RLGT — FY2026 Annual Report Analysis

The headline earnings growth came from accounting items, not from the freight business

Radiant Logistics closed its fiscal 2026 year on June 30, 2026 — the company runs a July-to-June fiscal year, so "FY2026" here covers July 1, 2025 through June 30, 2026, not the calendar year. On the surface it was a decent year: revenue up 3.5% to $934.4 million, operating profit up 16.9%, and diluted earnings per share up 11.4% to $0.39.

Underneath, the picture is different. Adjusted EBITDA — the company's own preferred measure of core operating cash earnings, and the one its bank covenants are written against — fell 5.3%, from $38.8 million to $36.7 million. Essentially all of the reported earnings improvement came from two items that have little to do with how much money Radiant makes moving freight: a $6.2 million non-cash accounting gain on acquisition earn-out liabilities, and a $4.0 million drop in depreciation and amortization as older acquisition intangibles finished being written off.

Key metrics

A word on the two industry-specific lines. Radiant is a non-asset-based freight forwarder and broker: it owns almost no trucks, planes or ships, and instead buys transportation capacity wholesale and resells it to shippers. That means headline revenue is a poor gauge of the business — most of it is the carrier's money passing through. Adjusted gross profit (revenue minus what Radiant pays carriers, before depreciation) is what the company actually keeps to run itself, and net transportation margin is that retained slice expressed as a percentage of transportation revenue. Both are the numbers management, lenders and analysts watch instead of revenue.

Strip out the accounting noise and operating profit was flat

The two items driving the reported improvement are both disclosed plainly in the filing:

• Earn-out revaluation. When Radiant buys a company it typically holds back part of the price, payable later only if the acquired business hits performance targets. Accounting rules require re-estimating that future liability every period and running the change through the income statement. This year the estimate came down again, producing a $6.2 million gain, versus a $2.5 million gain last year. The filing attributes it to "a change in management's estimates of future earn-out payments" — i.e. acquired businesses are tracking below what Radiant originally expected to have to pay for them. No cash moved.
• Amortization roll-off. Depreciation and amortization in operating expenses fell 22.0% to $14.3 million, "primarily attributable to amortization of intangible assets from acquisitions that are now fully amortized."

Back both out and the comparison inverts. Operating income excluding the earn-out gain was $18.4 million in FY2026 versus $18.6 million in FY2025 — down slightly, and that is before accounting for the $4.0 million of D&A relief. Add depreciation and amortization back on top, and the pre-depreciation operating result falls from $36.9 million to $32.8 million, an 11% decline. That is the same direction as the 5.3% adjusted EBITDA decline, and it is the honest read of the year.

Takeaway: Radiant's reported EPS growth of 11% is an artifact of a larger non-cash earn-out gain and a step-down in acquisition amortization. On the measure that strips both out — adjusted EBITDA, which is also what its loan covenants key off — profitability went backwards by 5.3% even as revenue grew, because the cost of paying its agent network and its own staff rose faster than the gross profit those costs generated.

Revenue growth was bought, not earned

The 3.5% revenue increase is almost entirely attributable to a single acquisition. Effective September 1, 2025, Radiant acquired an 80% stake in Weport, S.A. de C.V., a Mexico City-based forwarder and customs broker. The auditor's internal-control carve-out discloses that Weport represented 3.1% of consolidated revenues for the year — roughly $29 million. Total revenue grew $31.7 million.

That leaves about $2.7 million of growth from everything else — and "everything else" includes a full twelve months of six acquisitions Radiant completed during FY2025 (Foundation Logistics in September 2024, Focus Logistics in October 2024, TCB Transportation in December 2024, Transcon Shipping in March 2025, USA Logistics in April 2025, and Universal Logistics in May 2025), several of which contributed only a few months to the prior-year comparison. Annualizing those alone should have added meaningfully more than $2.7 million. The implication is that Radiant's pre-existing book of business shrank in FY2026.

