2021
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BACK ON TRACK
WITH PROFITABLE GROWTH
Fellow Shareholders:
It was nothing short of an
extraordinary year with most
of us touched both on a
personal and a professional
level by the challenges and
uncertainties presented by
COVID-19. At Radiant, we began the year with a focus
on four key objectives: ensuring the health and safety of
our employees; providing supply chain continuity for our
customers, operating partners and carriers; protecting the
economic security of our people to the greatest extent
possible; and taking the steps necessary to mitigate the
impacts of the slowing economy on our own business. We
had also taken steps to preserve our liquidity, initiating
temporary workforce reductions, tabling our acquisition
efforts and suspending our stock buy-back program as we
braced for the unknown.
record Adjusted EBITDA of $48.8 million. In addition, we
also set a new record in terms of our Adjusted EBITDA
margins for our fiscal year ended June 30, 2021, which
increased to 22.1% up from 18.3% over the comparable
prior year period.
We were also able to deliver these exceptional results while
maintaining very low leverage on our balance sheet. As of
June 30, 2021, we had $13.7 million of cash on hand and
net debt of $19.9 million, less than half of our $48.8 million
in trailing twelve-month EBITDA, maintaining our ultimate
financial flexibility moving forward.
In addition to our continued efforts to deliver organic
growth through our various sales and technology initiatives,
we also believe there is also a great opportunity for us
to create meaningful shareholder value by thoughtfully
re-levering our balance sheet. This will likely take the
form of a combination of synergistic acquisitions and the
purchase of our own stock. Despite all our progress and
achievement, we believe that our current share price does
not accurately reflect Radiant’s intrinsic value or long-term
growth prospects, particularly given our unlevered balance
sheet. In this regard we were able to begin to re-engage
in our stock buy-back and purchased approximately $1.9
million of our stock during the quarter ended June 30, 2021.
We expect to make more meaningful purchases of our stock
in the coming quarters to take advantage of the opportunity
being presented to us by the disconnect between the
underlying value of our stock and our current stock price.
As we think about capital allocation, we do not see
acquisitions and stock buy backs as mutually exclusive
events. Rather, we expect to take a balanced and
opportunistic approach and will continue to look for
compelling acquisition opportunities that bring critical
mass to our current platform with respect to geography,
purchasing power and complementary service offerings.
Through this approach we will continue to scale our
business, leveraging our best-in-class technology operating
system and extensive global network of service partners
which we believe, over time, will deliver meaningful value
for our shareholders, our operating partners and the end
customers that we serve.
It’s the Network that Delivers!®
Bohn H. Crain
Founder, Chairman & CEO
These proactive measures helped us navigate the challenges
of the pandemic and over the course of the year we saw a
slow and steady improvement across many of the industries
that we serve that allowed us to restore our workforce while
helping our customers get their supply-chains back online.
During the year we also continued to make good progress
with our vertical and field sales strategy along with various
technology initiatives which all contributed to putting us
back on track for profitable growth.
At the same time, we saw a persistent and broad-based
tightening of capacity across virtually every mode of
transportation over the course of the year which only
heightened the importance of the work we do. Not only
have we seen increased activity from our legacy customers
as their business continues to recover from the pandemic,
but we have also had the opportunity to win new customers
looking to take advantage of the breadth and depth of our
service offerings and the strength our carrier relationships in
this capacity constrained market environment.
As a result, Radiant reported record results for our fiscal
year ended June 30, 2021. We reported revenues of
$889.1 million compared to $855.2 million for the prior
period. This reflects an increase of $33.9 million over the
prior period or an increase of $107.4 million or 71.4%
from the prior year after excluding Covid-related project
revenues of $125.5 million realized from air charters in the
year ago period. We were able to replace last year’s lower
margin project revenue with higher margin business during
the year. This ultimately grew our net revenues to $220.8
million delivering record net income attributable to common
stockholders of $22.9 million, record adjusted net income
attributable to common stockholders of $34.4 million and
FINANCIAL HIGHLIGHTS
GROSS REVENUES (MILLIONS)
NET REVENUES(1) (MILLIONS)
0.0
100
200
300 400
500
600 700
800
900 1000
0.0
25
50
75 100
125
150 175
200
225 250
‘21
‘20
‘19
‘18
‘17
889.1
855.2
890.5
842.4
777.6
‘21
‘20
‘19
‘18
‘17
220.8
209.4
230.1
200.1
194.6
ADJUSTED EBITDA(2) (MILLIONS)
ADJUSTED EBITDA(2) MARGIN
0.0
5
10
15 20
25
30
35
40
45
50
0.0
2.5%
5.0%
7.5% 10%
12.5%
15% 17.5%
20%
22.5% 25%
‘21
‘20
‘19
‘18
‘17
48.8
38.3
40.8
29.2
29.6
‘21
‘20
‘19
‘18
‘17
22.1%
18.3%
17.7%
14.6%
15.2%
(1) Net revenues are revenues net of cost of transportation and other services.
(2) Reflects a non-GAAP measure of income management considered useful in analyzing our results. A reconciliation of our non-GAAP
financial measures presented to our GAAP-based net income, as well as a description of our non-GAAP measures, is included on the last page of
this Annual Report. Our non-GAAP measures are not intended to replace any presentation included in our consolidated financial statements.
OUR OPERATIONSRADIANT and its operating partners provide a unique and comprehensive service platform offering domestic and international freight forwarding, truck and rail brokerage and an array of value added supply chain management services primarily to customers in the United States and Canada who operate across North America and around the world.NET REVENUE BY SERVICE OFFERINGFreight Forwarding Brokerage Value Added Service (VAS)Domestic InternationalLess-Than-Truckload Truckload IntermodalConsulting/OtherCustoms House Brokerage (CHB)Materials Management & Distribution (MM&D) NET REVENUE BREAKOUTFREIGHT FORWARDING$220.8 Million79%12%9%$174.9 Million67%33%BROKERAGEVALUE ADDED SERVICES$26.0 Million52%29%19%$20.0 Million87%10%3% UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended June 30, 2021
or
☐ 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
(State or other jurisdiction
of incorporation or organization)
04-3625550
(I.R.S. Employer
Identification Number)
Triton Tower Two
700 S Renton Village Place, Seventh Floor
Renton, Washington 98057
(Address of Principal Executive Offices)
(425) 462-1094
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol(s)
RLGT
Securities registered under Section 12(g) of the Exchange Act:
None
Title of each class
Common Stock, $.001 Par Value
Name of each exchange on which registered
NYSE American
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 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 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
Non-accelerated filer
☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered accounting firm that prepared
or issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant based on the closing share price of the
registrant’s common stock on December 31, 2020 was approximately $226 million.
As of September 1, 2021, 49,919,062 shares of the registrant’s common stock were outstanding.
Documents Incorporated by Reference:
Portions of the registrant’s proxy statement for the 2021 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual
Report on Form 10-K. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year
ended June 30, 2021.
TABLE OF CONTENTS
PART I
ITEM 1.
BUSINESS..............................................................................................................................................................
ITEM 1A. RISK FACTORS.....................................................................................................................................................
ITEM 1B. UNRESOLVED STAFF COMMENTS .................................................................................................................
PROPERTIES .........................................................................................................................................................
ITEM 2.
LEGAL PROCEEDINGS .......................................................................................................................................
ITEM 3.
MINE SAFETY DISCLOSURES ..........................................................................................................................
ITEM 4.
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ITEM 6.
ITEM 7.
ISSUER PURCHASES OF EQUITY SECURITIES ........................................................................................
SELECTED FINANCIAL DATA ..........................................................................................................................
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS ...................................................................................................................................................
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......................................
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .......................................................................
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
ITEM 9.
DISCLOSURE ...................................................................................................................................................
ITEM 9A. CONTROLS AND PROCEDURES.......................................................................................................................
ITEM 9B. OTHER INFORMATION ......................................................................................................................................
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ...............................................
ITEM 11. EXECUTIVE COMPENSATION..........................................................................................................................
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS........................................................................................................
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE ....
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES........................................................................................
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES .............................................................................
ITEM 16.
FORM 10-K SUMMARY ......................................................................................................................................
Signatures
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i
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
Cautionary Statement for 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; the impact of COVID-19 on our operations and financial results; and such other factors that
may be identified from time to time in our 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 this report. In addition, the global economic climate and
additional or unforeseen effects from the COVID-19 pandemic amplify many of these risks. 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.
1
ITEM 1. BUSINESS
Our Company
PART I
Radiant Logistics, Inc. (the “Company”, “we” or “us”), operates as a third-party logistics company, providing multi-modal transportation
and logistics services primarily in the United States and Canada. We service a large and diversified account base consisting of consumer
goods, food and beverage, manufacturing and retail customers, which we support from 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. We
provide these services through a multi-brand network, which includes over 100 operating locations, which includes a number of
independent agents, who we also refer to as our “strategic operating partners” that operate exclusively on our behalf as well as
approximately 20 Company-owned offices. As a third-party logistics company, we have a vast carrier network of asset-based
transportation companies, including motor carriers, railroads, airlines and ocean lines in our 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. Our services include 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), and customs house brokerage ("CHB") 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 truck brokerage and intermodal service offerings,
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.
COVID-19
The COVID-19 pandemic continues to have widespread implications and while we see improvements in the broader economy, it is
difficult to predict how COVID-19 will impact the overall economy in the future. Many countries have begun the process of vaccinating
their residents against COVID-19. However, the large scale and challenging logistics of distributing the vaccines, as well as uncertainty
over the efficacy of the vaccines against new variants of the virus, may impact the economy as well as our operations in the future. Our
results for the fiscal year 2021 showed encouraging recovery as we navigate through this unique environment. While we are seeing
positive results despite the current COVID-19 environment, there remains uncertainty regarding how COVID-19 will impact the
Company's results in the future.
The effect of the COVID-19 pandemic may last for a significant period of time and may continue to adversely affect our business, results
of operations and financial condition even after the COVID-19 outbreak has subsided. The extent to which the COVID-19 pandemic
impacts us will depend on numerous evolving factors and future developments that we are not able to predict, including the duration
and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic
activity including the possibility of recession or financial market instability. These factors may adversely impact consumer, business,
and government spending as well as customers' ability to pay for our services on an ongoing basis. This uncertainty also affects
management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these
estimates and assumptions, including receivables and forward-looking guidance.
2
Competitive Strengths
As a non-asset based third-party logistics provider, we believe that we are well-positioned to provide cost-effective and efficient
solutions to address the demand in the marketplace for transportation and logistics services. We believe that the most important
competitive factors in our industry are quality of service, including reliability, responsiveness, expertise and convenience, scope of
operations, geographic coverage, information technology and price. We believe our primary competitive advantages are as follows:
Non-asset-based business model
As a non-asset-based logistics provider, we own only a minimal amount of equipment. By not owning the transportation equipment used
to transport the freight, which results in relatively minimal fixed operating costs, we are able to leverage our network of locations to
offer competitive pricing and flexible solutions to our customers. Moreover, our balanced product offering provides us with revenue
streams from multiple sources and enables us to retain customers even as they shift across various modes of transportation. We believe
our low capital intensity model allows us to provide low-cost solutions to our customers, operate our business with strong cash flow
characteristics, and retain significant flexibility in responding to changing industries and economic conditions.
Offer significant advantages to our strategic operating partners
Our current network is predominantly represented by independent agents, who operate exclusively on our behalf, who we also refer to
as our “strategic operating partners”, who rely on us for operating authority, technology, sales and marketing support, access to working
capital, our carrier and international partner networks, and collective purchasing power. Through this collaboration, our strategic
operating partners have the ability to focus on the operational and sales support aspects of their business without diverting costs or
expertise to the structural aspect of their operations, thus, providing our strategic operating partners with the regional, national and global
brand recognition that they would not otherwise be able to achieve acting alone.
Lower-risk operation of network of strategic operating partners
We derive a substantial portion of our revenue pursuant to agreements with our strategic operating partners operating under our various
brands. These arrangements afford us with a relatively low risk growth model as each strategic operating partner is responsible for its
own sales and costs of operations. Under shared economic arrangements, we are responsible to provide to our strategic operating partners
centralized back-office infrastructure, transportation and accounting systems, billing and collection services.
Diverse customer base
We service a large and diversified account base of over 12,000 accounts consisting of consumer goods, food and beverage,
manufacturing and retail customers. For the annual period up to the date of this report, no single customer and no strategic operating
partner represented more than 10% of our consolidated revenue, reducing risks associated with any particular industry, geographic or
customer concentration.
Information technology resources
A primary component of our business strategy is the continued development of advanced information systems to provide accurate and
timely information to our management, strategic operating partners and customers. We believe that the ability to provide accurate real-
time information on the status of shipments has and will become increasingly important in our industry. Our customer delivery tools
enable connectivity with our customers’ and trading partners’ systems, which leads to more accurate and up-to-date information on the
status of shipments. Our centralized transportation management system (rating, routing, tender and financial settlement process) drives
significant efficiency across our network.
Global network of transportation providers
We provide worldwide supply chain services, which include international air and ocean services that complement our domestic service
offerings. Our offerings include heavyweight and small package air services, providing same day (next flight out) air charters, next day
a.m./p.m., second day a.m./p.m. as well as time definite surface transport moves. Our non-asset-based business model allows us to use
commercial passenger and cargo flights. Thus, we have thousands of daily flight options to choose from, and our pickup and delivery
network provides us with zip code to zip code coverage throughout North America.
3
Sourcing and managing transportation
As we continue to grow and scale the business, we believe that we are developing density in our trade lanes, which creates opportunities
for us to more efficiently source and manage our transportation capacity. With our acquisition of Radiant Canada (formerly, Wheels
Group, Inc.) in 2015, our network has access to truck brokerage and intermodal capabilities. We believe the benefit of our relative
purchasing power along with our service line expansion will serve as a competitive differentiator in the marketplace to help us secure
new customers and attract additional strategic operating partners to our network.
Value-added services
In addition to our core transportation service offerings, we also provide value-added supply chain services including MM&D, and CHB.
We believe that our value-added services allow us to leverage our transportation services to generate additional revenue and provide
additional convenience to our customers.
Industry Overview
The logistics industry is highly fragmented with thousands of companies of various sizes competing in the domestic and international
markets. As business requirements for efficient and cost-effective logistics services have increased, so has the importance and
complexity of effectively managing freight transportation. Businesses increasingly strive to minimize inventory levels, perform
manufacturing and assembly operations in the lowest cost locations, and distribute their products in numerous global markets. As a
result, companies are increasingly looking to third-party logistics providers to help them execute their supply chain strategies.
Shippers typically manage their supply chains using some combination of asset and non-asset-based service providers. We operate
principally as a non-asset based third-party logistics provider focused on freight forwarding, truck brokerage and intermodal
transportation services along with associated value-added services. According to Armstrong and Associates, the market for third-party
logistics services in the United States and Canada is estimated at approximately $229.2 billion annually.
Because non-asset based companies select from various transportation options in routing customer shipments, they are often able to
serve customers less expensively and with greater flexibility than their asset based competitors, who are typically focused on maximizing
the utilization of their own captive fleets of trucks, aircraft and ships rather than the specific needs of the customer.
We believe there are several factors that are increasing demand for global logistics solutions. These factors include:
outsourcing of non-core activities;
globalization of trade;
increased need for time-definite delivery;
consolidation of global logistics providers; and
increasing influence of e-business and the Internet.
Our Growth Strategy
Our objective is to provide customers with comprehensive multi-modal transportation and logistics solutions offered by us through our
Radiant®, Radiant Canada™, Clipper, Airgroup®, Adcom®, DBA™ and Service by Air™ brands. Since inception of our business in
2006, we have executed a strategy to expand operations through a combination of organic growth and the strategic acquisition of non-
asset-based transportation and logistics providers meeting our acquisition criteria. We have successfully completed 19 acquisitions since
our initial acquisition of Airgroup in January of 2006, including:
Automotive Services Group, expanding our services into the automotive industry, in 2007;
Adcom Express, Inc., (“Adcom”) adding domestic operating partner locations, in 2008;
DBA Distribution Services, Inc., (“DBA”) adding two Company-owned locations and operating partner locations, in 2011;
ISLA International Ltd., (“ISLA”) adding a Company-owned location in Laredo, Texas, providing us with bilingual
expertise in both north and south bound cross-border transportation and logistics services, in 2011;
Brunswicks Logistics, Inc., (“ALBS”) adding a strategic Company-owned location in New York-JFK, in 2012;
Marvir Logistics, Inc., (“Marvir”) adding a Company location in Los Angeles from the conversion of a former operating
partner since 2006, in 2012;
International Freight Systems of Oregon, Inc., (“IFS”) adding a Company location in Portland, Oregon, from the conversion
of a former operating partner since 2007, in 2012;
4
On Time Express, Inc., (“On Time”) adding three Company-owned locations in Phoenix, Arizona, Dallas, Texas and
Atlanta, Georgia, to providing additional line-haul and time critical logistics capabilities, in 2013;
Phoenix Cartage and Air Freight, LLC, (“PCA”) opening a Company-owned location in Philadelphia, Pennsylvania, in
2014;
Trans-NET, Inc. (“TNI”) expanding Company-owned operations in Seattle, Washington and providing a gateway of
services to the Russian Far East, in 2014;
Don Cameron and Associates, Inc. (“DCA”), a Minnesota based, privately held company that provides a full range of
domestic and international transportation and logistics services across North America, in 2014;
Radiant Canada, one of the largest third-party logistics providers in Canada, offering truck brokerage services and
intermodal service offering throughout the United States and Canada along with value-added warehouse and distribution
service offerings in support of U.S. shippers looking to access the Canadian markets, in 2015;
Highways and Skyways, Inc. (“Highways”), a privately held Kentucky based company, adding a Company-owned location
near the Cincinnati airport from the conversion of a former SBA operating partner in 2015;
Service by Air, Inc. (“SBA”), a privately held corporation based in New York, adding three Company-owned operating
locations and forty strategic operating partner locations across North America, in 2015;
Copper Logistics, Incorporated (“Copper”), a Minneapolis, Minnesota based privately held company that provides a full
range of domestic and international transportation and logistics services across North America, in 2015;
Lomas Logistics (“Lomas”), a division of L.V. Lomas Limited, a Canada based third-party logistics provider that operates
in Ontario and British Columbia, in 2017; and
Dedicated Logistics Technologies, Inc. (“DLT”), a privately held company that has historically operated under the
Company’s SBA brand in Newark, New Jersey and Los Angeles, California, in 2017;
Sandifer-Valley Transportation and Logistics, Ltd. (“SVT”), a privately held company providing a full range of domestic
and international cross-border services with Mexico, in 2017; and
Alexandria, Virginia based Friedway Enterprises, Inc. (“Friedway”) and Pittsburgh, Pennsylvania based CIC2, Inc.
(“CIC2”), historically operated the Company’s Adcom agency locations, in 2020.
We expect to grow our business organically and by completing acquisitions of other companies with complementary geographical and
logistics service offerings. We will continue to make enhancements to our back-office infrastructure, transportation management, and
accounting systems to support this growth. Our organic growth strategy will continue to focus on strengthening existing and expanding
new customer relationships, while continuing our efforts on the organic build-out of our network of strategic operating partner locations.
In addition, we will also be working to drive further productivity improvements enabled through our value-added truck brokerage and
customs house brokerage service capabilities.
Our acquisition strategy has been designed to take advantage of shifting market dynamics. The third-party logistics industry continues
to grow as an increasing number of businesses outsource their logistics functions to more cost effectively manage and extract value from
their supply chains. The industry is positioned for further consolidation as it remains highly fragmented, and as customers are demanding
the types of sophisticated and broad reaching service offerings that can more effectively be handled by larger more diverse organizations.
We believe the highly fragmented composition of the marketplace, the industry participants’ need for capital, and their owners’ desire
for liquidity has and will continue to produce a large number of attractive acquisition candidates. For the most part, our target acquisition
candidates are generally smaller than those identified as acquisition targets of larger public companies and have limited ability to conduct
their own public offerings or obtain financing that will provide them with capital for liquidity or rapid growth. We believe that many of
these “smaller” companies are receptive to our acquisition program as a vehicle for liquidation or growth. We intend to be opportunistic
in executing our acquisition strategy with a goal of expanding both our domestic and international capabilities.
Our Operating Strategy
Leverage the People, Process and Technology Available through a Central Platform. A key element of our operating strategy is to
maximize our operational efficiencies by integrating general and administrative functions into our back-office operations and reducing
or eliminating redundant functions and facilities at acquired companies. This is designed to enable us to quickly realize potential savings
and synergies, efficiently control and monitor operations of acquired companies, and allow acquired companies to focus on growing
their sales and operations.
5
Develop and Maintain Strong Customer Relationships. We seek to develop and maintain strong interactive customer relationships by
anticipating and focusing on our customers’ needs. We emphasize a relationship-oriented approach to business, rather than the
transaction or assignment-oriented approach used by many of our competitors. To develop close customer relationships, we and our
network of operating partners regularly meet with both existing and prospective customers to help design solutions for, and identify the
resources needed to execute, their supply chain strategies. We believe that this relationship-oriented approach results in greater customer
satisfaction and reduced business development expense.
Operations
Through our operating locations across North America, we offer domestic and international air and ocean freight forwarding services
and freight brokerage services including truckload services, LTL services, and intermodal services, which is the movement of freight in
trailers or containers by combination of truck and rail. As a third-party logistics provider, 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 supply chain
services, including MM&D and CHB, to complement our core transportation service offering.
As a non-asset-based provider, we generally do not own the transportation equipment used to transport the freight. We generally expect
to neither own nor operate any material transportation assets and, consequently, arrange for transportation of our customers’ shipments
via trucking companies, commercial airlines, air cargo carriers, railroads, ocean carriers and other non-asset based third-party providers.
We select the carrier for a shipment based on route, departure time, available cargo capacity and cost. We may charter cargo aircraft
and/or ocean vessels from time to time depending upon seasonality, freight volumes and other factors. We generate our gross margin on
the difference between what we charge to our customers for the services provided to them, and what we pay to the transportation
providers to transport the freight.
We are organized functionally in two geographic operating segments: U.S. and Canada. Our transportation services for both the U.S.
and Canada segments can be broadly placed into the categories of freight forwarding and freight brokerage services:
Freight forwarding. As a freight forwarder, we operate as a non-asset-based carrier providing domestic and international air and ocean
freight forwarding services. Our freight forwarding operations involve obtaining shipment or material orders from customers, creating
and delivering a wide range of logistics solutions to meet customers' specific requirements for transportation and related services, and
arranging and monitoring all aspects of material flow activity utilizing advanced information technology systems. We arrange for
transportation of our customers’ shipments via trucking companies, commercial airlines, air cargo carriers, ocean carriers and other asset
and non-asset based third-party providers. We select the carrier for a shipment based on route, departure time, available cargo capacity
and cost. We charter cargo aircraft from time to time depending upon seasonality, freight volumes and other factors.
Freight brokerage. We also provide significant bi-modal brokerage capabilities providing truckload, LTL and intermodal services
throughout the United States and Canada, which is managed through our centralized service centers in Chicago, Illinois and Toronto,
Ontario. We offer temperature-controlled, dry van, intermodal drayage, and flatbed services and specialize in the transport of food and
beverage, consumer packaged goods and frozen food and refrigerated products.
