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EX-32.1 - EX-32.1 - RADIANT LOGISTICS, INCrlgt-ex321_6.htm
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EX-31.1 - EX-31.1 - RADIANT LOGISTICS, INCrlgt-ex311_7.htm

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2018

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

 

04-3625550

 

 

(State or Other Jurisdiction of

Incorporation or Organization)

 

(IRS Employer

Identification No.)

 

 

 

405 114th Ave S.E., Bellevue, WA 98004

 

 

(Address of principal executive offices)

 

 

 

 

 

(425) 943-4599

 

 

(Registrant’s telephone number, including area code)

 

 

 

 

 

N/A

 

(Former name, former address, and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 the 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

 

  

 

Accelerated filer

 

 

 

 

 

 

Non-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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

There were 49,459,188 shares outstanding of the registrant’s common stock, par value $.001 per share, as of November 1, 2018.

 

 

 


 

RADIANT LOGISTICS, INC.

TABLE OF CONTENTS

 

PART I. FINANCIAL INFORMATION

 

Item 1.

 

 

Financial Statements (unaudited)

  

 

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2018 and June 30, 2018

  

3

 

 

 

Condensed Consolidated Statements of Comprehensive Income for the three months ended September 30, 2018 and 2017

  

4

 

 

 

Condensed Consolidated Statements of Changes in Equity for the three months ended September 30, 2018

  

5

 

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2018 and 2017

  

6

 

 

 

Notes to Condensed Consolidated Financial Statements

  

8

 

Item 2.

 

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

26

 

Item 3.

 

 

Quantitative and Qualitative Disclosures About Market Risk

  

33

 

Item 4.

 

 

Controls and Procedures

  

33

 

PART II. OTHER INFORMATION

  

 

 

Item 1.

 

 

Legal Proceedings

  

34

 

Item 1A.

 

 

Risk Factors

  

34

 

Item 6.

 

 

Exhibits

  

35

Signatures

 

 

 

 

36

 

 

 

 

 

 

 

 

2


 

RADIANT LOGISTICS, INC.

Condensed Consolidated Balance Sheets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands, except share and per share data)

 

September 30,

 

 

June 30,

 

 

 

2018

 

 

2018

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,956

 

 

$

6,992

 

Accounts receivable, net of allowance of $2,035 and $1,703, respectively

 

 

100,444

 

 

 

137,578

 

Contract assets

 

 

27,254

 

 

 

 

Income tax receivable

 

 

1,073

 

 

 

2,105

 

Prepaid expenses and other current assets

 

 

8,499

 

 

 

6,599

 

Total current assets

 

 

145,226

 

 

 

153,274

 

 

 

 

 

 

 

 

 

 

Technology and equipment, net

 

 

19,125

 

 

 

18,566

 

 

 

 

 

 

 

 

 

 

Goodwill

 

 

65,389

 

 

 

65,389

 

Intangible assets, net

 

 

63,055

 

 

 

65,264

 

Deposits and other assets

 

 

1,248

 

 

 

2,945

 

Total other long-term assets

 

 

129,692

 

 

 

133,598

 

Total assets

 

$

294,043

 

 

$

305,438

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

80,462

 

 

$

90,153

 

Operating partner commissions payable

 

 

13,869

 

 

 

14,322

 

Accrued expenses

 

 

6,608

 

 

 

5,404

 

Current portion of notes payable

 

 

3,946

 

 

 

3,726

 

Current portion of contingent consideration

 

 

1,100

 

 

 

960

 

Transition and lease termination liability

 

 

1,094

 

 

 

1,385

 

Other current liabilities

 

 

259

 

 

 

295

 

Total current liabilities

 

 

107,338

 

 

 

116,245

 

 

 

 

 

 

 

 

 

 

Notes payable, net of current portion

 

 

41,475

 

 

 

43,197

 

Contingent consideration, net of current portion

 

 

1,380

 

 

 

1,615

 

Deferred rent liability

 

 

987

 

 

 

1,020

 

Deferred income taxes

 

 

8,297

 

 

 

8,665

 

Other long-term liabilities

 

 

367

 

 

 

1,082

 

Total long-term liabilities

 

 

52,506

 

 

 