Management's own language supports this. The transportation revenue increase is described as "primarily attributable to incremental revenues generated from current and prior year acquisitions, partially offset by meaningful project charter revenues in the prior year" — charter work is lumpy, one-off aircraft-hire business that does not repeat. Net transportation margin also slipped from 24.7% to 24.3%, meaning the freight Radiant did move was slightly less profitable per dollar.

The one genuinely organic bright spot is value-added services (warehousing, customs brokerage, distribution), where revenue rose 6.8% to $51.6 million and the margin on that work improved from 58.0% to 60.9%, "driven by higher volumes and incremental revenue from expanded warehouse operations primarily in our Canadian segment." It is a small business — 13% of adjusted gross profit — but it is growing under its own power and at roughly two and a half times the margin of the freight business.

The cost lines that ate the gross profit gain

Adjusted gross profit rose $6.6 million. Two expense lines consumed nearly all of it:

• Operating partner commissions +$3.9 million (+5.0%) to $82.4 million. Radiant runs a hybrid network: about 42% of adjusted gross profit is generated by independently owned "strategic operating partner" agencies that operate under Radiant's brands and take a commission. Those commissions rose to 33.5% of adjusted gross profit from 32.8%, growing faster than the profit pool itself.
• Personnel costs +$7.0 million (+8.6%) to $88.5 million, or 36.0% of adjusted gross profit versus 34.0% — a 193 basis point deterioration and the single largest drag on the year. The filing gives two causes: headcount added through acquisitions, and a swing in share-based compensation from a $0.8 million benefit in FY2025 (a credit, arising when previously recorded stock-award expense is reversed) to a $1.7 million expense in FY2026. That $2.5 million swing accounts for roughly a third of the increase; the rest is real added headcount.

Selling, general and administrative costs were the one line that went the right way, down 0.4% to $42.3 million on lower technology spend from consolidating transportation management systems, the absence of $1.1 million of prior-year warehouse lease-termination costs, and lower travel — partly offset by higher bad debt expense and credit-loss allowances.

Below the operating line, net interest expense swung from a negligible $39 thousand to $2.1 million, as interest income collapsed from $1.3 million to $0.2 million and revolver borrowings rose. That $2.1 million swing is why pre-tax income was up only $1.8 million despite operating income rising $3.6 million.

Segments: Canada carried the year, the U.S. gave ground

Radiant reports two geographic segments. Note that Weport, despite being Mexican, is folded into the United States segment — which matters for reading the U.S. numbers.

The U.S. segment grew revenue $31.2 million — approximately the whole of Weport — while its operating income fell 11.7% to $32.4 million and its adjusted EBITDA fell 8.3%. U.S. personnel costs rose 9.6%. Read together with the Weport contribution, the legacy U.S. business declined on both revenue and profit.

Canada did the opposite: revenue was flat at $111.6 million, but operating income rose 71% to $7.1 million and adjusted EBITDA rose 18% to $11.4 million, on higher-margin warehouse work and a $1.7 million (17%) cut in segment SG&A — helped by the prior year carrying $1.4 million of lease-termination charges from moving to a larger British Columbia facility. Canada now generates 15% of consolidated adjusted gross profit but 23% of segment-level adjusted EBITDA.

Cash flow and a receivables build worth watching

Operating cash flow improved to $17.5 million from $13.3 million. That is still only about 48% of adjusted EBITDA, and the reason is visible on the balance sheet: accounts receivable rose 20.7% to $162.8 million against revenue growth of 3.5%. Receivables now represent roughly 64 days of revenue, against 55 days a year earlier. Contract assets — revenue recognized on shipments still in transit at year-end — rose from $6.9 million to $11.6 million.

