Earnings call transcript: Titanium Q3 2025 sees revenue dip, strategic growth

Titanium Transportation Group Inc. reported its third-quarter earnings for 2025, revealing a slight decline in revenue but an improvement in net income per share. The company continues to focus on its asset-light growth strategy amid challenging market conditions. The stock price remained stable, reflecting a cautious but steady investor sentiment.

Key Takeaways

• Revenue decreased to CAD 115.7 million from CAD 118.4 million year-over-year.
• Net income per share improved to $0.01 from a loss of $0.01 in Q3 2024.
• The company opened new logistics offices and emphasized technological investments.
• The freight market remains soft, but signs of stabilization are emerging in certain U.S. regions.

Company Performance

Titanium Transportation Group Inc. experienced a modest decline in revenue during the third quarter of 2025, reflecting ongoing challenges in the freight market. Despite this, the company's strategic focus on an asset-light model and technological advancements has allowed it to maintain a positive trajectory in net income. The opening of new logistics offices in Dallas and Virginia Beach signals a commitment to expanding its operational footprint and enhancing service delivery.

Financial Highlights

• Revenue: CAD 115.7 million, down from CAD 118.4 million year-over-year.
• Earnings per share: $0.01, improved from a loss of $0.01 in Q3 2024.
• EBITDA: CAD 8.9 million, with an 8.7% margin.
• Operating cash flow: CAD 9.5 million, up from CAD 7 million.
• Cash position: CAD 20.7 million.

Outlook & Guidance

Looking ahead, Titanium projects next quarter revenue between CAD 112 million and CAD 117 million, with an EBITDA margin estimate of 8.5-9.5%. The company aims to protect margins, strengthen its balance sheet, and execute disciplined operations. Minimal capital expenditures are expected, ranging from CAD 2.5 million to CAD 10 million for 2026, as the company focuses on leveraging its asset-light strategy.

Executive Commentary

CEO Ted Daniel emphasized proactive measures, stating, "We are not waiting for the market to recover. We are taking proactive steps to ensure that Titanium emerges stronger." CFO Alex highlighted the company's strategy, saying, "Our asset-light growth strategy, combined with prudent cost management and operational discipline, continues to position Titanium to navigate this cycle effectively."

Risks and Challenges

• Market softness: The freight market continues to experience softness, impacting revenue growth.
• Geopolitical volatility: Trade tensions and geopolitical factors pose risks to the sector.
• Overcapacity: Persistent overcapacity in the market may pressure pricing and margins.
• Regulatory changes: Potential impacts from driver-ink regulations could affect operations.
• Margin compression: Factors in the logistics segment could lead to margin pressures.

Q&A

During the earnings call, analysts inquired about the company's fleet rebalancing efforts in the U.S. and Canadian markets. Titanium addressed potential impacts from regulatory changes and explored factors contributing to margin compression in its logistics segment. The company confirmed its plans for minimal capital expenditures, reinforcing its focus on cost management and operational efficiency.

Full transcript - Titanium Transportation Group Inc (TTR) Q3 2025:

Ted Daniel, President and CEO, Titanium: Good morning. Thank you, Operator, and thank you all for joining us. Titanium continues to navigate a challenging freight market with discipline and focus for the period ending September 30, 2025. Despite persistent softness across the transportation sector, driven by trade tensions, geopolitical volatility, and weaker consumer confidence, our third-quarter performance underscores the momentum building across the business. Both our truck transportation and logistics segments delivered positive operating income for the second consecutive quarter. This reflects the impact of the strategic actions we've taken over the past several quarters. On a consolidated basis, we generated CAD 115.7 million of revenue and CAD 8.9 million of EBITDA, supported by continued strength in our U.S. logistics platform and improved operating performance in truck transportation. In both segments, we remained disciplined on pricing, customer and industry mix, along with focus on cost efficiency.

