What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2020-11-09 compared with 2020-05-11 · 129 added, 210 removed, 155 unchanged (69% of the section changed)

16 unchanged sentences

the impact of COVID-19 on our operations and financial results;

and such other factors that may be identified from time to time in our Securities and Exchange Commission (“SEC”) filings and other public announcements, including those set forth under the caption “Risk Factors” in our Form 10-K for the year ended June 30, 2019 and this Form 10-Q for the quarter ended March 31, 2020.

In addition, the global economic climate and additional or unforeseen effects from the COVID-19 pandemic amplify many of these risks.

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We provide these services through a multi-brand network, which includes over 100 locations operated exclusively on our behalf by independent agents, who we also refer to as our “strategic operating partners”, as well as approximately 20 Company-owned offices.

As a third-party logistics company, we have approximately 10,000 asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in our carrier network.

As a third-party logistics company, we have a vast carrier network of asset-based transportation companies, including motor carriers, railroads, airlines and ocean lines in our carrier network.

We believe shippers value our services because we are able to objectively arrange the most efficient and cost-effective means, type and provider of transportation service without undue influence caused by the ownership of transportation assets.

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Our services include arranging and monitoring all aspects of material flow activity utilizing advanced information technology systems.

We also provide other value-added logistics services, including customs brokerage and MM&D solutions to complement our core transportation service offering.

We expect to grow our business organically and by completing acquisitions of ot her companies with complementary geographic and logistics service offerings.

Our organic growth strategy will continue to focus on strengthening existing and expanding new customer relationships leveraging the benefit of our truck brokerage and intermodal service offerings, while continuing our efforts on the organic build-out of our network of strategic operating partner locations.

In addition to our focus on organic growth, we continue to search for acquisition candidates that bring to our current platfor m a critical mass from a geographic and/or purchasing power standpoint along with complementary service offerings.

As we continue to grow and scale our business, we believe that we are creating density in our trade lanes, which creates opportunities for us to more efficiently source and manage our transportation capacity.

In addition, we remain focused on leveraging our back-office infrastructure to drive productivity improvement across the organization.

The recent COVID-19 outbreak was declared a pandemic by the World Health Organization on March 11, 2020 and has rapidly spread to the United States and many other parts of the world and has impacted and may continue to impact our business operations, including employees, customers, financial condition, liquidity and cash flow for an extended period of time.

In particular, we are seeing significant changes in demand among our various customers depending on their industry.

Certain industries saw an increase in demand, while other industries experienced a slowdown of demand and production.

Federal and state governments have implemented measures in an effort to contain the virus, including social distancing, travel restrictions, border closures, limitations on public gatherings, work from home, supply chain logistical changes, and closure of nonessential businesses.

Since late March, we shifted our focus to delivering against four key objectives:

ensuring the health and safety of our employees;

providing supply chain continuity for our customers, operating partners and carriers;

protecting the economic security of our people to the greatest extent possible;

and taking the steps necessary to mitigate the impacts of the slowing economy on our own business.

We also provide other value-added logistics services, including materials management and distribution (“MM&D”) services and customs house brokerage (“CHB”) services to complement our 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.

The COVID-19 pandemic continues to have widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.

The pandemic has created significant volatility, uncertainty and economic disruption.

We are closely monitoring the impact of the pandemic on all aspects of our business, our customers, employees and business partners.

The overall demand for transportation services have been significantly impacted.

COVID-19 has adversely affected most of our operations, financial condition, and results of operations in fiscal year 2020 and the first quarter of our fiscal year 2021.

Beginning in April of 2020, we have experienced decreased customer demands in many parts of our business while seeing improvements in the demand in certain segments of business.

We have been working hard to mitigate the negative financial impacts of COVID-19 with a number of initiatives in response to our declining revenues.

However, the relative effectiveness will depend on the severity and duration of the pandemic.

We face significant risks related to the spread of COVID-19 and the recent developments surrounding the global pandemic have had, and will continue to have, significant effects on our business, financial condition, results of operations, and cash flows.

We are facing increased operational challenges from the need to protect employee health and safety.

We expect to continue to incur additional costs as we continue to implement operational changes in response to the pandemic.