55,579

 

Total liabilities

 

 

159,844

 

 

 

171,824

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 5,000,000 shares authorized; 839,200 shares issued and

   outstanding, liquidation preference of $20,980

 

 

1

 

 

 

1

 

Common stock, $0.001 par value, 100,000,000 shares authorized; 49,544,886 and 49,511,907

   shares issued, and 49,453,088 and 49,420,109 shares outstanding, respectively

 

 

31

 

 

 

31

 

Additional paid-in capital

 

 

118,236

 

 

 

117,968

 

Treasury stock, at cost, 91,798 shares

 

 

(253

)

 

 

(253

)

Retained earnings

 

 

16,071

 

 

 

15,539

 

Accumulated other comprehensive income (loss)

 

 

(119

)

 

 

186

 

Total Radiant Logistics, Inc. stockholders’ equity

 

 

133,967

 

 

 

133,472

 

Non-controlling interest

 

 

232

 

 

 

142

 

Total equity

 

 

134,199

 

 

 

133,614

 

Total liabilities and equity

 

$

294,043

 

 

$

305,438

 

 

The accompanying notes form an integral part of these condensed consolidated financial statements.

 

3


 

RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Comprehensive Income

(unaudited)

 

(In thousands, except share and per share data)

 

Three Months Ended September 30,

 

 

 

2018

 

 

2017

 

Revenues

 

$

218,883

 

 

$

197,977

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of transportation and other services

 

 

164,015

 

 

 

152,374

 

Operating partner commissions

 

 

24,828

 

 

 

19,692

 

Personnel costs

 

 

14,545

 

 

 

13,993

 

Selling, general and administrative expenses

 

 

7,124

 

 

 

6,303

 

Depreciation and amortization

 

 

3,633

 

 

 

3,575

 

Transition and lease termination costs

 

 

 

 

 

107

 

Change in fair value of contingent consideration

 

 

(95

)

 

 

(300

)

Total operating expenses

 

 

214,050

 

 

 

195,744

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

4,833

 

 

 

2,233

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

12

 

 

 

7

 

Interest expense

 

 

(789

)

 

 

(771

)

Foreign currency transaction gains (losses)

 

 

34

 

 

 

(85

)

Other

 

 

150

 

 

 

130

 

Total other expense

 

 

(593

)

 

 

(719

)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

4,240

 

 

 

1,514

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

(977

)

 

 

(626

)

 

 

 

 

 

 

 

 

 

Net income

 

 

3,263

 

 

 

888

 

Less: net income attributable to non-controlling interest

 

 

(180

)

 

 

(61

)

 

 

 

 

 

 

 

 

 

Net income attributable to Radiant Logistics, Inc.

 

 

3,083

 

 

 

827

 

Less: preferred stock dividends

 

 

(511

)

 

 

(511

)

 

 

 

 

 

 

 

 

 

Net income allocable to common stockholders

 

$

2,572

 

 

$

316

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Foreign currency translation loss

 

 

(305

)

 

 

(805

)

Comprehensive income

 

$

2,958

 

 

$

83

 

 

 

 

 

 

 

 

 

 

Income per share allocable to common stockholders:

 

 

 

 

 

 

 

 

Basic and Diluted

 

$

0.05

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

49,437,930

 

 

 

49,085,545

 

Diluted

 

 

50,705,434

 

 

 

50,642,953

 

 

The accompanying notes form an integral part of these condensed consolidated financial statements.

4


 

 

RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Changes in Equity

(unaudited)

 

 

RADIANT LOGISTICS, INC. STOCKHOLDERS' EQUITY

 

 

 

 

 

(In thousands, except share and per share data)

Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-in

 

 

Treasury

 

 

Retained

 

 

Accumulated

Other

Comprehensive

 

 

Total Radiant

Logistics,

Inc.