All of these are key elements of our approach during this prolonged period of market softness. Our logistics segment, despite considerable headwinds, continued to perform well. Revenue increased 3.3% year-over-year to CAD 62.9 million, driven primarily by continued organic volume growth of 19% across both our Canadian and U.S. brokerage operations. We did see some pricing pressure in transactional freight toward the latter part of the quarter, which tempered the full impact of the volume growth. Even so, underlying demand trends remain stable, and our asset-light model continues to demonstrate its scalability and resilience. Our operational and sales teams are working hard to maintain market share and functional margins. During the quarter, we also formally opened our Dallas and Virginia Beach offices. Turning to truck transportation, revenue came in at CAD 53.8 million, down year-over-year as expected, given our deliberate exit from unprofitable lanes last year.

EBITDA was $7.7 million, with an EBITDA margin of 16.1%. This is now our most efficient trucking quarter in nearly two years, and it reflects the benefit of our efforts to streamline capacity and focus on sustainable freight. On the capital allocation front, we remained focused on building financial flexibility. We generated CAD 9.5 million in operating cash flow, up from CAD 7 million last year, and ended the quarter with CAD 20.7 million in cash. Importantly, we repaid CAD 8.9 million in debt in the quarter, continuing our deleveraging priority. Our substantially modern fleet requires no rolling stock expenditures over the next year. This will result in below-average CapEx for the next 12 months, allowing us to continue our debt reduction efforts. We're operating with discipline, staying focused on what we can control, and positioning Titanium for the long term.

With that, I'll hand it over to our CFO, Alex, to walk through the financials in more detail. Alex, over to you.

Alex, CFO, Titanium: Thanks, Ted, and good morning, everyone. Titanium continues to demonstrate operational discipline and resilience in Q3 despite ongoing macro headwinds. I'll walk through the consolidated numbers first and then touch on the segment performance. On a consolidated basis, the company generated revenue of CAD 115.7 million, compared with CAD 118.4 million in the same period last year. EBITDA was CAD 8.9 million, with an EBITDA margin of 8.7%. While margins were modestly compressed year-over-year, the underlying performance reflects continued progress in operational efficiency, customer mix, optimization, and disciplined pricing across both segments. Logistics continues to be a key growth engine for the company. Revenue in this segment increased 3.3% year-over-year to CAD 62.9 million, supported by steady U.S. volume growth and continued customer engagement across our brokerage network. EBITDA for the segment was CAD 2.3 million, with an EBITDA margin of 4.2%.

Similar to last quarter, margins were affected by ongoing geopolitical uncertainty and supply-side cost pressures. Despite this, underlying demand trends remain stable, and our asset-light model continues to demonstrate its scalability, particularly in the U.S., where newer offices are strengthening relationships and gaining traction. In truck transportation, revenue for the quarter was CAD 53.8 million, down from CAD 58.1 million last year, reflecting our strategic exit of unprofitable lanes in 2024. EBITDA for the segment was CAD 7.7 million, representing a margin of 16.1%. This marks the segment's third consecutive quarter of sequential profitability improvement. Disciplined pricing and continued efficiency gained across the fleet supported another quarter of positive operating income. Operating cash flow remained strong at CAD 9.5 million, up from CAD 7 million last year, highlighting improved cash conversion and working capital management.

Net income from continued operations per share was $0.01, a year-over-year improvement from a loss of $0.01 per share in Q3 2024. From a capital allocation standpoint, we remained committed to strengthening the balance sheet. We ended the quarter with CAD 20.7 million in cash and repaid CAD 8.9 million in loans and finance lease during the quarter. These actions contribute to further improvements in our leverage position and reinforce our focus on debt repayment. Overall, our asset-light growth strategy, combined with prudent cost management and operational discipline, continues to position Titanium to navigate this cycle effectively. We remain focused on protecting margins, enhancing liquidity, and supporting long-term shareholder value. With that, I'll pass the call over back to Ted. Thank you, Alex. Overall, our performance this quarter reflects the strength of our operating model and the progress we've made in sharpening our disciplined execution across the business.