We face significant risks related to the global economic downturn and severe reduction in revenues caused by the pandemic.

These risks include materially reduced demand for our services and challenges to the ongoing viability of some of our customers.

An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business.

The effect of the COVID-19 pandemic may last for a significant period of time and may continue to adversely affect our business, results of operations and financial condition even after the COVID-19 outbreak has subsided.

The extent to which the COVID-19 pandemic impacts us will depend on numerous evolving factors and future developments that we are not able to predict, including:

the severity and duration of the outbreak;

governmental, business and other actions;

the impact of the pandemic on economic activity;

the effect on consumer confidence and spending, customer demand and buying patterns;

the health of and the effect on our workforce and our ability to meet staffing needs;

any impairment in value of our tangible or intangible assets that could be recorded as a result of weaker economic conditions;

and the potential effects on our internal controls including those over financial reporting as a result of changes in working environments.

Provisions for bad debt expense may increase given the financial difficulty faced by our customers, which could impact our ability to borrow under our revolving credit facility.

Due to the unprecedented and evolving nature of the COVID-19 pandemic, it remains very difficult to predict the extent of the impact on our industry generally and our business in particular.

While we anticipate that our results of operations will continue to be impacted by this pandemic in fiscal year 2021, we are unable to reasonably estimate the extent of the impact on our full-year results of operations, our liquidity or our overall financial position.

We may face similar risks in connection with any future public health crises.

Our business model has also shown its strength in the diversity of our service offerings.

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This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions, including receivables and forward-looking guidance.

In response to COVID-19 we have implemented the following measures to ensure the health and safety of our employees, the financial soundness of the Company and the continuity of our services to our customers :

We are applying the social distancing guidelines by having a majority of our office employees work from their homes;

We provide clear communication to our employees promoting essential healthy hygiene habits and assist in responsibly responding to potential symptoms including self-quarantining and testing;

We initiated a series of workforce reduction measures impacting employees across our U.S.

operations that included 20% salary reductions, reduction in hours, furloughs and terminations;

We implemented temporary salary reductions for company executive officers and temporary reductions in cash retainers for board members;

Our executives have agreed to forgo any bonuses under the Company’s discretionary quarterly Short-term Incentive Plan;

We have tabled any acquisition opportunities, suspended our stock buy-back program, deferred discretionary technology investments and reduced discretionary operating expenses.

Performance Metrics

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Since all acquisitions are made using the acquisition method of accounting for business combinations, our financial statements will only include the results of operations and cash flows of acquired companies for periods subsequent to the date of acquisition.

Net revenues, a non-GAAP financial measure, is our total revenue minus our total cost of transportation and other services (excluding depreciation and amortization, which are reported separately) and net margin is net revenues as a percentage of our total revenue.

We believe that these provide investors meaningful information to understand our results of operations and the ability to analyze financial and business trends on a period-to-period basis.

Our GAAP-based net income will be affected by non-cash charges relating to the amortization of customer related intangible assets and other intangible assets attributable to completed acquisitions.

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We exclude all depreciation charges related to property, technology, and equipment and all amortization charges (including amortization of leasehold improvements).

We then further adjust EBITDA to exclude changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, transition and lease termination costs, foreign currency transaction gains and losses, extraordinary items, share-based compensation expense, litigation expenses unrelated to our core operations, MM&D start-up costs and other non-cash charges.

We then further adjust EBITDA to exclude changes in fair value of contingent consideration, expenses specifically attributable to acquisitions, transition and lease termination costs, foreign currency transaction gains and losses, share-based compensation expense, litigation expenses unrelated to our core operations, and other non-cash charges.

While management considers EBITDA and adjusted EBITDA useful in analyzing our results, it is not intended to replace any presentation included in our condensed consolidated financial statements.

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Results of Operations

Three months ended March 31, 2020 and 2019 (unaudited)

The following table summarizes revenues, cost of transportation and other services, and net revenues by geographic operating segments for the three months ended March 31, 2020 and 2019 (in thousands):

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

Three months ended September 30, 2020 and 2019 (unaudited)

The following table summarizes revenues, cost of transportation and other services, and net revenues by reportable operating segments for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

(In thousands)

United States

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(1) Net revenues are revenues net of cost of transportation and other services.

