Earnings call transcript: Titanium Transportation Q1 2025 sees revenue growth

Titanium Transportation Group reported a solid start to 2025 with a 7.5% increase in consolidated revenue for the first quarter, reaching $121.4 million. The company’s trucking and logistics segments both showed growth, with logistics revenue surging by 17.6%. Despite the challenging freight market conditions, Titanium’s asset-light model and strategic focus on technology helped maintain stability.

Key Takeaways

• Consolidated revenue grew by 7.5% year-over-year to $121.4 million.
• Logistics segment revenue increased by 17.6%.
• EBITDA margin stood at 8.2%.
• Debt reduction of $10.7 million achieved in Q1.
• Dividend suspension to prioritize financial discipline.

Company Performance

Titanium Transportation’s Q1 2025 results highlight its resilience amid a recessionary freight industry. The company’s diversified service offerings in trucking and logistics, combined with a strong focus on technology, have positioned it well against economic fluctuations. The trucking segment generated $56.1 million in revenue, while logistics contributed $66.1 million, underscoring the growing importance of logistics in the company’s portfolio.

Financial Highlights

• Consolidated Revenue: $121.4 million (7.5% YoY growth)
• EBITDA: $8.8 million (8.2% margin)
• Trucking Segment Revenue: $56.1 million
• Trucking Segment EBITDA: $6.6 million (13.3% margin)
• Logistics Segment Revenue: $66.1 million (17.6% increase)
• Logistics Segment EBITDA: $3.3 million (5.6% margin)

Outlook & Guidance

Titanium Transportation is focusing on debt reduction and cash flow generation, with minimal capital expenditure planned for 2025-2026. The company is preparing for a potential domestic freight pivot and has suspended its dividend to maintain financial discipline amid market uncertainties.

Executive Commentary

"Titanium’s fundamentals are strong, and our team is executing with discipline and purpose," said CEO Ted Daniel. He emphasized the company’s strategic focus on logistics, stating, "Logistics is a much higher ROIC business and is very scalable." COO Nyeline Daniel added, "We’re not seeing our customers halting business, they are just moving cautiously."

Risks and Challenges

• Freight Industry Conditions: Recessionary trends and macroeconomic uncertainties pose risks.
• Market Uncertainty: Trade tensions and tariff risks could impact operations.
• Weather Impact: Severe weather conditions affected Q1 performance and could continue to be a challenge.
• Asset-Light Strategy: While providing flexibility, it requires careful management to ensure scalability and efficiency.

Titanium Transportation Group’s Q1 2025 performance reflects its strategic resilience and adaptability in a challenging market environment. The company’s focus on logistics growth and technological innovation positions it well for future opportunities.

Full transcript - Titanium Transportation Group Inc (TTR) Q1 2025:

Conference Call Operator: Thank you for standing by. Good morning, and welcome to Titanium Transportation Group Q1 twenty twenty five Conference Call. On today’s call, you have Ted Daniel, President and Chief Executive Officer Alex Fu, Chief Financial Officer and Nyeline Daniel, Chief Operating Officer. Before we begin, 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 and SEDAR.

Please note that this call is being recorded today, Wednesday, 05/14/2025. A replay of this call will be made available until midnight on 05/26/2025. The details of this place can be found on Titanium’s website under the investor section. I would now like to turn the call over to Titanium’s president and CEO, Ted Daniel. Please go ahead, sir.

Ted Daniel, President and Chief Executive Officer, Titanium Transportation Group: Good morning. Thank you, operator, and thank you all for joining us. Titanium for q one twenty twenty five delivered solid momentum and disciplined execution despite the seemingly never ending great recession and chaos of tariffs that were implemented and then retracted or adjusted, creating customer uncertainty. Titanium was able to deliver a 7.5% year over year consolidated revenue growth in the first quarter. This performance reflects our continued focus on things we can control, like operating efficiencies, prudent capital management, strong customer value added service, and tech integrations, as well as the adoption of AI inspired initiatives.

In addition, we continue to see value in our safety and security protocols. On a consolidated basis, the 7.5% growth for q one generated a hundred and 21,400,000.0 in revenue and an 8,800,000.0 EBITDA, a margin of 8.2%. Both our Canadian and US logistics segments were a key driver of this growth with revenue up more than 17% year over year. The company’s asset light high ROIC logistics model continues to scale effectively, supported by our continued tech developments and customer integrations as well as the successful expansion of our U. Freight brokerage network.

