Radiant Logistics' Q4 2025 Earnings Call: Contradictions Unveiled on Tariffs, Trade Shifts, and EBITDA Margins

The above is the analysis of the conflicting points in this earnings call

Date of Call: None provided

Financials Results

• Revenue: $220.6M for Q4 FY25, up 7.1% YOY (vs $206.0M); $902.7M for FY25, up 12.5% YOY (vs $802.5M).
• EPS: $0.10 per diluted share in Q4, flat YOY; $0.35 diluted for FY25 vs $0.16 prior year.

Business Commentary:

* Revenue and Earnings Performance: - Radiant Logistics reported net income of $17.291 million on $902.7 million in revenue for the fiscal year ended June 30, 2025, reflecting a 125% increase over the prior year. - The growth was driven by acquisitions, which generated $6 million in adjusted EBITDA, and a diverse service offering.

• Adjusted EBITDA and Organic Growth:
• The company's adjusted EBITDA reached $38.8 million for the fiscal year ended June 30, 2025, indicating a 24.4% increase year-on-year.

• This growth was driven by the acquisition of strategic partners and operational conversions, along with strong organic growth.

• Acquisition Strategy and Market Expansion:

• Radiant Logistics completed three Greenfield acquisitions and three strategic operating partner conversions in fiscal 2025, leading to $6 million in adjusted EBITDA from these acquisitions.

• The acquisition strategy was implemented to expand the company's North American footprint and support its global network of service partners.

• Impact of Trade Policies and Tariffs:

• The company noted volatility tied to U.S. trade negotiations and tariffs, which may impact near-term results.
• Despite these uncertainties, Radiant Logistics remains optimistic about long-term global trade growth and is repositioning to support customers in navigating evolving markets.

Sentiment Analysis:

• Management highlighted FY25 strength: adjusted EBITDA up 24.4% YOY to $38.8M and strong balance sheet ($23M cash; $20M drawn on $200M facility). Near term remains volatile due to tariffs and trade policy; peak season expected to be muted. Strategy is to stay nimble, expand in Mexico (WePort), and re-lever toward ~2.5x for M&A. Q4 adjusted EBITDA declined 13.1% YOY; adjusted net income down 21.8% YOY.

Q&A:

• Question from Elliot Appel (TD Cowen): How are changing trade policies affecting the business, particularly in Mexico post-WePort?
  Response: Trade remains volatile with diversification from China to SE Asia and Mexico; WePort completes a North American platform to support customers amid tariff shifts.

• Question from Elliot Appel (TD Cowen): How are you and customers managing import volatility and capacity changes?
  Response: Customers are timing shipments around tariff dates and using Canada/Mexico adjacencies; customs brokerage is very active; Radiant is guiding customers through uncertainty.

• Question from Elliot Appel (TD Cowen): Q4 adjusted EBITDA/margins were below expectations—any pull-forward dynamics?
  Response: Less pull-forward occurred this quarter; timing effects drove softness, not structural issues.

• Question from Mark Argento (Lake Street): Why was D&A down to ~$3.6M from ~$5M?
  Response: Amortization from the 2015 Wills acquisition ended after its 10-year life; $3.6M is the new baseline.

• Question from Mark Argento (Lake Street): Any capacity limits to doing 10–15 acquisitions per year?
  Response: Deal capacity is ample; constraint is integration; multiple platforms (US forwarding, intermodal/truck brokerage, Canada, Mexico) and low leverage support more M&A.

• Question from Mark Argento (Lake Street): Are you seeing activity changes into year-end given tariffs/holiday peak?
  Response: Expect a muted peak; continued sourcing shift to SE Asia and strong Mexico growth; expanded presence supports nearshoring.

• Question from Jeff Kaufman (Vertical Research Partners): What is your target leverage as you re-lever the balance sheet?
  Response: Target around ~2.5x; could temporarily flex higher for the right deal but not to 4–5x.

• Question from Jeff Kaufman (Vertical Research Partners): Rationale for acquiring a Mexico operation amid tariff uncertainty?
  Response: Opportunistic with the right partner; WePort adds true international air/ocean in Mexico; Radiant already had cross-border capability.

• Question from Jeff Kaufman (Vertical Research Partners): Is ~$3.6M the forward D&A run rate, and impact on EBITDA?
  Response: Wills amortization rolled off around end of Q3; D&A run rate steps down; amortization doesn’t affect EBITDA, but benefits net income.

• Question from Jeff Kaufman (Vertical Research Partners): Nature of the contingent consideration add-back—one-time?
  Response: Quarterly true-ups are normal; earnout structure adjusts up/down to align payment with performance.

• Question from Jeff Kaufman (Vertical Research Partners): Why was tax expense a benefit this quarter versus the expected ~24% rate?
  Response: Year-end true-up created a slight benefit; expect normalized rate going forward.

• Question from Mike Vermitt (Newland Capital): How will recent acquisitions and customer activity drive the next 1–2 years?
  Response: Building a unified sales org to cross-sell; rolling out Navigate’s collaboration platform with early positive customer feedback.