While freight markets remain challenging and visibility continues to be limited, we are seeing early signs of stabilization in certain regions. As we continue to adapt to our current industry environment, we look forward to more productive market conditions. Titanium continues to operate with discipline, focusing on what we can control. The benefits of our refined operating model are becoming increasingly evident, reflected in positive operating income in both segments for the second consecutive quarter. Titanium continues to operate with a strong foundation, an even more efficient cost structure, and most importantly, a resilient platform. To conclude, I would like to reiterate that we remain confident in the fundamentals of the business and continue to be focused on operational execution, margin preservation, and cash generation. We estimate revenue of CAD 112 million-CAD 117 million and EBITDA % of 8.5-9.5% for the next quarter.

As we look ahead, our priorities remain unchanged: protect margins, maintain balance sheet strength, and continue executing with discipline across our network. We're not waiting for the market to recover. We are taking proactive steps to ensure that Titanium emerges stronger and better positioned for long-term sustainable growth. With that, I'll turn the call over back to the Operator for questions.

Conference Call Operator: Thank you. Before we begin the question and answer session, I would like to remind everyone that certain statements made on this call today may be forward-looking. In that regard, please refer to the risk factors and cautionary provisions outlined in the press release issued by the company yesterday, as well as the filings made by Titanium on SEDAR+. We will now begin the question and answer session. To ask a question, you may press star followed by the number one on your telephone keypad. If you're using a speakerphone, please speak off your handset before pressing the keys. To withdraw your question, please press star followed by the number two. With that, our first question comes from the line of Gianluca Tucci with Haywood Securities. Please go ahead.

Ted Daniel, President and CEO, Titanium: Hi, good morning, guys.

Morning, John, Lisa.

Good morning, Gianluca.

It sounds like with the market, the way it is, that you've had to do some rejigging of routes to adapt to this market. Any color there, I think, would be helpful, Ted. Secondly, when you think about your asset-based fleet size as it is today, are you comfortable with the size for this market, these market conditions, or is there some work to be done there too?

Alex, CFO, Titanium: I mean, you've got really two questions. Yeah, the first one is kind of rebalancing the fleet given current market conditions. I know Marilyn would like to answer that.

Marilyn, Unnamed Executive, Titanium: Yeah. I mean, we are seeing more domestic work. Cross-border has softened, but we're well-positioned with our U.S. fleet and Canadian fleet to sort of balance out the two marketplaces between Canada and the U.S. Kind of just we work on our domestic U.S. and our domestic Canadian. That kind of helps us sort of balance off the typical cross-border freight that we were experiencing for many years. A bit of a change there for sure. In terms of the size of the fleet, we're fine for the moment. I don't know, Ted, if you want to add anything else to that.

Ted Daniel, President and CEO, Titanium: I think we're good. We have already right-sized to a certain degree last year, and we're managing what we have. At this point in time, it's continue to just do the best we can and focus on profit and just kind of go from there and see what happens in terms of the general North American economy over the next couple of quarters.

Okay. Thanks, guys. That's helpful color. Then just secondly, how are you thinking about asset-light expansion in the face of the current environment in the near term, at least? Is the cadence of a couple offices incrementally per year still the game plan, or how are you thinking about the brokerage piece of the business in light of the current situation out here?

Alex, CFO, Titanium: We believe that we're going to continue to grow in brokerage. It's going to be sure and steady at this point in time. Obviously, this is not an economy where I think people are where you—let's just say it's not a tailwinds economy. Certainly, I think in this industry, we're still experiencing headwinds. We are going to—we're definitely going to continue to focus on technology in the space, and we're going to continue to expand our existing offices and try and continue to gain market share.

Ted Daniel, President and CEO, Titanium: Okay. Thanks, guys. Talk soon.

Marilyn, Unnamed Executive, Titanium: Thank you.

Alex, CFO, Titanium: Thanks, John.

Conference Call Operator: The next question comes from Michael Carucci with Desjardins Securities. Please go ahead.