The new offices that we announced in 2024 and during the first quarter of twenty twenty five are already demonstrating promising early returns, and we’re encouraged by the strong customer uptake in those regions. In Q1, our brokerage asset light segment now represents over 54% of our top line revenue, demonstrating our commitment to growing our asset light, high ROIC and high free cash flow conversion division. Another way of looking at titanium is that we have become a transportation company that is now less than half asset based. As we continue with this focus, I noted today, only about half our trucks are company owned, further demonstrating our shift to a more asset light model in our trucking segment helping to delever our balance sheet. During Q1, we also maintained a disciplined approach to capital allocation, reducing debt by $10,700,000 in the quarter and allocating proceeds from redundant asset divestitures to pay down debt and strengthen our balance sheet.

As a result, flow from operating activities more than doubled to 15,000,000 and cash on hand increased by 14,000,000 during the quarter, underscoring our focus on disciplined execution and strong cash flow generation. While the economic situation remains uncertain and the freight industry remains in a recessive state, we see the company’s results against this backdrop as a statement to our resilient team. Now turning our segmented results. The trucking segment delivered revenue of $56,100,000 in Q1. EBITDA came in at $6,600,000 with an EBITDA margin of 13.3%.

Logistics continued to drive growth during the first quarter of the year, generating revenue of $66,100,000 an increase of 17.6% when compared to the same quarter last year, with EBITDA coming in at $3,300,000 and EBITDA margins for this segment during the quarter were 5.6. While profitability over the period was impacted due to the competitive due to competitive contract rates and increased costs, We continue to be pleased with the strong consistent volume growth in this segment and have been focused on scaling this asset light segment as we prepare for an inevitable improvement in market conditions with particular focus on The U. S. Freight brokerage market. During q one twenty twenty five, we added our newest logistics office in The US in Dallas, Texas, further strengthening our footprint in The US market.

Growing our US based brokerage remains a key driver of Titanium’s next stage of growth. Our asset light model provides the flexibility to navigate potential disruptions while reinforcing our financial position amid challenges such as tariffs, fuel costs, and market uncertainty. Our model allows growth in both domestic USA and Canada as well as cross border opportunities. While macro uncertainty persists, including tariff related risks and global trade tensions, titanium remains well insulated. Approximately two thirds of our total volume is domestic and not directly exposed to cross border or tariff related disruptions.

That said, we remain vigilant. Prolonged trade disputes could temporarily increase economic uncertainty, contribute to inflationary pressures, and eventually affect border supply chains. To mitigate these risks, we’re closely monitoring global trade developments and remain agile in our operational planning. Our team is ready to respond to shifting customer needs and market dynamics to maintain service continuity and operational stability. Our commitment to technology, solutions and adoption of AI enhancements allows us to progress as market conditions improve and opportunities for growth present themselves.

In closing, let me say this with absolute confidence. Titanium’s fundamentals are strong, and our team is executing with discipline and purpose. Despite near term industry challenges, we’re confident in Titanium’s ability to scale effectively, strengthen operational resilience, and seize new opportunities. As the industry stabilizes, our diversified services, operational efficiencies, and strategic growth initiatives will ensure we remain competitive and well positioned for long term success. Amid ongoing macroeconomic uncertainty, freight market volatility and an unpredictable tariff backdrop, we’ll continue to withhold formal guidance at this time.

Understandably, during these unpredictable times, we remain focused on fundamentals of the business and prioritizing operational execution, margin preservation, and free cash flow generation. When the cycle turns, Sardin will be in an even better position with a lean, more asset light light cost structure, a strengthened balance sheet and a broader, more diversified business model, both within The US and Canada as well as cross border. And with that, I’ll turn it over to my trusted CFO sitting next to me here, Alex, for a more detailed discussion of our financial results for the quarter. Alex, take it away. Thanks, Ted.

