Radiant Logistics Management Discusses Q2 2014 Results - Earnings Call Transcript

Feb.14.14 | About: Radiant Logistics, (RLGT)

Radiant Logistics (NYSEMKT:RLGT)

Q2 2014 Earnings Call

February 14, 2014 4:00 pm ET

Executives

Bohn H. Crain - Co-Founder, Chairman and Chief Executive Officer

Todd E. Macomber - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Analysts

Jeff Martin - Roth Capital Partners, LLC, Research Division

Marco Rodriguez - Stonegate Securities Inc., Research Division

David Pearce Campbell - Thompson, Davis & Company

Operator

Good afternoon. Bohn Crain, Radiant Logistics Founder and CEO; and Radiant's Chief Financial Officer, Todd Macomber, will discuss financial results for the company's second fiscal quarter ended December 31, 2013, as well as the company's recent preferred stock offering. Following their comments, we will open the call to questions. This conference is scheduled for 30 minutes.

This conference call may include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The company has based these forward-looking statements on its current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about the company that may cause the company's actual results or achievements to be materially different from the results or achievements expressed or implied by such forward-looking statements.

While it is impossible to identify all the factors that may cause the company's actual results or achievements to differ materially from those set forth in our forward-looking statements, such factors include those that have in the past and may in the future be identified in the company's SEC filings and other public announcements, which are available on the Radiant website at www.radiantdelivers.com. In addition, past results are not necessarily an indication of future performance.

Now I would like to pass the call over to Radiant's Founder and CEO, Bohn Crain.

Bohn H. Crain

Thank you, Shae. Good afternoon, everyone, and thank you for joining in on today's call. We are very pleased to report another solid quarter and continuing our trend of margin expansion and earnings growth for the quarter ended December 31, where we posted adjusted EBITDA of $3.6 million, up $1.6 million and 76.4% over the comparable prior year period.

Consistent with past quarters, we also continue to make good progress in leveraging our scalable business model to drive margin expansion, with adjusted EBITDA as a function of net revenues up 520 basis points to 14.7%.

As we have previously discussed, our incremental cost of supporting that next dollar of gross margin is very small, and we are very excited about our opportunity to drive further margin expansion as we continue to scale the business and convert more agent locations to company-owned stores. This was also the first quarter where our reported results included the benefit of our recent acquisition of On Time, which brought us our own proprietary dedicated line-haul network and a step function in growth in the earnings power of our platform. We believe On Time will become even more impactful over time as we get further into the integration and have the opportunity to leverage On Time's capabilities for the benefit of the broader Radiant network, serving as a catalyst for margin expansion on our existing business and a competitive differentiator to help us secure new end customers and attract additional agent stations.

We are also very excited to have completed our recent preferred equity offering, which fortified our balance sheet and positioned us for future growth. The preferred offering is effectively non-dilutive growth capital, which we used to de-lever, retiring our subordinated debt and substantially reducing amounts outstanding under our senior credit facility with Bank of America.

At December 31, and excluding contingent earn-outs, we had no net debt, $11.5 million in total debt and $11.8 million of cash. In effect, we now have access to approximately $30 million of low cash capital via our senior credit facility to continue to advance our acquisition strategy. Assuming we continue to focus on acquiring complementary non-asset-based transportation businesses following historic practices, this would imply we could onboard an additional $12 million in incremental EBITDA with minimal dilution to our common shareholders. That is acquisition candidates generating $1 million to $3 million in EBITDA representing $12 million in aggregate EBITDA valued at a multiple of 5x with 50% of the purchase price paid at closing. Or the more precise math, $12 million multiplied times 5 is $60 million, and 50% of the $60 million, it's back to our $30 million of debt capacity today.

We are not ruling out the possibility of larger transactions at potentially higher multiples in the years ahead, but acquisition candidates generating this $1 million to $3 million in earnings power continues to be the focus of our efforts.

As we've discussed on our previous calls, we remain very bullish on the growth platform we have created at Radiant and the scalability of our non-asset-based business model. Looking forward, the heart of our growth strategy continues to focus on bringing value to the agent-based boarding community; leveraging our status as a public company to provide our operating partners with an opportunity to share in the value that they help create; providing a robust platform from which to service the end customers, including providing differentiated service offerings like On Time; and offering a unique opportunity in terms of succession planning and liquidity for our station owners. This approach has made us unique in the marketplace and has been key to our ability to grow.