Transportation revenue was $170.0 million and $197.6 million for the three months ended March 31, 2020 and 2019, respectively.

The decrease of $27.6 million, or 14.0%, is primarily attributable to general market softness including a slight impact from COVID-19, a decrease in non-recurring disaster relief project work reported in the comparable prior year period, and decisions to exit certain lower margin business.

Net transportation revenue was $43.1 million and $48.6 million for the three months ended March 31, 2020 and 2019, respectively.

Net transportation margins increased from 24.6% to 25.4%, primarily due to shifts in product mix and exiting certain lower margin business.

Value-added services revenue was $7.2 million and $8.4 million, for the three months ended March 31, 2020 and 2019, respectively.

The decrease of $1.2 million, or 14.6%, is primarily attributable to slowdown in our contract logistics and custom brokerage services offerings.

Net value-added services revenue was $4.7 million for the three months ended March 31, 2020, compared to $4.1 million for the comparable prior year period.

Transportation revenue was $169.8 million and $191.8 million for the three months ended September 30, 2020 and 2019, respectively.

The decrease of $22.0 million, or 11.5%, is primarily attributable to the impact of COVID-19.

Net transportation revenue was $42.1 million and $50.7 million for the three months ended September 30, 2020 and 2019, respectively.

Net transportation margins decreased from 26.4% to 24.8%, primarily due to shifts in product mix and certain lower margin business.

Value-added services revenue was $6.0 million and $8.8 million, for the three months ended September 30, 2020 and 2019, respectively.

The decrease of $2.8 million, or 31.8%, is primarily attributable to slowdown in our contract logistics and custom brokerage services offerings as the result of COVID-19 .

Net value-added services revenue was $3.9 million for the three months ended September 30, 2020, compared to $4.9 million for the comparable prior year period.

Net value-added services revenue margins increased from 55.6% to 64.1%, primarily due to lower personnel and warehousing costs as a percentage of revenue.

The following table compares condensed consolidated statements of comprehensive income data by operating segment for the th ree months ended March 31, 2020 and 2019 (in thousands):

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

United States

Net revenues (1)

Operating expenses:

Operating partner commissions

Personnel costs

Selling, general and administrative expenses

Depreciation and amortization

Change in fair value of contingent consideration

Total operating expenses

Income (loss) from operations

Other income (expense)

Income (loss) before income taxes

Income tax expense

Net income (loss)

Net income attributable to non-controlling interest

Net income (loss) attributable to Radiant Logistics, Inc.

Net income (loss) attributable to common stockholders

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

Operating expenses as a percent of

net revenue (1) :

United States

Operating partner commissions

Personnel costs

Selling, general and administrative

The following table provides a reconciliation for the three months ended September 30, 2020 and 2019 of net revenues to gross profit, the most directly comparable GAAP measure:

(In thousands)

Three Months Ended September 30,

Reconciliation of net revenues to GAAP gross profit

Cost of transportation and other services (exclusive of depreciation and amortization, shown separately below)

Depreciation and amortization

(1) Net revenues are revenues net of cost of transportation and other services.

Operating partner commissions decreased $2.7 million, or 12.0%, to $20.4 million for the three months ended March 31, 2020.

The decrease is primarily due to decreased net revenues from operating partners.

As a percentage of net revenues, operating partner commissions decreased 125 basis points to 42.6% from 43.8% for the three months ended March 31, 2020 and 2019, respectively, as a result of reduced volume of special projects with lower margin characteristic.

Personnel costs decreased $0.4 million, or 2.7%, to $14.4 million for the three months ended March 31, 2020.

The decrease is primarily due to decreased headcount.

As a percentage of net revenues, personnel costs increased 209 basis points to 30.2% from 28.1% for the three months ended March 31, 2020 and 2019 , respectively.

Selling, general and administrative (“SG&A”) expenses increased $1.2 million, or 17.8%, to $8.0 million for the three months ended March 31, 2020.

The increase is primarily attributable to increased technology spending for the quarter.

As a percentage of net revenues, SG&A increased 388 basis points to 16.8% from 12.9% for the three months ended March 31, 2020 and 2019 , respectively.