Stockholders'

 

 

Non-

Controlling

 

 

Total

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Earnings

 

 

Income (Loss)

 

 

Equity

 

 

Interest

 

 

Equity

 

Balance as of June 30, 2018

 

839,200

 

 

$

1

 

 

 

49,420,109

 

 

$

31

 

 

$

117,968

 

 

$

(253

)

 

$

15,539

 

 

$

186

 

 

$

133,472

 

 

$

142

 

 

$

133,614

 

Cumulative effect adjustment, upon adoption

    of ASC 606 on July 1, 2018 (Note 2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(335

)

 

 

 

 

 

(335

)

 

 

 

 

 

(335

)

Cumulative effect adjustment, upon adoption

    of ASU 2016-16 on July 1, 2018 (Note 2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,705

)

 

 

 

 

 

(1,705

)

 

 

 

 

 

(1,705

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

331

 

 

 

 

 

 

 

 

 

 

 

 

331

 

 

 

 

 

 

331

 

Issuance of common stock upon exercise

   of stock options

 

 

 

 

 

 

 

32,979

 

 

 

 

 

 

(63

)

 

 

 

 

 

 

 

 

 

 

 

(63

)

 

 

 

 

 

(63

)

Preferred dividends paid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(511

)

 

 

 

 

 

(511

)

 

 

 

 

 

(511

)

Distribution to non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(90

)

 

 

(90

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,083

 

 

 

 

 

 

3,083

 

 

 

180

 

 

 

3,263

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(305

)

 

 

(305

)

 

 

 

 

 

(305

)

Balance as of September 30, 2018

 

839,200

 

 

$

1

 

 

 

49,453,088

 

 

$

31

 

 

$

118,236

 

 

$

(253

)

 

$

16,071

 

 

$

(119

)

 

$

133,967

 

 

$

232

 

 

$

134,199

 

 

The accompanying notes form an integral part of these condensed consolidated financial statements.

 

 

5


 

RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

(In thousands, except share and per share data)

 

Three Months Ended September 30,

 

 

 

 

2018

 

 

 

2017

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income

 

$

3,263

 

 

$

888

 

ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

share-based compensation

 

 

331

 

 

 

350

 

amortization of intangible assets

 

 

2,472

 

 

 

2,494

 

depreciation and amortization of technology and equipment

 

 

1,161

 

 

 

1,081

 

deferred income tax benefit

 

 

(253

)

 

 

(512

)

amortization of debt issuance costs

 

 

59

 

 

 

62

 

change in fair value of contingent consideration

 

 

(95

)

 

 

(300

)

transition and lease termination costs

 

 

 

 

 

107

 

gain on disposal of technology and equipment

 

 

(16

)

 

 

(4

)

change in allowance for doubtful accounts

 

 

332

 

 

 

231

 

CHANGES IN OPERATING ASSETS AND LIABILITIES:

 

 

 

 

 

 

 

 

accounts receivable

 

 

4,440

 

 

 

(6,592

)

contract assets

 

 

6,759

 

 

 

 

income tax receivable

 

 

1,055

 

 

 

(233

)

prepaid expenses, deposits and other assets

 

 

(1,876

)

 

 

692

 

accounts payable

 

 

(5,488

)

 

 

(939

)

operating partner commissions payable

 

 

506

 

 

 

623

 

accrued expenses

 

 

(5,761

)

 

 

503

 

other liabilities

 

 

(742

)

 

 

473

 

deferred rent liability

 

 

(29

)

 

 

112

 

transition and lease termination liability

 

 

(276

)

 

 

(213

)

Net cash provided by (used for) operating activities

 

 

5,842

 

 

 

(1,177

)

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Payments to acquire businesses

 

 

 

 

 

(1,025

)

Purchases of technology and equipment

 

 

(1,134

)

 

 

(1,383

)

Proceeds from sale of technology and equipment

 

 

232

 

 

 

41

 

Net cash used for investing activities

 

 

(902

)

 

 

(2,367

)

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from (repayments to) credit facility, net

 

 

(2,003

)

 

 

4,975

 

Payments of debt issuance costs

 

 

 

 

 

(87

)

Repayments of notes payable

 

 

(843

)

 

 

(835

)

Payments of preferred stock dividends

 

 

(511

)

 

 

(511

)

Distribution to non-controlling interest

 

 

(90

)

 

 

 

Payments of employee tax withholdings related to cashless exercise of stock options

 

 

(63

)

 

 

(2

)

Net cash provided by (used for) financing activities

 

 

(3,510

)

 

 

3,540

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(466

)

 

 

(37

)

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

964

 

 

 

(41

)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

6,992

 

 

 

5,808

 

 

 

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

7,956

 

 

$

5,767

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

Income taxes paid

 

$

178

 

 

$

1,404

 

Interest paid

 

$

735

 

 

$

701

 

 

 

 

 

The accompanying notes form an integral part of these condensed consolidated financial statements.