As a truck broker, we match the customers’ needs with carriers’ capacity to provide the most effective combination of service and price.
We have contracts with a substantial number of carriers allowing us to meet the varied needs of our customers. As part of the truck
brokerage services, we negotiate rates, track shipments in transit and handle claims for freight loss and damage on behalf of our
customers. For our LTL service, we employ a point-to-point model that we believe serves as a competitive advantage over the traditional
hub and spoke LTL model in terms of faster transit times, lower incidence of damage, and reduced fuel consumption.
As an intermodal services company, we arrange for the movement of our customers’ freight in containers, trailers and rail boxcars,
typically over long distances of at least 750 miles. We contract with railroads to provide transportation for the long-haul portion of the
shipment and with local trucking companies, known as “drayage companies,” for pickup and delivery. As part of our intermodal services,
we negotiate rail and drayage rates, electronically track shipments in transit, consolidate billing and handle claims for freight loss or
damage on behalf of our customers.
To complement our core transportation service offerings, we also provide a number of value-added services, including MM&D and
CHB solutions.
6
Information Services
The continued enhancement of our information systems and ultimate migration of acquired companies and additional strategic operating
partners to a common set of customer-facing and back-office applications is a key component of our growth strategy. We believe that
the ability to provide accurate real-time information on the status of shipments as well as enhanced reporting and visibility tools has
become increasingly important and that our efforts in this area will result in competitive service advantages. In addition, we believe that
centralizing our operations into a single transportation management system (rating, routing, tender and financial settlement processes)
will continue to drive significant productivity improvement across our network.
In our forwarding operations, we use a third-party and proprietary transportation management system (Cargowise, SBA Review) and
are migrating operations to SAP TM, that are integrated to our third-party accounting system (SAP ECC). These systems combine to
form the foundation of our supply-chain technologies, which provides us with a common set of back-office operating, accounting and
customer facing applications. In our brokerage operations, we utilize the TEDS system for transportation management and Megatrans
for intermodal services. In our warehousing operations, we use Microsoft’s Navision and are migrating to Highjump, which uses SAP
for order management services. These systems are connected to Epicor and JD Edwards for accounting and financial reporting. We
continue to make gradual progress in migrating these various operating and financial reporting systems to a singular SAP-based platform.
We are taking a phased approach to these migrations and currently we continue to transition our domestic and international freight
forwarding services to our new SAP-based transportation management system. Future phases will include the transition of our legacy
brokerage transportation management and financial reporting systems to SAP ECC.
Sales and Marketing
We principally market our services through our network of Company-owned and strategic operating partner locations across North
America. Each office is staffed with operational employees to provide support for the sales team, develop frequent contact with the
customer’s traffic department, and maintain customer service. Our current network is predominantly represented by strategic operating
partners that rely on us for operating authority, technology, sales and marketing support, access to working capital, our carrier and
international partners networks, and collective purchasing power. Through this collaboration, our strategic operating partners have the
ability to focus on the operational and sales support aspects of the business without diverting costs or expertise to the structural aspect
of their operations, providing our partners with the regional, national and global brand recognition that they would not otherwise be able
to achieve by solely serving their local market. We have no customers or strategic operating partners that separately account for more
than 10% of our consolidated revenue, although we do have a number of significant customers and strategic operating partner locations
with volume and stature, the loss of one or more of which could negatively impact our ability to retain and service our customers.
Competition and Business Conditions
The logistics business is directly impacted by the volume of domestic and international trade. The volume of such trade is influenced by
many factors, including economic and political conditions in the United States and abroad, major work stoppages, currency fluctuations,
acts of war, terrorism and other armed conflicts, United States and international laws relating to tariffs, trade restrictions, foreign
investments and taxation.
The global transportation and logistics services industry is intensively competitive and is expected to remain so for the foreseeable
future. We compete against asset based and other non-asset based third-party logistics companies, consultants, information technology
vendors and shippers’ transportation departments. This competition is based primarily on rates, quality of service (such as damage-free
shipments, on-time delivery and consistent transit times), reliable pickup and delivery and scope of operations. Certain of our competitors
have substantially greater financial resources than we do. However, we believe the incremental service offerings enabled through our
acquisition strategy (e.g. Radiant Canada’s truck brokerage and intermodal capabilities) will serve as a catalyst for margin expansion in
our existing business and a competitive differentiator in the marketplace to help us secure new customers and attract additional strategic
operating partners to our network.
Regulation
Interstate and international transportation of freight is highly regulated. Failure to comply with applicable state and federal regulations,
or to maintain required permits or licenses, can result in substantial fines or revocation of operating permits or authorities imposed on
both transportation intermediaries and their shipper customers. We cannot give assurance as to the degree or cost of future regulations
on our business. Some of the regulations affecting our current and prospective operations are described below.
Air freight forwarding operations are subject to regulation, as an indirect air cargo carrier, under the Federal Aviation Act as enforced
by the Federal Aviation Administration of the U.S. Department of Transportation, and the Transportation Security Administration of
the Department of Homeland Security. While air freight forwarders are exempted from most of the Federal Aviation Act’s requirements
by the Economic Aviation Regulations, the industry is subject to ongoing regulatory and legislative developments that can impact the
economics of the industry by requiring changes to operating practices or influencing the demand for, and the costs of, providing services
to customers.
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Surface freight forwarding operations are subject to various state and federal statutes and are regulated by the Federal Motor Carrier
Safety Administration of the U.S. Department of Transportation and, to a very limited extent, the Surface Transportation Board. These
federal agencies have broad investigatory and regulatory powers, including the power to issue a certificate of authority or license to
engage in the business, to approve specified mergers, consolidations and acquisitions, and to regulate the delivery of some types of
domestic shipments and operations within particular geographic areas.
The Federal Motor Carrier Safety Administration also has the authority to regulate interstate motor carrier operations, including the
regulation of certain rates, charges and accounting systems, to require periodic financial reporting, and to regulate insurance, driver
qualifications, operation of motor vehicles, parts and accessories for motor vehicle equipment, hours of service of drivers, inspection,
repair, maintenance standards and other safety related matters. The federal laws governing interstate motor carriers have both direct and
indirect application to the Company. The breadth and scope of the federal regulations may affect our operations and the motor carriers
that are used in the provisioning of the transportation services. In certain locations, state or local permits or registrations may also be
required to provide or obtain intrastate motor carrier services.
The Federal Maritime Commission, or FMC, regulates and licenses ocean forwarding operations. Non-vessel operating common carriers
are subject to FMC regulation, under the FMC tariff filing and surety bond requirements, and under the Shipping Act of 1984,
particularly those terms proscribing rebating practices.
United States customs brokerage operations are subject to the licensing requirements of the Bureau of Customs and Border Protection
of the Department of Homeland Security. Likewise, any customs brokerage operations must also be licensed in and subject to the
regulations of countries into which freight is imported.
Human Capital
As of June 30, 2021, we have 685 employees, of which 656 are full time. None of these employees are covered by a collective bargaining
agreement. We have experienced no work stoppages and consider our relations with our employees to be good.
Available Information
We maintain a website at www.radiantdelivers.com. We are not including the information contained on our website as a part of, nor
incorporating it by reference into, this Annual Report on Form 10-K. We post on our website, free of charge, documents that we file
with or furnish to the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form
8-K and proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish such material to,
the SEC. These reports are also available free of charge on the SEC website at www.sec.gov.
8
ITEM 1A. RISK FACTORS
RISKS PARTICULAR TO OUR BUSINESS
You should carefully consider the risk factors set forth below as well as the other information contained in or incorporated by reference
into this Annual Report on Form 10-K before investing in our common stock. Any of the following risks could materially and adversely
affect our business, financial condition or results of operations. In such a case, you may lose all or part of your investment. The risks
described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view
to be immaterial may also materially adversely affect our business, financial condition or results of operations. The future trading price
of shares of our common stock will be affected by the performance of our business relative to, among other things, competition, market
conditions and general economic and industry conditions.
Risks Related to our Business
COVID-19 or other health crises may adversely affect our business.
The COVID-19 pandemic continues to have widespread implications and while we see improvements in the broader economy, it is
difficult to predict how COVID-19 will impact the overall economy in the future. Many countries have begun the process of vaccinating
their residents against COVID-19. However, the large scale and challenging logistics of distributing the vaccines, as well as uncertainty
over the efficacy of the vaccines against new variants of the virus, may impact the economy as well as our operations in the future. Our
results for the fiscal year 2021 showed encouraging recovery as we navigate through this unique environment. While we are seeing
positive results despite the current COVID-19 environment, there remains uncertainty regarding how COVID-19 will impact the
Company's results in the future.
The effect of the COVID-19 pandemic may last for a significant period of time and may continue to adversely affect our business, results
of operations and financial condition even after the COVID-19 outbreak has subsided. The extent to which the COVID-19 pandemic
impacts us will depend on numerous evolving factors and future developments that we are not able to predict, including the duration
and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic
activity including the possibility of recession or financial market instability. These factors may adversely impact consumer, business,
and government spending as well as customers' ability to pay for our services on an ongoing basis. This uncertainty also affects
management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these
estimates and assumptions, including receivables and forward-looking guidance.
We need to maintain and expand our existing strategic operating partner network to increase revenues.
We sell our services through Company-owned locations operating under the Radiant brands and through a network of independently
owned strategic operating partners throughout North America operating under the Airgroup, Adcom, DBA and Service by Air brands.
For the years ended June 30, 2021 and 2020, approximately 52% and 55% of our consolidated net revenues (this is a non-GAAP
measure, see further discussion and reconciliation to a GAAP measure in Item 7) was derived through our strategic operating partners.
We believe our strategic operating partners will remain a critical component to our success for the foreseeable future. Although the
terms of our strategic operating partner agreements vary widely, they generally cover the manner and amount of payments, the services
to be performed, the length of the contract, and provide us with certain protections such as strategic operating partner-funded reserves
against potential bad debts, indemnification obligations, and in certain instances include a personal guaranty of the independent owner(s)
of the strategic operating partners. Certain of our strategic operating partner agreements are for defined terms, while others are subject
to “evergreen” terms, or contain automatic renewal provisions or are at-will on a month-to-month basis. Regardless of stated term, in
most situations the agreements can be terminated by the strategic operating partner with prior notice. As certain agreements expire, there
can be no assurance that we will be able to enter into new agreements that provide for the same terms and economics as those previously
agreed upon, if at all. Thus, we are subject to the risk of strategic operating partner terminations and the failure or refusal of certain of
our strategic operating partners to renew their existing agreements. This risk is often accentuated upon the acquisition of a new agency-
based network. We have a number of customers and strategic operating partner locations with significant volume and stature; however,
no single customer or strategic operating partner location represents more than 10% of our consolidated revenue. We cannot be certain
that we will be able to maintain and expand our existing strategic operating partner relationships or enter into new strategic operating
partner relationships, or that new or renewed strategic operating partner relationships will be available on commercially reasonable
terms. If we are unable to maintain and expand our existing strategic operating partner relationships, renew existing strategic operating
partner relationships, or enter into new strategic operating partner relationships, we may lose customers, customer introductions and co-
marketing benefits, and our operating results may be negatively impacted. We may also be restricted from growing in certain territories
or with certain customers, except through our strategic operating partners.
9
If our strategic operating partners fail to maintain adequate reserves against unpaid customer invoices, or if we are unable to offset
against commissions earned and payable by us to our strategic operating partners for unpaid customer invoices, our results of
operations and financial condition may be adversely affected.
We derive a substantial portion of our revenue pursuant to agreements with strategic operating partners operating under our various
brands. Under these agreements, each individual strategic operating partner is responsible for some or all of the collection of amounts
due from customers being serviced by such strategic operating partner. Certain of our strategic operating partners are required to maintain
a security deposit with us to be used to fund those customer accounts ultimately not collected by us. We charge each of the strategic
operating partners for any accounts receivable aged beyond 90 days. If the strategic operating partner’s deposit with us has been depleted,
an amount will be owed to us by our strategic operating partner. Based on legacy contracts assumed upon acquisition, some strategic
operating partners are not required to maintain a security deposit, however, they are still responsible for deficits and their strategic
operating partner agreements provide that we may withhold all or a portion of future commissions payable to the strategic operating
partner in satisfaction of any deficit. As of June 30, 2021, approximately $1.0 million was owed to us by our strategic operating partners.
To the extent any of these strategic operating partners cease operations or are otherwise unable to replenish these deficit accounts, we
would be at risk of loss for any such amount. We include such amounts in the allowance for doubtful accounts when it is probable the
amounts owed will not be collected.
Failure to comply with obligations as an “indirect air carrier” could result in penalties and fines and limit our ability to ship freight.
We are regulated, among other things, as “indirect air carriers” by the Transportation Security Administration of the Department of
Homeland Security. These agencies provide requirements, guidance and, in some cases, administer licensing requirements and processes
applicable to the freight forwarding industry. We monitor our compliance and the compliance of our subsidiaries with such agency
requirements. We rely on our strategic operating partners to monitor their own compliance, except when we are notified of a violation,
when we may become involved. Failure to comply with these requirements, policies and procedures could result in penalties and fines.
To date, a limited number of our strategic operating partners have been out of compliance with the “indirect air carrier” regulations,
resulting in fines to us, which we attempt to collect from the strategic operating partners. There is no assurance that additional violations
will not take place, which could result in penalties or fines or, in the extreme case, limits on our ability to ship freight.
Our business will be seriously harmed if we fail to develop, implement, maintain, upgrade, enhance, protect and integrate
information technology systems.
We rely heavily on our information technology systems to efficiently run our business, and they are a key component of our growth
strategy. To keep pace with changing technologies and customer demands, we must correctly interpret and address market trends and
enhance the features and functionality of our technology platform in response to these trends, which may lead to significant ongoing
software development or licensing costs. We may be unable to accurately determine the needs of our customers and strategic operating
partners and the trends in the transportation services industry, or to design or license and implement the appropriate features and
functionality of our technology platform in a timely and cost-effective manner, which could result in decreased demand for our services
and a corresponding decrease in our revenues. Despite testing, external and internal risks, such as malware, insecure coding, “Acts of
God,” data leakage and human error pose a direct threat to our information technology systems and operations. We may also be subject
to cybersecurity attacks and other intentional hacking. Any failure to identify and address such defects or errors or prevent a cyber-
attack could result in service interruptions, operational difficulties, loss of revenues or market share, liability to customers or others,
diversion of resources, injury to our reputation and increased service and maintenance costs. Addressing such issues could prove to be
impossible or very costly and responding to resulting claims or liability could similarly involve substantial cost. We must maintain and
enhance the reliability and speed of our information technology systems to remain competitive and effectively handle higher volumes
of freight through our network and the various service modes we offer. If our information technology systems are unable to manage
additional volume for our operations as our business grows, or if such systems are not suited to manage the various service modes we
offer or businesses we acquire, our service levels and operating efficiency could decline. We expect customers and strategic operating
partners to continue to demand more sophisticated, fully integrated information systems from their supply chain services providers. If
we fail to hire and retain qualified personnel to implement, protect and maintain our information technology systems or if we fail to
upgrade our systems to meet our customers’ and strategic operating partners’ demands, our business and results of operations could be
seriously harmed. This could result in a loss of customers or a decline in the volume of freight we receive from customers.
In addition, acquired companies will need to be integrated with our information technology systems, which may cause additional training
or licensing cost, along with potential delays and disruption. In such event, our revenue, financial results and ability to operate profitably
could be negatively impacted. The challenges associated with integration of our acquisitions may increase these risks.
10
Our management information and financial reporting systems are spread across diverse platforms and geographies.
The growth of our business through acquisitions has resulted in our reliance on the accounting, business information, and other computer
systems of these acquired entities to capture and transmit information concerning customer orders, carrier payment, payroll, and other
critical business data. We continue to make progress towards migrating our various legacy operating and accounting systems to a new
singular SAP-based system. As long as an acquired business remains on another information technology system, we face additional
manual calculations, training costs, delays, and an increased possibility of inaccuracies in the data we use to manage our business and
report our financial results. Any delay in compiling, assessing, and reporting information could adversely impact our business, our
ability to timely react to changes in volumes, prices, or other trends, or to take actions to comply with financial covenants, all of which
could negatively impact our stock price.
We depend on third-party carriers to transport our customers’ cargo.
We rely on commercial airfreight carriers and air charter operators, ocean freight carriers, trucking companies, major U.S. railroads,
other transportation companies, draymen and longshoremen for the movement of our customers’ cargo. Consequently, our ability to
provide services for our customers could be adversely impacted by, among other things: shortages in available cargo capacity; changes
by carriers and transportation companies in policies and practices such as scheduling, pricing, payment terms and frequency of service,
increases in the cost of fuel, taxes and labor, changes in the financial stability or operating capabilities of carriers, and other factors not
within our control. Reductions in airfreight or ocean freight capacity could negatively impact our yields. Material interruptions in service
or stoppages in transportation, whether caused by strike, work stoppage, lock-out, slowdown or otherwise, could adversely impact our
business, results of operations and financial condition.
In addition, any determination that our third-party carriers have violated laws and regulations could seriously damage our reputation and
brands, resulting in diminished revenue and profit and increased operating costs.
Our profitability depends on our ability to effectively manage our cost structure as we grow the business.
We have increased, and intend to further increase, our revenue through organic growth, adding strategic operating partners, and
acquisitions. We believe that certain of our costs, such as those related to information technology, physical locations, senior management,
and sales and general operations, and excluding non-cash amortization, should grow more slowly than our net revenue, which would
lead to improved cash flow margins over time. Historically, our cash flow margins have fluctuated, and have not always improved as
we have grown. To the extent we fail to manage our costs, including purchased transportation, strategic operating partner commissions,
personnel expenses, and sales and general expenses, our profitability may not improve or may decrease. This could adversely impact
our business, results of operation, financial condition, and the trading price of our common stock.
Our business is subject to seasonal trends.
Historically, our operating results have been subject to seasonal trends when measured on a quarterly basis. Our first and fourth fiscal
quarters are traditionally weaker compared with our second and third fiscal quarters. As a result, our quarterly operating results are likely
to continue to fluctuate. This trend is dependent on numerous factors, including the markets in which we operate, holiday seasons,
climate, economic conditions and numerous other factors. A substantial portion of our revenue is derived from customers in industries
whose shipping patterns are tied closely to consumer demand, which can sometimes be difficult to predict or are based on just-in-time
production schedules. Therefore, our revenue is, to a large degree, affected by factors that are outside of our control. There can be no
assurance that our historic operating patterns will continue in future periods as we cannot influence or forecast many of these factors.
Comparisons of our operating results from period to period are not necessarily meaningful and should not be relied upon as an
indicator of future performance.
Our operating results have fluctuated in the past and likely will continue to fluctuate in the future because of a variety of factors, many
of which are beyond our control. A substantial portion of our revenue is derived from customers in industries whose shipping patterns
are tied closely to economic trends and consumer demand that can be difficult to predict or are based on just-in-time production
schedules. Because our quarterly revenues and operating results vary significantly, comparisons of our results from period to period are
not necessarily meaningful and should not be relied upon as an indicator of future performance. Additionally, the timing of acquisitions,
as well as the revenue and expenses of the acquired operations, the transaction expenses, amortization of intangible assets, and interest
expense associated with acquisitions can make our operating results from period to period difficult to compare. Accordingly, there can
be no assurance that our historical operating patterns will continue in future periods or that comparisons to prior periods will be
meaningful.
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Economic recessions and other factors that reduce freight volumes could have a material adverse impact on our business.
The transportation industry historically has experienced cyclical fluctuations in financial results due to economic recession, downturns
in business cycles of our customers, interest rate fluctuations and other economic factors beyond our control. Deterioration in the
economic environment subjects our business to various risks that may have a material impact on our operating results and cause us to
not reach our long-term growth goals, and which may include the following:
a reduction in overall freight volumes in the marketplace reduces our opportunities for growth. In addition, if a downturn in
our customers’ business cycles causes a reduction in the volume of freight shipped by those customers, our operating results
could be adversely affected;
some of our customers may face economic difficulties and may not be able to pay us, and some may go out of business. In
addition, some customers may not pay us as quickly as they have in the past, causing our working capital needs to increase;
a significant number of our transportation providers may go out of business and we may be unable to secure sufficient
equipment or other transportation services to meet our commitments to our customers; and
we may not be able to appropriately adjust our expenses to changing market demands. In order to maintain high variability
in our business model, it is necessary to adjust staffing levels to changing market demands. In periods of rapid change, it is
more difficult to match our staffing level to our business needs. In addition, we have other primarily variable expenses that
are fixed for a period of time, and we may not be able to adequately adjust them in a period of rapid change in market
demand.
Higher carrier prices may result in decreased net revenues.
Carriers can be expected to charge higher prices if market conditions warrant, or to cover higher operating expenses. Our net revenues
and income from operations may decrease if we are unable to increase our pricing to our customers. Increased demand for truckload
services and pending changes in regulations may reduce available capacity and increase carrier pricing.
We face intense competition in the freight forwarding, freight brokerage, logistics and supply chain management industry.
The freight forwarding, freight brokerage, logistics and supply chain management industry is intensely competitive and is expected to
remain so for the foreseeable future. We face competition from a number of companies, including many that have significantly greater
financial, technical and marketing resources. Customers increasingly are turning to competitive bidding processes, in which they solicit
bids from a number of competitors, including competitors that are larger than us. Increased competition may lead to revenue reductions,
reduced profit margins, or a loss of market share, any one of which could harm our business. There are many factors that could impair
our profitability, including the following:
competition with other transportation services companies, some of which have a broader coverage network, a wider range
of services, more fully developed information technology systems and greater capital resources than we do;
reduction by our competitors of their rates to gain business, especially during times of declining growth rates in the economy,
which reductions may limit our ability to maintain or increase rates, maintain our operating margins or maintain significant
growth in our business;
shift in the business of shippers to asset-based trucking companies that also offer brokerage services in order to secure access
to those companies’ trucking capacity, particularly in times of tight industry-wide capacity;
solicitation by shippers of bids from multiple transportation providers for their shipping needs and the resulting depression
of freight rates or loss of business to competitors; and
establishment by our competitors of cooperative relationships to increase their ability to address shipper needs.
Our industry is consolidating and if we cannot gain sufficient market presence, we may not be able to compete successfully against
larger companies in our industry.
There currently is a trend within our industry towards consolidation of the niche players into larger companies that are attempting to
increase global operations through the acquisition of regional and local freight forwarders, brokers, and other freight logistics providers.
If we cannot gain sufficient market presence or otherwise establish a successful strategy in our industry, we may not be able to compete
successfully against larger companies in our industry.
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If we are not able to limit our liability for customers’ claims for loss or damage to their goods through contract terms and limit our
exposure through the purchase of insurance, we could be required to pay large amounts to our customers as compensation for their
claims and our results of operations could be materially adversely affected.
In our freight forwarding operations, we have liability under law to our customers for loss or damage to their goods. We attempt to limit
our exposure through release limits, indemnification by the air, ocean, and ground carriers that transport the freight, and insurance.
Moreover, because a freight forwarder relationship to an airline or ocean carrier is that of a shipper to a carrier, the airline or ocean
carrier generally assumes the same responsibility to us as we assume to our customers. When we act in the capacity of an authorized
agent for an air or ocean carrier, the carrier, rather than us, assumes liability for the safe delivery of the customer’s cargo to its ultimate
destination, unless due to our own errors and omissions. However, these efforts may prove unsuccessful and we may be liable for loss
and damage to the goods.