Depreciation and amortization costs increased $0.5 million, or 11.3%, to $4.3 million for the three months ended March 31, 2020.

The increase is due to investments in a new transportation management system and technology infrastructure.

Change in fair value of contingent consideration represents the change in the fair value of contingent consideration due to former shareholders of acquired operations.

The change in the current period is primarily attributable to an increase in management’s estimates of future earn-out payments through the remainder of the respective earn-out periods.

Other net expenses were $0.5 million and $0.6 million for the three months ended March 31, 2020 and 2019 , respectively.

Our change in net income is driven principally by decreased net revenues, partially offset by decreased operating expenses and decreased income taxes compared to the comparable prior year period .

Our future financial results may be impacted by amortization of intangible assets resulting from acquisitions as well as gains or losses from changes in fair value of contingent consideration that are difficult to predict.

The following table provides a reconciliation for the three months ended March 31, 2020 and 2019 of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure (in thousands):

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

United States

Net income (loss) attributable to common stockholders

Net income (loss) attributable to Radiant Logistics, Inc.

Income tax expense

GAAP gross profit

Depreciation and amortization

Net interest expense

Share-based compensation

Change in fair value of contingent consideration

Acquisition related costs

Litigation costs

Transition, lease termination, and other costs

Foreign currency transaction loss (gain)

Adjusted EBITDA

Adjusted EBITDA as a % of net revenues (1)

(1) Net rev enues are revenues net of cost of transportation and other services.

Nine months ended March 31, 2020 and 2019 (unaudited)

The following table summarizes revenues, cost of transportation and other services, and net revenues by geographic operating segments for the nine months ended March 31, 2020 and 2019 (in thousands):

Nine Months Ended March 31, 2020

Nine Months Ended March 31, 2019

United States

Transportation

Value-added services

Cost of transportation and other services

Transportation

Value-added services

Net revenues (1)

Transportation

Value-added services

Transportation

Value-added services

(1) Net revenues are revenues net o f cost of transportation and other services.

Transportation revenue was $555.5 million and $661.2 million for the nine months ended March 31, 2020 and 2019, respectively.

The decrease of $105.7 million, or 16.0%, is primarily attributable to general market softness including a slight impact from COVID-19, a decrease in non-recurring disaster relief project revenue reported in the comparable prior year period, and decisions to exit certain lower margin business.

Net transportation revenue was $144.8 million and $159.5 million for the nine months ended March 31, 2020 and 2019, respectively.

Net transportation margins increased from 24.1% to 26.1%, primarily due to shifts in product mix and exiting certain lower margin business.

Value-added services revenue was $24.2 million and $24.6 million, for the nine months ended March 31, 2020 and 2019, respectively.

The decrease of $0.4 million, or 1.7%, is primarily attributable to the slowdown in our contract logistics and custom brokerage services offerings.

Net value-added services revenue was $14.5 million for the nine months ended March 31, 2020, compared to $12.1 million for the comparable prior year period.

Net value-added services revenue margins increased from 49.0% to 59.7%, primarily due to lower personnel and warehousing costs as a percentage of revenue.

The following table compares condensed consolidated statements of comprehensive income data by operating segment for the nine months ended March 31, 2020 and 2019 (in thousands):

Nine Months Ended March 31, 2020

Nine Months Ended March 31, 2019

GAAP gross margin (GAAP gross profit as a percentage of revenues)

Net margin (net revenues as a percentage of revenues)

The following table compares condensed consolidated statements of comprehensive income data by reportable operating segment s for the three months ended September 30, 2020 and 2019 :

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

(In thousands)

United States

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Net income (loss)

net income attributable to non-

controlling interest

Net income attributable to non-controlling interest

Net income (loss) attributable to Radiant Logistics, Inc.

preferred stock dividends

issuance costs for preferred stock redemption

Net income (loss) attributable to common stockholders

Nine Months Ended March 31, 2020

Nine Months Ended March 31, 2019

Operating expenses as a percent of

net revenue (1) :

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

Operating expenses as a percent of net revenues:

United States

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(1) Net revenues are revenues net of cost of transportation and other services.

Operating partner commissions decreased $6.4 million, or 8.4%, to $69.9 million for the nine months ended March 31, 2020.