 

 

 

 

6


 

RADIANT LOGISTICS, INC.

Condensed Consolidated Statements of Cash Flows (continued)

(unaudited)

 

Supplemental disclosure of non-cash investing and financing activities:

In September 2017, the Company issued 10,019 shares of common stock at a fair value of $4.99 per share in satisfaction of $50 of the Sandifer-Valley Transportation & Logistics, Ltd. Purchase price, resulting in an increase to common stock and additional paid-in capital of $50.

During the three months ended September 30, 2018, the Company acquired $812 of refrigerated trailers financed through a capital lease.

In September 2018, $262 was recorded as an increase to accrued expenses and intangible assets for the purchase of a customer list.

 

 

The accompanying notes form an integral part of these condensed consolidated financial statements.

 

7


 

RADIANT LOGISTICS, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

(Dollars in thousands, except share and per share data)

 

NOTE 1 – THE COMPANY AND BASIS OF PRESENTATION

The Company

Radiant Logistics, Inc. and its consolidated subsidiaries (the “Company”) operates as a third-party logistics company, providing multi-modal transportation and logistics services primarily to customers based in the United States and Canada. The Company services a large and diversified account base which it supports from an extensive multi-brand network of over 100 operating locations (including 20 Company-owned offices) across North America as well as an integrated international service partner network located in other key markets around the globe. As a third-party logistics company, the Company has a carrier network of approximately 10,000 asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines. The Company believes shippers value its services because it is able to objectively arrange the most efficient and cost-effective means, type and provider of transportation service since it is not influenced by the ownership of transportation assets. In addition, the Company’s minimal investment in physical assets affords it the opportunity for a higher return on invested capital and net cash flows than the Company’s asset-based competitors.

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. The Company also provides other value added supply chain services, including order fulfillment, inventory management, and warehouse and distribution services (collectively, “MM&D” services), and customs brokerage services to complement its 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.

Interim Disclosure

The condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The Company’s management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2018.

The interim period information included in this Quarterly Report on Form 10-Q reflects all adjustments, consisting of normal recurring adjustments, that are, in the opinion of the Company’s management, necessary for a fair statement of the results of the respective interim periods. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.

 

 

 

 

8


 

 

NOTE 2 - RECENT ACCOUNTING GUIDANCE

Recent Accounting Guidance Not Yet Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. ASU 2018-15 is effective for the Company in the first quarter of fiscal year 2021, and early adoption is permitted. The Company is assessing the impact of this guidance on its consolidated financial statements.

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 (ASU 2018-13), which modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for the Company in the first quarter of fiscal 2021, and earlier adoption is permitted. The Company is assessing the impact of this guidance on its consolidated financial statements.

In February 2016 and July 2018, the FASB issued Accounting Standard Update (“ASU”) 2016-02 (ASC Topic 842), Leases ASU 2018-10, Codification Improvements to Topic 842, and Leases, ASU 2018-11, Leases (Topic 842), Target improvements, respectively. These ASUs amend a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. Topic 842 is effective for the Company in the first quarter of fiscal year 2020. Companies are required to use a modified retrospective approach on adoption, with the option of applying the requirements of the standard either (1) retrospectively to each prior comparative reporting period presented, or (2) retrospectively at the beginning of the period of adoption, through a cumulative-effect adjustment to retained earnings. The Company is currently evaluating the impact of the standard on its consolidated financial statements and disclosures.

In February 2018, the FASB issued ASU 2018-02 (Topic 220), Income Statement—Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU was issued following the enactment of the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”) and permits entities to elect a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act. Topic 220 is effective for the Company in the first quarter of fiscal year 2020, and early adoption is permitted. The Company is assessing the impact of this guidance on its consolidated financial statements.

