Radiant Logistics, Inc.
Q3 2016 Earnings Call Transcript

Published: 17 May 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 Third Fiscal Quarter and Nine Months Ended March 31, 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 those 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 the Radiant website 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. Please go ahead.

[Bohn Crain:]

Thank you, Emily. Good afternoon, everyone, and thank you for joining in on today's call. We're very pleased to report another record quarter and what was generally a soft-freight environment and our seasonally slowest quarter ended March 31, 2016. We posted revenues of $173.3 million, up 71 million or 69.4%; net revenues of 41.8 million, up 14.7 million or 54.2% and adjusted EBITDA of $4.7 million, up 1.3 million or 36.4% over the comparable prior year period. Normalizing our adjusted EBITDA to exclude 600,000 in non-recurring transition cost associated with SBA's redundant back office operations, we would have reported adjusted EBITDA of 5.2 million, up 1.8 million or 52.9%. In addition, we also reported record cash from operations for the nine months ended March 31, 2016 of $19.2 million. We also took the opportunity in April of this year to retire 25 million of subordinated debt that we originally obtained in April of 2015 in connection with our acquisition of Wheels Group. Given the cash that we've been accumulating on our balance sheet and the fact that we had virtually no amounts outstanding under our $65 million senior credit facility, we took the opportunity to retire the $25 million in sub-debt and excluding a one-time payment of $750,000 for a prepayment fee, we will capture what we estimate to be approximately $2 million in annual cost savings associated with reduced interest expense going forward. Even after giving effect to the payment of the -- repayment of the subordinated debt, we had approximately $10 million in net debt outstanding under our senior credit facility and remained well-positioned to continue our disciplined approach of acquiring non-asset based businesses. We have low leverage on our balance sheet, strong free cash flow and continue to search for acquisition candidates that bring critical mass to our current platform with respect to geography, purchasing power, and complementary service offerings. We've also updated our guidance for fiscal 2016 to reflect current market trends and our recent retirement of the $25 million in subordinated debt with normalized adjusted EBITDA in the range of 27.5 million to 29.5 million on revenues of approximately 790,000 to 800,000 -- excuse me $790 million to $830 million. This equates to adjusted net income attributable to common shareholders in the range of $7.8 million to $9.1 million or approximately $0.16 to $0.18 per basic and fully diluted share. Going forward we will continue to execute our multi-pronged growth strategy that includes both organic and acquisition growth initiatives. Our organic growth strategy will continue to focus on strengthening existing and expanding new customer relationships, leveraging the benefit of our new [truck] brokerage mobile [ph] service offerings, while continuing our efforts on the organic buildout of our network of strategic operating partner locations. In addition, we will also continue to focus on integration and productivity improvement initiatives to drive further merger expansion enabled in part by our ingoing investment in technology. With that, I'll turn it over to Todd to walk us through the numbers in detail.