Thank you for taking my question. I know it's still early days, as the budget only came out last week, but do you have any early signs of maybe changes with customers in the Canadian market when it comes to, let's say, customers diversifying away from players that are perceived to be driver-ink?

Marilyn, Unnamed Executive, Titanium: I can answer to that. Way too early for that kind of an effect to be known. Customers have talked about it over the years. It's not nothing completely new, but definitely a positive, positive for the industry, positive direction. The impact will be over time. We don't know all the details yet in terms of penalties, etc. We know it's a project and a source of attention for the government over the next four years with a good chunk of money allocated to it. How it all rolls out, the enforcement, the penalties, and so on, I think we don't have any details on that yet, but it is definitely positive. From a customer perspective, they're going to have to see the effects of it first to have a real impact on the customer.

Ted Daniel, President and CEO, Titanium: All right. Appreciate it. Maybe just on the logistics segment, maybe just any additional details you could provide in terms of the margin compression despite the volume growth, maybe startup inefficiency costs at the new locations, or what are your expectations in terms of the fourth quarter?

I think it's just, honestly, Mike, I think it's just pure pricing at this point in time. Again, it's still a market where you've got a lot of overcapacity. It is improving slowly but surely. Last year, everybody was hoping for the end of the freight recession, and it's just taken a lot longer. It is headed in the right direction, but I believe that a more balanced pricing environment is what's going to help with that. The other thing is, of course, technology. We believe that there's more efficiency in the market from a technological perspective, which is something that we do invest in. We are very technologically focused from that perspective.

Marilyn, Unnamed Executive, Titanium: From a margin compression, there were some announcements in the quarter that affected carrier relations with brokers during the quarter with immigration and language law enforcement that came up. There was a lot of disruption for a little bit. I think it is coming down, but that was definitely a peak toward the end of the quarter. Definitely had an effect.

Ted Daniel, President and CEO, Titanium: That's helpful. I appreciate it. Thanks, guys.

Marilyn, Unnamed Executive, Titanium: Thank you.

Ted Daniel, President and CEO, Titanium: Thanks, Michael.

Conference Call Operator: If you would like to ask a question, please press star one on your telephone keypad. We do have a follow-up question coming from the line of Gianluca Tucci with Haywood Securities. Please go ahead.

Ted Daniel, President and CEO, Titanium: Hey, guys. Perhaps a question for Alex. Just to confirm, it sounds like CapEx plans for 2026 is pretty marginal at best at this point. Any color there, Alex, on the CapEx plans for next year?

Alex, CFO, Titanium: Yes, for sure. Thanks, Gianluca. The CapEx plan for the next year, all the way to Q3 2026, is going to be minimal, as you say. For the entire year for 2026, like we said in the previous call, there will be some replacements for the Oakwood fleet, so it may go to CAD 2.5 million-CAD 10 million. It really depends on the market at the time. We may not need all CAD 10 million. It's now trending to the lower side, to be honest, and that's where we're going to be at for 2026, and there's no replacement for the Canadian fleet.

Ted Daniel, President and CEO, Titanium: Okay. Thanks for that, Alex. Perhaps just one last follow-up for Ted. Ted, when you size up the market today, are you continuing to see all capacity exit the market, or how's the supply side shaking out these days? Is it still trending to being a smaller market, and is the pace that you're seeing of cuts on the capacity piece of things, is it coming down aggressively or modestly? How would you kind of stack up the lay of the land right now in the transport market on the supply side?

There are definitely indicators. You're right, Gianluca. There are definitely indicators that are saying, "Hey, you know what? We are shrinking capacity." I believe that it isn't happening as fast as we would have liked it. It's been a very, very prolonged freight recession, and it is happening, but very, very, very slowly. Pricing pressure, you still see it in the RFQs. It's still a very competitive market from a pricing perspective. I don't believe that it's—I don't believe that it's—call it as an industry, it's out of the woods. At this point in time, we're definitely seeing indicators that are saying, "Yes, it is shrinking slowly." It's headed in the right direction.

Okay. Cheers to greener days ahead, Ted.