In addition to legal liability, from time to time customers exert economic pressure when the underlying carrier fails to cover the costs of
loss or damage. We have, from time to time, made payments to our customers for claims related to our services and may make such
payments in the future. Should we experience an increase in the number or size of such claims or an increase in liability pursuant to
claims or unfavorable resolutions of claims, our results could be adversely affected.
There can be no assurance that our insurance coverage will provide us with adequate coverage for such claims or that the maximum
amounts for which we are liable in connection with our services will not change in the future or exceed our insurance levels. As with
every insurance policy, there are limits, exclusions and deductibles that apply, and we could be subject to claims for which insurance
coverage may be inadequate or even disputed and such claims could adversely impact our financial condition and results of operations.
In addition, significant increases in insurance costs could reduce our profitability.
We may be subject to claims arising from transportation of freight by the carriers with which we contract.
We use the services of thousands of transportation companies in connection with our transportation operations. From time to time, the
drivers employed and engaged by the carriers we contract with are involved in accidents, which may result in death or serious personal
injuries. The resulting types and/or amounts of damages may be excluded from or exceed the amount of insurance coverage maintained
by the contracted carrier. Although these drivers are not our employees and all of these drivers are employees, owner-operators, or
independent contractors working for carriers, from time to time, claims may be asserted against us for their actions, or for our actions in
retaining them. Claims against us may exceed the amount of our insurance coverage or may not be covered by insurance at all. A material
increase in the frequency or severity of accidents, liability claims or workers’ compensation claims, or unfavorable resolutions of claims
could materially and adversely affect our operating results. In addition, significant increases in insurance costs or the inability to purchase
insurance as a result of these claims could reduce our profitability. Our involvement in the transportation of certain goods, including but
not limited to hazardous materials, could also increase our exposure in the event one of our contracted carriers is involved in an accident
resulting in injuries or contamination.
We are subject to various claims and lawsuits that could result in significant expenditures.
Our business exposes us to claims and litigation related to damage to cargo, labor and employment practices (including wage-and-hour,
employment classification of independent contractor drivers, sales representatives, brokerage agents and other individuals, and other
federal and state claims), personal injury, property damage, business practices, environmental liability and other matters. We carry
insurance to cover most exposures, subject to specific coverage exceptions, aggregate limits, and self-insured retentions that we negotiate
from time to time. However, not all claims are covered, and there can be no assurance that our coverage limits will be adequate to cover
all amounts in dispute. To the extent we experience claims that are uninsured, exceed our coverage limits, or involve significant
aggregate use of our self-insured retention amounts, the expenses could have a material adverse effect on our business, results of
operations, financial condition or cash flows, particularly in the quarter in which the amounts are accrued. In addition, in the future, we
may be subject to higher insurance premiums or increase our self-insured retention amounts, which could increase our overall costs or
the volatility of claims expense.
Our failure to comply with, or the costs of complying with, government regulation could negatively affect our results of operation.
Our business is subject to evolving, complex and increasing regulation by national and international sources. Regulatory changes could
affect the economics of our industry by requiring changes in operating practices or influencing the demand for, and the costs of providing,
services to customers. Future regulation and our failure to comply with any applicable regulations could have a material adverse effect
on our business.
13
The motor carriers we contract with are subject to increasingly restrictive laws protecting the environment, including those relating
to climate change, which could directly or indirectly have a material adverse effect on our business.
Future and existing environmental regulatory requirements could adversely affect operations and increase operating expenses, which in
turn could increase our purchased transportation costs. If we are unable to pass such costs along to our customers, our business could be
materially and adversely affected. Even without any new legislation or regulation, increased public concern regarding greenhouse gases
emitted by transportation carriers could harm the reputations of companies operating in the transportation logistics industries and shift
consumer demand toward more locally sourced products and away from our services.
If we are unable to maintain our brand images and corporate reputation, our business may suffer.
Our success depends in part on our ability to maintain the image of the Radiant, Radiant Canada, Clipper, Airgroup, Adcom, DBA and
Service by Air brands and our reputation for providing excellent service to our customers. Service quality issues, actual or perceived,
even when false or unfounded, could tarnish the image of our brand and may cause customers to use other freight-forwarding companies.
Damage to our reputation and loss of brand equity could reduce demand for our services and thus have an adverse effect on our business,
financial position and results of operations, and could require additional resources to rebuild our reputation and restore the value of our
brands.
Issues related to the intellectual property rights on which our business depends, whether related to our failure to enforce our own
rights or infringement claims brought by others, could have a material adverse effect on our business, financial condition and results
of operations.
We use both internally developed and purchased technology in conducting our business. Whether internally developed or purchased, it
is possible that the user of these technologies could be claimed to infringe upon or violate the intellectual property rights of third parties.
In the event that a claim is made against us by a third-party for the infringement of intellectual property rights, any settlement or adverse
judgment against us either in the form of increased costs of licensing or a cease and desist order in using the technology could have an
adverse effect on us and our results of operations.
We also rely on a combination of intellectual property rights, including copyrights, trademarks, domain names, trade secrets, intellectual
property licenses and other contractual rights, to establish and protect our intellectual property and technology. Any of our owned or
licensed intellectual property rights could be challenged, invalidated, circumvented, infringed or misappropriated; our trade secrets and
other confidential information could be disclosed in an unauthorized manner to third-parties or we may fail to secure the rights to
intellectual property developed by our employees, contractors and others. Given our international operations, we seek to register our
trademarks and other intellectual property domestically and internationally. The laws of certain foreign countries may not protect
trademarks to the same extent as do the laws of the United States. Efforts to enforce our intellectual property rights may be time
consuming and costly, distract management’s attention and resources and ultimately be unsuccessful. Moreover, our failure to develop
and properly manage new intellectual property could adversely affect our market positions and business opportunities.
Our failure to obtain, maintain and enforce our intellectual property rights could therefore have a material adverse effect on our business,
financial condition and results of operations.
We may not successfully manage our growth.
We intend to grow rapidly and substantially, including by expanding our internal resources, by making acquisitions and entering into
new markets. We may experience difficulties and higher-than-expected expenses in executing this strategy as a result of unfamiliarity
with new markets and change in revenue and business models.
Our growth will place a significant strain on our management, operational and financial resources. We will need to continually improve
existing procedures and controls as well as implement new transaction processing, operational and financial systems, and procedures
and controls to expand, train and manage our employee base. Our working capital needs will increase substantially as our operations
grow. Failure to manage growth effectively, or obtain necessary working capital, could have a material adverse effect on our business,
results of operations, cash flows, stock price and financial condition.
14
Our loans and credit facilities contain financial covenants that may limit current availability and impose ongoing operational
limitations and risk of compliance.
We currently maintain (i) a USD$150.0 million revolving credit facility (the “Revolving Credit Facility”) with Bank of America
Securities, Inc. as sole book runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG
Union Bank, N.A as lender and documentation agent and Bank of America, N. A., KeyBank National Association and Washington
Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as “Lenders”), pursuant to a Credit
Agreement dated as of March 13, 2020, (ii) a CAD$29.0 million senior secured Canadian term loan from Fiera Private Debt Fund IV
LP (“FPD IV” formerly, Integrated Private Debt Fund IV LP) pursuant to a CAD$29,000,000 Credit Facilities Loan Agreement (the
“FPD IV Loan Agreement”), and (iii) a CAD$10.0 million senior secured Canadian term loan from Fiera Private Debt Fund V LP (“FPD
V” formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000,000 Credit Facilities Loan Agreement (the “FPD V Loan
Agreement” and, together with the FPD IV Loan Agreement, the “FPD Loan Agreements”). Repayment of the foregoing credit facilities
is secured by our assets and the assets of our subsidiaries, including, without limitation, all of the capital stock of our subsidiaries.
For general borrowings under the Revolving Credit Facility, the Company is subject to the maximum consolidated leverage ratio of 3.00
and minimum consolidated fixed charge coverage ratio of 1.25. 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.
Our compliance with the financial covenants of our credit facilities is particularly important given the materiality of such facilities to
our day-to-day operations and overall acquisition strategy. If we fail to comply with these covenants and are unable to secure a waiver
or other relief, our financial condition would be materially weakened and our ability to fund day-to-day operations would be materially
and adversely affected. Accordingly, we employ EBITDA and adjusted EBITDA as management tools to measure our historical
financial performance and as a benchmark for future financial flexibility.
We may operate with a significant amount of indebtedness, which is secured by substantially all of our assets and subject to variable
interest rates and restrictive covenants.
Substantial indebtedness could have adverse consequences, such as:
require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness with our
lenders, which could reduce the availability of our cash flow to fund future operating capital, capital expenditures,
acquisitions and other general corporate purposes;
expose us to the risk of increased interest rates, as a substantial portion of our borrowings are at variable rates of interest;
require us to sell assets to reduce indebtedness or influence our decisions about whether to do so;
increase our vulnerability to general adverse economic and industry conditions;
limit our flexibility in planning for, or reacting to, changes in our business and our industry;
restrict us from making strategic acquisitions, buying assets or pursuing business opportunities; and
limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow
additional funds.
In addition, violating covenants in these agreements could have a material adverse effect on our business, financial condition and results
of operations. Consequences if the violations are not cured or waived could include substantially increasing our cost of borrowing,
restricting our future operations, termination of our lenders’ commitments to supply us with further funds, cross defaults to other
obligations, or acceleration of our obligations. If some or all of our obligations are accelerated, we may not be able to fully repay them.
Dependence on key personnel.
For the foreseeable future, our success will depend largely on the continued services of our Founder, Chairman and Chief Executive
Officer, Bohn H. Crain, as well as certain of our other key executives and executives of our acquired businesses because of their
collective industry knowledge, marketing skills and relationships with vendors, customers and strategic operating partners. Should any
of these individuals leave us, we could have difficulty replacing them with qualified individuals and it could have a material adverse
effect on our future results of operations.
15
Our results of operations could vary as a result of the methods, estimates, and judgments that we use in applying our accounting
policies.
The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on our results of
operations (see “Critical Accounting Policies” in Part II, Item 7 of this report). Such methods, estimates, and judgments are, by their
nature, subject to substantial risks, uncertainties, and assumptions, and factors may arise over time that lead us to change our methods,
estimates, and judgments. Changes in those methods, estimates, and judgments could significantly affect our results of operations.
Terrorist attacks and other acts of violence, anti-terrorism measures or war may affect our operations and our profitability.
As a result of the potential for terrorist attacks, federal, state and municipal authorities have implemented and continue to follow various
security measures, including checkpoints and travel restrictions on large trucks. Such measures may reduce the productivity of our
independent contractors and transportation providers or increase the costs associated with their operations, which we could be forced to
bear. For example, security measures imposed at bridges, tunnels, border crossings and other points on key trucking routes may cause
delays and increase the non-driving time of our independent contractors and transportation providers, which could have an adverse effect
on our results of operations. We also have higher costs due to mandated security screening of air cargo traveling on passenger airlines
and ocean freight. War, risk of war, or a terrorist attack also may have an adverse effect on the economy. A decline in economic activity
could adversely affect our revenues or restrict our future growth. Instability in the financial markets as a result of terrorism or war also
could impact our ability to raise capital. In addition, the insurance premiums charged for some or all of the coverage currently maintained
by us could increase dramatically or such coverage could be unavailable in the future.
We intend to continue growing our international operations and will become increasingly subject to variations in the international
trade market.
We provide services to customers engaged in international commerce and intend to grow our international business in the coming years.
For the years ended June 30, 2021 and 2020, international transportation revenue accounted for 43% and 40% of our net revenues,
respectively. International transportation revenue is defined as any shipment with an initiation or destination point outside of the United
States. All factors that affect international trade have the potential to expand or contract our international business and impact our
operating results. For example, international trade is influenced by, among other things:
currency exchange rates and currency control regulations;
interest rate fluctuations;
changes in governmental policies, such as taxation, quota restrictions, tariffs, other forms of trade barriers and/or restrictions
and trade accords;
changes in and application of international and domestic customs, trade and security regulations;
wars, strikes, civil unrest, acts of terrorism, and other conflicts, such as the conflict that has led to the imposition of economic
sanctions by the United States and the European Union against Russia;
natural disasters and pandemics;
changes in consumer attitudes regarding goods made in countries other than their own;
changes in availability of credit;
economic conditions in other countries and regions;
changes in supply chain design including those resulting from near shoring, widening and deepening of canals, and port
congestion or disruption;
changes in the price and readily available quantities of oil and other petroleum-related products; and
increased global concerns regarding environmental sustainability.
If any of the foregoing factors have a negative effect on the international trade market, we could suffer a decrease in our international
business, which could have a material adverse effect on our results of operations and financial condition.
16
In connection with our international business, we are subject to certain foreign regulatory requirements, and any failure to comply
with these requirements could be detrimental to our business.
We provide services in parts of the world where common business practices could constitute violations of the anticorruption laws, rules,
regulations and decrees of the United States, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and of all other
countries in which we conduct business; as well as trade control laws, or laws, regulations and Executive Orders imposing embargoes
and sanctions; and anti-boycott laws and regulations. Compliance with these laws, rules, regulations and decrees is dependent on our
employees, subcontractors, consultants, agents, third-party brokers and customers, whose individual actions could violate these laws,
rules, regulations and decrees. Failure to comply could result in substantial penalties, damages to our reputation and restrictions on our
ability to conduct business. In addition, any investigation or litigation related to such violations may require significant management
time and could cause us to incur extensive legal and related costs, all of which may have a material adverse effect on our results of
operations and operating cash flows.
International operations expose us to currency exchange risk, and we cannot predict the effect of future exchange rate fluctuations
on our business and operating results.
We generate a significant portion of revenues from our international operations, including a substantial amount in Canada. During the
year ended June 30, 2021, approximately 43% of our net revenues were generated from international operations. Our international
operations are sensitive to currency exchange risks. We have currency exposure arising from both sales and purchases denominated in
foreign currencies, as well as intercompany transactions. 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.
In addition, our international operations also expose us to currency fluctuations as we translate the financial statements of our foreign
operations to the U.S. dollar. There can be no guarantee that the effect of currency fluctuations will not be material in the future.
Ineffective internal controls could impact our business and operating results as well as our public reporting and stock price.
We have grown rapidly and face additional challenges of disparate systems and geographically dispersed management. Our internal
controls over financial reporting and disclosure are strained at times due to COVID-19, acquisitions, and other corporate development
activities.
Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the
possibility of human error, the circumvention or overriding of controls, or fraud. Effective internal controls are necessary for us to
provide reliable and accurate financial statements and to effectively prevent fraud. As further described in Part II Item 9A “Controls and
Procedures” of this Annual Report, management has concluded that our disclosure controls and procedures were not effective as of June
30, 2021 because of material weaknesses in internal control over financial reporting related to the following:
(i)
(ii)
Our controls with respect to the recording and processing of revenue as currently designed lack the level of precision
necessary to ensure the completeness and accuracy of revenue.
Our controls with respect to the calculation of operating partner commissions as currently designed lack the level of
commissions.
precision necessary
accuracy of operating partner
completeness
ensure
and
the
to
We are currently working on the remediation of these material weaknesses.
We cannot be certain that we will be able to prevent future significant deficiencies or material weaknesses. Any remediation efforts
additionally may require us to incur unanticipated costs for various professional fees and services. If we fail to maintain the adequacy
of our internal controls, including any failure to implement required new or improved controls, or if we experience difficulties in their
implementation, our business and operating results could be harmed, and we could fail to meet our financial reporting obligations.
Material inaccuracies in our financial statements would decrease the reliability of our financial reporting, which could adversely affect
our business and reduce our stock price.
17
Risks related to our receipt of PPP funding.
In response to the COVID-19 pandemic and the resulting impact on our current and future operations we applied for funds under the
Paycheck Protection Program (the “PPP”). In April of 2020 we were approved for the amount of $5.9 million, which we received in
May 2020. The PPP loan application required us to certify, among other things, that the current economic uncertainty made the PPP
loan request necessary to support our ongoing operations. While we made this certification in good faith, the certification does not
contain any objective criteria and is subject to interpretation. In early 2020, the Small Business Administration provided guidance that
it would be unlikely that a public company with substantial market value and access to capital markets would be able to make the
required certification in good faith, and such company should be prepared to demonstrate to the Small Business Administration, upon
request, the basis for its certification. Further, the Secretary of the Treasury and the Small Business Administration Administrator
announced that the government will conduct a full audit of all PPP loans of more than $2 million for which the borrower applies for
forgiveness. While we believe we have satisfied all eligibility requirements for the PPP loans, there is a risk that we may be deemed to
have been ineligible to receive the PPP loans or in violation of any of the laws or governmental regulations that apply to us in connection
with the PPP loans; we may be required to repay the PPP loans in their entirety and we could be subject to additional penalties. The
Company applied for forgiveness during the year and received forgiveness during the current fiscal year.
Risks Related to our Acquisition Strategy
There is a scarcity of and competition for acquisition opportunities.
There are a limited number of operating companies available for acquisition that we deem to be desirable targets. In addition, there is a
very high level of competition among companies seeking to acquire these operating companies. We are and will continue to be a very
minor participant in the business of seeking acquisitions of these types of companies. A large number of established and well-financed
entities are active in acquiring interests in companies that we may find to be desirable acquisition candidates. Many of these entities
have significantly greater financial resources, technical expertise and managerial capabilities than us. Consequently, we will be at a
competitive disadvantage in negotiating and executing possible acquisitions of these businesses. Even if we are able to successfully
compete with these entities, this competition may affect the terms of completed transactions and, as a result, we may pay more or receive
less favorable terms than we expected for potential acquisitions. We may not be able to identify operating companies that complement
our strategy, and even if we identify a company that complements our strategy, we may be unable to complete an acquisition of such a
company for many reasons, including:
failure to agree on the terms necessary for a transaction, such as the purchase price;
incompatibility between our operational strategies or management philosophies with those of the potential acquiree;
competition from other acquirers of operating companies;
lack of sufficient capital to acquire a profitable logistics company;
unwillingness of a potential acquiree to agree to subordinate any future payment of earn-outs or promissory notes to the
payments due to our lenders; and
unwillingness of a potential acquiree to work with our management.
Risks related to acquisition financing.
We have a limited amount of financial resources and our ability to make additional acquisitions without securing additional financing
from outside sources is limited. In order to continue to pursue our acquisition strategy, we may be required to obtain additional financing.
We may obtain such financing through a combination of traditional debt financing or the placement of debt and equity securities. We
may finance some portion of our future acquisitions by either issuing equity or by using shares of our common stock for all or a portion
of the purchase price for such businesses. In the event that our common stock does not attain or maintain a sufficient market value, or
potential acquisition candidates are otherwise unwilling to accept our common stock as part of the purchase price for the sale of their
businesses, we may be required to use more of our cash resources, if available, in order to maintain our acquisition program. If we do
not have sufficient cash resources, we will not be able to complete acquisitions and our growth could be limited unless we are able to
obtain additional capital through debt or equity financings. The terms of our credit facility require that we obtain the consent of our
lenders prior to securing additional debt financing. There could be circumstances in which our ability to obtain additional debt financing
could be constrained if we are unable to secure such consent.
Our credit facilities place certain limits on the acquisitions we may make.
Under the terms of our credit facilities, we may be required to obtain the consent of each of our lenders prior to making any additional
acquisitions.
18
We are permitted to make additional acquisitions without the consent of the lenders only if certain conditions are satisfied. These
conditions include the following: (i) no default shall have occurred or would result from such acquisition, (ii) the property acquired is
used or useful in the same or a similar line of business as Radiant's, (iii) in the case of an acquisition of the equity interests, the board of
directors of the target business shall have duly approved such Acquisition, (iv) we shall be in compliance with the financial
covenants after giving effect to such acquisition and the consolidated leverage ratio shall be less than 3.25 to 1.00 for acquisitions valued
above $25 million and 2.75 to 1.00 for any other acquisitions, (v) the representations and warranties made by Radiant in each loan
document shall be true and correct, (vi) if such transaction involves the purchase of an interest in a partnership between Radiant as a
general partner and entities unaffiliated with the borrower as the other partners, such transaction shall be effected by having such equity
interest acquired by a corporate holding company directly or indirectly wholly owned by Radiant newly formed for the sole purpose of
effecting such transaction, and (vii) immediately after giving effect to such acquisition, there shall be at least $25 million of availability
under the Revolving Credit Facility.
In the event we are not able to satisfy the conditions of our credit facilities in connection with a proposed acquisition, we must either
forego the acquisition, obtain the consent of the lenders, or retire the credit facility. This may prevent us from completing acquisitions
that we determine are desirable from a business perspective and limit or slow our ability to achieve the critical mass we need to achieve
our strategic objectives.
To the extent we make any material acquisitions, our earnings will be adversely affected by non-cash charges relating to the
amortization of intangible assets, which may cause our stock price to decline.
Under applicable accounting standards, purchasers are required to allocate the total consideration paid in a business combination to the
identified acquired assets and liabilities based on their fair values at the time of acquisition. The excess of the consideration paid to
acquire a business over the fair value of the identifiable tangible assets acquired must be allocated among identifiable intangible assets
including goodwill. The amount allocated to goodwill is not subject to amortization. However, it is tested at least annually for
impairment. The amount allocated to identifiable intangible assets, such as customer relationships and the like, is amortized over the life
of these intangible assets. We expect that this will subject us to periodic charges against our earnings to the extent of the amortization
incurred for that period. Because our business strategy focuses, in part, on growth through acquisitions, our future earnings will be
subject to greater non-cash amortization charges than a company whose earnings are derived solely from organic growth. As a result,
we will experience an increase in non-cash charges related to the amortization of intangible assets acquired in our acquisitions. Our
financial statements will show that our intangible assets are diminishing in value, even if the acquired businesses are increasing (or not
diminishing) in value. Because of this discrepancy, we believe our EBITDA, a measure of financial performance that does not conform
to generally accepted accounting principles (“GAAP”) of the United States, provides a meaningful measure of our financial performance.
However, the investment community generally measures a public company’s performance by its net income. Further, the financial
covenants of our credit facility adjust EBITDA to exclude costs related to share-based compensation and other non-cash charges. Thus,
we believe that EBITDA and adjusted EBITDA provide a meaningful measure of our financial performance. If the investment
community elects to place more emphasis on net income, the future price of our common stock could be adversely affected.
We are not obligated to follow any particular criteria or standards for identifying acquisition candidates.
Other than as required under the credit facility, we are not obligated to follow any particular operating, financial, geographic or other
criteria in evaluating candidates for potential acquisitions or business combinations. We will determine the purchase price and other
terms and conditions of acquisitions. Our stockholders will not have the opportunity to evaluate the relevant economic, financial and
other information that our management team will use and consider in deciding whether or not to enter into a particular transaction.
We may be required to incur a significant amount of indebtedness in order to successfully implement our acquisition strategy.
Subject to the restrictions contained under our current credit facilities, we may be required to incur a significant amount of indebtedness
in order to complete future acquisitions. If we are not able to generate sufficient cash flow from the operations of acquired businesses
to make scheduled payments of principal and interest on the indebtedness, then we will be required to use our capital for such payments.