Operating partner commissions decreased $5.6 million, or 23.1%, to $18.6 million for the three months ended September 30, 2020.

The decrease is primarily due to decreased net revenues from operating partners.

As a percentage of net revenues, operating partner commissions decreased 59 basis points to 43.9% from 44.5% for the nine months ended March 31, 2020 and 2019, respectively.

Personnel costs decreased $0.8 million, or 1.7%, to $44.5 million for the nine months ended March 31, 2020.

The decrease is primarily due to decreased headcount.

As a percentage of net revenues, personnel costs increased 155 basis points to 27.9% from 26.4% for the nine months ended March 31, 2020 and 2019 , respectively.

Selling, general and administrative (“SG&A”) expenses increased $0.9 million, or 4.3%, to $22.4 million for the nine months ended March 31, 2020.

The increase is primarily attributable to increased technology, legal and other general expenses for the nine-month period.

As a percentage of net revenues, SG&A increased 154 basis points to 14.0% from 12.5% for the nine months ended March 31, 2020 and 2019 , respectively.

Depreciation and amortization costs increased $1.1 million, or 9.9%, to $12.4 million for the nine months ended March 31, 2020.

The increase is primarily due to investments in a new transportation management system and technology infrastructure.

Transition, lease termination and other costs increased $0.3 million for the nine months ended March 31, 2020.

The increase is primarily attributable to non-recurring severance expense during the most recent nine-month period.

Change in fair value of contingent cons ideration represents the change in the fair value of contingent consideration due to former shareholders of acquired operations.

The change in the current period is primarily attributable to an increase in management’s estimates of future earn-out payments through the remainder of the respective earn-out periods.

Other expenses were $1.7 million and $1.9 million for the nine months ended March 31, 2020 and 2019, respectively .

As a percentage of net revenues, operating partner commissions decreased 310 basis points to 40.4% from 43.5% for the three months ended September 30, 2020 and 2019, respectively, as a result of a higher percentage of net revenues coming from company owned stores.

Personnel costs decreased $2.1 million, or 13.9%, to $12.8 million for the three months ended September 30, 2020.

The decrease is primarily due to temporary workforce reductions and temporary compensation reductions as a result of managements response to COVID-19.

As a percentage of net revenues, personnel costs increased 106 basis points to 27.8% from 26.7% for the three months ended September 30, 2020 and 2019 , respectively.

Selling, general and administrative (“SG&A”) expenses decreased $2.0 million, or 26.2%, to $5.7 million for the three months ended September 30, 2020.

The decrease is primarily attributable to decreased spending for professional services fees, bad debt & claims, and travel for the quarter.

As a percentage of net revenues, SG&A decreased 150 basis points to 12.3% from 13.8% for the three months ended September 30, 2020 and 2019 , respectively.

Depreciation and amortization costs increased $0.2 million, or 3.1%, to $4.2 million for the three months ended September 30, 2020.

The increase is due to investments in technology infrastructure and increased amortizable intangible assets associated with recent acquisitions of two operating partner locations .

Other expenses were $0.5 million and $0.7 million for the three months ended September 30, 2020 and 2019 , respectively.

Our change in net income is driven principally by decreased net revenues, partially offset by decreased operating expenses and decreased income taxes compared to the comparable prior year period .

The following table provides a reconciliation for the nine months ended March 31, 2020 and 2019 of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure (in thousands):

Nine Months Ended March 31, 2020

Nine Months Ended March 31, 2019

The following table provides a reconciliation for the three months ended September 30, 2020 and 2019 of adjusted EBITDA to net income (loss), the most directly comparable GAAP measure (in thousands):

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

(In thousands)

United States

Net income (loss) attributable to common stockholders

preferred stock dividends

issuance costs for preferred stock redemption

Net income (loss) attributable to Radiant Logistics, Inc.

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Transition, lease termination, and other costs

Foreign currency transaction loss (gain)

Change in fair value of interest rate swap contracts

Foreign exchange loss (gain)

Adjusted EBITDA

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(1) Net revenues are revenues net of cost of transportation and other services.

Adjusted EBITDA decreased $0.5 million, or 4.7% to $9.2 million for the quarter ended September 30, 2020.