Within this framework, we are fueling our growth through a combination of organic and acquisition initiatives. Organically, we continue to focus on improving the tools available to our existing network to win new business, as well as expanding the network itself by onboarding new agent stations that would recognize the benefit of our platform.

In addition, we will also continue to be opportunistic in our pursuit of accretive acquisition opportunities to further accelerate our growth. This would include the conversion of our current agent stations, like our acquisitions in Los Angeles and Portland; the acquisition of agent stations participating in competing networks, like our Laredo and JFK acquisitions; and ultimately, the potential acquisition of other competing networks, like our acquisitions of Adcom and Distribution By Air. In addition, we also have an interest in pursuing other non-asset-based acquisition opportunities that bring critical mass from a geographic standpoint, purchasing power and/or complementary service offerings to the current platform. Broadly, these would fall into the categories of truck brokerage, intermodal, NVOCC and customs brokerage services.

Moving on to the outlook. We are providing guidance for the upcoming quarter ended March 31, '14 with adjusted EBITDA in the range of $3.1 million to $3.6 million on approximately $80 million to $83 million in revenues, which equates to adjusted net income in the range of $1.2 million to $1.5 million or approximately $0.04 per basic and $0.03 per diluted share.

We would also like to remind investors that our free cash flow is generally higher than our net income because we have significant noncash depreciation and amortization expenses flowing through our financial statements as a result of the mechanics of accounting for acquisitions and the fact that we have minimal maintenance capital expenditure requirements.

This remains a very exciting time in the evolution of Radiant, and we remain confident that our growth strategy will continue to bring value to our operating partners, shareholders and the end customers that we serve.

I will now turn it over to Todd, our Chief Financial Officer, to walk us through the financial results, and then we will open it up for Q&A.

Todd E. Macomber

Thanks, Bohn, and good afternoon, everyone. Today, we will be discussing our financial results, including adjusted net income, adjusted EBITDA for the 3 and 6 months ended December 31, 2013.

In reviewing net income, for the 3 months ended December 31, 2013, we reported net income attributable to common shareholders of $264,000 on $84.1 million of revenues or $0.01 per basic and fully diluted share, including a noncash charge of $1.2 million related to the unamortized OID and debt issuance costs written off in connection with the retirement of subordinated debt.

For the 3 months ended December 31, 2012, we reported net income attributable to common shareholders of $21,000 on $78.2 million of revenues or $0.00 per basic and fully diluted share, including a net gain on litigation settlement of $368,000 and another $325,000 gain in change in contingent consideration. This represents an increase of $243,000 or 1,169% over the comparable prior year period.

For the 6 months ended December 31, 2013, we reported net income attributable to common shareholders of $1,355,000 on $160.8 million of revenues or $0.04 per basic and fully diluted share, including the noncash charge of $1.2 million related to the unamortized OID and debt issuance costs written off in connection with the subordinated debt.

For the 6 months ended December 31, 2012, we reported net income attributable to common shareholders of $424,000 on $157.3 million of revenues or $0.01 per basic and fully diluted share, including a net gain on litigation settlement of $368,000 and another $275,000 gain in change in contingent consideration. This represents an increase of $931,000 or approximately 219.7% over the comparable prior year period.

In reviewing adjusted net income, for the 3 months ended December 31, 2013, we reported adjusted net income attributable to common shareholders of $1,858,000 or $0.06 per basic and $0.05 per fully diluted share. For the 3 months ended December 31, 2012, we reported adjusted net income attributable to common shareholders of $882,000 or $0.03 per basic and $0.02 per fully diluted share, representing an increase of $976,000 or approximately 10.7%.

For the 6 months ended December 31, 2013, we reported adjusted net income attributable to common shareholders of $3,381,000 or $0.10 per basic and $0.09 per fully diluted share. For the 6-month period ending December 31, 2012, we reported adjusted net income attributable to common shareholders of $2,220,000 or $0.07 per basic and $0.06 per fully diluted share, representing an increase of $1,161,000 or approximately 52.3%.

Moving on to adjusted EBITDA. We reported adjusted EBITDA of $3,588,000 for the 3 months ended December 31, 2013 compared to adjusted EBITDA of $2,035,000 for the 3 months ended December 31, 2012. This represents an increase of $1,553,000 or 76.3% over the comparable prior year period.

We reported adjusted EBITDA of $6,684,000 for the 6 months ending December 31, 2013 compared to adjusted EBITDA of $4,540,000 for the 6 months ended December 31, 2012. This represents a $2,144,000 or 47.2% over the comparable prior year period. A reconciliation of the company's adjusted EBITDA to the most directly comparable GAAP measure appears at the end of our earnings release.

Additionally, I'd like to highlight the pro forma numbers included in our 10-Q, specifically with reference to a key metric of adjusted EBITDA as a percentage of net transportation revenue. We've already highlighted the improvement in the current quarter for the 3 months ending December 31 as an improvement of 520 basis points, moving from 9.5% in the year-ago period to 14.7% in the current quarter.

The pro forma numbers in our 10-Q represent 6-month numbers as if we had acquired all acquisitions as of July 1, 2012, thereby providing comparative 6-month year-over-year numbers. These pro forma numbers also reflect significant improvement in year-over-year adjusted EBITDA as a percentage of net revenues of approximately 310 basis points, improving from 12.3% for the prior year versus 15.4% in the current year.

Furthermore, the pro forma net revenues increased approximately 4.2%, and again, a key element of this number is the operating expenses. And if we exclude depreciation and amortization and the transition and lease termination costs, as well as the change in contingent consideration, this number decreased as a percentage of net revenue from 88.4% to 85.6%, which highlights the scalability of our business model.

Moving into the current quarter, which is typically our slowest quarter, we anticipate a continued trend of improvements in year-over-year performance of adjusted EBITDA as a percent of net revenues.

With that, I will turn the call back over to our moderator to facilitate any Q&A from our callers.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Jeff Martin from Roth Capital Partners.

Jeff Martin - Roth Capital Partners, LLC, Research Division

Bohn, could you kind of give an update on how the first 3 months have gone with On Time Express and what you think kind of the opportunities are there from a margin perspective? I know that they're certainly not running at capacity. And if you could kind of describe some of the strategy to get capacity up with On Time Express, that'd be helpful.

Bohn H. Crain

Sure. So as a reminder, we acquired On Time effective October 1, so the results here include the first 3 months. We are -- kind of during this period, we've integrated in terms of beginning to provide -- On Time identified as a carrier within our rating engines so that carriers can begin to select On Time as one of its carriers of service. And we have a handful of great little case studies where On Time -- Bart, Eric and his team have stepped in and done a fantastic job and executing for the benefit of kind of our legacy network, if you will. We intentionally started with the company-owned stores and, specifically, in Los Angeles, working through some of the accounting aspects of getting all the -- kind of the 2 entities exchanging information and data in an efficient way. And we have that largely accomplished now, and we're beginning kind of the broader rollout across the network. For those who don't necessarily have a good familiarity with On Time, On Time services a number of industries, but does quite a bit of work in the aviation industry. And in connection with supporting those customers, they were able to build out and configure their own proprietary dedicated line-haul network. It's a non-asset-based business, but they've got control of the drivers. They're calling on these airports 5 days a week. And we have some capacity on those trucks to effectively begin to move some freight already within our control. So to the extent that we have a pallet of freight that was otherwise going to move on a third-party carrier between Los Angeles and Dallas, by example, and as an alternative, we can take that pallet of freight and put it on a truck of On Time's that's already running. That will ultimately translate into, functionally, pure profit within our organization. And so we're very excited about what that means. We're still, to be fair, in the very early stages of rolling it out across the broader network, but certainly, we've kind of built the connectivity. And where we've called them into service, it's worked very, very well. So we're very excited for, I think, what that's going to mean for us going forward. And as we've touched on in a couple of our comments, if you ask anybody internally here what the #1 job is, it's focusing on organic growth. And on prior calls, we've talked about some of the new organizational structures we've put in place with our regional VPs to drive visibility and accountability towards some of those growth initiatives. And we see On Time as being a real tool available to the network to help execute some of those strategies. To the best of my understanding, none of our, what we would consider, our heads-up competitors really have this tool in the toolbox, their own proprietary dedicated line-haul network. So we think not only will On Time represent an opportunity for us to enhance the margins on our existing business, but it's given our entire network something very exciting to go talk to their customers about. So ultimately, we think that's going to translate into competitive advantage and winning new end customers, as well as attracting additional agent stations to our network, who just wouldn't have this type of capability or resource available to them in their current situation.

Jeff Martin - Roth Capital Partners, LLC, Research Division

And that was segued into my question about organic growth. Could you give us an update on the progress with some of those initiatives and if you feel like you're making progress in certain areas where organic growth just, on an overall basis, isn't quite showing yet but you're seeing improvements in parts of the business?

Bohn H. Crain

Yes, I think it's definitely -- again, maybe not everybody is total level set, so let me kind of frame it just for a little bit. So effective July 1, we rolled out a new organizational structure to help drive what people view as traditional same-store growth. We put in a territorial program. We now have Tim O'Brien running the East Coast, John Klesch running the Central Region and Mark Spisak running the West Coast, with all accountability for -- and kind of P&L visibility and accountability within their regions for driving growth. And for us, as we've talked about on some of our other calls, at the end of the day, we're principally focused on driving growth in our gross margin dollars and then getting as many of those gross margin dollars to the bottom line as we can. So ultimately, from their standpoint, that would give them accountability for driving absolute incremental gross margin wins, as well as driving productivity in the field level. And we've had some great successes in Los Angeles, as an example, when we did the Marvir transaction and driving some of those productivity gains. And ultimately, these guys will also have some responsibilities toward targeting and onboarding new agent stations as part of their areas of responsibility as well. So we started that program in July, so we're 6 months into it. I think it hasn't necessarily put a lot of points on the board yet as of 12/31, but I do think it's fair to say that there's a lot of things in the pipeline. It seems we are getting more and more opportunities for larger and larger RFPs and those types of things. And so I'm pretty optimistic -- organic growth is but yet another form of investment, right? So we are investing in organic growth through these sales people and their time and energy. But I do believe that investment will pay good returns over time. And I think some of that success may be muted a little bit by some of this incredible weather we're having along the Eastern seaboard. But certainly, as we kind of get into the spring and into kind of our next peak season, it's early in the game at this point, but we certainly hope to have some good news to share as we look at those metrics.

Jeff Martin - Roth Capital Partners, LLC, Research Division

Okay. And then, Bohn, you've had, for a couple of quarters of now, slower cross-border shipments in and out of Mexico. I was just curious if you could characterize that -- if you think that's market-driven or if there's anything that's Radiant-specific there.

Bohn H. Crain

It's hard to -- it's hard to say candidly. It's a great question. I can tell you in our own little world, we definitely saw some softening in Laredo specifically, but that seems to be recovering and restoring itself. So I think you're kind of correct to call out the dip, if you will. But at the same time, I think we seem to have things headed back in the right direction. And I think I should also take the opportunity kind of in connection with responding to that question, not necessarily with respect to Laredo specifically, but kind of this broader concept would apply to all of our acquisitions, and I might as well make it here. When we acquire companies and we use our earn-out mechanism, we have effectively kind of a self-correcting device structurally in our acquisitions that ensures that we only ultimately pay for the earnings that ultimately are delivered. So we're not just going to take a hypothetical acquisition, where we may gear the transaction towards a $4 million of purchase price -- or excuse me, $4 million of earnings power. A multiple of 5 would be a $20 million purchase price. We pay $10 million of that down, in my example, the other $10 million in contingent purchase price. If, for whatever reason or circumstance, that business ultimately only delivered $3 million of earnings power, that would still be an incredibly successful acquisition for us. No one should view that transaction as being somehow kind of missing the mark. What it would mean is that we were smart to use the earn-out mechanism that -- and that ultimately, we would pay for $3 million of earnings power, not $4 million of our earnings power. So we would pay, in our example, $15 million of purchase price rather than $20 million in purchase price. So ultimately, when and if that event were to happen, then kind of one of the byproducts of that we would effectively relieve contingent purchase price, the contingent liabilities that we carry on the face of our balance sheet and those liabilities would never come due, and they would be ultimately relieved. So as we continue to move through our acquisition strategy, I think it's just important that people recognize that it's really just kind of an analysis that says earn-out target A plus earn-out target B plus earn-out target C, then the earnings power of the business must necessarily be the summation of those 3 numbers. That's just kind of shortsighted analysis, candidly. But we've built in the right mechanisms within our own kind of capital structure and the gearing of these transactions and the expectations of the buyers and the sellers of the transactions, that everybody understands those dynamics. And ultimately, it's a bit of an insurance policy, but it's also a very healthy dynamic culturally because these earn-outs ensure that the sellers ultimately have skin in the game, they are at risk, and they're working hard to maximize their own opportunity within the Radiant organization. And my math and numbers weren't targeted to any one particular acquisition candidate, but it's fair to say that all of the former owners who are our partners are actively engaged and incented and working their tails off out there for the benefit of their own earn-outs, as well as the broader shareholders. Hopefully, that was responsive to your question.

Operator

Our next question comes from Marco Rodriguez from Stonegate Securities.

Marco Rodriguez - Stonegate Securities Inc., Research Division

Real quick. I just wanted to talk a little bit here about your adjusted EBITDA guidance. At the midpoint, it's kind of implying a sequential decline. Can you talk a little bit about what's kind of the drivers behind that?

Bohn H. Crain

Sure. I'll take a first stab at it, and then Todd can backfill if I don't get it quite right. There's certainly seasonality in our business that we have to, at least, contemplate as we're building out the projections, as well as we are having some pretty tough weather on the East Coast. And I think if you look at pretty much all of the -- or I shouldn't say all or speaking laterally like that, but a lot of the transports are getting caught up in some of those results and having a tough sledding, no pun intended. And fortunately, we have kind of the added attributes of our acquisition strategy to kind of combat some of that. So I think clearly, on a year-over-year -- on a quarter-over-quarter comparative basis, it's certainly going to be up. But this is part of the dynamics kind of our business and the seasonality of the business. And kind of as another kind of, I guess, data point around some of that, if we look back at our, I think, the pro formas that were in the Q for the 6-month period, which tries to kind of give at least some indication of what the run rate would have been had On Time been part of the mix for the full 6 month period, I want to say that was -- was it $7.4 million, something like that?

Todd E. Macomber

That's right.

Bohn H. Crain

So I think if you, by memory, if you take our pro forma number and effectively double that number, I think we'd get close to $15 million on kind of a trailing pro forma historical basis. And of course, that's before weather and synergies and productivity improvements and success in organic growth, with On Time and our regional VP. So there's ultimately a lot of contributing factors. But with, kind of, January to March historically being the slow period, compounded by the horrific weather systems we're having on the East Coast right now, I think that ultimately, that kind of is the tale of the tape. But I would also ultimately kind of caution and encourage folks not to -- we all obviously have to kind of look and take a measure on our quarterly performance. But ultimately, I would like to guide your eye to, really, the longer-term opportunity that we have here at Radiant, the fact that we were able to effectively de-lever. If you -- when I go out and do these presentations, I have a slide that really talks about and kind of emphasizes the point of the really good revenue and adjusted EBITDA growth we have delivered consistently since inception, with both revenue and adjusted EBITDA north of 40% since we started. And if I think about kind of where we kind of started as an organization back in 2006 and where we've come to relative to all the resources and capabilities we have at our disposal today, we just have never been better positioned in the history of the company to really take hold of the opportunity ahead of us. So the upcoming quarter is what the quarter is. And notwithstanding that, we are very excited about the long-term prospects for Radiant.

Marco Rodriguez - Stonegate Securities Inc., Research Division

Right. And from the operating line perspective, your personnel costs and the SG&A line in Q2, are those pretty good numbers to use for modeling purposes going forward?

Bohn H. Crain

I think at current state, yes, they are. Obviously, none of those -- from a historical base, yes. And all that should be reflective up until we do our next acquisition.

Marco Rodriguez - Stonegate Securities Inc., Research Division

Got it. And then just one real quick housekeeping item. With the senior note gone, I'm just wondering if there's been some other changes to the facility in terms of covenants. Do you still have the limit of 3 acquisitions a year?

Bohn H. Crain

No, that's gone. And kind of -- it wasn't directly in connection with the preferred. But when we upsized our facility to the $30 million facility, we moved from the commercial bank to the asset-based lending group within BofA. And in connection with that transition, we really ended up with a little different set and dramatically more flexible banking relationship. So functionally, we have a single covenant, which is a fixed-charge coverage ratio covenant of -- I believe it's 1.1:1. But even that covenant doesn't even come into play until when and if we have availability of less than $5 million. So that's kind of a long way of giving you a technically correct answer to your question. But kind of the other approach is we have dramatically more financial flexibility than we've ever had before, and we have effectively free reign to effect whatever transactions we would like to pursue so long as post closing, we have at least $5 million of availability under our senior facility. And Marco, as you know, from our -- as we kind of work through these types of opportunities, typically, as we would do acquisitions, with the acquisitions will come incremental accounts receivable. So today it’s a $30 million facility. As we roll forward our program, we could well see some expansion in that facility by operation of the incremental receivables of the targets coming into the borrowing base.

Operator

Our next question comes from David Campbell from Thompson, Davis & Company.

David Pearce Campbell - Thompson, Davis & Company

I want to ask about the December quarter. There's a substantial change in the Asian commission cost and personnel cost vis-à-vis the first quarter, one up and the other down. I mean, what's the -- why did that change, and is it going to continue to be that way?

Bohn H. Crain

Well, again, I'll take a first shot, and then Todd can bet cleanup. Probably the single biggest driver will be the acquisition of On Time, right? So as we acquired On Time, we have obviously picked up all their personnel and SG&A costs. And so that will be -- will ultimately come into mix. And in terms of commission expense on a comparative basis, we had converted some agent stations over in the prior periods, I believe. Los Angeles and Portland were some recent conversions. So as we continue to grow and kind of make good on our strategy of converting agent stations and doing other acquisitions, we're going to see a number -- there's a couple of dynamics that I will just kind of reinforce here. One is as we convert agent stations to company-owned stores, that should manifest itself as margin expansion because as we convert agent stations to company-owned stores, their revenue was already our revenue, their gross margin was already our gross margin. So gross margin doesn't change when we convert a station, but we effectively eliminate the commission expense associated with that conversion, and then pick up their local-level personnel and SG&A costs, with the difference being the incremental profitability of that individual location that we would have onboarded. And then ultimately, as we continue kind of the other point, as we kind of look at kind of that area of the P&L in the MD&A, is that we may well see, as we continue to grow the business, we will almost, by definition, see absolute growth in labor dollars, as an example. But it's why we kind of take the time in the MD&A to also look at those dollars expressed as a percentage of gross margin. So I think we historically and we would expect to continue to see very positive trends. And if we go back and plot over time, again, our EBITDA as a function of gross margin, it's a really compelling story about the scalability of the back office. And each of these component parts are just part of that story. So again, not to beat a horse to death, but we would almost expect to see, as we do acquisitions, growth in our absolute labor cost dollars. But when we measure that or look at that on a percentage basis, I think we're still going to continue to see positive trends over time as we kind of work through our own acquisition and conversion process.

David Pearce Campbell - Thompson, Davis & Company

Right. But the decrease on the September quarter -- or the changes in the September quarter, is it On Time, or doesn't On Time affect that?

Bohn H. Crain

I believe so.

Todd E. Macomber

Personnel, absolutely, is On Time comparing quarter-over-quarter.

David Pearce Campbell - Thompson, Davis & Company

The commissions went down, too.

Todd E. Macomber

Commissions are going to move around a little bit, depending upon whether it's domestic or international, what the margin characteristics are. So it doesn't -- so every mix, every quarter is going to be a little different than the other quarters. And unfortunately, I don't have the September numbers in front of me. But like, for instance, looking at the 3-month quarter-over-quarter, I mean, they're relatively close to the same as far as the agent-based commission. But like Bohn said, I mean, we're increasing revenue for On Time, but they're not getting paid the commission. So you got to factor that in when you're looking at these changes.

David Pearce Campbell - Thompson, Davis & Company

Right. And do you expect international revenues to increase? I mean, they've been flat the last 2 quarters. Gross revenues have. But then gross revenue has been down and the net revenues have been flat. Is that just the market, the industry, or is it something you've done?

Bohn H. Crain

Well, I think it's a combination of events. There was one of kind of the old legacy L.A. DBA operations that, I think, some of that went away as we exited the old facility and we exited unprofitable business. There's some charter-type businesses in the prior periods, which can be big dollars but very, very low gross margin on an absolute basis, which is why -- so some of those things are contributing factors. And if you kind of flip it around a little bit, I think we actually did have, on a gross margin percentage basis, a little improvement period-over-period. And even having said that, ultimately, we're, again, most interested in growing our gross margin dollars and then getting as many of those gross margin dollars to the bottom line. So I think all of those things kind of come together. I do think -- I think to answer, at least, part of your question, David, I think if I had to handicap it right now, I would expect to see more organic growth come from domestic because of On Time and its capabilities and what it brings to the table and helping us on the domestic side. And we would see -- we'll see more -- changes to international will be more likely driven by new agent stations or acquisitions that might occur, up and until we have some other tools to act as a further catalyst to help us drive international growth.

David Pearce Campbell - Thompson, Davis & Company

And the last question I had, your gross profit margin percentage was down from the September quarter from 30.2% to 29% in the December quarter. Is that your. . .

Bohn H. Crain

And again, that was -- I think I answered -- I can just hit the On Time button. I think a lot of that, the easy answers are like the easy button, the On Time button. Again, as it relates to that change, it was On Time coming into the mix on a sequential quarter look, which carries a little bit lower margin characteristics than our legacy boarding business.

David Pearce Campbell - Thompson, Davis & Company

Okay, okay. That's good. Is there -- what's the rationale for excluding your depreciation and amortization from adjusted earnings per share?

Bohn H. Crain

We used that analysis in part to try to get to at least some -- to give people some sense of what we would view a more normalized EPS-type number to be. And principally, there's a handful of items that are kind of scheduled out that you can see. But as a non-asset-based business, the depreciation and amortization flowing through our P&L is amortization, right? It's the amortization of customer relationships and covenant not to compete as a byproduct of our purchase accounting. So if we were an asset-based transportation company, depreciation would be a proxy for sustaining a replacement capital to keep our trains or our trucks operating. But that's just simply not the case for us as a non-asset-based company. So we were trying to give people a better sense of -- or at least something a little closer to some type of free cash flow per share type analysis that tried to tease out these kind of noncash, GAAP-type elements that are really consistent with the underlying economic dynamics in play.

David Pearce Campbell - Thompson, Davis & Company

Right, okay. And I don't know that I can do that since I don't do that for other companies in the logistics business. We generally keep the D&A in there in terms of earnings per share. That's the only problem.

Bohn H. Crain

Fair enough. We give it to you both ways. And EBITDA is near and dear to my heart.

Operator

At this time, I will turn the call back over to our speakers for closing comments.

Bohn H. Crain

Thank you. Let me close by saying that we remain very excited with our progress and prospects here at Radiant, and we remain very bullish on the growth platform that we've created and the scalability of our non-asset-based business model. We continue to make good progress in executing our strategy, leveraging the Radiant platform to bring value to our operating partners. And we remain very excited about the opportunity to grow our business organically, leveraging the capabilities of On Time's dedicated line-haul network, to strengthen existing and expand new customer relationships, as well as help us to attract additional independent agencies to our platform, and by completing acquisitions of other companies that bring critical mass from a geographic standpoint, incremental purchasing power and/or complementary service offerings that will benefit the broader network. We are patiently persistent in the execution of this strategy, which, we believe, will continue to deliver value for our shareholders, our operating partners and the end customers that we serve.

Thanks for listening and your support of Radiant Logistics.

Operator

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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