This will restrict our ability to make additional acquisitions. We may also be forced to sell an acquired business in order to satisfy
indebtedness. We cannot be certain that we will be able to operate profitably once we incur this indebtedness or that we will be able to
generate a sufficient amount of proceeds from the ultimate disposition of such acquired businesses to repay the indebtedness incurred
to make these acquisitions.
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We may experience difficulties in integrating the operations, personnel and assets of acquired businesses that may disrupt our
business, dilute stockholder value and adversely affect our operating results.
A core component of our business plan is to acquire businesses and assets in the transportation and logistics industry. There can be no
assurance that we will be able to identify, acquire or profitably manage businesses or successfully integrate acquired businesses into the
Company without substantial costs, delays or other operational or financial problems. Such acquisitions also involve numerous
operational risks, including:
difficulties in integrating operations, technologies, services and personnel;
the diversion of financial and management resources from existing operations;
the risk of entering new markets;
the potential loss of existing or acquired strategic operating partners following an acquisition;
the potential loss of key employees following an acquisition and the associated risk of competitive efforts from such departed
personnel;
possible legal disputes with the acquired company following an acquisition; and
the inability to generate sufficient revenue to offset acquisition or investment costs.
As a result, if we fail to properly evaluate and execute any acquisitions or investments, our business and prospects may be seriously
harmed.
In certain acquisitions, we may recognize non-cash gains or losses on changes in fair value of contingent consideration. We include
contingent consideration based on future financial performance as a portion of the purchase price of certain acquisitions. To the extent
that an acquired operation underperforms relative to anticipated earnings levels, we are able to set-off certain levels of future unpaid
purchase price for such acquired operations. This will result in the recognition of a non-cash gain on the change in fair value of contingent
consideration. In the alternative, to the extent an acquired operation outperforms anticipated earnings levels, we will recognize a non-
cash expense on the change in fair value of contingent consideration. These non-cash gains and expenses may have a material impact
on our financial results, and the impact could be opposite to the underlying results of the acquired operation.
Not every acquisition is structured utilizing contingent consideration. Our 2015 acquisitions of Radiant Canada and SBA and our 2017
acquisition of Lomas were structured without using contingent consideration. We will be unable to reduce the purchase price of these
entities if they underperform relative to anticipated earnings levels.
Claims against us or other liabilities we incur relating to any acquisition or business combination may necessitate our seeking claims
against the seller for which the seller may not indemnify us or that may exceed the seller’s indemnification obligations.
There may be liabilities we assume in any acquisition or business combination that we did not discover or underestimated in the course
of performing our due diligence investigation. A seller will normally have indemnification obligations to us under an acquisition or
merger agreement, but these obligations will be subject to financial limitations, such as general deductibles and a cap, as well as time
limitations. There can be no assurance that our right to indemnification from any seller will be enforceable, collectible or sufficient in
amount, scope or duration to fully offset the amount of any undiscovered or underestimated liabilities. Any such liabilities, individually
or in the aggregate, could have a material adverse effect on our business, results of operations or financial condition.
We may face competition from parties who sell us their businesses and from professionals who cease working for us.
In connection with our acquisitions, we generally obtain non-solicitation agreements from the professionals we hire, as well as non-
competition agreements from senior managers and professionals. The agreements prohibit such individuals from competing with us
during the term of their employment and for a fixed period afterwards and seeking to solicit our employees or clients. In some cases,
but not all, we may obtain non-competition or non-solicitation agreements from parties who sell us their business or assets. Certain
activities may be carved out of or otherwise may not be prohibited by these arrangements. We cannot assure that one or more of the
parties from whom we acquire assets or a business or who do not join us or leave our employment will not compete with us or solicit
our employees or clients in the future. Even if ultimately resolved in our favor, any litigation associated with the non-competition or
non-solicitation agreements could be time consuming, costly and distract management’s focus from locating suitable acquisition
candidates and operating our business. Moreover, states and foreign jurisdictions may interpret restrictions on competition narrowly and
in favor of employees.
20
Therefore, certain restrictions on competition or solicitation may be unenforceable. In addition, we may not pursue legal remedies if we
determine that preserving cooperation and a professional relationship with the former employee or his clients, or other concerns,
outweigh the benefits of any possible legal recourse or the likelihood of success does not justify the costs of pursuing a legal remedy.
Such persons, because they have worked for us or a business that we acquire, may be able to compete more effectively with us, or be
more successful in soliciting our employees and clients, than unaffiliated third parties.
Risks Related to our Common Stock
The market price of our common stock may fluctuate significantly, and this may make it difficult for you to resell our common stock
at times or at prices you find attractive.
The market price of our common stock may fluctuate significantly as a result of a number of factors, many of which are outside our
control. The current market price of our common stock may not be indicative of future market prices. Fluctuations may occur in response
to the other risk factors listed in this prospectus supplement and for many other reasons, including:
actual or anticipated variations in earnings, financial or operating performance or liquidity, including those resulting from
the seasonality of our business;
our financial performance or the performance of our competitors and similar companies;
the public’s reaction to our press releases, other public announcements and filings with the SEC;
changes in estimates of our performance or recommendations by securities analysts;
failure to meet securities analysts’ quarterly and annual projections;
the impact of new federal or state regulations;
changes in accounting standards, policies, guidance, interpretations or principles;
the introduction of new services by us or our competitors;
the arrival or departure of key personnel;
acquisitions, strategic alliances or joint ventures involving us or our competitors;
technological innovations or other trends in our industry;
news affecting our customers;
operating and stock performance of other companies deemed to be peers;
regulatory or labor conditions applicable to us, our industry or the industries we serve;
market conditions in our industry, the industries we serve, the financial markets and the economy as a whole;
changes in our capital structure; and
sales of our common stock by us or members of our management team.
In addition, the stock market historically has experienced significant price and volume fluctuations. These fluctuations are often
unrelated to the operating performance of a particular company. These broad market fluctuations may cause declines in the market price
of our common stock.
Volatility in the market price of our common stock may make it difficult for you to resell shares of our common stock when you want
or at attractive prices. In addition, when the market price of a company’s common stock drops significantly, stockholders often institute
securities class action lawsuits against the Company. A lawsuit against us could cause us to incur substantial costs, including settlement
costs or awards for legal damages, and could divert the time and attention of our management and other resources.
21
Provisions of our certificate of incorporation, bylaws and Delaware law may make a contested takeover more difficult.
Certain provisions of our certificate of incorporation, bylaws and the General Corporation Law of the State of Delaware (“DGCL”)
could deter a change in our management or render more difficult an attempt to obtain control of us, even if such a proposal is favored
by a majority of our stockholders. For example, we are subject to the provisions of the DGCL that prohibit a public Delaware corporation
from engaging in a broad range of business combinations with a person who, together with affiliates and associates, owns 15% or more
of such corporation’s outstanding voting shares (an “interested stockholder”) for three years after the person became an interested
stockholder, unless the business combination is approved in a prescribed manner. Our certificate of incorporation provides that directors
may only be removed for cause by the affirmative vote of 75% of our outstanding shares and that amendments to our bylaws require the
affirmative vote of holders of two-thirds of our outstanding shares. Our certificate of incorporation also includes undesignated preferred
stock, which may enable our board of directors to discourage an attempt to obtain control of us by means of a tender offer, proxy contest,
merger or otherwise. Finally, our bylaws include an advance notice procedure for stockholders to nominate directors or submit proposals
at a stockholders meeting.
Our Founder, Chairman and Chief Executive Officer controls a large portion of our common stock and has substantial control over
us, which could limit other stockholders’ ability to influence the outcome of key transactions, including changes of control.
Under applicable SEC rules, our Founder, Chairman and Chief Executive Officer, Bohn H. Crain, beneficially owns approximately 20%
of our outstanding common stock as of June 30, 2021. Accordingly, Mr. Crain can exert substantial influence over our management and
affairs and matters requiring stockholder approval, including the election of directors and the approval of significant corporate
transactions, such as mergers, consolidations or the sale of substantially all of our assets. Consequently, this concentration of ownership
may have the effect of delaying or preventing a change of control, including a merger, consolidation, or other business combination
involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that
change of control would benefit our other stockholders. Further, this concentration of share ownership may adversely affect the trading
price for our common stock because investors may perceive disadvantages in owning stock in companies with concentrated stockholders.
Trading in our common stock has been limited.
Although our common stock is traded on the NYSE American, it is traded not as frequently as compared to the volume of trading activity
associated with larger companies whose shares trade on the larger national exchanges. Because of this limited liquidity, stockholders
may be unable to sell their shares at the prices or volumes they desire. The trading price of our shares may from time to time fluctuate
widely. The trading price may be affected by a number of factors including events described in the risk factors set forth in this report as
well as our operating results, financial condition, announcements, general conditions in the industry and the financial markets, and other
events or factors. In recent years, broad stock market indices, in general, and smaller capitalization companies, in particular, have
experienced substantial price fluctuations. In a volatile market, we may experience wide fluctuations in the market price of our common
stock. These fluctuations may have a negative effect on the market price of our common stock.
The influx of additional shares of our common stock onto the market may create downward pressure on the trading price of our
common stock.
We have completed many acquisitions that often include the issuance of additional shares pursuant to the purchase agreements. In
addition, we may issue additional shares in connection with such acquisitions upon the achievement of certain earn-out thresholds or in
connection with future acquisitions as part of the purchase consideration. The availability of additional shares for sale to the public under
Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”) and sale of such shares in public markets could have an
adverse effect on the market price of our common stock. Such an adverse effect on the market price would make it more difficult for us
to sell our equity securities in the future at prices we deem appropriate or to use our shares as currency for future acquisitions, which
will make it more difficult to execute our acquisition strategy.
The issuance of additional shares may result in additional dilution to our existing stockholders.
At any time, we may make private offerings of our securities. We have issued, and may be required to issue, additional shares of common
stock or common stock equivalents in payment of the purchase price of businesses we have acquired. This will have the effect of further
increasing the number of shares outstanding. In connection with future acquisitions, we may undertake the issuance of more shares of
common stock without notice to our then existing stockholders. We may also issue additional shares in order to, among other things,
compensate employees or consultants or for other valid business reasons in the discretion of our board of directors, which could result
in diluting the interests of our existing stockholders.
22
The exercise or conversion of our outstanding options, or other convertible securities or any derivative securities we issue in the future
will result in the dilution of the ownership interests of our existing stockholders and may create downward pressure on the trading price
of our common stock. We are currently authorized to issue 100 million shares of common stock. As of September 1, 2021, we had
49,919,062 outstanding shares of common stock. As of September 1, 2021, we may in the future issue up to 1,412,889 additional shares
of our common stock upon exercise of existing stock options.
We may issue shares of preferred stock with greater rights than our common stock.
Our certificate of incorporation authorizes our board of directors to issue shares of preferred stock and to determine the price and other
terms for those shares without the approval of our stockholders. Any such preferred stock we may issue in the future could rank ahead
of our common stock in many ways, including in terms of dividends, liquidation rights, and voting rights.
As we do not anticipate paying dividends on our common stock, investors in our shares of common stock will not receive any dividend
income.
We have not paid any cash dividends on our common stock since our inception and we do not anticipate paying cash dividends on our
common stock in the foreseeable future. Any dividends that we may pay in the future will be at the discretion of our board of directors,
and will depend on our future earnings, any applicable regulatory considerations, our financial requirements and other similarly
unpredictable factors. Our ability to pay dividends on our common stock is further limited by the terms of our credit facilities.
Accordingly, investors seeking dividend income should not purchase our common stock.
If securities or industry analysts do not publish research about our business, or publish negative reports about our business, our
stock price and trading volume could decline.
The trading market for our common stock, to some extent, depends on the research and reports that securities or industry analysts publish
about our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade our shares
or lower their opinion of our shares, our share price may decline. If one or more of these analysts ceases coverage of our business or
fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading
volume to decline.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our principal executive offices are located in Renton, Washington. Our network is comprised of over 100 operating locations, including
the following Company-owned offices and warehouses operating from the following leased locations:
United States:
Tempe, Arizona
●
Carson, California
●
● Woodridge, Illinois
Hebron, Kentucky
●
Louisville, Kentucky
●
Taylor, Michigan
●
Canada:
Mendota Heights, Minnesota
Edison, New Jersey
Jamaica, New York
●
●
●
● Woodbury, New York
Portland, Oregon
●
Folcroft, Pennsylvania
●
●
●
Calgary, Alberta
Delta, British Columbia
●
●
Bolton, Ontario
Brampton, Ontario
●
●
●
●
●
●
●
●
Middletown, Pennsylvania
Pittsburgh, Pennsylvania
Argyle, Texas
Laredo, Texas
McAllen, Texas
Alexandria, Virginia
Mississauga, Ontario
Laval, Québec
We believe our current offices and warehouses are adequately covered by insurance and are sufficient to support our operations for the
foreseeable future.
ITEM 3. LEGAL PROCEEDINGS
The information set forth in Legal Proceedings of Note 15 - Commitments and Contingencies in the notes to the audited consolidated
financial statements in Item 8 of this Form 10-K is incorporated by reference.
23
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
24
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
PART II
Market Information
Our common stock trades on the NYSE American under the symbol “RLGT.”
Holders
As of September 1, 2021, the number of stockholders of record of our common stock was 76. This figure does not include a greater
number of beneficial holders of our common stock, whose shares are held of record by banks, brokers and other financial institutions.
Dividend Policy
We have never declared or paid cash dividends on our common stock. In addition, we and our subsidiaries are subject to certain
restrictions on declaring dividends under our existing credit facilities. We currently do not anticipate declaring or paying any cash
dividends in the foreseeable future on our common stock. Any future determination to declare cash dividends on our common stock will
be made at the discretion of our board of directors, subject to applicable laws and contractual restrictions, and will depend on our
financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors
may deem relevant.
Unregistered Sales of Equity Securities and Use of Proceeds
In March 2018, 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, 2019. On February 4, 2020, the Company announced that its board of directors had approved the renewal
of the repurchase program through December 31, 2021. Under this repurchase program the Company purchased the following shares of
common stock during the three months ended June 30, 2021. As of June 30, 2021, future repurchases of up to 4,098,184 shares were
available in the share repurchase program.
Total Number of
Shares Purchased
—
—
268,969
268,969
$
Average Price
Paid per Share
—
—
7.10
7.10
Total Number of
Shares Purchased
as Part of
Publicly
Announced Plans
or Programs
Maximum Number
(or Approximate
Dollar Value) of
Shares That May
Yet Be Purchased
Under the Plans or
Programs
—
—
268,969
268,969
—
—
—
—
Period
April 1 - 30, 2021
May 1 - 31, 2021
June 1 - 30, 2021
Total
Comparative Stock Performance
The graph below compares the cumulative total stockholder return on our common stock with the Russell 2000 Index and the Dow Jones
Transportation Average Index, which is a SIC code 4731 line-of-business index, for the last five years. S&P Dow Jones Indices LLC
prepared the line-of-business index. The graph assumes $100 is invested in our common stock, the Russell 2000 Index, and the line-of-
business index on June 30, 2016. The comparisons in the graph below are based on historical data and are not intended to forecast the
possible future performance of our common stock. The information in the graph below shall be deemed “furnished” and not “filed” for
purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.
Radiant Logistics, Inc.
Dow Jones Transportation Average Index
Russell 2000 Index
$
100 $
100
100
179 $
128
123
130 $
138
143
205 $
140
136
$
131
123
125
231
199
201
2016
2017
2018
2019
2020
2021
Investment value as of June 30,
25
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
26
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis of our financial condition and result of operations should be read in conjunction with the
consolidated financial statements and the related notes and other information included elsewhere in this report.
Overview
We operate as a third-party logistics company, providing multi-modal transportation and logistics services primarily in the United States
and Canada. We service a large and diversified account base consisting of consumer goods, food and beverage, manufacturing and retail
customers, which we support from 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. We provide these services through a multi-brand
network, which includes over 100 operating locations, which includes a number of independent agents, who we also refer to as our
"strategic operating partners" that operated exclusively on our behalf as well as approximately 20 Company-owned offices. As a third-
party logistics company, we have a vast carrier network of asset-based transportation companies, including motor carriers, railroads,
airlines and ocean lines in our 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, 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. Our services include arranging and monitoring all aspects of material flow
activity utilizing advanced information technology systems. We also provide other value-added logistics services, including MM&D
and CHB solutions 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 truck brokerage and intermodal service offerings,
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.
COVID-19
The COVID-19 pandemic continues to have widespread implications and while we see improvements in the broader economy, it is
difficult to predict how COVID-19 will impact the overall economy in the future. Many countries have begun the process of vaccinating
their residents against COVID-19. However, the large scale and challenging logistics of distributing the vaccines, as well as uncertainty
over the efficacy of the vaccines against new variants of the virus, may impact the economy as well as our operations in the future. Our
results for the fiscal year 2021 showed encouraging recovery as we navigate through this unique environment. While we are seeing
positive results despite the current COVID-19 environment, there remains uncertainty regarding how COVID-19 will impact the
Company's results in the future.
The effect of the COVID-19 pandemic may last for a significant period of time and may continue to adversely affect our business, results
of operations and financial condition even after the COVID-19 outbreak has subsided. The extent to which the COVID-19 pandemic
impacts us will depend on numerous evolving factors and future developments that we are not able to predict, including the duration
and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic
activity including the possibility of recession or financial market instability. These factors may adversely impact consumer, business,
and government spending as well as customers' ability to pay for our services on an ongoing basis. This uncertainty also affects
management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these
estimates and assumptions, including receivables and forward-looking guidance.
27
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 net transportation revenue (gross transportation
revenue less the direct cost of transportation) 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. In addition, management believes measuring its
operating costs as a function of net transportation revenue provides a useful metric, as our ability to control costs as a function of net
transportation revenue directly impacts operating earnings.
Our operating results will be affected as acquisitions occur. Since all acquisitions are made 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.
Net revenues, a non-GAAP financial measure, is our total revenue minus our total cost of transportation and other services (excluding
depreciation and amortization, which are reported separately) and net margin is net revenues as a percentage of our total revenue. We
believe that these provide investors meaningful information to understand our results of operations and the ability to analyze financial
and business trends on a period-to-period basis.
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 preferred stock dividends, interest, and taxes, and
excludes 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 changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, transition
and lease termination costs, foreign currency transaction gains and losses, share-based compensation expense, 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 consolidated financial statements.
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.
28
Critical Accounting Policies
Accounting policies, methods and estimates are an integral part of the consolidated financial statements prepared by management and
are based upon management’s current judgments. These judgments are normally based on knowledge and experience regarding past and
current events and assumptions about future events. Certain accounting policies, methods and estimates are particularly sensitive because
of their significance to the financial statements and because of the possibility that future events affecting them may differ from
management’s current judgments. While there are a number of accounting policies, methods and estimates that affect our financial
statements, the areas that are particularly significant include revenue recognition; accruals for the cost of purchased transportation; the
fair value of acquired assets and liabilities; fair value of contingent consideration; and the assessment of the recoverability of long-lived
assets, goodwill and intangible assets.
We perform an annual impairment test for goodwill as of April 1 of each year unless events or circumstances indicate impairment may
have occurred before that time. We assess qualitative factors to determine whether it is more-likely-than-not that the fair value of the
reporting unit is less than the carrying amount. After assessing qualitative factors, if further testing is necessary, we would determine
the fair value of each reporting unit and compare the fair value to the reporting unit’s carrying amount.
Intangible assets consist of customer related intangible assets, trade names and trademarks, and non-compete agreements arising from
our acquisitions. Customer related intangible assets are amortized using the straight-line method over a period of up to ten years,
trademarks and trade names are amortized using the straight-line method over 15 years, and non-compete agreements are amortized
using the straight-line method over the term of the underlying agreements.
We review long-lived assets to be held-and-used for impairment whenever events or changes in circumstances indicate the carrying
amount of the assets may not be recoverable. If the sum of the undiscounted expected future cash flows over the remaining useful life
of a long-lived asset is less than its carrying amount, the asset is considered to be impaired. Impairment losses are measured as the
amount by which the carrying amount of the asset exceeds the fair value of the asset. When fair values are not available, we estimate
fair value using the expected future cash flows discounted at a rate commensurate with the risks associated with the recovery of the
asset. Assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
As a non-asset-based carrier, we do not generally own transportation assets. We do, however, own certain trailers and refrigerated trailers
that we use in our business. We generate the majority of our air and ocean freight forwarding and freight brokerage revenues by
purchasing transportation services from direct (asset-based) carriers and reselling those services to our customers. Freight forwarding
revenues related to shipments where we issue a House Airway Bill or a House Ocean Bill of Lading are recognized over the transit
period as customers’ goods move from origin to destination. Costs related to the shipments are also recognized at this same time based
upon anticipated margins, contractual arrangements with direct carriers, and other known factors. The estimates are routinely monitored
and compared to actual invoiced costs. The estimates are adjusted as deemed necessary by us to reflect differences between the original
accruals and actual costs of purchased transportation. All other revenue, including revenue from other value-added services including
freight brokerage services, customs brokerage services and warehousing and fulfillment services, is recognized upon completion of the
service.
The Company has contingent obligations to transfer cash payments and equity shares to former shareholders of acquired operations in
conjunction with certain acquisitions if specified operating results and financial objectives are met over the next four fiscal years. 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.
29
Results of Operations
Fiscal year ended June 30, 2021, compared to fiscal year ended June 30, 2020
The following table summarizes revenues, cost of transportation and other services, and net revenues by reportable operating
segments for the fiscal years ended June 30, 2021 and 2020:
(In thousands)
Revenues
Transportation
Value-added services
Cost of transportation and other
services
Transportation
Value-added services
Net revenues (1)
Transportation
Value-added services
Net margin
Transportation
Value-added services
Year Ended June 30, 2021
United
States
Canada
Corporate/
Eliminations
Total
United
States
Year Ended June 30, 2020
Corporate/
Eliminations
Canada
Total
$
$
761,898
8,887
770,785
$
97,418
21,410
118,828
577,731
6,003
583,734
184,167
2,884
187,051
80,715
4,339
85,054
16,703
17,071
33,774
$
$
$
(489) $ 858,827
30,297
889,124
—
(489)
$
745,097
14,142
759,239
$ 80,090
16,539
96,629
$
(671) $
—
(671)
824,516
30,681
855,197
(489)
—
(489)
657,957
10,342
668,299
200,870
—
—
19,955
— $ 220,825
$
569,557
9,203
578,760
175,540
4,939
180,479
65,249
2,486
67,735
14,841
14,053
$ 28,894
$
(671)
—
(671)
—
—
— $
634,135
11,689
645,824
190,381
18,992
209,373
24.2%
32.5%
17.1%
79.7%
N/A
N/A
23.4%
65.9%
23.6%
34.9%
18.5%
85.0%
N/A
N/A
23.1%
61.9%
(1)
Net revenues are revenues net of cost of transportation and other services.
Transportation revenue was $858.8 million and $824.5 million for the years ended June 30, 2021 and 2020, respectively. The increase
of $34.3 million, or 4.2%, is primarily attributable to increased volume with certain customers offset by lower disaster relief project
work enjoyed in the prior year. Net transportation revenue was $200.9 million and $190.4 million for the years ended June 30, 2021 and
2020, respectively. Net transportation revenue margins increased slightly from 23.1% to 23.4%, primarily due to a significant decrease
in the current year of low margin disaster relief project work, somewhat offset by surcharges on certain trade lanes due to the tightness
of capacity as well as general shifts in product mix.
