the last call. I believe your response is no; not giving guidance at this time; not until you've a better feel for how the operating environment is going to be looking forward. There was no message of guidance in this one; I'm not really looking for guidance. Just wondering if you guys are re-evaluating your whole views on giving guidance?

[Bohn Crain:]

Well, again for the benefit of the Group, in the early days, we provided quarterly guidance. And then when we moved to -- and in the early days, I'll say somewhat sarcastically, I would pay my mother $10 to be on the phone to ask a question, because no one was paying attention. Then no one was participating in these calls; we didn't have research coverage; we didn't have analyst; we didn't have some other mechanisms to interact with the capital markets to frame the question the opportunity. And then when we did Wheels transaction, we were really compelled to provide some level of annual pro-forma guidance for the combined group, just to people could have an understanding of what we thought we were looking at. So, we had annual guidance out once and it was really only in-connection with and in-support of the Wheels transaction. Our historic norm had been quarterly guidance. But we were providing quarterly at a time when we really didn't have research coverage and some of the things we have today. So, we'll continue to evaluate; and I don't think we have concluded one way or another; I don't think there's any absolutes that we definitely won't, or definitely will. And we'll take it at a quarter at a time and see how our appetite for guidance evolves. I can tell you, at the Board level, our Board is not anxious to provide guidance. I've always been more bullish in providing guidance, because I just felt like we needed that as part -- I needed that as part of the ability to tell our story; that may not be the case now with a little more analyst coverage available to us.

[Gerry Heffernan:]

Fair enough. I greatly appreciate your time here, and as far as having people on the call, I guess I’d add, be careful what you wish for, as we are. And it's on this call now. Anyhow, thank you very much for your time.

[Bohn Crain:]

All right thank you.

[Operator:]

Ladies and gentlemen, we have reached the end of the question-and-answer session. I'd like to turn the floor back to management for closing remarks.

[Bohn Crain:]

Thanks, Sam. Let me close by saying that we remain very excited with our progress and prospects here at Radiant. And we remain very bullish on the growth platform that we've created, and the scalability of our non-asset based business model. Our 10 year first-to-market advantage and executing our multi-brand strategy; and consolidating agent-based freight-forwarding networks; our ongoing investment in technology; and our low leverage in our balance sheet, puts us in a unique position to support further consolidation in the marketplace. We believe this represents our long-term and almost perpetual opportunity as we continue to invest in technology, and our people, with an eye towards building-out a world- class scalable back-office infrastructure, to support a much larger enterprise going forward. We are patiently persistent in the pursuit of this long-term vision, which we believe, overtime, will deliver meaningful value for our shareholders, our operating partners, and the end-customers that we serve. Thanks for [Call Ended Abruptly].