[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 and nine months ended March 31, 2016. Quarterly net income results, for the three months ended March 31, 2016, we reported a net loss attributable to common stockholders of $2.230 million on 173.3 million of revenues or a loss of $0.05 per basic and fully diluted share, which included $789,000 of transition and lease termination cost, a $442,000 expense on change in contingent considerations, and approximately $840,000 in non-recurring legal costs and accounting cost. For the three months ended March 31, 2015, we reported net income attributable to common stockholders of $825,000 on 102.3 million of revenues or $0.02 per basic and fully diluted share. This represents a decrease of approximately $3.055 million or approximately 370.4% over the comparable prior year period. Quarterly adjusted net income results, for the three months ended March 31, 2016, we reported adjusted net income attributable to common stockholders of $1.766 million or $0.04 per basic and fully diluted share. For the three months ended March 31, 2015, we reported adjusted net income attributable to common shareholders of $1.368 million or $0.04 per basic and fully diluted share. This represents an increase of approximately $398,000 million or approximately 29.1%. Quarterly adjusted EBITDA results, we reported adjusted EBITDA of $4.650 million for the three months ended March 31, 2016 compared to adjusted EBITDA of $3.408 million for the three months ended March 31, 2015. This represents an increase of $1.243 million or approximately 36.5%. Adding back the transition costs associated with SBA's back-office representing an additional $544,000, adjusted EBITDA would have been $5.204 million or an increase of $1.796 million or $52.7%. Now moving along to the nine months results are as follows. For the nine months ended March 31, 2016, we reported a net loss attributable to common stockholders of $4,930,000 on $598.9 million of revenues or a loss of $0.10 per basic and fully diluted share. This includes a $3,680,000 impairment on the customer list of On Time Express, $5,109,000 of transition and lease termination costs, and $628,000 charge on change in contingent considerations, and approximately $1,591,000 in legal and accounting costs that we anticipate will be non-recurring. For the nine months ended March 31, 2015, we reported net income attributable to common stockholders of $2,161,000 on $306.4 million of revenues or $0.06 per basic and fully diluted share. This represents a decrease of approximately $7,082,000 or approximately 328.1% over the comparable prior-year period. For the nine months, adjusted net income results -- for the nine months and ended March 31, we reported adjusted net income attributable to common shareholders of $9,002,000 or $0.19 per basic and fully diluted share. For the nine months ended March 31, 2015, we reported adjusted net income attributable to common stock holders of $4,710,000 or $0.14 per basic and $0.13 per fully diluted share. This represents an increase of approximately $4,291,000 or approximately 91.1%. For nine months adjusted EBITDA results, we reported adjusted EBITDA of $18,986,000 for the nine months ended March 31, 2016 compared to adjusted EBITDA of $10,723,000 for the nine months ended March 31, 2015. This represents an increase of $8,263,000 or approximately 77.1%. Adding back transition costs associated with SBA’s back office representing an additional $1,931,000, adjusted EBITDA would have been $20,917,000 or an increase of $10,194,000 or 95.1%. With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.

[Operator:]

Thank you. [Operator Instructions] Our first question is from Jason Seidl of Cowen. Please go ahead.

[Jason Seidl:]

Thank you, Operator. Hey, Bohn, how are you?

[Bohn Crain:]

Good. How are you today?

[Jason Seidl:]

I can’t complaint, sir. Couple of quick ones from me. Talk a little bit about how that cross-pollination of business is going from the Wheels and to the legacy right in logistics for us.

[Bohn Crain:]

Yes, sure. So there is a couple of different flavors of that. One is our freight forwarding network beginning to use our access wheels for the purpose of accessing truck brokerage capacity historically we would call and interact with a number of third party brokerage operations and we continue to gain momentum on that front. So that’s kind of one aspect other then it is slowly but steadily growing month over month in terms of network participation and support of that initiative. Similarly, we have opportunities to try to effectively sale the Canadian competency back into our installed customer base across North America and there too it is slow but steadily improving kind of month over month, quarter over quarter. And as we think about integration as between wheels and our legacy forwarding platform, we’re really starting -- what I’ll call the customer facing side of the integration. So we’ve got various members of our leadership team working on kind of a developing a common CRM where we can see customer activity across the platform to look for opportunities to kind of leverage each other’s relationships to continue to grow the business. So there is a few kinds of anecdotal comments.

[Jason Seidl:]

I think you used the word slowly twice on both of those items there. Is it going slower than you had initially hoped?

[Bohn Crain:]

No, I don’t. We always would like it to go faster. So I guess I’ll concede that. But I think the fact is that it takes time to get adoption and kind of I guess further to that as it happens later this week we actually have our annual meeting where we’ve got and live across 250 of our operating partners coming together and later this week this is our annual meeting where we bring all of our operating partners together to kind of continue to emphasize the message and the opportunity to come together and continue to build momentum. For us, there is no better kind of internal marketing tool than case studies and success stories of folks who made use of the tools and won incremental business through that process. So it continues to incubate and continues to – it does continue to grow, but it’s not certainly couldn’t say it’s a big bang theory either in terms of that growth.