Marilyn, Unnamed Executive, Titanium: Thank you.

Ted Daniel, President and CEO, Titanium: We're slowly but surely getting there.

Marilyn, Unnamed Executive, Titanium: Yeah.

Ted Daniel, President and CEO, Titanium: I appreciate it, guys. Thank you.

Marilyn, Unnamed Executive, Titanium: Thank you.

Ted Daniel, President and CEO, Titanium: Thank you.

Conference Call Operator: The next question comes from Robert Murphy with Raymond James. Please go ahead.

Oh, yeah. Hi, team. Thanks for the time. I just wanted to follow up kind of on the outlook here. You indicated some early signs of stabilization in certain regions. Just wondering if you could provide a bit more color here. Are there certain end markets, geographies in particular where you're seeing this improvement, etc.?

Ted Daniel, President and CEO, Titanium: A little bit of improvement in the, kind of call it, the Northeast and the Midwest. That is probably along the lines to some degree of the whole issue of illegal drivers. It's interesting because you wouldn't have expected that region, but that seems to have more of the impact on pricing. Again, it's more kind of a little bit of everything, right? It's the fact that we're going to address, hopefully, over the next couple of years. I don't know what the budget has, but the driver-ink, they're addressing language laws in the U.S. There's issues with making sure that you've got compliant drivers and so on. I think it's kind of a culmination of a whole bunch of different components. Do you have anything to add to that?

Marilyn, Unnamed Executive, Titanium: No, I think you've covered it all. I mean, it's certain regions that are happening. Definitely in the U.S., you're starting to see a spark in certain areas, which is good. It's usually a good telltale sign for us here in Canada. There is some movement in the right direction. I think you will see carriers exit just out of pure exhaustion over this period. I think things will come together between regulations, costing, technology, and all of those things to see sort of a better marketplace in the future. When is the question?

Ted Daniel, President and CEO, Titanium: Yeah. That's the crystal ball right there.

Okay. Great. Thank you. That's great color. Just kind of shifting gears, just had one follow-up here. Just on the trucking margin, good to see some progression there sequentially the last couple of quarters. Just kind of looking into 4Q, and I know you guys provided kind of the 4Q guide there, but just looking to 4Q in 2026, kind of how should we think of margins progressing on the trucking side?

Alex, CFO, Titanium: Thanks, Robert. Margin for the trucking side, barring any market improvements, we're definitely trying to improve it as we streamline. Like we said in previous calls and last year as well, we're looking to only take on business that have sustainable rates, and that has been our focus for operations this year and will continue to go that way. That's why our operational efficiency has improved. How far can we go? It's difficult to say given the current market conditions, but we are looking to improve that. Our expectation is that we are going to bring that up to potentially the 17% mark and hopefully beyond that.

Ted Daniel, President and CEO, Titanium: Okay. Great. Thanks very much for the color. I'll turn it back.

Yeah. Thanks.

Conference Call Operator: If you would like to ask a question, please press star followed by the number one on your telephone keypad.

Marilyn, Unnamed Executive, Titanium: Alex is okay.

Ted Daniel, President and CEO, Titanium: Good. Yeah. We sent it.

Marilyn, Unnamed Executive, Titanium: Are you there?

Conference Call Operator: I am showing no further questions at this time. I would like to turn it back to Titanium's President and CEO, Ted Daniel, for closing remarks.

Ted Daniel, President and CEO, Titanium: All right. Great. Thank you, Operator. Thank you all for joining us. We appreciate your interest in our company. At this time, I'd also like to thank all of our team members, our staff for their hard work and dedication. I would also like to acknowledge and thank the hard work and dedication and attention to compliance and safety of all of our drivers. I look forward to providing an update on our progress and all of our priorities discussed today when we report our Q4 and full year 2025 results in March. If there are any further questions, please feel free to contact us. Thank you for joining us today on this call.

Conference Call Operator: Thank you. Ladies and gentlemen, this now concludes today's conference call. Thank you all for joining. You may now disconnect.

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