Liquidity and Capital Resources

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These sources also fund a portion of our capital expenditures and contractual contingent consideration obligations.

Adapting to COVID-19, we have curtailed mergers and acquisitions activities and suspended stock buy-back.

Our level of cash and financing capabilities along with cash flows from operations have historically been sufficient to meet our operating and capital needs.

We believe that during the next 12 months the COVID-19 pandemic is likely to impact general economic activity and demand in our markets, which if continued unabated could continue to have an adverse effect on our results of operations;

which, in turn, could cause the amounts available to us under the Revolving Credit Facility to be limited and cause us to seek other external financing sources to meet our operating and capital needs.

However, in this case, conditions in the credit markets may also deteriorate and the availability of alternative sources of credit on commercially reasonable terms may be reduced.

In addition, the Company has a limited market capitalization and its stock price has declined roughly 30% since January 1, 2020.

The Company believes access to capital markets has tightened and that accessing such markets at this time would be significantly detrimental to the business.

Net cash used in operating activities were $1.3 million for the nine months ended March 31, 2020.

Net cash provided by operating activities were $33.5 million for the nine months ended March 31, 2019.

As of September 30, 2020, we have $23.9 million in cash on hand to serve as adequate working capital.

We believe that COVID-19 is likely to continue impacting general economic activity and demand in our markets, which could have an adverse effect on our results of operations, which in turn, could limit the amounts available to us under the Revolving Credit Facility and cause us to seek other external financing sources to meet our operating and capital needs.

However, future conditions in the credit markets may be unpredictable alternative sources of credit may be reduced.

Net cash provided by operating activities were $13.4 million for the three months ended September 30, 2020.

Net cash provided by operating activities were $0.1 million for the three months ended September 30, 2019.

The cash used or provided primarily consisted of net income adjusted for depreciation and amortization and changes in accounts receivable, contract assets, accounts payable, income taxes, operating partner commissions payable, and accrued and other liabilities.

Cash flow from operating activities for the nine months ended March 31, 2020 decreased by $34.8 million, compared with the same period in fiscal year 2019, primarily due to the decrease in net income and net change in operating assets and liabilities.

Net cash used for investing activities were $13.8 million and $4.7 million for the nine months ended March 31, 2020 and 2019, respectively.

The primary uses of cash were for business acquisitions and purchases of property, technology, and equipment.

Cash paid for business acquisition were $9.2 million for the nine months ended March 31, 2020.

Cash paid for purchases of property, technology, and equipment were $4.7 million for each of the nine months ended March 31, 2020 and 2019.

Net cash provided by financing activities was $24.1 million for the nine months ended March 31, 2020.

Net cash used for financing activities were $30.7 million for the nine months ended March 31, 2019.

Net proceeds from the Revolving Credit Facility were $32.2 million for the nine months ended March 31, 2020.

Net repayments to the Revolving Credit Facility were $4.7 million for the nine months ended March 31, 2019.

Repayments of notes payable and finance lease liability were $3.2 million and $2.7 million for the nine months ended March 31, 2020 and 2019, respectively.

Repurchases of common stock were $2.5 million for the nine months ended March 31, 2020.

Payments of contingent consideration were $0 million and $0.2 million for the nine months ended March 31, 2020 and 2019, respectively.

Payments for the redemption of preferred stock and payments of preferred stock dividends were $21 million and $1.3 million for the nine months ended March 31, 2019.

Distributions to non-controlling interest were $0.3 million and $0.7 million for the nine months ended March 31, 2020 and 2019, respectively.

Payments of employee tax withholdings related to vesting of restricted stock awards were $0.3 million for the nine months ended March 31, 2020.

Payments of employee tax withholdings related to the cashless exercise of stock option were $0.1 million for both the nine months ended March 31, 2020 and 2019.

Cash flow from operating activities for the three months ended September 30, 2020 increased by $13.3 million, compared with the same period in fiscal year 2019, primarily due to the net change in operating assets and liabilities.

Net cash used for investing activities were $2.1 million and $1.7 million for the three months ended September 30, 2020 and 2019, respectively.

The primary use of cash was for purchases of property, technology, and equipment.