[Jason Seidl:]

Okay. Well, that makes sense. Now your forecast for on EBITDA basically was right in line with -- at least was expecting which is actually encouraging to me because things feel like they’ve definitely slowed down here of late. Could you talk a little bit about your end markets and what you’re seeing out there?

[Bohn Crain:]

Sure. I think – I guess the way that I would attack it is we’re seeing a little softness in Canada in terms of what’s going on in kind of in the Canadian marketplace and the Canadian economy. And then I think more broadly and as a remainder through the Wheels acquisition we now enjoy some intermodal as part of our business mix. As you know Jason, there is always some kind of component of the business that will tick and shift back and forth between truck and rail. And kind of that marginal freight with fuel prices coming down and kind of a natural competition between truck and rail. I think we along with the broader industry facing a little bit of head wins relative to that dynamic. So those are some of the things that we’re kind of working with on a day-to-day basis. But having said that, we’re here to – with the multi model solution over here that’s kind of working support. Our customers irrespective of the market environment and whatever modes that would suit their particular needs at the time, but that’s definitely a dynamics that’s coming into play.

[Jason Seidl:]

Thank you. And what about the freight forwarding portion?

[Bohn Crain:]

I think on the freight forwarding side, I think its holding reasonably firm. I don’t feel like we’re facing kind of macro-economic head wins on the forwarding side the way we are on what we would call the brokerage side meaning Wheels Canada and Wheels--.

[Jason Seidl:]

Okay. That’s fair enough. Last one from me then I’ll pass over to somebody else. Can you talk a little bit about the market for future tuck-in acquisitions and how that changed any? Are you still thinking now that you saw before?

[Bohn Crain:]

I would say that we have -- we’ve remained very interested in that component of the strategy. We continue to look for opportunities that make sense. We have looked closely at a few things in the past couple of months. But ultimately, and now I’ll say that it’s to our surprise, but the fact is the multiples are a little richer than we’ve had the appetite for. So we’ve basically engaged in and past on a couple of M&A opportunities and I think the short answer is I think the PE firms are continuing to kind of bid up from our perspective bid up multiples for businesses and we’re not prepared to chase at this point and in this environment. So we’ll continue to be what we used to call patiently persistent and looking for deals that kind of fit our business model and philosophy. About the same time really kind of sharpening the pencil and looking internally for productivity improvements and cross sale opportunities. There is a lot of things that we think we can do internal to the organization to drive improvement from here than being partially enabled by technology and what we’re doing kind of on that side of things. So I think that’s kind of a long winded way of saying. We’re still interested in M&A. We certainly expect to continue to get things done and that leg of our strategy while after same time we’ve got a lot to do internally around technology and integration that will drive value and should continue to drive improvement in our margin expansion as we think about our EBITDA as a function of gross margin.

[Jason Seidl:]

So it’s good to hear that you’re out chasing things that are too highly price or too risky price. Bohn, I appreciate the time as always. And I’ll turn over to somebody else there.

[Bohn Crain:]

Alright, thank you.

[Operator:]

And next question is from Kevin Sterling, a Private Investor. Please go ahead.

[Kevin Sterling:]

Hi. Good afternoon, Bohn and Todd.

[Bohn Crain:]

Good afternoon, Private Investor.

[Kevin Sterling:]

Yes, I’m not quite a private investor. You’ll get play well on TV. Bohn, if you look at your EBITDA guidance for the full year, you’re targeting from your fourth quarter EBITDA could be the second song with EBITDA quarter and fiscal year 2016, just behind Q1. So is that part seasonality or maybe some synergies, do you see their beginning to bear fruit?

[Bohn Crain:]

Well, I think it’s a combination of those things, right. So we should continue to pick up momentum kind of quarter-over-quarter through the balance of the calendar year which is kind of the traditional cycle that we would expect. We certainly are expecting some ongoing improvement in the operations through cross-sell opportunities and synergies as we continue to move forward. So it’s a combination of things and we certainly notwithstanding the good – we’re very excited with the cash flow characteristics of the business and what we’ve been able to do there. While at the same time, we’ve had a bunch of kind of non-recurring cost, legal cost lease termination cost, some of these other things that have been consumer of cash as well. So I think we as kind of get those things behind us, I think we’re going to continue to build on the momentum the balance sheet, we’ll continue to get stronger. We’re really happy to have gotten the debt pay down done and what that’s going to do for incremental free cash flows from here.