Value added services revenue was $30.3 million and $30.7 million for the years ended June 30, 2021 and 2020, respectively. The
decrease of $0.4 million, or 1.3%, is primarily attributable to slowdown in our contract logistics and custom brokerage services offerings.
Net value added services revenue was $20.0 million for the year ended June 30, 2021, compared to $19.0 million for the comparable
prior year period. Net value added services revenue margins increased from 61.9% to 65.9%, primarily due to lower personnel and
warehousing costs as a percentage of revenue.
The following table provides a reconciliation for the fiscal years ended June 30, 2021 and 2020 of net revenues to gross profit, the
most directly comparable GAAP measure:
(In thousands)
Reconciliation of net revenues to GAAP gross profit
Revenues
Cost of transportation and other services (exclusive of depreciation and
amortization, shown separately below)
Depreciation and amortization
GAAP gross profit
Depreciation and amortization
Net revenues
(668,299)
(11,986)
208,839
11,986
220,825
(645,824)
(12,056)
197,317
12,056
209,373
Year Ended June 30,
855,197
889,124
2021
2020
$
$
$
$
$
$
GAAP gross margin (GAAP gross profit as a percentage of revenues)
Net margin (net revenues as a percentage of revenues)
23.5%
24.8%
23.1%
24.5%
30
The following table compares consolidated statements of comprehensive income data by reportable operating segments for the fiscal
years ended June 30, 2021 and 2020:
(In thousands)
Net revenues (1)
Operating expenses:
United
States
187,051 $
$
Year Ended June 30, 2021
Canada
Corporate/
Eliminations
Total
33,774 $
— $
220,825
$
United
States
180,479 $
Year Ended June 30, 2020
Canada
Corporate/
Eliminations
Total
28,894 $
— $
209,373
Operating partner commissions
Personnel costs
Selling, general and administrative
expenses
Depreciation and amortization
Transition, lease termination, and other
costs
Change in fair value of contingent
consideration
94,040
38,135
15,690
3,929
—
—
—
13,441
5,765
2,586
—
—
—
3,802
2,979
10,127
—
4,350
94,040
55,378
24,434
16,642
—
4,350
85,821
41,426
19,953
4,300
474
—
—
12,880
5,528
2,001
26
—
—
3,373
4,067
10,270
—
1,752
85,821
57,679
29,548
16,571
500
1,752
Total operating expenses
151,794
21,792
21,258
194,844
151,974
20,435
19,462
191,871
Income (loss) from operations
Other income (expense)
Income (loss) before income taxes
Income tax expense
Net income (loss)
Less: net income attributable to non-
controlling interest
Net income (loss) attributable to Radiant
Logistics, Inc.
35,257
676
35,933
—
11,982
(162)
11,820
—
(21,258)
2,863
(18,395)
(5,896)
25,981
3,377
29,358
(5,896)
28,505
216
28,721
—
8,459
30
8,489
—
(19,462)
(2,227)
(21,689)
(3,157)
17,502
(1,981)
15,521
(3,157)
35,933
11,820
(24,291)
23,462
28,721
8,489
(24,846)
12,364
(519)
—
—
(519)
(1,823)
—
—
(1,823)
$
35,414 $
11,820 $
(24,291) $
22,943
$
26,898 $
8,489 $
(24,846) $
10,541
Operating expenses as a percent of
net revenues (1):
Operating partner commissions
Personnel costs
Selling, general and administrative
expenses
Depreciation and amortization
Year Ended June 30, 2021
Year Ended June 30, 2020
United
States
Canada
50.3%
20.4%
8.4%
2.1%
0.0%
39.8%
17.1%
7.7%
Corporate/
Eliminations
N/A
N/A
N/A
N/A
Total
United
States
Canada
42.6%
25.1%
11.1%
7.5%
47.6%
23.0%
11.1%
2.4%
0.0%
44.6%
19.1%
6.9%
Corporate/
Eliminations
N/A
N/A
N/A
N/A
Total
41.0%
27.5%
14.1%
7.9%
(1)
Net revenues are revenues net of cost of transportation and other services.
Operating partner commissions increased $8.2 million, or 9.6%, to $94.0 million for the year ended June 30, 2021. The increase is
primarily due to increased net revenues from operating partners. As a percentage of net revenues, operating partner commissions
increased 160 basis points to 42.6% from 41.0% for the years ended June 30, 2021 and 2020, respectively, primarily due to significantly
lower disaster relief project work, which resulted in smaller operating partner commission payments in the year ended June 30, 2020.
Personnel costs decreased $2.3 million, or 4.0%, to $55.4 million for the year ended June 30, 2021. The decrease is primarily due to
temporary work force reductions and temporary compensation reductions as a result of management response to COVID-19, particularly
for the first two quarters of the year. As a percentage of net revenues, personnel costs decreased 247 basis points to 25.1% from 27.5% for
the years ended June 30, 2021 and 2020, respectively.
Selling, general and administrative (“SG&A”) expenses decreased $5.1 million, or 17.3%, to $24.4 million for the year ended
June 30, 2021. The decrease is primarily attributable to decreased bad debt expense, claims, professional services and travel. As a
percentage of net revenues, SG&A decreased 305 basis points to 11.1% from 14.1% for the years ended June 30, 2021 and 2020,
respectively.
Depreciation and amortization costs remained around $16.6 million for both years ended June 30, 2021 and 2020. As a percentage of
net revenues, depreciation and amortization decreased 38 basis points to 7.5% from 7.9% for the years ended June 30, 2021 and 2020,
respectively.
The transition, lease termination, and other costs increased $0.5 million for the year ended June 30, 2020.
Change in fair value of contingent consideration was a loss of $4.4 million for the year ended June 30, 2021, compared to a loss of $1.8
million for the year ended June 30, 2020. The change in each year is attributable to a change in management’s estimates of future earn-
out payments through the remainder of the respective earn-out periods.
31
Net other income (expenses) increased by $5.4 million, or 270.5%, to net other income of $3.4 million for the year ended June 30, 2021
primarily due to gain on the forgiveness of the PPP loans offered under the CARES Act as a result of the COVID-19 pandemic.
Our change in net income is driven principally by increased net revenues, partially offset by increased operating expenses and increased
income taxes compared to the prior year.
Our future financial results may be impacted by amortization of intangible assets resulting from acquisitions as well as gains or losses
from changes in fair value of contingent consideration that are difficult to predict.
The following table provides a reconciliation for the fiscal years ended June 30, 2021 and 2020 of adjusted EBITDA to net income
(loss), the most directly comparable GAAP measure:
(In thousands)
Net income (loss) attributable to Radiant
Logistics, Inc.
$
Income tax expense
Depreciation and amortization
Net interest expense
United
States
Year Ended June 30, 2021
Corporate/
Eliminations
Canada
Total
United
States
Year Ended June 30, 2020
Corporate/
Eliminations
Canada
Total
$
35,414
—
3,929
—
$
11,820
—
2,586
—
(24,291) $
5,896
10,127
2,531
22,943
5,896
16,642
2,531
$
$
$
26,898
—
4,300
—
8,489
—
2,001
—
(24,846) $
3,157
10,270
2,826
10,541
3,157
16,571
2,826
EBITDA
39,343
14,406
(5,737)
48,012
31,198
10,490
(8,593)
33,095
Share-based compensation
Change in fair value of contingent
consideration
Acquisition related costs
Litigation costs
Gain on litigation settlement, net
Transition, lease termination, and other
costs
Change in fair value of interest rate swap
contracts
Gain on forgiveness of debt
Foreign currency transaction loss (gain)
378
218
—
—
—
—
—
—
—
(179)
—
—
—
—
—
—
—
368
475
4,350
42
535
(25)
—
594
(5,987)
—
1,071
4,350
42
535
(25)
—
594
(5,987)
189
894
—
—
—
—
560
—
—
155
212
—
—
—
—
26
—
—
(30)
557
1,752
577
1,061
—
—
(600)
—
—
1,663
1,752
577
1,061
—
586
(600)
—
125
Adjusted EBITDA
$
39,542
$
14,992
$
(5,753) $
48,781
$
32,807
$
10,698
$
(5,246) $
38,259
Adjusted EBITDA as a % of net
revenues (1)
21.1%
44.4%
N/A
22.1%
18.2%
37.0%
N/A
18.3%
(1)
Net revenues are revenues net of cost of transportation and other services.
Adjusted EBITDA increased $10.5 million, or 27.5% to $48.8 million for the year ended June 30, 2021.
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. Adapting to COVID-19, we have curtailed mergers and acquisitions activities and suspended the stock buy-back program
through our third fiscal quarter, but reinitiated the stock buy-back program starting in the fourth quarter of the fiscal year ended June
30, 2021. 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 June 30, 2021, we have $13.7 million in cash on hand to serve as adequate working capital.
Fiscal year ended June 30, 2021 compared to fiscal year ended June 30, 2020
Net cash provided by operating activities were $14.1 million and $29.9 million for the fiscal years ended June 30, 2021 and 2020,
respectively. The cash provided primarily consisted of net income adjusted for depreciation and amortization and changes in accounts
payable and accounts receivable. Compared to the prior fiscal year, cash provided by operating activities decreased mainly due to
increased accounts receivable balance from customers and partially offset by increased payables to vendors.
Net cash used for investing activities were $11.1 million and $14.1 million for the years ended June 30, 2021 and 2020, respectively.
The primary uses of cash were for acquisition and purchases of technology and equipment. Cash paid for acquisitions was $9.2 million
for the fiscal year ended June 30, 2020. Cash paid for purchases of technology and equipment were $11.4 million and $5.2 million for
the years ended June 30, 2021 and 2020, respectively.
32
Net cash used for financing activities was $23.7 million and net cash provided by financing activities was $12.3 million for the fiscal
years ended June 30, 2021 and 2020, respectively. Gross proceeds from the credit facility was $6.4 million and gross repayments from
the credit facility was $21.4 million during the fiscal year ended June 30, 2021. Gross proceeds from the credit facility was $586.3
million and gross repayments to the credit facility was $570.1 million for the fiscal year ended June 30, 2020. Proceeds from the PPP
loans was $5.9 million received during the fiscal year ended June 30, 2020. Payments of debt issuance costs was $1.9 million for the
fiscal year ended June 30, 2020. Repayments of notes payable and finance lease liability were $4.7 million and $4.3 million for the fiscal
years ended June 30, 2021 and 2020, respectively. Repurchases of common stock were $1.9 million and $2.5 million for the fiscal years
ended June 30, 2021 and 2020, respectively. Payments of contingent consideration was $2.0 million for the year ended June 30, 2021.
Distributions to non-controlling interest were $1.0 million and $1.3 million for the fiscal years ended June 30, 2021 and 2020,
respectively. Proceeds from employees’ exercise of stock options were $1.4 million and $0.6 million for the fiscal years ended
June 30, 2021 and 2020, respectively. Payments of employee tax withholdings related to vesting of restricted stock awards were $0.3
million for each of the fiscal years ended June 30, 2021 and 2020. Payments of employee tax withholdings related to the cashless exercise
of stock option were $0.2 million for each of the fiscal years ended June 30, 2021 and 2020.
Working Capital
We believe that our current working capital, anticipated cash flow from operations, and access to financing through the Revolving Credit
Facility are adequate for funding existing operations for the next twelve months.
Acquisitions
Below are descriptions of recent acquisitions in the last two fiscal years.
On February 7, 2020 the Company acquired the assets and operations of two of its Adcom agency locations: Alexandria, Virginia based
Friedway Enterprises, Inc. (“Friedway”) and Pittsburgh, Pennsylvania based CIC2, Inc. (“CIC2”). The acquired agencies are expected
to strengthen and diversify Radiant’s network of Company-owned operations and will continue to provide a full range of hyper-care
domestic and international transportation and logistics service to customers in medical device, high-tech and trade-show industries. As
consideration for the acquisition, the Company paid $9.2 million in cash upon closing and issued 45,086 shares of common stock
recorded at fair value, and the seller is entitled to additional contingent consideration payable in subsequent periods based on
future performance of the acquired operation. The maximum contingent consideration payable is $10 million.
Technology
A primary component of our business strategy is to provide robust and advanced technology offerings to our customers, while providing
advanced technology to our operations, strategic operating partners and management. To accomplish this, we will continuously develop
and enhance our technology platform to align with current and future business requirements. During the year ended June 30, 2021, we
spent approximately $2.1 million on technology enhancements and software systems in order to increase our operating efficiency and
improve technology offerings. We intend to spend in excess of $3.5 million during the fiscal year ended June 30, 2022 in order to
continue enhancing our technology platform, which we expect will include elements focused on customer facing, vendor facing, and
user facing tools and systems that will be integrated into our existing platform and support our continued growth.
Revolving Credit Facility
The Company entered into a $150 million syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit
Agreement dated as of March 13, 2020. On June 30, 2021, the borrowings outstanding on the Revolving Credit Facility was $15 million.
The Revolving Credit Facility was entered into with Bank of America Securities, Inc. as sole book runner and sole lead arranger, Bank
of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A as lender and documentation agent and Bank
of America, N. A., KeyBank National Association and Washington Federal Bank, National Association as lenders (such named lenders
are collectively referred to herein as “Lenders”). This replaces the Company’s $75 million facility dated June 14, 2017.
The Revolving Credit Facility has a term of five years, matures on March 13, 2025, and is collateralized by a first-priority security
interest in the accounts receivable and other assets of the Company. Borrowings under the Revolving Credit Facility accrue interest (at
the Company’s option), at the Lenders’ base rate plus 1.00% or LIBOR plus 2.00% and can be subsequently adjusted based on the
Company’s consolidated leverage ratio under the facility at the Lenders’ base rate plus 1.00% to 1.75% or LIBOR plus 2.00% to 2.75%.
The Revolving Credit Facility includes a $50 million accordion feature to support future acquisition opportunities. For general
borrowings under the Revolving Credit Facility, the Company is subject to the maximum consolidated leverage ratio of 3.00 and
minimum consolidated fixed charge coverage ratio of 1.25. 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.
33
In conjunction with the Revolving Credit Facility, Radiant entered into two interest rate swap contracts. On March 20, 2020, and
effective April 17, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows
at one-month LIBOR for a $20 million notional amount, for fixed interest cash outflows at 0.635%. On April 1, 2020, and effective
April 2, 2020, Radiant 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 million notional amount, for fixed interest cash outflows at 0.5865%. Both interest rate swap contracts
mature and terminate on March 13, 2025.
Senior Secured Loan
On April 2, 2015, Radiant Canada obtained a CAD$29.0 million senior secured Canadian term loan from Fiera Private Debt Fund IV
LP (“FPD IV” formerly, Integrated Private Debt Fund IV LP) pursuant to a CAD$29,000,000 Credit Facilities Loan Agreement (the
“FPD IV Loan Agreement”). The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations
thereunder. The loan matures on April 1, 2024 and accrues interest at a rate of 6.65% per annum. We made interest-only payments for
the first twelve months and blended principal and interest payments through maturity. In connection with the loan, we paid an amount
equal to five months of interest payments into a debt service reserve account controlled by FPD IV.
In connection with our acquisition of Lomas, Radiant Canada obtained a CAD$10.0 million senior secured Canadian term loan from
Fiera Private Debt Fund V LP (“FPD V” formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000,000 Credit Facilities
Loan Agreement (the “FPD V Loan Agreement,” and together with the FPD IV Loan Agreement, the “FPD Loan Agreements”). The
Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan matures on June
1, 2024 and accrues interest at a rate of 6.65% per annum. The loan repayment consists of monthly blended principal and interest
payments.
The loans may be prepaid in whole at any time upon providing at least 30 days prior written notice and paying the difference between
(i) the present value of the loan interest and the principal payments foregone discounted at the Government of Canada Bond Yield for
the term from the date of prepayment to the maturity date and (ii) the face value of the principal amount being prepaid.
For additional information regarding our indebtedness, see Note 8 to the consolidated financial statements.
Paycheck Protection Program Loans
On May 4, 2020, the Company received loan proceeds of $5.9 million pursuant to the Paycheck Protection Program (the “PPP”) under
the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The application for these funds required the Company to, in
good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the
Company. This certification further required the Company to take into account our current business activity and our ability to access
other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. On
April 28, 2020, the Secretary of the U.S. Department of the Treasury stated that the Small Business Administration will perform a full
review of any PPP loan over $2 million before forgiving the loan. The certification made by the Company did not contain any objective
criteria and is subject to interpretation. Despite the good-faith belief that given the Company’s circumstances all eligibility requirements
for the PPP loans were satisfied, if it is later determined that the Company had violated any applicable laws or regulations or it is
otherwise determined the Company was ineligible to receive the PPP loans, it may be required to repay the PPP loans in its entirety
and/or be subject to additional penalties.
The term of the Company’s PPP loans was two years. The annual interest rate on the PPP loans was 1% and no payments of principal
or interest would have been due until the conclusion of the deferral period. The deferral period would end on the earlier of (i) the date
that Small Business Administration remits the loan forgiveness amount to the lender, or (ii) if the loan were not forgiven, ten months
after the end of the 24-week loan forgiveness covered period. Under the terms of the PPP loans, all or a portion of the principal could
be forgiven if the loan proceeds were used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits, rent,
and utilities. The PPP loan was recognized on the Company’s June 30, 2020 consolidated balance sheet as notes payable and was
derecognized when forgiven during the year ended June 30, 2021.
As of June 30, 2021, all PPP loans totaling $5.9 million were forgiven, including $0.06 million of interest previously accrued.
Off Balance Sheet Arrangements
As of June 30, 2021, we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred
to as structured finance or special purpose entities, which had been established for the purpose of facilitating off-balance sheet
arrangements or other contractually narrow or limited purposes. As such, we are not materially exposed to any financing, liquidity,
market or credit risk that could arise if we had engaged in such relationships.
34
Recent Accounting Guidance
The recent accounting guidance is discussed in Note 2 to the consolidated financial statements contained in this report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, the Company is not required to provide the information called for by this Item 7A.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
35
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Radiant Logistics, Inc.
Renton, Washington
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Radiant Logistics, Inc. (the “Company”) as of June 30, 2021 and
2020, the related consolidated statements of comprehensive income, changes in equity, and cash flows for the years then ended, and the
related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company at June 30, 2021 and 2020, and the results of its operations
and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),
the Company's internal control over financial reporting as of June 30, 2021, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated
September 20, 2021 expressed an adverse opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements
that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a
whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on
the accounts or disclosures to which it relates.
36
Goodwill
As described in Notes 3 and 7 to the consolidated financial statements, the Company’s consolidated goodwill balance was $72.6 million
as of June 30, 2021. The Company performs goodwill impairment testing annually as of April 1, or more frequently if events or
circumstances indicate the carrying value of a reporting unit that includes goodwill might exceed the fair value of that reporting unit.
The Company estimates the fair value of each reporting unit based on a combination of an income approach, that utilizes discounted
cash flows specific to each reporting unit, and a market approach, that considers guideline public company market multiples.
We identified the determination of the fair value of each reporting unit included in the Company’s annual goodwill impairment test as
a critical audit matter. The key assumptions utilized by management in the determination of the fair value under the income approach
include projected revenue growth rates, profit margins, operating expenses, terminal value and discount rates for each of the Company’s
reporting units. The key assumptions utilized by management in the determination of the fair value under the market approach include
the selection of guideline public companies utilized. Changes to these assumptions can have a significant impact on the fair value of
each reporting unit. Auditing management’s valuation methods and assumptions utilized in estimating the fair value of the reporting
units involved especially challenging and subjective auditor judgment due to the nature and extent of audit effort required to address
this matter, including the extent of specialized skill or knowledge needed.
The primary procedures we performed to address this critical audit matter included:
Testing the design and operating effectiveness of controls relating to management’s goodwill impairment tests, including
management’s review of the key assumptions and judgments used in determining the valuation methodology for the
measurement of the fair value of each reporting unit.
Evaluating management’s ability to forecast cash flows and the reasonableness of management’s assumptions used to
develop cash flow forecasts and projections by comparing them to prior period forecasts, historical operating performance,
internal and external communications made by the Company, and forecasted information included in industry reports.
Testing the accuracy and completeness of the data used by management to develop its projections.
Utilizing personnel with specialized knowledge and skill of valuation techniques to assist in: (i) evaluating the
methodologies used by management to determine the fair value of each reporting unit including the weighting of the income
and market approaches; (ii) assessing the underlying projections by comparing key assumptions to historical levels and
guideline public companies; (iii) evaluating the reasonableness of assumptions used in the income and market approaches
including discount rates, terminal values, present value factors, market multiples, and the control premium; and (iv) testing
the mathematical accuracy of the Company’s calculations.
/s/ BDO USA, LLP
We have served as the Company's auditor since 2019.
Seattle, Washington
September 20, 2021
37
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Shareholders and Board of Directors
Radiant Logistics, Inc.
Renton, Washington
Opinion on Internal Control over Financial Reporting
We have audited Radiant Logistics, Inc.’s (the “Company’s”) internal control over financial reporting as of June 30, 2021, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (the “COSO criteria”). In our opinion, the Company did not maintain, in all material respects, effective internal
control over financial reporting as of June 30, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),
the consolidated balance sheets of the Company as of June 30, 2021 and 2020, and the related consolidated statements of comprehensive
income, changes in equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated
financial statements”) and our report dated September 20, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Controls and Procedures”. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
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 financial statements will not be prevented or
detected on a timely basis. Material weaknesses regarding management’s failure to design and maintain controls over (1) revenue, and
(2) operating partner commissions have been identified and described in management’s assessment. These material weaknesses were
considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2021 consolidated financial statements,
and this report does not affect our report dated September 20, 2021 on those consolidated financial statements.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
38
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.
/s/ BDO USA, LLP
Seattle, Washington
September 20, 2021
39
RADIANT LOGISTICS, INC.
Consolidated Balance Sheets
(In thousands, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance of $1,489 and $1,990, respectively
Contract assets
Income tax receivable
Prepaid expenses and other current assets
Total current assets
Property, technology, and equipment, net
Goodwill
Intangible assets, net
Operating lease right-of-use assets
Deposits and other assets
Total other long-term assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Operating partner commissions payable
Accrued expenses
Income tax payable
Current portion of notes payable
Current portion of operating lease liability
Current portion of finance lease liability
Current portion of contingent consideration
Other current liabilities
Total current liabilities
Notes payable, net of current portion
Operating lease liability, net of current portion
Finance lease liability, net of current portion
Contingent consideration, net of current portion
Deferred income taxes
Other long-term liabilities
Total long-term liabilities
Total liabilities
Commitments and contingencies (Note 15)
Equity:
Common stock, $0.001 par value, 100,000,000 shares authorized; 50,832,205 and 50,188,486
shares issued, and 49,930,389 and 49,555,639 shares outstanding, respectively
Additional paid-in capital
Treasury stock, at cost, 901,816 and 632,847 shares, respectively
Retained earnings
Accumulated other comprehensive income
Total Radiant Logistics, Inc. stockholders’ equity
Non-controlling interest
Total equity
Total liabilities and equity
June 30,
2021
2020
13,696
117,349
27,753
—
17,512
176,310
24,151
72,582
41,404
39,022
3,772
156,780
357,241
87,941
13,779
6,801
2,713
4,446
6,989
743
2,600
345
126,357
24,000
34,899
1,809
4,663
4,021
89
69,481
195,838
32
104,228
(4,658)
60,367
1,141
161,110
293
161,403
357,241
$
$
$
$
34,841
71,838
16,312
780
16,817
140,588
18,712
72,199
51,192
12,580
4,769
140,740
300,040
65,003
9,131
6,538
—
3,800
6,121
688
2,127
308
93,716
48,091
7,192
2,476
2,813
7,484
93
68,149
161,865
32
102,214
(2,749)
37,424
445
137,366
809
138,175
300,040
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
40
RADIANT LOGISTICS, INC.
Consolidated Statements of Comprehensive Income
(In thousands, except share and per share data)
Revenues
Operating expenses:
Cost of transportation and other services
Operating partner commissions
Personnel costs
Selling, general and administrative expenses
Depreciation and amortization
Transition, lease termination, and other costs
Change in fair value of contingent consideration
Total operating expenses
Income from operations
Other income (expense):
Interest income
Interest expense
Foreign currency transaction loss
Change in fair value of interest rate swap contracts
Gain on forgiveness of debt
Other
Total other income (expense)
Income before income taxes
Income tax expense
Net income
Less: net income attributable to non-controlling interest
Net income attributable to Radiant Logistics, Inc.
Other comprehensive income:
Foreign currency translation gain
Comprehensive income
Income per share:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
Year Ended June 30,
2021
2020
$
889,124
$
855,197
668,299
94,040
55,378
24,434
16,642
—
4,350
863,143
25,981
18
(2,549)
(189)
(594)
5,987
704
3,377
29,358
(5,896)
23,462
(519)
645,824
85,821
57,679
29,548
16,571
500
1,752
837,695
17,502
59
(2,885)
(125)
600
—
370
(1,981)
15,521
(3,157)
12,364
(1,823)
$
$
$
$
22,943
$
10,541
696
24,158
0.46
0.45
$
$
$
258
12,622
0.21
0.21
49,890,945
51,208,295
49,600,506
51,091,799
The accompanying notes are an integral part of these consolidated financial statements.
41
(In thousands, except share and per share data)
Common Stock
Additional
Paid-in
Amount
Capital
Balance as of June 30, 2019
Issuance of common stock to
shareholders of acquired business
Repurchase of common stock
Issuance of common stock upon vesting of
restricted stock awards, net of taxes withheld
and paid
Issuance of common stock upon exercise of stock
options, net of taxes withheld and paid
Distribution to non-controlling interest
Share-based compensation
Net income
Other comprehensive income
Balance as of June 30, 2020
Repurchase of common stock
Issuance of common stock upon vesting of
restricted stock awards, net of taxes withheld
and paid
Issuance of common stock upon exercise of stock
options, net of taxes withheld and paid
Distribution to non-controlling interest
Share-based compensation
Net income
Other comprehensive income
Balance as of June 30, 2021
Shares
49,586,464
$
45,086
(541,049)
176,730
288,408
—
—
—
—
49,555,639
(268,969)
$
155,046
488,673
—
—
—
—
49,930,389
$
RADIANT LOGISTICS, INC.
Consolidated Statements of Changes in Equity
RADIANT LOGISTICS, INC. STOCKHOLDERS' EQUITY
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Total Radiant
Logistics,
Inc.
Stockholders'
Non-
Controlling
Income
Equity
Interest
Total
Equity
31 $
100,186
$
(253) $
26,883 $
187
$
127,034
$
246
$
127,280
—
—
—
1
—
—
—
—
32 $
—
—
—
—
—
—
—
32 $
250
—
(326)
441
—
1,663
—
—
—
(2,496)
—
—
—
—
—
—
—
—
—
—
—
—
10,541
—
102,214
—
$
(2,749) $
(1,909)
37,424 $
—
(334)
—
—
1,277
—
1,071
—
—
104,228
$
—
—
—
—
—
(4,658) $
—
—
—
22,943
—
60,367 $
—
—
—
—
—
—
—
258
445
—
—
—
—
—
—
696
1,141
$
$
250
(2,496)
(326)
442
—
1,663
10,541
258
—
—
—
—
(1,260)
—
1,823
—
250
(2,496)
(326)
442
(1,260)
1,663
12,364
258
137,366
(1,909)
$
$
809
—
138,175
(1,909)
(334)
1,277
—
1,071
22,943
696
161,110
$
—
—
(1,035)
—
519
—
293
$
(334)
1,277
(1,035)
1,071
23,462
696
161,403
The accompanying notes are an integral part of these consolidated financial statements.
42
(In thousands)
OPERATING ACTIVITIES:
RADIANT LOGISTICS, INC.
Consolidated Statements of Cash Flows
Year Ended June 30,
2021
2020
Net income
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
$
23,462
$
Share-based compensation
Amortization of intangible assets
Depreciation and amortization of property, technology, and equipment
Deferred income tax benefit
Amortization of debt issuance costs
Change in fair value of contingent consideration
Gain on forgiveness of debt
Other
CHANGES IN OPERATING ASSETS AND LIABILITIES:
Accounts receivable
Contract assets
Income tax receivable/payable
Prepaid expenses, deposits, and other assets
Accounts payable
Operating partner commissions payable
Accrued and other liabilities
Payment of contingent consideration
Net cash provided by operating activities
INVESTING ACTIVITIES:
Payments to acquire businesses
Purchases of property, technology, and equipment
Proceeds from sale of property, technology, and equipment
Net cash used for investing activities
FINANCING ACTIVITIES:
Proceeds from revolving credit facility
Repayment of revolving credit facility
Proceeds from notes payable
Payments of debt issuance costs
Repayments of notes payable and finance lease liability
Repurchases of common stock
Payments of contingent consideration
Distribution to non-controlling interest
Proceeds from exercise of stock options
Payments of employee tax withholdings related to vesting of restricted stock awards
Payments of employee tax withholdings related to cashless exercise of stock options
Net cash provided by (used for) financing activities
Effect of exchange rate changes on cash and cash equivalents
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS, END OF YEAR
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid
Interest paid
1,071
10,120
6,522
(3,392)
522
4,350
(5,987)
(695)
(43,495)
(11,392)
3,578
7,672
24,078
4,648
(6,962)
—
14,100
—
(11,431)
358
(11,073)
6,371
(21,371)
—
—
(4,721)
(1,909)
(2,027)
(1,035)
1,446
(334)
(169)
(23,749)
(423)
(21,145)
34,841
13,696
6,520
2,021
$
$
$
$
$
$
12,364
1,663
10,259
6,312
(411)
305
1,752
—
499
20,605
1,428
(266)
(2,983)
(9,618)
(3,768)
(7,981)
(280)
29,880
(9,150)
(5,175)
182
(14,143)
586,316
(570,105)
5,925
(1,878)
(4,281)
(2,496)
(47)
(1,260)
625
(326)
(184)
12,289
1,395
29,421
5,420
34,841
3,852
2,626
The accompanying notes are an integral part of these consolidated financial statements.
RADIANT LOGISTICS, INC.
Consolidated Statements of Cash Flows (continued)
Supplemental disclosure of non-cash investing and financing activities:
During the twelve months ended June 30, 2021, Paycheck Protection Program (the “PPP”) Loans totaling $5,925 were forgiven,
including $62 of interest previously accrued.
In February 2020, the Company issued 45,086 shares of common stock at fair value in satisfaction of $250 of consideration towards the
acquisition of Friedway Enterprises, Inc. and CIC2, Inc.
The accompanying notes are an integral part of these consolidated financial statements.
44
RADIANT LOGISTICS, INC.
Notes to the Consolidated Financial Statements
(Dollars in thousands, except share and per share data)
NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS
Radiant Logistics, Inc. and its consolidated subsidiaries (the “Company”, “we” or “us”), operates as a third-party logistics company,
providing multi-modal transportation and logistics services primarily in the United States and Canada. We service a large and diversified
account base consisting of consumer goods, food and beverage, manufacturing and retail customers, which we support from 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. We provide these services through a multi-brand network, which includes over 100 operating locations,
including a number of independent agents, who we also refer to as our “strategic operating partners” that operate exclusively on our
behalf including approximately 20 Company-owned offices. As a third-party logistics company, we have a vast carrier network of asset-
based transportation companies, including motor carriers, railroads, airlines and ocean lines in our 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. We also provide 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 our core transportation service offering.
The COVID-19 pandemic continues to have widespread implications and while we see improvements in the broader economy, it is
difficult to predict how COVID-19 will impact the overall economy in the future. Many countries have begun the process of vaccinating
their residents against COVID-19. However, the large scale and challenging logistics of distributing the vaccines, as well as uncertainty
over the efficacy of the vaccines against new variants of the virus, may impact the economy as well as our operations in the future.
While we are seeing positive results despite the current COVID-19 environment, there remains uncertainty regarding how COVID-19
will impact the Company's results in the future.
Due to the unprecedented and evolving nature of the COVID-19 pandemic, many of our estimates and assumptions required increased
judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes
available, our estimates may change materially in future periods.
NOTE 2 - RECENT ACCOUNTING GUIDANCE
Recent Accounting Guidance Not Yet Adopted
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference
Rate Reform (Topic 848) and subsequent amendments to the initial guidance: ASU 2021-01, which provides temporary optional
expedients and exceptions to the current guidance on contract modifications to ease the financial reporting burdens related to the
expected market transition from London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates.
The amendments are effective as of March 12, 2020 and applies to contract modifications made before December 31, 2022. As of June
30, 2021, the Company has not utilized any of the expedients discussed within this ASU, however, it continues to assess its agreements
to determine if LIBOR is included and if the expedients would be utilized through the allowed period of December 31, 2022.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments and subsequent amendments to the initial guidance: ASU 2018-19, 2019-04, 2019-05, and 2020-03 (collectively,
Topic 326). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. Topic 326 is effective
for the Company in the first quarter of fiscal year 2024. The Company is currently evaluating the impact of the standard on its
consolidated financial statements and disclosures.
Recently Adopted Accounting Guidance
In August 2018, the FASB issued ASU 2018-15 (Subtopic 350-40), Intangibles—Goodwill and Other—Internal-Use Software—
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This ASU
aligns the accounting for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the
accounting for implementation costs incurred to develop or obtain internal-use software. The Company adopted this standard on
July 1, 2020. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.
45
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the
Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. The
Company adopted this standard on July 1, 2020. The adoption of this standard did not have a material impact on the Company's
consolidated financial statements.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a)
Principles of Consolidation
The consolidated financial statements include the accounts of Radiant Logistics, Inc. and its wholly-owned subsidiaries as well as a
single variable interest entity, Radiant Logistics Partners, LLC (“RLP”), which is 40% owned by Radiant Global Logistics, Inc. (“RGL”)
and 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 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.
b)
Use of Estimates
The preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United
States (“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 financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results reported in future periods may be based upon amounts that could differ from these estimates
due to the inherent uncertainty involved in making estimates and risks and uncertainties, including uncertainty in the current economic
environment due to COVID-19.
c)
Cash and Cash Equivalents
The Company maintains its cash in bank deposit accounts that, at times, may 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)
Accounts Receivable
The Company’s receivables are recorded when billed and represent amounts owed by third-party customers, as well as amounts owed
by strategic operating partners. The carrying value of the Company’s receivables, net of the allowance for doubtful accounts, represents
their estimated net realizable value. The Company evaluates the collectability of accounts receivable on a customer-by-customer basis.
The Company records an allowance for doubtful accounts to reduce the net recognized receivable to an amount the Company believes
will be reasonably collected. The allowance for doubtful accounts is determined from the analysis of the aging of the accounts receivable,
historical experience and knowledge of specific customers.
The Company derives a substantial portion of its revenue through independently owned strategic operating partner locations operating
under various Company brands. Each strategic operating partner is responsible for some or all of the collection of the accounts related
to the underlying customers being serviced by such strategic operating partner. To facilitate this arrangement, based on contractual
agreements, certain strategic operating partners are required to maintain a bad debt reserve in the form of a security deposit with the
Company. The Company charges each strategic operating partner’s bad debt reserve account for any accounts receivable aged beyond
90 days along with any other amounts owed to the Company by strategic operating partners. However, the bad debt reserve account may
carry a deficit balance when amounts charged to this reserve account exceed amounts otherwise available. In these circumstances, a
deficit bad debt reserve account is recognized as a receivable in the Company’s financial statements. Some strategic operating partners
are not required to establish a bad debt reserve; however, they are still responsible to make up for any deficits and the Company may
withhold all or a portion of future commissions payable to the strategic operating partner to satisfy any deficit balance. As of
June 30, 2021, a number of the Company’s strategic operating partners have a deficit balance in their bad debt reserve accounts. The
Company expects to replenish these funds through the future business operations of these strategic operating partners or as their
customers satisfy the amounts payable to the Company. However, to the extent any of these strategic operating partners were to cease
operations or otherwise be unable to replenish these deficit accounts, the Company would be at risk of loss for any such amounts and
generally would reserve for them.
46
e)
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 or amortization are removed from the accounts and the resulting gain or loss,
if any, is reflected in other income or expense. Expenditures for maintenance, repairs and renewals of minor items are expensed as
incurred. Major renewals and improvements are capitalized.
f)
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. The Company performs its annual goodwill impairment test as of April 1 of each year or more
frequently if facts or circumstances indicate that the carrying amount may not be recoverable. Based on the most recent annual
impairment test, there was no impairment.
An entity 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 prior to performing a quantitative impairment test. The qualitative assessment evaluates
various factors, such as macro-economic conditions, industry and market conditions, cost factors, relevant 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 value. 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 multiples of current and future earnings, and market approach,
which utilizes 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 June 30, 2021, management believes there are no indications of impairment.
g)
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. No impairment losses of long-lived assets
were recorded during the years ended June 30, 2021 and 2020.
Intangible assets consist of customer related intangible assets, trade names and trademarks, and non-compete agreements arising from
the Company’s acquisitions. Customer related intangible assets are amortized using the straight-line method over a period of up to ten
years, trademarks and trade names are amortized using the straight-line method over 15 years, and non-compete agreements are
amortized using the straight-line method over the term of the underlying agreements.
h)
Business Combinations
The Company accounts for business acquisitions using the acquisition method as required by FASB ASC Topic 805, Business
Combinations. 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.
47
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
objectives and financial results by acquired companies using Level 3 inputs and the amounts are then 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 consolidated statements of comprehensive income. Amounts are generally due annually on November 1st, and 90 days following the
quarter of the final earn-out period of each respective acquisition.
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 consolidated statements of comprehensive income.
i)
Revenue Recognition
The Company’s revenues are primarily from transportation services, which includes providing for the arrangement of freight, both
domestically and internationally, through modes of transportations such as air freight, ocean freight, truckload, less than truckload and
intermodal. The Company generates its transportation services revenue by purchasing transportation from direct 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
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 these promises aren’t distinct in the context of
the contract. 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 origin to destination. The Company determines the period to
recognize revenue in transit based upon the departure date and the delivery date, which may be estimated if delivery has not occurred
as of the reporting date. Determination of the transit period and the percentage of completion of the shipment as of the reporting date
requires management to make judgments that affect the timing 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 Company also provides materials management and distribution ("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 fulfilment 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 they are performed. 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 customs house brokerage ("CHB") services sold on a standalone basis 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 consolidated statements of comprehensive income.
The Company had certain major customers. For the year ended June 30, 2021, there were no customer whose revenue individually
represented 10% or more of consolidated revenues. For the year ended June 30, 2020, revenue from one customer of our U.S. operating
segment represents $126,913, or 14.8%, of the Company’s consolidated revenues.
A summary of the Company’s gross revenues disaggregated by major service lines and geographic markets (reportable segments), and
timing of revenue recognition for the years ended June 30, 2021 and 2020, respectively, are as follows:
48
(In thousands)
Major Service Lines:
Transportation services
Value-added services (1)
Total
Timing of Revenue Recognition:
Services transferred over time
Services transferred at a point in time
Total
(In thousands)
Major Service Lines:
Transportation services
Value-added services (1)
Total
Timing of Revenue Recognition:
Services transferred over time
Services transferred at a point in time
Total
United States
$ 761,898
8,887
$ 770,785
$ 768,421
2,364
$ 770,785
United States
$ 745,097
14,142
$ 759,239
$ 756,521
2,718
$ 759,239
$
$
$
$
$
$
$
$
Year Ended June 30, 2021
Corporate/
Eliminations
Canada
Total
97,418
21,410
118,828
118,828
—
118,828
$
$
$
$
(489) $
—
(489) $
858,827
30,297
889,124
(489) $
—
(489) $
886,760
2,364
889,124
Year Ended June 30, 2020
Corporate/
Eliminations
Canada
Total
80,090
16,539
96,629
96,629
—
96,629
$
$
$
$
(671) $
—
(671) $
824,516
30,681
855,197
(671) $
—
(671) $
852,479
2,718
855,197
(1)
Value added services include MM&D, CHB, and other services.
Practical Expedients
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 contracts with its transportation customers have an expected duration of one
year or less.
For the performance obligation to transfer MM&D services in contracts with customers, 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 Company also applies the practical expedient that permits the recognition of employee sales commissions related to transportation
services as an expense when incurred since the amortization period of such costs is less than one year. These costs are included in the
consolidated statements of comprehensive income.
Contract Assets
Contract assets represent amounts for which the Company has the right to consideration for the services provided while a shipment is
still in-transit but for which it has not yet completed the performance obligation and has not yet invoiced the customer. Upon completion
of the performance obligations, which can vary in duration based upon the method of transport and billing the customer, these amounts
become classified within accounts receivable.
Operating Partner Commissions
The Company enters into contractual arrangements with independent agents 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 independent agent
is compensated through the payment of sales commissions, which are based on individual shipments. The Company accrues the
independent agent’s commission obligation ratably as the goods are transferred to the customer.
j)
Defined Contribution Savings Plans
The Company has an employee savings plan under which the Company provides safe harbor matching contributions. For the years
ended June 30, 2021 and 2020, the Company’s contributions under the plan were $1,347 and $1,302, respectively.
49
k)
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.
l)
Share-Based Compensation
The Company grants restricted stock awards, restricted stock units and stock options to certain directors, officers and employees. The
Company accounts for share-based compensation as equity awards such that compensation cost is measured at the grant date based on
the fair value of the award and is expensed ratably over the vesting period. The fair value of restricted stock is the market price 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 share-based awards at the grant date requires judgment about, among other things, stock volatility, the
expected life of the award, and other inputs. 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 the consolidated statements of comprehensive income as part of personnel costs.
m) 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 if the potential common shares, such as restricted stock awards and stock options, had been issued and were
considered dilutive.
n)
Foreign Currency Translation
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 year-end exchange rates and all income statement amounts are translated
at the weighted average rates for the period. Translation adjustments are recorded in accumulated other comprehensive (loss) income.
Gains and losses on transactions of monetary items denominated in a foreign currency are recognized in other income (expense) in the
consolidated statements of comprehensive income.
o)
Reclassifications of Previously Issued Financial Statements
Certain amounts for prior periods have been reclassified in the consolidated financial statements to conform to the current year
presentation. There has been no impact on previously reported net income or shareholders’ equity from such reclassifications.
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 liability; and operating lease liability, net of current
portion in our consolidated balance sheets. Assets and obligations related to finance leases are included in property, technology, and
equipment, net; current portion of finance lease liability; and finance lease liability, net of current portion in our consolidated balance
sheets.
50
ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our 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. We use the
implicit rate when readily determinable. Our lease terms may include options to extend or terminate the lease when it is reasonably
certain that we will exercise that option. Annually, we perform an impairment analysis on ROU assets, and as of June 30, 2021, there
was no material impairment to ROU assets.
The Company’s agreements with lease and non-lease components, are all each accounted for as a single lease component. For leases
with an initial term of twelve months or less, the Company elected the exemption from recording right of use 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 fiscal years ended June 30, 2021 and 2020 are immaterial.
Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the
lease. We exclude variable payments from lease ROU assets and lease liabilities, to the extent not considered fixed, and instead expense
as incurred. Variable lease costs for the fiscal years ended June 30, 2021 and 2020 are immaterial.
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 June 30, 2021, 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 values are recognized in other income
(expense) in the consolidated statements of comprehensive income.
NOTE 4 – EARNINGS PER SHARE
The computations of the numerator and denominator of basic and diluted income per share are as follows:
(In thousands, except share data)
Numerator:
Year Ended June 30,
2021
2020
Net income attributable to Radiant Logistics, Inc.
$
22,943
$
10,541
Denominator:
Weighted average common shares outstanding, basic
Dilutive effect of share-based awards
49,890,945
1,317,350
49,600,506
1,491,293
Weighted average common shares outstanding, diluted
51,208,295
51,091,799
Potentially dilutive common shares excluded
122,875
475,743
NOTE 5 – LEASES
The Company has operating and finance leases for office space, warehouse space, trailers and other equipment. Lease terms expire at
various dates through April 2032 with options to renew for varying terms at the Company’s sole discretion. The Company has not
included these options to extend or terminate in its calculation of right-or-use assets or lease liabilities as it is not reasonably certain to
exercise these options.
In February 2021, the Company commenced a new lease for warehouse space in Bolton, Ontario. The lease has a seven-year term ending
in January 2028 replacing the Company's warehouse lease at Brampton, Ontario, which expired in March 2021.
In March 2021, the Company commenced a new lease for office space in Renton, Washington. The lease has an eleven-year term ending
in April 2032 replacing office space leased at Bellevue, Washington, which expired in May 2021.
51
The components of lease expense were as follows:
(In thousands)
Operating:
Operating lease cost
Financing:
Amortization of leased assets
Interest on lease liabilities
Total finance lease cost
$
$
Supplemental cash flow information related to leases was as follows:
(In thousands)
Cash paid for amounts included in the measurement
of lease liabilities:
Operating cash flows arising from operating leases $
Operating cash flows arising from finance leases
Financing cash flows arising from finance leases
Right-of-use assets obtained in exchange for new
lease liabilities:
Operating leases
Finance leases
$
33,089
38
Supplemental balance sheet information related to leases was as follows:
Year Ended June 30,
2021
2020
7,762
$
7,012
616
137
753
$
Year Ended June 30,
2021
2020
7,455
139
716
$
$
619
170
789
7,393
169
675
3,341
28
(In thousands)
Operating lease:
Operating lease right-of-use assets
Current portion of operating lease liability
Operating lease liability, net of current portion
Total operating lease liabilities
Finance lease:
Property, technology, and equipment, net
Current portion of finance lease liability
Finance lease liability, net of current portion
Total finance lease liabilities
Weighted average remaining lease term:
Operating leases
Finance leases
Weighted average discount rate:
Operating leases
Finance leases
June 30,
2021
2020
39,022
$
12,580
6,989
34,899
41,888
2,663
743
1,809
$
$
2,552
$
6,121
7,192
13,313
3,254
688
2,476
3,164
$
$
$
$
7.1 years
4.4 years
2.9 years
5.0 years
4.11%
4.75%
3.22%
4.52%
52
As of June 30, 2021, maturities of lease liabilities for each of the next five fiscal years ending June 30 and thereafter are as follows:
(In thousands)
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less imputed interest
Total lease liability
Operating
Finance
$
$
8,482
7,246
6,783
6,859
6,365
11,213
46,948
(5,060)
$
41,888
$
840
648
573
541
176
—
2,778
(226)
2,552
NOTE 6 – PROPERTY, TECHNOLOGY, AND EQUIPMENT
(In thousands)
Computer software
Trailers and related equipment
Office and warehouse equipment
Leasehold improvements
Computer equipment
Furniture and fixtures
Less: accumulated depreciation and amortization
$
Useful Life
3 - 5 years
3 - 15 years
3 - 15 years
(1)
3 - 5 years
3 - 15 years
June 30,
2021
2020
$
23,967
6,902
8,650
5,595
3,885
1,720
21,884
6,733
3,980
3,799
3,054
1,017
50,719
(26,568)
40,467
(21,755)
$
24,151
$
18,712
(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 $6,522 and $6,312 for the years ended
June 30, 2021 and 2020, respectively. Computer software includes approximately $568 and $174 of software in development as of
June 30, 2021 and 2020, respectively.
NOTE 7 – GOODWILL AND INTANGIBLE ASSETS
Goodwill
The table below reflects the changes in the carrying amounts of goodwill for the years ending June 30, 2021 and 2020:
(In thousands)
Balance as of June 30, 2019
Acquisition
Balance as of June 30, 2020
Foreign currency translation gain
Balance as of June 30, 2021
$
$
$
Total
65,389
6,810
72,199
383
72,582
At June 30, 2021, the Company had $72,582 of goodwill; $50,801 is attributable to the U.S. reporting unit, while $21,781 is attributable
to the Canadian reporting unit. The Company assesses goodwill for impairment annually as of April 1, or more frequently, if events and
circumstances indicate impairment may have occurred.
53
We considered the uncertainties from COVID-19 as part of our determination as to whether any triggering events occurred in the period
after the most recent annual assessment of goodwill for impairment dated April 1, 2021, which would indicate an impairment of goodwill
is more likely than not. Based on our assessment, there were no triggering events identified that would have an adverse impact on our
business; and therefore, no impairment was identified for our goodwill as of June 30, 2021.
As additional facts and circumstances evolve, we continue to observe and assess our reporting units particularly as a direct consequence
of the circumstances surrounding COVID-19. To the extent new information becomes available that impacts our results of operations
and financial condition, we expect to revise our projections accordingly as our estimates of future net after-tax cash flows are highly
dependent upon certain assumptions, including, but not limited to, the amount and timing of the economic recovery globally and
nationally.
Furthermore, the evaluation of impairment of goodwill requires the use of estimates about future operating results. Changes in forecasted
operations can materially affect these estimates, which could materially affect our results of operations and financial condition. The
estimates of expected future cash flows require significant judgment and are based on assumptions we determined to be reasonable;
however, they are unpredictable and inherently uncertain, including, estimates of future growth rates, operating margins and assumptions
about the overall economic climate as well as the competitive environment within which we operate. There can be no assurance that our
estimates and assumptions made for purposes of our impairment assessments as of the time of evaluation will prove to be accurate
predictions of the future, especially in light of the uncertainty surrounding the COVID-19 pandemic. If our assumptions regarding
business plans, competitive environments, or anticipated growth rates are not correct, we may be required to record non-cash impairment
charges in future periods, whether in connection with our normal review procedures periodically, or earlier, if an indicator of an
impairment is present prior to such evaluation.
Intangible Assets
Intangible assets consisted of the following as of June 30, 2021 and 2020:
Weighted
Average
Amortization
Period
4.2 years
(In thousands)
Customer related
Trade names and
trademarks
8.6 years
Covenants not to compete 3.4 years
Gross
Carrying
Amount
$ 102,713
15,119
1,433
June 30, 2021
Accumulated
Amortization
$
(70,490) $
(6,349)
(1,022)
Net
Carrying
Amount
32,223
8,770
411
(In thousands)
Customer related
Trade names and trademarks
Covenants not to compete
$ 119,265
$
(77,861) $
41,404
Weighted
Average
Amortization
Period
5.1 years
9.6 years
4.3 years
June 30, 2020
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
$
102,153
14,977
1,433
(61,227) $
(5,268)
(876)
40,926
9,709
557
118,563
$
(67,371) $
51,192
$
$
Total amortization expense amounted to $10,120 and $10,259 for the years ended June 30, 2021 and 2020, respectively. Future
amortization expense for each of the next five fiscal years ending June 30 are as follows:
(In thousands)
2022
2023
2024
2025
2026
$
9,555
9,077
8,701
6,710
1,926
54
NOTE 8 – NOTES PAYABLE
Notes payable consist of the following:
(In thousands)
Revolving Credit Facility
Senior Secured Loans
Other debt
Unamortized debt issuance costs
Total notes payable
Less: current portion
June 30,
2021
2020
$
$
15,000
13,690
—
(244)
28,446
(4,446)
30,000
16,302
5,925
(336)
51,891
(3,800)
Total notes payable, net of current portion
$
24,000
$
48,091
Future maturities of notes payable for each of the next five fiscal years ending June 30 are as follows:
(In thousands)
2022
2023
2024
2025
$
$
4,446
4,751
4,493
15,000
28,690
Revolving Credit Facility
The Company entered into a $150,000 syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit
Agreement dated on March 13, 2020. The Revolving Credit Facility was entered into with Bank of America Securities, Inc. as sole book
runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A as lender
and documentation agent and Bank of America, N. A., KeyBank National Association and Washington Federal Bank, National
Association as lenders (such named lenders are collectively referred to herein as “Lenders”).
The Revolving Credit Facility has a term of five years, matures on March 13, 2025, and is collateralized by a first-priority security
interest in the accounts receivable and other assets of the Company. Borrowings under the Revolving Credit Facility accrue interest (at
the Company’s option), at the Lenders’ base rate plus 1.00% or LIBOR plus 2.00% and can be subsequently adjusted based on the
Company’s consolidated leverage ratio under the facility at the Lenders’ base rate plus 1.00% to 1.75% or LIBOR plus 2.00% to 2.75%.
As of June 30, 2021 and 2020, the interest rates used were 2.10% and 2.19%, respectively.
The Revolving Credit Facility includes a $50,000 accordion feature to support future acquisition opportunities. For general borrowings
under the Revolving Credit Facility, the Company is subject to the maximum consolidated leverage ratio of 3.00 and minimum
consolidated fixed charge coverage ratio of 1.25. 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.
As of June 30, 2021, the borrowings outstanding on the Revolving Credit Facility was $15,000 and the Company was in compliance
with all of its covenants.
55
Senior Secured Loans
In connection with the Company’s acquisition of Radiant Canada (formerly, Wheels International Inc.), Radiant Canada obtained a
CAD$29,000 senior secured Canadian term loan from Fiera Private Debt Fund IV LP (“FPD IV” formerly, Integrated Private Debt Fund
IV LP) pursuant to a CAD$29,000 Credit Facilities Loan Agreement. The Company and its U.S. and Canadian subsidiaries are
guarantors of the Radiant Canada obligations thereunder. The loan matures on April 1, 2024 and accrues interest at a rate of 6.65% per
annum. The Company is required to maintain five months interest in a debt service reserve account to be controlled by FPD IV. The
amount of approximately $600 is recorded as deposits and other assets in the accompanying consolidated financial statements. The
Company made interest-only payments for the first twelve months followed by monthly principal and interest payments of CAD$390
that will be paid through maturity. As of June 30, 2021, $9,733 was outstanding under this term loan.
In connection with the Company’s acquisition of Lomas, Radiant Canada obtained a CAD$10,000 senior secured Canadian term loan
from Fiera Private Debt Fund V LP (formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000 Credit Facilities Loan
Agreement. The Company and its U.S. and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder. The loan
matures on June 1, 2024 and accrues interest at a fixed rate of 6.65% per annum. The loan repayment consists of monthly principal and
interest payments of CAD$149. As of June 30, 2021, $3,957 was outstanding under this term loan.
The loans may be prepaid in whole at any time providing the Company gives at least 30 days prior written notice and pays the difference
between (i) the present value of the loan interest and the principal payments foregone discounted at the Government of Canada Bond
Yield for the term from the date of prepayment to the maturity date, and (ii) the face value of the principal amount being prepaid.
The covenants of the Revolving Credit Facility, described above, also apply to the FPD IV and FPD V term loans. As of June 30, 2021,
the Company was in compliance with all of its covenants.
Paycheck Protection Program Loans
On May 4, 2020, the Company received loan proceeds of $5,925 pursuant to the Paycheck Protection Program (the “PPP”) under the
Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The application for these funds required the Company to, in good
faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company.
This certification further required the Company to take into account our current business activity and our ability to access other sources
of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. On April 28, 2020,
the Secretary of the U.S. Department of the Treasury stated that the Small Business Administration will perform a full review of any
PPP loan over $2,000 before forgiving the loan. The certification made by the Company did not contain any objective criteria and is
subject to interpretation. Despite the good-faith belief that given the Company’s circumstances all eligibility requirements for the PPP
loans were satisfied, if it is later determined that the Company had violated any applicable laws or regulations or it is otherwise
determined the Company was ineligible to receive the PPP loans, it may be required to repay the PPP loans in its entirety and/or be
subject to additional penalties.
The term of the Company’s PPP loans was two years. The annual interest rate on the PPP loans was 1% and no payments of principal
or interest would have been due until the conclusion of the deferral period. The deferral period would end on the earlier of (i) the date
that Small Business Administration remits the loan forgiveness amount to the lender, or (ii) if the loan were not forgiven, ten months
after the end of the 24-week loan forgiveness covered period. Under the terms of the PPP loans, all or a portion of the principal could
be forgiven if the loan proceeds were used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits, rent,
and utilities. The PPP loan was recognized on the Company’s June 30, 2020 consolidated balance sheet as notes payable and was
derecognized when forgiven during the year ended June 30, 2021.
As of June 30, 2021, all PPP loans totaling $5,925 were forgiven, including $62 of interest previously accrued.
NOTE 9 – DERIVATIVES
All derivatives are recognized on the Company’s consolidated balance sheets at their fair values and consist of interest rate swap
contracts at June 30, 2021 and 2020. On March 20, 2020, and effective April 17, 2020, Radiant 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, Radiant 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.
56
The Company uses an interest rate swap for the management of interest rate risk exposure, as the interest rate swap effectively converts
a portion of the Company’s Revolving Credit Facility from a floating to a fixed rate. The interest rate swap is an agreement 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 contract and the prevailing market interest
rates. The Company may terminate the swap contract prior to its expiration date, 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. As of June 30, 2021, the derivative instruments had a total notional amount of $30,000 and a
fair value of $6 recognized in deposits and other assets in the consolidated balance sheet. As of June 30, 2020, the derivative instrument
had a total notional amount of $30,000 and a fair value of $600 recorded in deposits and other assets on the consolidated balance sheet.
Both interest rate swap contracts are not designated as hedges; gains and losses from changes in fair value are recognized in other income
(expense) in the 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 at June 30, 2021 or 2020.
Common Stock
In March 2018, 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, 2019. On February 4, 2020, the Company announced that its board of directors had approved the renewal of the
repurchase program through December 31, 2021. Under the stock repurchase program, 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 program does not obligate the Company to repurchase
any specific number of shares and could be suspended or terminated at any time without prior notice. Under this repurchase program,
the Company purchased 268,969 shares of its common stock at an average cost of $7.10 per share for an aggregate cost of $1,909 during
the fiscal year ended June 30, 2021. During the fiscal year ended June 30, 2020, the Company purchased 541,049 shares of its common
stock at an average cost of $4.61 per share for an aggregate cost of $2,496.
NOTE 11 – VARIABLE INTEREST ENTITY AND RELATED PARTY TRANSACTIONS
RLP is owned 40% by RGL 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 a majority 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 the 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 consolidated financial statements.
RLP recorded profits of $865 and $3,039 for the years ended June 30, 2021 and 2020, respectively. RCP’s distributable share was $519
and $1,823 for the years ended June 30, 2021 and 2020, respectively. The non-controlling interest recorded as a reduction of net income
available to common stockholders in the consolidated statements of comprehensive income represents RCP’s distributive share.
57
The following table summarizes the balance sheets of RLP:
(In thousands)
ASSETS
Accounts receivable - Radiant Global Logistics, Inc.
Prepaid expenses and other current assets
LIABILITIES AND PARTNERS’ CAPITAL
Accrued expenses
Partners’ capital
June 30,
2021
2020
$
$
$
$
$
488
1
489
$
$
2
487
489
$
1,392
1
1,393
45
1,348
1,393
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 at 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.
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:
(In thousands)
Contingent consideration
Interest rate swap contracts (derivatives)
Contingent consideration
Interest rate swap contracts (derivatives)
Fair Value Measurements as of
June 30, 2021
Level 3
Total
(7,263) $
6
(7,263)
6
Fair Value Measurements as of
June 30, 2020
Level 3
Total
(4,940) $
600
(4,940)
600
$
$
58
The following table provides a reconciliation of the financial assets (liabilities) measured at fair value using significant unobservable
inputs (Level 3):
(In thousands)
Balance as of June 30, 2019
Increase related to accounting for
acquisitions
Contingent consideration paid
Change in fair value
Balance as of June 30, 2020
Contingent consideration paid
Change in fair value
Balance as of June 30, 2021
Contingent
Consideration
Interest rate swap
contracts
(derivatives)
$
$
$
(375) $
(3,140)
327
(1,752)
(4,940) $
2,027
(4,350)
(7,263) $
—
—
—
600
600
—
(594)
6
The Company has contingent obligations to transfer cash payments and equity shares to former shareholders of acquired operations in
conjunction with certain acquisitions if specified operating results and financial objectives are met over the next three fiscal years.
Contingent consideration is measured quarterly at fair value, and any change in the fair value of the contingent liability is included in
the consolidated statements of comprehensive income. The change in the current period fair value is principally attributable to a net
increase 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 $8,473 through earn-out periods measured through
January 2023, although there are no maximums on certain earn-out payments.
For contingent consideration the following table provides quantitative information about the significant unobservable inputs used in fair
value measurement:
(In thousands)
Contingent consideration
Fair Value
Valuation
Methodology
(7,263) Discounted
$
cash flows
Unobservable Inputs
Actual and projected
EBITDA over three-year
earnout period
Risk adjusted discount
rate
> $9,000
18%
As discussed in Note 9, derivative instruments are carried at fair value on the consolidated balance sheets. Interest rate swap contracts
are included in deposits and other assets.
Fair Value of Financial Instruments
The carrying values 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 value 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.
59
NOTE 13 – INCOME TAXES
The significant components of income tax expense (benefit) are as follows:
(In thousands)
Current:
Federal
State
Foreign
Total current
Deferred:
Federal
State
Foreign
Total deferred
Year ended June 30,
2021
2020
$
$
4,852
1,731
2,705
9,288
(3,516)
(619)
743
(3,392)
1,587
614
1,367
3,568
(893)
(87)
569
(411)
Total income tax expense
$
5,896
$
3,157
The following table reconciles income taxes based on the U.S. statutory tax rate to the Company’s income tax expense:
$
(In thousands)
Income tax expense at U.S.
statutory rate (21%)
PPP loan forgiveness
Permanent differences
State income taxes, net of federal
benefit
Foreign tax rate differential
GILTI & FDII
Stock compensation
Other, net
Year ended June 30,
2021
2020
6,162
(1,218)
25
745
891
(425)
(294)
10
$
2,238
—
69
416
291
—
(186)
329
Total income tax expense
$
5,896
$
3,157
Significant components of deferred tax assets and liabilities are as follows:
(In thousands)
Deferred tax assets (liabilities):
$
Allowance for doubtful accounts
Accruals
Share-based compensation
Operating lease liabilities
Operating lease ROU asset
Property, technology, and equipment basis
differences
Goodwill deductible for tax purposes
Intangible assets
Other, net
June 30,
2021
2020
$
323
842
1,209
11,049
(10,541)
(2,980)
(492)
(2,816)
(615)
Net deferred tax liabilities
$
(4,021) $
308
509
1,321
1,779
(1,660)
(4,536)
(781)
(4,819)
395
(7,484)
The Company’s effective tax rate for the fiscal year ended June 30, 2021 is lower than the U.S. federal statutory rate primarily due to
PPP loan forgiveness, benefit from foreign-derived intangible income and windfall benefit from exercise of stock options. The
Company’s effective tax rate for the fiscal year ended June 30, 2020 is higher than the U.S. federal statutory rate primarily due to state
and foreign income taxes. The Company does not have any uncertain tax positions.
60
The Company and its wholly-owned U.S. subsidiaries file a consolidated Federal income tax return. The Company also files unitary or
separate returns in various state, local and non-U.S. jurisdictions based on state, local and non-U.S. filing requirements. The Company
was under examination by the U.S. Internal Revenue Service (the “IRS”) for the tax year ending June 30, 2018. In January 2021, the
IRS issued a letter confirming that the audit was complete and there were no findings as a result. Tax years that remain subject to
examination by the IRS are the years ended June 30, 2019, June 30, 2020 and June 30, 2021. Tax years that remain subject to examination
by state authorities are the years ended June 30, 2017 through June 30, 2021. Tax years that remain subject to examination by non-U.S.
authorities are the periods ended December 31, 2015 through June 30, 2021. Occasionally acquired entities have tax years that differ
from the Company and are still open under the relevant statute of limitations and therefore are subject to potential adjustment.
During the fiscal year ended June 30, 2020, the Canadian Revenue Agency completed its examination of Radiant Global Logistics
(Canada) Inc. for the tax period ending March 31, 2015. The examination resulted in an additional income tax of an immaterial amount,
which was recorded during the fiscal year ended June 30, 2020.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act was enacted and signed into law. The CARES
Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s social security
payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical
corrections to tax depreciation methods for qualified improvement property (QIP). The Company did not pay income tax in most
jurisdictions from funds recovered under the Paycheck Protection Program of the CARES Act in May of 2020 – see Note 8. Otherwise,
the CARES Act did not have a material impact on the Company’s income tax provision for the years ended June 30, 2021 and 2020.
NOTE 14 – SHARE-BASED COMPENSATION
The Company has two stock-based plans: the 2005 Stock Incentive Plan and the 2012 Stock Option and Performance Award Plan. Each
plan authorizes the granting of up to 5,000,000 shares of the Company’s common stock. The plans provide for the grant of stock options,
stock appreciation rights, shares of restricted stock, restricted stock units, performance shares and performance units. Restricted stock
awards and units are equivalent to one share of common stock and generally vest after three years. The Company does not plan to make
additional grants under the 2005 Stock Incentive Plan.
Restricted Stock Awards
During the years ended June 30, 2021 and 2020, the Company recognized share-based compensation expense related to restricted stock
awards of $1,039 and $1,168, respectively. As of June 30, 2021, the Company had approximately $1,593 of total unrecognized share-
based compensation cost for restricted stock awards. Such costs are expected to be recognized over a weighted average period of
approximately 1.76 years.
The following table summarizes restricted stock award activity under the plans:
Unvested balance as of June 30, 2020
Vested
Granted
Forfeited
Unvested balance as of June 30, 2021
Number of
Units
Weighted
Average
Grant Date Fair
Value
$
755,872
(213,326)
243,009
(80,974)
704,581
$
5.07
4.94
5.06
5.09
5.10
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 under each plan vest 20% annually over a five-year period from the date of grant. For the years ended
June 30, 2021 and 2020, the Company recognized share-based compensation expense related to stock options of $32 and $495,
respectively. The aggregate intrinsic value of options exercised was $1,920 and $812, respectively for the years ended June 30, 2021
and 2020. As of June 30, 2021, the Company had approximately $365 of total unrecognized share-based compensation cost for stock
options. Such costs are expected to be recognized over a weighted average period of approximately 4.77 years.
61
The following table summarizes stock option activity under the plans:
Outstanding as of June 30, 2020
Granted
Exercised
Forfeited
Outstanding as of June 30, 2021
Exercisable as of June 30, 2021
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual Life
(Years)
Aggregate
Intrinsic Value
(In thousands)
3.46
7.45
3.48
3.37
3.73
3.44
3.75
—
—
—
3.56
3.03
$
$
$
1,653
—
1,920
—
4,573
4,494
Number of
Shares
1,995,368
100,000
(630,926)
(50,000)
1,414,442
1,289,442
$
$
$
For the year ended June 30, 2021 the weighted average fair value per share of stock options granted was $3.53. There were no stock options granted
during the year ended June 30, 2020. The fair value of each stock option grant is estimated as of the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions:
Risk-free interest rate
Expected term
Expected volatility
Expected dividend yield
Year ended
June 30, 2021
1.08%
6.5 years
47.50 - 47.97%
0.00%
The following table summarizes outstanding and exercisable options by exercise price range as of June 30, 2021:
Outstanding Options
Exercisable Options
Exercise Prices
$1.50 - $1.99
$2.00 - $2.49
$2.50 - $2.99
$3.00 - $3.49
$3.50 - $3.99
$4.00 - $4.49
$4.50 - $4.99
$5.00 - $5.49
$5.50 - $5.99
$6.00 - $6.49
$6.50 - $6.99
$7.00 - $7.49
Number of
Shares
194,357 $
175,864
50,000
281,309
110,000
153,405
258,095
56,412
—
25,000
10,000
100,000
1,414,442 $
1.88
2.29
2.75
3.15
3.76
4.13
4.58
5.21
—
6.18
6.77
7.45
3.73
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic Value
(In thousands)
$
1.96
0.76
2.67
3.65
4.38
3.51
3.64
3.84
—
5.86
4.08
9.93
981
816
209
1,064
349
430
607
97
—
18
2
—
Number of
Shares
194,357 $
175,864
50,000
261,309
110,000
153,405
258,095
56,412
—
20,000
10,000
—
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Life (Years)
Aggregate
Intrinsic Value
(In thousands)
1.88
2.29
2.75
3.15
3.76
4.13
4.58
5.21
—
6.18
6.77
—
3.44
$
1.96
0.76
2.67
3.54
4.38
3.51
3.64
3.84
—
5.86
4.08
—
981
816
209
988
349
430
607
97
—
15
2
—
3.03
$
4,494
3.56
$
4,573
1,289,442 $
NOTE 15 – COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The Company is involved in various claims and legal actions arising in the ordinary course of business. The Company records accruals
for estimated losses relating to claims and lawsuits when available information indicates that a loss is probable and the amount of the
loss, or range of loss, can be reasonably estimated. Legal expenses are expensed as incurred. There are no potentially material legal
proceedings as of June 30, 2021.
62
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 objectives and financial results are achieved in future periods.
Earn-out payments are generally due annually on November 1st, and 90 days following the quarter of the final earn-out period for 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)
Earn-out payments:
Cash
Total estimated earn-out payments
2022
2023
2024
Total
$
$
2,600
2,600
$
$
1,941
1,941
$
$
2,722
2,722
$
$
7,263
7,263
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.