Cash paid for purchases of property, technology, and equipment were $2.1 million and $1.7 million for the three months ended September 30, 2020 and 2019, respectively.

Net cash used for financing activities was $21.7 million for the three months ended September 30, 2020 .

Net cash provided by financing activities were $4.8 million for the three months ended September 30, 2019 .

Repayment of the Revolving Credit Facility were $20 million for the three months ended September 30, 2020 .

Proceeds from the Revolving Credit Facility were $193.9 million for the three months ended September 30, 2019 , and Repayment of the Revolving Credit Facility were $187.3 million for the three months ended September 30, 2019 .

Repayments of notes payable and finance lease liability were $0.7 million and $1.1 million for the three months ended September 30, 2020 and 2019, respectively.

Distributions to non-controlling interest were $0.7 million and $0.2 million for the three months ended September 30, 2020 and 2019, respectively.

Payments of employee tax withholdings related to vesting of restricted stock awards were $0.3 million for both the three months ended September 30, 2020 and 2019 .

Payments of employee tax withholdings related to the cashless exercise of stock option were $0.1 million for the three months ended September 30, 2019.

Revolving Credit Facility

The Company entered into a $150 million syndicated, revolving credit facility (the “Revolving Credit Facility”) pursuant to a Credit Agreement dated as of March 13, 2020.

On March 31, 2020, the borrowings outstanding on the Revolving Credit Facility was $46 million.

On September 30, 2020 , the borrowings outstanding on the Revolving Credit Facility was $10 million.

The Revolving Credit Facility was entered into with Bank of America Securities, Inc.

as sole book runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A as lender and documentation and Bank of America, N.

as sole book runner and sole lead arranger, Bank of Montreal Chicago Branch, as lender and syndication agent, MUFG Union Bank, N.A as lender and documentation agent and Bank of America, N.

A., KeyBank National Association and Washington Federal Bank, National Association as lenders (such named lenders are collectively referred to herein as “Lenders”).

This replaces the Company’s $75 million facility dated June 14, 2017.

The Revolving Credit Facility has a term of five years, matures on March 13, 2025, and is collateralized by a first-priority security interest in the accounts receivable and other assets of the Company.

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In conjunction with the Revolving Credit Facility, Radiant entered into two interest rate swap contracts.

On March 20, 2020, and effective April 17, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows at one-month LIBOR for a $20,000 notional amount, for fixed interest cash outflows at 0.635%.

This interest rate swap matures and terminates on March 13, 2025.

On April 1, 2020, and effective April 2, 2020, Radiant entered into an interest rate swap

co ntract with Bank of America to trade the variable interest cash inflows at one-month LIBOR for a $10,000 notional amount, for fixed interest cash outflows at 0.5865%.

This interest rate swap matures and terminates on March 13, 2025.

On March 20, 2020, and effective April 17, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade variable interest cash inflows at one-month LIBOR for a $20 million notional amount, for fixed interest cash outflows at 0.635%.

On April 1, 2020, and effective April 2, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade the variable interest cash inflows at one-month LIBOR for a $10 million notional amount, for fixed interest cash outflows at 0.5865%.

Both interest rate swap contracts mature and terminate on March 13, 2025.

Senior Secured Loan

On April 2, 2015, Radiant Canada obtained a CAD$29.0 million senior secured Canadian term loan from Fiera Private Debt Fund IV LP (“FPD IV” formerly, Integrated Private Debt Fund IV LP) pursuant to a CAD$29,000,000 Credit Facilities Loan Agreement (the “FPD IV Loan Agreement”).

The Company and its U.S.

and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder.

The Company and its US and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder.

The loan matures on April 1, 2024 and accrues interest at a rate of 6.65% per annum.

We made interest-only payments for the first 12 months and blended principal and interest payments through maturity.

We made interest-only payments for the first twelve months and blended principal and interest payments through maturity.

In connection with the loan, we paid an amount equal to five months of interest payments into a debt service reserve account controlled by FPD IV.

In connection with our acquisition of Lomas, Radiant Canada obtained a CAD$10.0 million senior secured Canadian term loan from Fiera Private Debt Fund V LP (“FPD V” formerly, Integrated Private Debt Fund V LP) pursuant to a CAD$10,000,000 Credit Facilities Loan Agreement (the “FPD V Loan Agreement,” and together with the FPD IV Loan Agreement, the “FPD Loan Agreements”).