[Kevin Sterling:]

That was great. You talked about the free cash flow generation, and you’re not going to look out and see that looks to be quite strong. So have you bought back any stock on repurchase program?

[Bohn Crain:]

We have not yet.

[Kevin Sterling:]

Okay. So you still look at drive pattern. And so let me ask you – I’m just a dumb certified analyst not a smart investor. How do I get to your EPS guidance for the full year $0.16 to $0.18? Because if I make all adjustments, you’re already at $0.18, so what am I missing there? Maybe you could walk through quarter-to-quarter the EPS numbers you’re using to help us get to your EPS guidance for the full year.

[Bohn Crain:]

I’ll have to guide …..

[Todd Macomber:]

I’m going to have to circle back with you on that, when I don’t have in front of me as far as I still haven’t here in front of me.

[Kevin Sterling:]

Okay.

[Todd Macomber:]

But I’ll come back.

[Kevin Sterling:]

Alright. My question to Todd, if I use your – your guys adjusted EPS number and operating number, we’re already at $0.18 for the first three months of the fiscal year. So yes, you could follow up or whatever I’ll appreciate that. Okay. Thanks.

[Todd Macomber:]

Yes, no problem.

[Kevin Sterling:]

Bohn, when can you guys pay off the preferred?

[Bohn Crain:]

The preferred -- when we put the preferred in place it had a five year no call. I think that takes us technically to December of 2018 and then just as a reminder, we can call that at par. So, it has -- the preferred had no appreciation like in our common stock, but we can call it at par in December of 2018.

[Kevin Sterling:]

All right. Great. And Bohn about organic growth in the quarter, could you touch a little bit on that?

[Bohn Crain:]

Organic growth excluding On Time which everybody knows we had some challenges that was relatively flat for the quarter and for the nine months was trending at about 8%. That's at the net revenue line item.

[Kevin Sterling:]

So, is that typical organic growth -- typically flat in your fiscal year -- in your Q3, since it is your seasonally weakest quarter?

[Bohn Crain:]

I haven’t looked -- I haven’t organized the data to respond to that particular question. I think it's fair to say we would like to have seen a little stronger organic growth in the quarter, but we're continuing to invest -- if you remember, we added Joe Bento and we certainly expect to make some progress on that front in perspective quarters.

[Kevin Sterling:]

Okay. And you mentioned On Time, we had you lost a loss last year, because you lost a major customer, where does that stand it On Time, is it still operating at loss or is it maybe breakeven or it is quite profitable, any divestment?

[Bohn Crain:]

It was effectively breakeven for the quarter, but the good news inside of that quarter is that it lost money in the first month and then -- it lost significant money in the first month and then made money in the two subsequent months. So, we believe we've kind of turned that around and are now profitable and it will be a net contributor in perspective quarters from here.

[Kevin Sterling:]

Okay, great. And last question here, you mention SBA redundant back-office operations, are we going to see another quarter of those where we still see the redundancy and when do you expect to -- I guess normalize eliminated?

[Bohn Crain:]

Yes. I think we're going to -- we will incur those for one more -- I think the short answer is yes, I think we'll see in for one more quarter, but coming into our new fiscal year. I don't know that we'll -- I wouldn’t say that we'll have them all out, but we should see some meaningful progress made on true net-net cash dollar savings from getting cost out of that side of things.

[Kevin Sterling:]

I got you. Okay. And just kind of wrap-up here Bohn, as I think about this fourth quarter, we are expecting -- it looks like a pretty nice bounce back in EBITDA from sequential basis from Q3, is that right?

[Bohn Crain:]

That's correct.

[Kevin Sterling:]

Okay. Thanks for your time this afternoon.