As of and for Year Ended June 30, 2021
(In thousands)
Revenues
Income (loss) from operations
Other income (expense)
Income (loss) before income taxes
Depreciation and amortization
Total assets
Property, technology, and equipment, net
Goodwill
As of and for Year Ended June 30, 2020
(In thousands)
Revenues
Income (loss) from operations
Other income (expense)
Income (loss) before income taxes
Depreciation and amortization
Total assets
Property, technology, and equipment, net
Goodwill
$
$
United States
Canada
$
$
770,785
35,257
676
35,933
3,929
290,912
13,613
50,801
759,239
28,505
216
28,721
4,300
273,457
12,994
50,801
118,828
11,982
(162)
11,820
2,586
66,329
10,538
21,781
96,629
8,459
30
8,489
2,001
26,583
5,718
21,398
Corporate/
Eliminations
$
(489) $
(21,258)
2,863
(18,395)
10,127
—
—
—
$
(671) $
(19,462)
(2,227)
(21,689)
10,270
—
—
—
Total
889,124
25,981
3,377
29,358
16,642
357,241
24,151
72,582
855,197
17,502
(1,981)
15,521
16,571
300,040
18,712
72,199
63
NOTE 17 - BUSINESS COMBINATION
On February 7, 2020 the Company acquired the assets and operations of two of its Adcom agency locations: Alexandria, Virginia based
Friedway Enterprises, Inc. (“Friedway”) and Pittsburgh, Pennsylvania based CIC2, Inc. (“CIC2”) through its wholly-owned subsidiary,
Radiant Global Logistics, Inc. Friedway and CIC2 continue to provide a full range of domestic and international services from the mid-
Atlantic region operating under the Radiant brand. The acquired agencies are expected to strengthen and diversify Radiant’s network of
Company-owned operations and continue to provide a full range of hyper-care domestic and international transportation and logistics
service to customers in medical device, high-tech and trade-show industries. The goodwill recognized is attributable to expanded service
lines and geographic footprint. The acquisitions of Friedway and CIC2 were accounted for as purchases of a business under ASC 805
Business Combinations.
As consideration for the acquisition, the Company paid $9,150 in cash upon closing and issued 45,086 shares of common stock recorded
at fair value, and the seller is entitled to additional contingent consideration payable in subsequent periods based on future performance
of the acquired operation. The maximum contingent consideration payable is $10,000. The Company has engaged valuation specialists
to assist the Company with its estimate of the fair value of the contingent consideration using future projected earnings relative to the
corresponding future earn-out payments. To calculate fair value, the future earn-out payments were then discounted using Level 3 inputs.
The Company believes the rate used to discount the earn-out payments reflect market participant assumptions.
The fair values of the intangible assets were estimated by the Company with the assistance of valuation specialists. The fair value was
estimated using a discounted cash flow approach with Level 3 inputs. Under this method, an intangible asset’s fair value 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 calculate fair value, the Company used 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 reflect market participant
assumptions. The goodwill is recorded in the U.S. operating segment and is expected to be deductible for income tax purposes over a
period of 15 years.
The acquisition date fair value of the consideration transferred for the acquisitions consisted of the following:
(In thousands)
Cash
Common stock (45,086 common shares)
Contingent consideration, at fair value
The purchase price allocation for the acquisitions is as follows:
(In thousands)
Prepaid expenses and other current assets
Intangible assets
Deposits and other assets
Liabilities assumed
Total identifiable net assets
Goodwill
$
$
$
$
9,150
250
3,140
12,540
16
5,709
8
(3)
5,730
6,810
12,540
Intangible assets that were acquired and their respective useful lives are as follows:
(In thousands)
Customer related
Covenants not to compete
$
$
Amount
5,150
559
5,709
Useful Life
8.5 years
5 years
The results of operations for these acquired entities subsequent to the date of acquisition for the fiscal year ended June 30, 2020, were
immaterial and thus not presented. The proforma results of operations as if the acquisition had occurred on the first day of each
reporting period have not been presented because the operations of these above-mentioned acquisitions would not have been material
to the consolidated financial statements.
64
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. 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 June 30, 2021, was carried out by our management under the supervision and with the participation of our
CEO and CFO. Based upon that evaluation, our CEO and CFO concluded that, as of June 30, 2021, our disclosure controls and
procedures were not effective because of the material weaknesses in our internal control over financial reporting described below.
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”) in 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 generally accepted accounting principles in the U.S. Our
internal control over financial reporting includes those policies and procedures, which:
(i)
(ii)
(iii)
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.
Based on management’s assessment based on the criteria of COSO, we concluded that, as of June 30, 2021, our internal control over
financial reporting was not effective due to the following material weaknesses that existed as of June 30, 2021.
The Company does not have effective internal controls over the recording and processing 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 lacks the level of precision necessary to ensure the completeness and accuracy of revenue.
The Company does not have effective internal controls over the calculation of operating partner commissions. Specifically,
the controls as currently designed are not sufficient to prevent or detect a material misstatement in operating partner
commissions as the design of the controls lacks the level of precision that ensures the completeness and accuracy of
operating partner commissions.
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. These material weaknesses did not result in material misstatements to the consolidated financial
statements. However, these material weaknesses could result in misstatements that would result in a material misstatement of the
consolidated financial statements that would not be prevented or detected.
BDO USA, LLP, an independent registered public accounting firm has issued an attestation report on our internal control over financial
reporting, which is set forth on page 36 of this Annual Report on Form 10-K.
65
Remediation of Material Weaknesses
We are evaluating the material weaknesses and have considered plans for remediation to strengthen our internal controls over the
recording of revenues and related to the calculation of operating partner commissions.
Changes in Internal Control Over Financial Reporting
Except for the material weaknesses 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
June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
66
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required in response to this Item is incorporated herein by reference to the information contained under the captions
entitled “Proposal No. 1 Election of Directors—Information about Director Nominees,” “Executive Officers,” and “Corporate
Governance” in our definitive proxy statement for our 2021 Annual Meeting of Stockholders, (which we refer to as our “2021 Proxy
Statement”).
Our Code of Business Conduct and Ethics, which applies to all of our directors, executive officers and employees, is available in the
“About—Governance” section of our website located at www.radiantdelivers.com. In addition, printed copies of our Code of Business
Conduct and Ethics are available upon written request to Attn: Human Resources, Radiant Logistics, Inc., Triton Towers Two, 700 S.
Renton Village Place, Seventh Floor, Renton, Washington 98057. Any waiver of our Code of Business Conduct and Ethics for our
employees may be made only by our CEO and, with respect to or director or executive officers, our Board of Directors and will be
promptly disclosed as required by law and NYSE rules. We intend to satisfy the disclosure requirements of Item 5.05 of Form 8-K and
applicable NYSE rules regarding amendments to or waivers from any provision of our Code of Business Conduct and Ethics by posting
such information in the “About—Governance” section of our website located at www.radiantdelivers.com.
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this Item is incorporated herein by reference to the information contained under the captions
entitled “Executive Compensation,” “Compensation Discussion and Analysis,” “Audit and Executive Oversight Committee Report” and
“Director Compensation” in our 2021 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The information required in response to this Item is incorporated herein by reference to the information contained under the caption
entitled “Stock Ownership” and “Securities Authorized for Issuance under Equity Compensation Plans” in our 2021 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information required in response to this Item is incorporated herein by reference to the information contained under the captions
entitled “Certain Relationships and Related Party Transactions,” and “Corporate Governance—Director Independence” in our 2021
Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required in response to this Item is incorporated herein by reference to the information be contained under the captions
entitled “Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm—Audit, Audit-Related, Tax,
and Other Fees” and “Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm—Pre-Approval
Policies and Procedures” in our 2021 Proxy Statement.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
List of Documents Filed as part of this Report
(1) All Financial Statements and Supplemental Information
The Company’s consolidated financial statements filed in this Annual Report on Form 10-K are included in Part II, Item 8.
(2) Financial Statement Schedules
Not applicable.
(3) Exhibits
The exhibits required by Item 601 of Regulation S-K are included under Item 15(b) below.
67
(b)
Exhibits
Exhibit
Number
2.1
Description
Filed/Furnishe
d
Herewith
Arrangement Agreement among Radiant Logistics,
Inc., Radiant Global Logistics ULC and Wheels
Group Inc.
3.1 & 4.1 Certificate of Incorporation
3.2 & 4.2 Amendment
to Registrant’s Certificate
of
Incorporation (Certificate of Ownership and Merger
Merging Radiant Logistics, Inc. into Golf Two, Inc.
dated October 18, 2005)
Incorporated by Reference
Form
8-K
SB-2
8-K
Period
Ending
Exhibit
Number
Filing
Date
2.1
1/23/15
3.1
3.1
9/20/02
10/18/05
3.3 & 4.3 Amended and Restated Bylaw of Radiant Logistics,
8-K
3.1
10/2/2019
Inc. (October 1, 2019)
3.4 & 4.4 Certificate of Amendment of Certificate of
10-Q 12/31/1
3.1
2/12/13
Incorporation
2
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
Employment Agreement
Executive
dated
January 13, 2006 by and between Radiant Logistics,
Inc. and Bohn H. Crain
Letter Agreement dated June 10, 2011; amending
the Employment Agreement between Radiant
Logistics, Inc. and Bohn H. Crain+
Employment Agreement dated May 14, 2012 by and
between Radiant Logistics,
Inc. and Todd
Macomber+
Employment Agreement dated February 1, 2012 by
and between Wheels Group Inc. and Tim Boyce+
Employment Agreement dated November 20, 2015
by and between Radiant Logistics, Inc. and Joseph
Bento+
Employment Agreement dated February 2, 2015 by
and between Radiant Logistics, Inc. and Arnold
Goldstein+
Employment Agreement dated April 27, 2018 by
and between Radiant Logistics, Inc. and John W.
Sobba+
Operating Agreement of Radiant Logistics Partners,
LLC dated June 28, 2006
Discretionary
Compensation Plan effective July 1, 2012+
Management
Incentive
8-K
10.7
1/18/06
8-K
10.1
6/10/11
8-K
10.2
5/14/12
8-K
10.4
4/8/15
10-K
6/30/16
10.5
9/13/16
10-K
6/30/16
10.6
9/13/16
8-K
10.1
5/11/18
8-K
10.4
5/14/12
8-K
10.5
5/14/12
Radiant Logistics, Inc. 2012 Stock Option and
Performance Award Plan+
DEF 14
A
Annex
10/9/12
A
Form of Incentive Stock Option Award Agreement
under the Radiant Logistics, Inc. 2012 Stock Option
and Performance Award Plan+
Form of Restricted Stock Award Agreement under
the Radiant Logistics, Inc. 2012 Stock Option and
Performance Award Plan+
68
10-Q 12/31/1
10.5
2/12/13
2
10-Q 12/31/1
10.7
2/12/13
2
10-Q 12/31/1
10.8
2/12/13
2
10-Q 9/30/16
10.1
11/9/16
10-Q 9/30/16
10.2
11/9/16
10-Q 9/30/16
10.3
11/9/16
10-Q 9/30/16
10.4
11/9/16
10-Q 12/31/1
10.1
2/8/17
6
10-Q 12/31/1
10.2
2/8/17
6
8-K
8-K
8-K
10.1
12/23/2019
10.2
12/23/2019
10.1
3/19/2020
8-K
10.2
3/19/2020
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
Form of SAR Award Agreement under the Radiant
Logistics, Inc. 2012 Stock Option and Performance
Award Plan+
Form of Non-qualified Stock Option Award
Agreement under the Radiant Logistics, Inc. 2012
Stock Option and Performance Award Plan+
Form of Restricted Stock Unit Award Agreement
under the Radiant Logistics, Inc. 2012 Stock Option
and Performance Award Plan+
Form of Non-qualified Stock Option Award
Agreement (Director) under the Radiant Logistics,
Inc. 2012 Stock Option and Performance Award
Plan+
Form of Restricted Stock Unit Award Agreement
(Director) under the Radiant Logistics, Inc. 2012
Stock Option and Performance Award Plan+
Form of Canadian Restricted Stock Unit Award
Agreement under the Radiant Logistics, Inc. 2012
Stock Option and Performance Award Plan+
Form of Canadian Non-qualified Stock Option
Award Agreement under the Radiant Logistics, Inc.
2012 Stock Option and Performance Award Plan+
Separation and Release Agreement, dated effective
as of December 31, 2019, by and between Radiant
Global Logistics, Inc. and Tim Boyce
Independent Contractor Agreement, dated effective
as of January 1, 2020, by and between Radiant
Global Logistics, Inc. and Tim Boyce
Credit Agreement, dated March 13, 2020, by and
among Radiant Logistics, Inc., the Subsidiaries of
the Borrower Party Hereto, and Bank of America,
N.A., Bank of Montreal Chicago Branch, MUFG
Union Bank, N.A., the Lenders Party Hereto, BofA
Securities, Inc.
$29,000,000 Credit Facilities Amended and
Restated Loan Agreement, dated March 13, 2020,
by and among Radiant Global Logistics (Canada)
Inc., 2062698 Ontario Inc., Clipper Exxpress
Company, Radiant Logistics, Inc., Radiant Global
Logistics, Inc., Radiant Transportation Services,
Inc., Radiant Logistics Partners LLC, Adcom
Express, Inc., DBA Distribution Services, Inc.,
International Freight Systems (of Oregon), Inc.,
Radiant Off-Shore Holdings LLC, Green
Acquisition Company, Inc., On Time Express, Inc.,
Radiant Global Logistics (CA), Inc., Radiant Trade
Services, Inc., Service By Air, Inc., Radiant
Customs Services, Inc., and Fiera Private Debt Fund
IV LP
69
$10,000,000 Credit Facility Amended and Restated
Loan Agreement, dated March 13, 2020, by and
among Radiant Global Logistics (Canada) Inc. and
2062698 Ontario Inc., Clipper Exxpress Company,
Radiant Logistics, Inc., Radiant Global Logistics,
Inc., Radiant Transportation Services, Inc., Radiant
Logistics Partners LLC, Adcom Express, Inc., DBA
Distribution Services, Inc., International Freight
Systems (of Oregon), Inc., Radiant Off-Shore
Holdings LLC, Green Acquisition Company, Inc.,
On Time Express, Inc., Radiant Global Logistics
(CA), Inc., Radiant Trade Services, Inc., Service By
Air, Inc., Radiant Customs Services, Inc., Highways
& Skyways, Inc., and Fiera Private Debt Fund V LP
First Lien Pari Passu Intercreditor Agreement, dated
as of March 13, 2020, by and among Bank of
America, M.A., Fiera Private Debt Fund IV LP and
Fiera Private Debt Fund V LP, and acknowledged
and agreed to by Radiant Logistics, Inc.
8-K
10.3
3/19/2020
8-K
10.4
3/19/2020
Code of Business Conduct and Ethics+
10-KSB
14.1
3/17/06
10.24
10.25
14.1
21.1
23.1
31.1
31.2
32.1
X
X
X
X
X
X
X
X
X
X
X
X
Subsidiaries of the Registrant
Consent of BDO USA, LLP
Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
101.INS
Inline XBRL Instance
101.SCH
Inline XBRL Taxonomy Extension Schema
101.CAL
Inline XBRL Taxonomy Extension Calculation
101.DEF
Inline XBRL Taxonomy Extension Definition
101.LAB
Inline XBRL Taxonomy Extension Label
101.PRE
Inline XBRL Taxonomy Extension Presentation
104
Cover Page Interactive Data (embedded within the
Inline XBRL document)
+Compensatory plans or arrangements
ITEM 16. FORM 10-K SUMMARY
None.
70
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
Date: September 20, 2021
RADIANT LOGISTICS, INC.
(Registrant)
By: /s/ Bohn H. Crain
Bohn H. Crain
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signatures
/s/ Jack Edwards
Jack Edwards
/s/ Richard P. Palmieri
Richard P. Palmieri
/s/ Michael Gould
Michael Gould
/s/ Kristin Toth Smith
Kristin Toth Smith
/s/ Bohn H. Crain
Bohn H. Crain
/s/ Todd E. Macomber
Todd E. Macomber
Title
Director
Director
Director
Date
September 20, 2021
September 20, 2021
September 20, 2021
Director
September 20, 2021
Chairman and
Chief Executive Officer
(Principal Executive Officer)
Senior Vice President and Chief
Financial Officer
(Principal Financial and Accounting Officer)
September 20, 2021
September 20, 2021
71
Subsidiaries of
Radiant Logistics, Inc.
Name of Subsidiary
Radiant Global Logistics, Inc. (formerly Airgroup Corporation)
Radiant Logistics Partners LLC (40% owned by Radiant Global Logistics, Inc.)
International Freight Systems (of Oregon), Inc.
Highways & Skyways, Inc.
Adcom Express, Inc.
DBA Distribution Services, Inc.
Radiant Transportation Services, Inc. (formerly Radiant Logistics Global Services, Inc.)
On Time Express, Inc.
Clipper Exxpress Company
Radiant Global Logistics (CA), Inc. (formerly Wheels MSM US, Inc.)
Service By Air, Inc.
Radiant Customs Services, Inc.
Service By Air Limited
Green Acquisition Company
Radiant Trade Services, Inc.
Radiant Off-Shore Holdings LLC
RGL Mexico LLC
Radiant Global Logistics (HK) Limited
Radiant Global Logistics (MX) S. de R.L. de C.V.
Radiant Global Logistics (Canada), Inc. (formerly Wheels International Inc.)
2062698 Ontario Inc.
Exhibit 21.1
State of Incorporation or Organization
Washington
Delaware
Oregon
Kentucky
Minnesota
New Jersey
Delaware
Arizona
Delaware
Delaware
New York
New York
Prince Edward Island, Canada
Washington
Washington
Washington
Washington
Hong Kong
Mexico
Ontario, Canada
Ontario, Canada
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Radiant Logistics, Inc.
Renton, Washington
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-190683 and 333-179869)
and Form S-3 (Nos. 333-228833, 333-203821, and 333-179868) of Radiant Logistics, Inc. of our reports dated September 20, 2021,
relating to the consolidated financial statements, and the effectiveness of Radiant Logistics, Inc.’s internal control over financial
reporting, which appear in this Form 10-K. Our report on the effectiveness of internal control over financial reporting expresses an
adverse opinion on the effectiveness of Radiant Logistics, Inc.’s internal control over financial reporting as of June 30, 2021.
/S/ BDO USA, LLP
Seattle, Washington
September 20, 2021
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.1
I, Bohn H. Crain, certify that:
1. I have reviewed this annual report on Form 10-K of Radiant Logistics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. As a certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to me by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation;
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: September 20, 2021
By: /s/ Bohn H. Crain
Chief Executive Officer
(Principal Executive Officer)
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2
I, Todd E. Macomber, certify that:
1. I have reviewed this annual report on Form 10-K of Radiant Logistics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4. As a certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to me by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation;
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors:
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: September 20, 2021
By: /s/ Todd E. Macomber
Chief Financial Officer
(Principal Accounting Officer)
Certifications Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. Section 1350)
Exhibit 32.1
Pursuant to 18 U.S.C. Section 1350, each of the undersigned officers of Radiant Logistics, Inc. (the “Company”) hereby certifies that,
to his knowledge, the Company’s Annual Report on Form 10-K for the period ended June 30, 2021 (the “Report”) fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company.
Date: September 20, 2021
By: /s/ Bohn H. Crain
Bohn H. Crain
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Todd E. Macomber
Todd E. Macomber
Chief Financial Officer
(Principal Accounting Officer)
Reconciliation of Non-GAAP Financial Measures
The table below is provided to reconcile certain financial disclosures in the letter to Shareholders, page 1.
(In thousands)
Year Ended June 30:
Net income (loss) attributable to Radiant Logistics, Inc.
Income tax expense
Depreciation and amortization
Net interest expense
EBITDA
Share-based compensation
Change in fair value of contingent consideration
Acquisition related costs
Litigation costs
Gain on litigation settlement, net
Transition, lease termination, and other costs
Change in fair value of interest rate swap contracts
Gain on forgiveness of debt
Foreign currency transaction loss (gain)
MM&D start-up costs
Adjusted EBITDA
Transition costs
Normalized EBITDA
$
22,943
5,896
16,642
2,531
48,012
1,071
4,350
42
535
(25)
–
594
(5,987)
189
2021
2020
2019
2018
$
10,541
3,157
16,571
2,826
33,095
1,663
1,752
577
1,061
$
16,346
4,800
15,209
2,973
39,328
1,612
(1,207)
316
754
$
10,188
73
14,389
3,075
27,725
1,514
(1,176)
239
346
2017
$
4,862
3,673
12,349
2,497
23,381
1,304
3,431
944
177
–
–
586
(600)
125
–
–
–
117
(160)
–
48,781
–
48,781
$
–
38,259
–
$
38,259
–
40,760
–
$
40,760
176
–
–
–
8
410
29,242
–
$
29,242
–
–
–
580
(222)
–
29,595
1,539
31,134
$
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 preferred stock dividends, interest and taxes, and excludes 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 technology and equipment, all amortization charges (including amortization of leasehold
improvements), and other intangible assets. We then further adjust EBITDA to exclude changes in contingent consideration, expenses specifically attributable to
acquisitions, severance and lease termination costs, foreign exchange gains and losses, extraordinary items, share-based compensation expense, non-recurring
litigation expenses, and other non-cash charges. Adjusted EBITDA is then normalized by excluding non-recurring transition costs. While management considers
EBITDA, adjusted EBITDA, and normalized adjusted EBITDA useful in analyzing our results, it is not intended to replace any presentation included in our
consolidated financial statements.
CORPORATE HEADQUARTERS
Triton Towers Two
700 S. Renton Village Place
Seventh Floor
Renton, WA 98057
Tel: (800) 843-4784
www.radiantdelivers.com
ANNUAL MEETING
November 17, 2021
Corporate Headquarters
CORPORATE GOVERNANCE
Copies of the Company’s 2021 Annual Report
on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K, Proxy
Statement and this Annual Report are available
online at http://financials.radiantdelivers.com
or to shareholders without charge upon written
request to our Secretary at the Company’s
principal address or by calling (800) 843-4784.
Corporate Governance Principles, the Audit and
the Executive Oversight Committee Charter
and the Company’s Code of Ethics. Copies of
these documents are available to shareholders
without charge upon written request to our
Secretary at the Company’s principal address.
The Company is required to file as an Exhibit to
its Form 10-K for each fiscal year certifications
under the Sarbanes-Oxley Act signed by the
Chief Executive Officer and the Chief Financial
Officer. In addition, the Company is required
to submit a certification signed by the Chief
Executive Officer to the NYSE American within
30 days following the Annual Meeting of
Shareholders. Copies of the certifications will
be posted promptly upon filing.
COMMON STOCK
Listed on NYSE American
Symbol: RLGT
INVESTOR RELATIONS CONTACT
JP Deenihan
VP Marketing & Communications
communications@radiantdelivers.com
(800) 843-4784
STOCK TRANSFER AGENT
Questions regarding stock holdings, certificate
placement/transfer and address changes should
be directed to:
Broadridge Corporate Issuer Solutions, Inc.
1717 Arch Street
STE 1300
Philadelphia, PA 19103
(855) 418-5054
ONLINE ANNUAL REPORT
http://radiantdelivers.com/about/financials
In addition, on the Company’s Corporate
Governance website at
www.radiantdelivers.com/about,
shareholders can view the Company’s
SHAREHOLDER RELATIONS CONTACT
Todd Macomber
Chief Financial Officer
(800) 843-4784
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PMS COLORS Are 282 Blue & 7427 red
Thread colors at Cutter 2249 & 2613 RA
Burgundy & Pro Midnight
THE RADIANT FAMILY OF BRANDS
®
2021
A N N U A L R E P O R T
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FOR MORE INFORMATION, PLEASE VISIT:
www.radiantdelivers.com/about/financials