Recently Adopted Accounting Guidance

 

ASC 606 - Revenue from Contracts with Customers

On July 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, “ASC 606”) which superseded existing revenue recognition guidance under U.S. GAAP. The core principle of Accounting Standards Codification (“ASC”) 606 is for an entity to recognize revenue to depict the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing and uncertainty of an entity’s revenues and cash flows arising from contracts with customers.

 

The Company adopted ASC 606 using the modified retrospective method applied to those contracts not completed as of July 1, 2018.  Results for reporting periods beginning after July 1, 2018 are presented under ASC 606 while prior period amounts continue to be reported in accordance with ASC 605. The Company recorded a cumulative effect adjustment of $335, net of tax, to decrease the opening balance of retained earnings as of July 1, 2018, for the initial application of ASC 606. The transition adjustment includes primarily certain transportation services transactions with customers that required a change in the timing of when revenue is recognized. The corresponding direct costs of revenue, including primarily purchased transportation costs and commissions, have been expensed as incurred. The Company satisfied a significant majority of the performance obligations for contract liabilities recorded upon the adoption and recognized the corresponding revenues and related direct costs of revenue during the three months ended September 30, 2018.

 

As stated, the comparative prior period information for the three months ended September 30, 2017 has not been adjusted and continues to be reported under the Company’s historical revenue recognition policies as described in Note 2 to the consolidated financial statements in the Annual Report on Form 10-K filed on September 13, 2018.

 

The details of the significant changes and quantitative impact on the financial statement line items in the consolidated balance sheet as of July 1, 2018 for the adoption of ASC 606 were as follows:

 

9


 

(In thousands)

Balance as of June 30, 2018

 

 

Transition Adjustments

 

 

Balance as of July 1, 2018

 

Condensed Consolidated Balance Sheet

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable, net of allowance for doubtful accounts

$

137,578

 

 

$

(32,689

)

 

$

104,889

 

Contract assets

 

 

 

 

34,014

 

 

 

34,014

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

90,153

 

 

 

(3,995

)

 

 

86,158

 

Operating partner commissions payable

 

14,322

 

 

 

(959

)

 

 

13,363

 

Contract liabilities

 

 

 

 

6,716

 

 

 

6,716

 

Deferred income taxes

 

8,665

 

 

 

(102

)

 

 

8,563

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

Retained earnings

 

15,539

 

 

 

(335

)

 

 

15,204

 

 

The tables below summarize the impacts of the application of ASC 606 as compared with ASC 605, the guidance that was in effect before the change on the condensed consolidated statements of operations for the three months ended September 30, 2018 and condensed consolidated balance sheet as of September 30, 2018:

 

 

Three Months Ended September 30, 2018

 

(In thousands, except per share data)

As Reported

 

 

Adjustments for ASC 606

 

 

Balance,

ASC 605

 

Condensed Consolidated Statement of Operations

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

218,883

 

 

$

(3,152

)

 

$

215,731

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of transportation and other services

 

164,015

 

 

 

(2,917

)

 

 

161,098

 

Operating partner commissions

 

24,828

 

 

 

(156

)

 

 

24,672

 

Personnel costs

 

14,545

 

 

 

 

 

 

14,545

 

Selling, general and administrative expenses

 

7,124

 

 

 

 

 

 

7,124

 

Depreciation and amortization

 

3,633

 

 

 

 

 

 

3,633

 

Change in fair value of contingent consideration

 

(95

)

 

 

 

 

 

(95

)

Total operating expenses

 

214,050

 

 

 

(3,073

)

 

 

210,977

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

4,833

 

 

 

(79

)

 

 

4,754

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other expense

 

(593

)

 

 

 

 

 

(593

)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

4,240

 

 

 

(79

)

 

 

4,161

 

Income tax expense

 

(977

)

 

 

19

 

 

 

(958

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

3,263

 

 

 

(60

)

 

 

3,203

 

Less: net income attributable to noncontrolling interest

 

(180

)

 

 

 

 

 

(180

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Radiant Logistics, Inc.

 

3,083

 

 

 

(60

)

 

 

3,023

 

Less: preferred stock dividends

 

(511

)

 

 

 

 

 

(511

)

 

 

 

 

 

 

 

 

 

 

 

 

Net income allocable to common stockholders

$

2,572

 

 

$

(60

)

 

$