[Bohn Crain:]

All right. Thank you.

[Operator:]

Our next question is from Mark Argento of Lake Street Capital Markets. Please go ahead.

[Mark Argento:]

Good afternoon guys.

[Bohn Crain:]

Good afternoon.

[Mark Argento:]

Maybe you can review for us just kind of by modality or by segment kind of where you have exposure relative to kind of truck or the freight, rail and air, if you have just general percentages of gross bookings or I guess revenue. This maybe help us understand kind of where you guys are now given the acquisitions and everything over the last 12 months?

[Bohn Crain:]

I'll take a first stab and Todd can hop in. But as -- just the kind of bracket things, if we think about Wheels' legacy operation, on the U.S. side, their business was about -- well, let me back-up. When we acquired Wheels, their business was approximately 50% in the U.S. and 50% in Canada. And then when we looked at -- to your question relative modality, in the U.S., it was 70% intermodal, 30% over the road, and just the inverse of that in Canada, about 30% intermodal, 70% over the road.

[Mark Argento:]

And then the mix of the rest of the business in terms of where you mine service air versus other truck, and it’s the one question we get is trying to better understand obviously trucking rates have been over-capacity, over-supply rates have been soft which is positive for your customers, but trying to better understand kind of that impact [Indiscernible] truck right now or how do you think about?

[Bohn Crain:]

So, on the forwarding side that dynamic generally should not have any meaningful negative effect and hopefully will allow us to source capacity more favorably for the benefit of our customers and ourselves. That's on the forwarding side. And then on the truck brokerage side, we -- I would generally expect that we will see some pressure on intermodal with hopefully some offsetting benefit for the truck side that we do if you will.

[Mark Argento:]

Got you. That's helpful. And then getting back to more kind of the housekeeping question, previous caller had asked as well about this. But if I'm looking back -- and I have to back in, but at least in my model, if I add up the first three quarters of the year, I'm getting something over 20 million in adjusted EBITDA and I know you guys talked to kind of $19 million number for the year. Do you have the pieces that first -- I guess it would be Q1 and Q2, because now we have Q3, but pieces that get to you that $19 million for the first nine months, I just want to make sure kind of--

[Bohn Crain:]

Yes, well, certainly -- and again Todd can correct me, but for me, the easiest place to look at it is in the attachments to the press release, the very last page will drive all the way to adjusted and even normalized adjusted EBITDA and that the good clean reconciliation that will show the various line items that will take us from our GAAP-based results to the numbers that we were speaking from here today.

[Mark Argento:]

All right. I'll give it a shot and if I can't figure it out, I'll give you a call. Thanks guys.

[Bohn Crain:]

All right. Thank you.

[Todd Macomber:]

Thank you.

[Operator:]

Our next question is from Marco Rodriguez of Stonegate Capital. Please go ahead.

[Marco Rodriguez:]

Good afternoon guys. Thanks for taking my questions.

[Bohn Crain:]

Sure.

[Marco Rodriguez:]

Hey, just real quick follow-up here on some previous questions, just looking at the M&A market out there for you guys, obviously you -- Bohn, you mentioned some of the valuations are still little rich here, maybe driven up by the PE firms, just kind of curious on your thoughts, just kind of given the kind of weak environment that we're in, just kind of curious why you think PE firms are kind of driving that multiple just kind of given where we're and everything, is there something that their thinking is not happening or just any kind of color there would be helpful.

[Bohn Crain:]

Well, I'm certainly not the authority on it, but it's my understanding, -- I guess I'll just leave it at that that as a general rule of thumb, the PE firms are compensated based upon as a function of assets under management, right. So, they are kind of less sensitive to short-term or perhaps even intermediate term valuations of public company comps in terms of their own thinking. But again I'm not -- I don't come from the PE world, but that's my perception of at least part of the thinking. Flip it around from our side; we certainly do transactions with the intent of creating shareholder value and accretive transactions. And -- so would be hard for us to pay as a multiple of a company we would acquire and implicit valuation that's higher than the multiple we're receiving our own stock at the time. And so, ultimately that dynamic comes into play as we think about deployment of our own capital and how we create shareholder value.

[Marco Rodriguez:]

Got you. Thanks. That's helpful. And then also in terms of use of capital here for you guys. Kind of going forward, you mentioned Bohn; you have some other potential opportunities internally -- just kind of internal investments I'm assuming. I think you said technology, also assuming on sales and marketing, can you just kind of go into a little more detail there, what sort of opportunities you might have there? And also would they be sort of one quarter type events or multi-quarter events, any kind of color there would be helpful.

[Bohn Crain:]

Well, we certainly recently added Joe Bento, we're trying to bring in more, what I call, commercial orientation to help drive organic growth and over time, I would expect we will invest in a few incremental sales resource to help act as a catalyst on that side of things. Having said that I think from a financial impact standpoint, I think what we do in technology both in terms of the capital we deploy against it and the returns that we will receive in exchange for it will be significantly higher on the technology side as we work to drive productivity improvement. And hopefully, migrate to a singular system between forwarding and brokerage that will allow us to further standardize and streamline processes for the benefit of the organization and the end customers that we serve. So, that type of stuff doesn’t happen overnight, so I think -- I'm certainly expecting that we will have an ongoing and continuous investment in our technology moving forward, part of our opportunity and candidly, I think, part of our responsibility is to try to deliver state-of-the-art technologies to our operating partners to allow them to be as competitive and as successful as they can be in the marketplace and so we'll be spending more time, more energy and more money around technology to deliver against that vision.

[Marco Rodriguez:]

Got it. Thanks a lot. Appreciate your times guys.

[Bohn Crain:]

All right. Thank you.

[Operator:]

Our next question is from David Campbell of Thompson Davis & Co. Please go ahead.

[David Campbell:]

Hi, Bohn, hi Todd. Your forecast of fiscal year of gross revenues and if the gross margin percentage is roughly the same as the March quarter, you're going to have some organic growth in the June quarter. Or is the increase in net revenues in the June quarter all SBA, I'm coming up with about $5 million increase in net revenues in the June quarter, assuming 200 million of revenues midpoint of your range. But you just said there was no organic growth in the March quarter, so is there something more optimistic about the June quarter or is it all SBA?

[Bohn Crain:]

It's -- there is a little bit of organic growth in the quarter. I don't have the model in front of me; we're in a conference room. So, some of its SBA, of course, too, but yes, we're anticipating a nominal amount of organic growth. Typically, we've had decent organic growth and this last quarter was, -- I don't remember the exact number, but it was light [ph], so my model though does anticipate a little bit of organic growth.

[David Campbell:]

And SBA was acquired -- was that acquired in June last year?

[Bohn Crain:]

Yes, I think June 10 is my -- somewhere around there.

[David Campbell:]

So, you have a whole quarter obviously -- virtually a whole quarter. And that will contribute to the year-to-year growth in net revenues.

[Bohn Crain:]

Correct.

[David Campbell:]

Other than that that's about it though, right, there's no other M&A of significance contributing--

[Bohn Crain:]

Nothing--

[Todd Macomber:]

Nothing significant.

[David Campbell:]

Right, right, right. And as far as fiscal -- looking at the fiscal 2017, I mean would it be a mistake to multiply the June quarter by four and that four quarters would be somewhere around $200 million of -- somewhere around $200 million of net revenues next year excluding M&A, would that be too optimistic or would that be hoping you would consider normal?

[Bohn Crain:]

We certainly have some seasonality to it you got to factor in Dave. So, I'd have to look -- go back to the model. I mean typically I wouldn’t take just the last quarter. I think we got a pretty good baseline. We haven’t had material transactions in the current year. So, I think it's -- the prior -- this current year I think is a good base line and then some sort of a nominal increase year-over-year as probably how I would project forward for 2017.

[David Campbell:]

Okay. Thank you.

[Bohn Crain:]

You bet.

[Operator:]

And next question is from Jeff Kauffman of Buckingham. Please go ahead.

[Jeff Kauffman:]

Thank you very much. Hi, guys.

[Bohn Crain:]

Hello, Jeff.

[Jeff Kauffman:]

I apologize, I got on the call a little bit late so I don’t want to be repetitive, but it looks to me like you brought down the EBITDA guidance for this year by about $0.5 million high-end, low-end of the range, but the earnings guidance by about $0.04 to $0.05. What helps me bridge that difference between a $0.5 million change and about $0.04 in earnings?

[Bohn Crain:]

Well, $0.5 million we dropped I mean just based on the seasonality. And where the numbers were projecting. I mean we looked at Q3, and it's hard to know at all times where we’re going to -- where the numbers are going to fall in, but it's our best projection of course, going forward.

[Jeff Kauffman:]

Well, yes, I’m just taking the projection you have and if I say okay, we’re going to earn $0.5 million less in EBITDA then we thought that shouldn’t be $0.04 in earnings. So is there something else going on with the tax rate or below the line that might not profit to my head naturally that would cause such a big difference in your earnings guidance.

[Bohn Crain:]

Yes, I would have to look at the model. I’m sitting here at the conference room, without the model in front of me. And so I can’t answer that without the diluted model.

[Jeff Kauffman:]

Okay. And then just one follow-up, you talked about how the prices for third party acquisitions in the market. We’re little higher than you like, but historically you grown a lot by bringing agents in to the fold. Could you just give us an update given that revenue has been grown a little bit more slowly? Where do we stand on some of those agency opportunities as there are reason pipelines not as strong as it has been or how should I think about your internal growth opportunities as opposed to your external growth opportunities?

[Bohn Crain:]

Jeff, as you are alluding to kind of on-boarding new agent station historically has been kind of a contributing factor to our growth rates. I think now more than ever we’re top of mine good folks. Sounds like you’re at a baseball game.

[Jeff Kauffman:]

Indeed I am. Little late playoffs.

[Bohn Crain:]

Actually, well, I hope they’ve scored. I’m sorry I kind of got lost in the question on the homerun. What was your question again?

[Jeff Kauffman:]

Well, you talked about how the market for external growth is little bit expensive?

[Bohn Crain:]

I’m sorry. Yes, so for the agent stations that’s still a very interesting area that we continue to pursue and I think we’ve done a good job of positioning ourselves in the marketplace to continue to be top of mine because as we’ve talked about there can be any number of catalyst that would cause a potential partner to kind of be ready to make a change and we’re actively engaged with folks trying to make sure that when they are ready we’re ready. And I think as we’ve also talked about before when you get one it’s not unusual to get more than one out of our particular network. So that’s something that we continue to pursue and something that we would expect to arithmetic under which we would expect to continue to put points on the board in our business model going forward.

[Jeff Kauffman:]

All right. So I should think …

[Bohn Crain:]

But there is nothing that we have – we certainly haven’t abandoned that strategy and it's not something we no longer have an appetite in and it’s not something that you should not expect from us going forward. That remains part of the equation.

[Jeff Kauffman:]

Okay. So near-term growth, so little slow one we’d like but big chunk of powder if the right thing comes up.

[Bohn Crain:]

Clear.

[Jeff Kauffman:]

Okay. Thank you very much guys.

[Todd Macomber:]

You bet.

[Bohn Crain:]

Thank you.

[Operator:]

There are no further questions at this time. I’d like to turn this floor back over to Bohn for any closing remarks.

[Bohn Crain:]

Alright, thank you. 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 created and the scalability of our non-asset based business model. We continue to make good progress in executing our strategies, leveraging the Radiant platform to bring value to our operating partners. And we remain very excited about the opportunity to grow our business organically both to same-store and new store growth and by completing acquisitions of other companies that bring critical mass from a geographic standpoint, incremental purchasing power and/or complementary service offerings, which will benefit the broader network. At the right place, at the right time, with the right value proposition, we look forward to reporting further progress in terms of both organic and acquisition initiatives in the quarters ahead. Thanks for listening and your support of Radiant Logistics.