Some of that is mechanical (consolidating Weport's balance sheet for the first time). But the allowance for doubtful accounts also rose from $2.1 million to $3.2 million, and SG&A commentary cites "an increase to bad debt expense, the allowance for credit losses." A nine-day stretch in collection periods alongside a rising bad-debt reserve is the kind of thing that is either a one-year integration artifact or the first sign of customer stress; FY2027's first two quarters will settle which.

Balance sheet: unusually clean, and deliberately so

• Cash of $25.6 million against $25.0 million drawn on the revolver — effectively zero net debt.
• Total equity of $241.8 million on $444.4 million of assets.
• Remaining earn-out liabilities of just $7.7 million, down from $19.4 million, reflecting $6.8 million of earn-out payments and the $6.2 million revaluation gain, partly offset by new obligations added with Weport.
• Subsequent to year-end, on August 7, 2026, Radiant amended and restated its $200 million revolving credit facility, extending maturity to August 2031 with no significant change in terms and retaining a $100 million accordion. Covenants cap consolidated net leverage at 3.0x and require interest coverage of at least 3.0x; the company was in compliance.

Radiant bought back 585,050 shares at an average $5.97 for $3.5 million during the year, and in November 2025 the board extended the repurchase authorization for up to 5 million shares through December 2027.

With $175 million undrawn, a $100 million accordion, and essentially no net debt against a covenant that would permit roughly $110 million of net borrowings at current EBITDA, Radiant has more acquisition capacity than it has used. Cash paid for acquisitions fell to $5.2 million from $28.5 million, and the filing states flatly that "we have not made any material acquisitions in the last two fiscal years."

Outlook

Radiant does not issue formal financial guidance in its 10-K, and did not do so here. What management does commit to:

• Higher technology spending in FY2027: "We expect to increase our spending during the fiscal year ended June 30, 2027 to continue enhancing our technology platform." That is an incremental cost headwind against a cost base that already grew faster than gross profit this year.
• Continued acquisition-led growth, with the refinanced revolver explicitly sized to support it.
• An explicit caution that future results "may be impacted by amortization of intangible assets resulting from acquisitions, and gains or losses from changes in fair value of contingent consideration, which are difficult to predict" — management's own acknowledgment that the items flattering this year's EPS are not a reliable base.
• A known future cash call: from September 1, 2027 the Weport minority holders can put their remaining 20% to Radiant, and the company is "irrevocably obligated to purchase."

On risk, the filing is unusually direct about trade policy: "Since early 2025, U.S. trade policy has been subject to frequent and substantial change. As a material portion of our volumes derives from the movement of goods into and out of the United States, these trends, if they continue for more than the short-term, may have a material adverse effect on our business and results of operations." With 46% of adjusted gross profit now international (up from 45%) and a newly enlarged Mexico presence, tariff volatility hits Radiant's mix squarely.

Our read. The pieces that would make FY2027 better are identifiable but not yet in evidence: value-added services compounding at a 61% margin, Canada's cost base now reset, and a balance sheet with real firepower for deals. The pieces working against it are the ones that drove FY2026 — a legacy U.S. freight book that shrank, commissions and payroll growing faster than gross profit, and two tailwinds (the earn-out gain, the amortization roll-off) that are finite by construction. Earn-out liabilities are down to $7.7 million, so the gain cannot repeat at this scale. The most useful question for the next two quarters is narrow: does U.S. segment adjusted EBITDA stop declining once Weport is in both sides of the comparison? If it does not, the underlying business is shrinking and only M&A is masking it. If it does, FY2026 reads as an absorption year. Investors should also watch whether the nine-day receivables stretch reverses, because at 48% conversion of adjusted EBITDA into operating cash, Radiant's ability to self-fund the acquisitions its strategy depends on is tighter than its clean balance sheet suggests.

Source: Radiant Logistics, Inc. Form 10-K for the fiscal year ended June 30, 2026, filed with the SEC on September 14, 2026. Audited by Baker Tilly US, LLP, which issued unqualified opinions on both the financial statements and internal control over financial reporting.