Third-party logistics provider Radiant Logistics reported record results for its fiscal third quarter ended March 31. Management from the company said it’s not seeing any material slowdown in demand.
“We’re still seeing good volumes,” Bohn Crain, founder and CEO, stated on a call with analysts when discussing the company’s international freight network. “I think it’s fair to say everybody’s having to work a lot harder than we might have had to at different times but freight is still moving. We’re still busier than heck.”
He anticipates a “second surge” in freight flows when China lifts COVID lockdowns, which he thinks will reignite supply chain congestion and capacity issues.
Crain noted that “capacity is loosening up a little bit” in Radiant’s (NYSE: RLGT) domestic business. But he believes that may have more to do with a shift away from the West Coast as “demand has picked up in other geographies of the country.”
“There was certainly a time where you could be on the phone all day trying to secure a single truck for an account. Folks aren’t having to work quite that hard,” Crain added.
Radiant reported adjusted earnings per share of 33 cents, well ahead of the year-ago and consensus estimate of 18 cents. Revenue was 95% higher year-over-year at $461 million with net revenue increasing 49% to $85 million. Net revenue margin in the period slid 560 basis points to 18.4% as purchased transportation costs remained elevated.
Management remains frustrated with the lower valuation multiple (5.5x enterprise value-to-trailing 12 months’ adjusted earnings before interest, taxes, depreciation and amortization) attached to its shares.
“We do not believe that our current stock price accurately reflects Radiant’s intrinsic value or long-term growth prospects, particularly given our unlevered balance sheet and therefore represents an excellent investment opportunity for both the company and our shareholders,” Crain said.
Management will look at stock buybacks more earnestly, in addition to pursuing M&A, in efforts to drive valuation higher.
In February, Radiant renewed its stock buyback program, which allows for the repurchase of up to 5 million shares through 2023. On Monday, the company upped its shelf registration, allowing for the issuance of $150 million (prior $100 million) in common stock “to support and accelerate our growth strategy should the opportunity present itself.”
The company plans to use half of its free cash flow to buy back stock with the other half earmarked for acquisitions.
“We do believe that Radiant’s new normal is meaningfully stronger than what the market is giving us credit for,” Crain said.
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