The Company and its U.S.

and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder.

The Company and its US and Canadian subsidiaries are guarantors of the Radiant Canada obligations thereunder.

The loan matures on June 1, 2024 and accrues interest at a rate of 6.65% per annum.

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The loans may be prepaid in whole at any time upon providing at least 30 days prior written notice and paying the difference between (i) the present value of the loan interest and the principal payments foregone discounted at the Government of Canada Bond Yield for the term from the date of prepayment to the maturity date and (ii) the face value of the principal amount being prepaid.

For additional information regarding our indebtedness, see Note 8 to our unaudited condensed consolidated financial statements contained elsewhere in this report.

Paycheck Protection Program Loans

On May 4, 2020, the Company received loan proceeds of $5.9 million pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company.

This certification further required the Company to take into account our current business activity and our ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business.

On April 28, 2020, the Secretary of the U.S.

Department of the Treasury stated that the Small Business Administration will perform a full review of any PPP loan over $2 million before forgiving the loan.

The certification made by the Company did not contain any objective criteria and is subject to interpretation.

Despite the good-faith belief that given the Company’s circumstances all eligibility requirements for the PPP Loans were satisfied, if it is later determined that the Company had violated any applicable laws or regulations or it is otherwise determined the Company was ineligible to receive the PPP Loans, it may be required to repay the PPP Loans in its entirety and/or be subject to additional penalties.

The term of the Company’s PPP Loans is two years.

The annual interest rate on the PPP Loans is 1% and no payments of principal or interest are due until the conclusion of the deferral period.

The deferral period will end on the earlier of (i) the date that Small Business Administration remits the loan forgiveness amount to the lender, or (ii) if the loan is not forgiven, ten months after the end of the 24-week loan forgiveness covered period.

Under the terms of the PPP loans, all or a portion of the principal may be forgiven if the Loan proceeds are used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits, rent, and utilities.

No assurance is provided that the Company will obtain forgiveness of the Loan in whole or in part.

With respect to any portion of the PPP Loans that is not forgiven, the PPP Loans will be repayable on the terms set forth above.

The PPP Loans are recognized on the Company’s June 30, 2020 condensed consolidated balance sheet as notes payable and will be derecognized if and when forgiven.

For additional information regarding our indebtedness, see Note 8 to our unaudited condensed consolidated financial statements.

Working Capital

The outbreak of COVID-19 has already started to have an adverse impact on the Company’s results of operations during its quarter ended March 31, 2020.

The ongoing impacts of COVID-19 have created significant uncertainties around the Company’s operations during the quarter ended September 30, 2020 .

If these conditions continue unabated for more than the short-term, as most industry sources are predicting, the impact of COVID-19 is expected to significantly reduce our revenue, earnings and operating cash flow in future quarters.

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Furthermore, the Company has temporarily suspended its stock repurchase program.

Quantitative and Qualitat ive Disclosure About Market Risk

The Company uses interest rate swaps for the management of interest rate risk exposure, as the interest rate swaps effectively convert a portion of the Company’s Revolving Credit Facility from a floating to a fixed rate.

The interest rate swap is an agreement between the Company and Bank of America to pay, in the future, a fixed-rate payment in exchange for Bank of America paying the Company a variable payment.

The net payment obligation is based on the notional amount of the swap contract and the prevailing market interest rates.

The Company may terminate the swap contract prior to its expiration date, at which point a realized gain or loss would be recognized.

The value of the Company’s commitment would increase or decrease based primarily on the extent to which interest rates move against the rate fixed for each swap.

Radiant entered into two interest rate swap contracts.

This interest rate swap matures and terminates on March 13, 2025.

On April 1, 2020, and effective April 2, 2020, Radiant entered into an interest rate swap contract with Bank of America to trade the variable interest cash inflows at one-month LIBOR for a $10,000 notional amount, for fixed interest cash outflows at 0.5865%.

This interest rate swap matures and terminates on March 13, 2025.

Quantitative and Qualitative Disclosure About Market Risk

As a smaller reporting company, the Company is not required to provide information for Item 3.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis