RADIANT LOGISTICS, INC. 
By NEW YORK, May 22, 2013 /PRNewswire/ --
Ladies and Gentlemen,
I am very concerned about the current direction of Radiant Logistics, Inc. (AMEX: RLGT) (the "Company") and management's sustained failure to generate shareholder value. In particular, the Company has been marked by stagnant growth, acquisition blunders, poor shareholder liquidity and material dilution, all resulting in a depressed share price. As management seems unable to correct this situation, and for the reasons outlined below, I urge the Company and the Board to immediately engage a financial advisor in order to explore a transaction with a strategic partner or acquirer.
I have arrived at this conclusion for the following reasons:
-- The Company's average trading volume over the last 50 days has been a
meek $60,000, with the stock failing to trade at all on some days. This
dearth in liquidity seems to be largely the result of the shares being
so closely held, with my internal estimates showing insiders (i.e.
executive management and agent station owners), the Board, and a few
institutions controlling over 80 percent of the stock. As these holders
are keenly aware that their shares are grossly undervalued, very few
shares are on the open market for sale so as to allow for stock
appreciation.
-- The public nature of the Company's mandatory investor disclosures is
preventing management from sharing certain segment/unit information that
I believe is necessary to attract serious investors, such as information
about the Company's organic revenue growth, new franchise development
and the implementation of new horizontal business lines. Unless
management feels comfortable disclosing this information, I believe that
it will be very hard for the Company to attract sufficient interest to
justify remaining as an independent public company.
Given these facts, l urge the Company to explore a transaction with a synergistic strategic or financial partner who could provide (i) capital to accelerate the growth of the Company's business, (ii) economies of scale and other built-in infrastructure that would lower the Company's per capita operating costs and (iii) increased purchasing power. At the very least, the Company would benefit from the reduction of public company costs.
To give the Company an idea of the value I believe is being "left on the table" by remaining as an independent public company, just look at UTI Worldwide Inc. While UTIW's business is not identical to the Company's, the two companies overlap substantially in their major product category - freight forwarding. However, UTIW currently trades at 12.5 X Total Enterprise Value to trailing twelve month EBITDA. After adjustments for non-recurring expenses, I believe that the Company should earn almost $14.0 mm of EBITDA in the next twelve months (ending June 2014). If the Company were taken private by a strategic partner, I believe that the Company's business could save at least $4 mm in costs through the elimination of overhead -- at least $2 mm in executive salaries and an additional $2 mm in public company costs. If the Company were to go private through a transaction with a strategic partner like UTIW, with its "deep bench" of back office personnel and superior technology platform, it could result in meaningful cost reductions that could contribute at least another $2 mm to $3 mm in cost synergies.
By my conservative estimates of FYE 2014 EBITDA, I believe that the Company could contribute roughly $20 mm of EBITDA to a new buyer in FYE 2014. Ascribing a multiple somewhere between 7.5x and 10.5x EBITDA, the Company could enjoy a share price in the ranges of $3.75 to $5.40 - roughly two to three times the value of the listed shares today. This valuation also ascribes zero value to the potential revenue synergies that would come from a platform acquirer that has already built out a sizable truck brokerage and customs brokerage division. (See Exhibit A below for reference).
I am asking management to do the right thing for ALL stakeholders today and refocus its effort on building shareholder value through a transaction with a strategic/financial partner. ADW Capital Partners, L.P. and its affiliates hold a sizable stake in the Company's basic shares and urge the Board to take these recommendations very seriously. I look forward to hearing your response.
Sincerely yours,
Adam D. Wyden
Managing Member of ADW Capital Partners, L.P.
Exhibit A
($ in MM) Fiscal Year
Ended June 30
--------------
2013E 2014E
Stock Price $1.96 Base Business EBITDA $12.00 $14.00
Elimination of Corp. &
Public Co. Costs (4.00) (4.00)
Diluted Shares Outstanding 35.75
Elimination of
Redundant Back Office (2.00) (2.00)
Market Cap $70.1
Cash 1.3 Base Acquirer EBITDA
(1) $18.00 $20.00
Debt 17.4
Minority Interest 0.0
Enterprise Value 86.2 EV/EBITDA 4.79x 4.31x
(1) This estimate does not ascribe any value to additional consolidation of agent stations with an acquiror's network, additional purchasing power, or any potential revenue synergies.
Range of Equity Values on Base Acquirer EBITDA (1) for Year Ended June
30, 2014 7.5x 8.0x 8.5x 9.0x 9.5x 10.0x 10.5x
----------------------------------------------------------------------
Enterprise Value $150.0 $160.0 $170.0 $180.0 $190.0 $200.0 $210.0
Less:
Net Debt 16.1 16.1 16.1 16.1 16.1 16.1 16.1
Equity Value $133.9 $143.9 $153.9 $163.9 $173.9 $183.9 $193.9
Equity Value Per Share $3.75 $4.03 $4.30 $4.58 $4.86 $5.14 $5.42
Cautionary Statement Regarding Forward-Looking Statements
The information herein contains "forward-looking statements." Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "targets," "forecasts," "seeks," "could" or the negative of such terms or other variations on such terms or comparable terminology. Similarly, statements that describe our objectives, plans or goals are forward-looking. Our forward-looking statements are based on our current intent, belief, expectations, estimates and projections regarding the Company and projections regarding the industry in which it operates. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.
SOURCE ADW Capital Partners, L.P.