In the first quarter of twenty twenty five, on a consolidated basis, Titanium generated revenue of $121,400,000 compared to $112,900,000 in Q1 of twenty twenty four, a growth of 7.5% year over year. We delivered EBITDA of 8,800,000 with an EBITDA margin of 8.2%. Diving deeper into segment performance. The truck transportation segment generated revenue of 56,100,000.0 in q one twenty twenty five with EBITDA of 6,600,000.0 and an EBITDA margin of 13.3%. Our focus on operating efficiencies led to some revenue trade offs, but delivered improvements in our overall cost management.

Turning to logistics. As Pat noted, the segment continued to face pricing headwinds, but delivered strong performance with a solid volume growth of 9% year over year. During Q1, logistics generated revenue of 66,100,000.0 up 17.6% compared to Q1 twenty twenty four with EBITDA coming in at 3,300,000.0, a growth of 8.1% year over year, with EBITDA margins of 5.6%. We are encouraged by the continued organic growth of this segment and remain focused on our asset light business model. In addition to navigating the challenging economic environment, we continue to prioritize strengthening our balance sheet.

As part of our shift to a more asset light model, we strategically divested noncore assets, including older equipment and under utilized properties, generating 1,700,000.0 in proceeds. These proceeds were applied towards debt reduction. Subsequent to quarter end, we have conditionally sold our North Bay property, and we expect sale to be completed prior to the end of Q2. This liquidity, in addition to our ongoing operational efficiency, enable us to pay down $10,700,000 in company debt and acquisition loans during the quarter, contributing to an improvement in our net debt to equity ratio to 1.86 from two at year end 2024. These delivering deleveraging efforts remain a cornerstone of our financial strategy, enhancing both resilience and optionality as markets begin to recover.

Building on Ted’s comments earlier, our disciplined capital allocation approach is yielding results. Cash flow from operating activities more than doubled to $15,000,000 compared to $6,200,000 in Q1 twenty twenty four, and cash on hand increased by 14,000,000 during the quarter. Combining strong cash flow from operations with limited CapEx during 2025 and 2026, we expect to generate substantial free cash flow. Prioritizing debt reduction and focusing on cash flow generation not only lowers our interest burden, but also position us well to reinvest in high growth logistics opportunities as demand strengthens. Early in the quarter, we announced the temporary suspension of our dividend to maintain financial discipline and prioritize prudent capital allocation.

We will continue to review the cap the company’s budget, cash flow forecast, growth opportunities and market conditions on a quarterly basis to determine when dividends can be declared in future quarters. As we navigate the remainder of 2025, we remain committed to continuing our disciplined capital allocation strategy, ensuring our financial position is strengthened and poised for long term success. I would now like to turn the call back over to Ted. Thank you, Alex. Although market visibility remains limited, we are starting to see some signs of stabilization and opportunities in selected regional markets, particularly within our logistics operations.

Further substantiated by the recent announcement of the de escalation of tariffs between the two largest economies in the world, industry trends suggest that freight may have reached a cyclical trough, but any recovery will likely be gradual and a little uneven. In this environment, maintaining focus, operational agility, and financial discipline is essential. Titanium continues to execute with this mindset. Our asset light model supported by disciplined capital allocation and a strong US logistics presence continues to differentiate us in a tough market. We remain committed to leveraging our cash flow to reduce debt while selectively investing in high return opportunities aligned with our long term strategy.

As I outlined in our last call, the broader macroeconomic environment remains fluid, particularly on the trade front, but the essential role that trucking plays in North American supply chains remains unchanged. Should customers begin to pivot towards domestic freight or temporarily onshoring in response to evolving trade dynamics, both our truck transportation and logistics divisions are well positioned to respond. We believe these conditions will ultimately create opportunity for agile, well capitalized operators like Titanium. By staying focused on customer service productivity and cash flow generation, we are positioning the business to emerge stronger as market conditions normalize, driving long term value for our shareholders. With that, I’ll turn it over to the operator to open the line for Q and A.

Conference Call Operator: Thank you. And ladies and gentlemen, 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 pick up your handset before pressing any, please. To withdraw your question, please press star followed by the number 2.

1 moment, please, for your first question. And your first question comes from the line of David Ocampo with Cormark Securities. Please go ahead.

Ted Daniel, President and Chief Executive Officer, Titanium Transportation Group: Thanks. Good morning, everyone. Good morning, David. It was nice to see an increase in both volumes and pricing and logistics. But it did surprise me that margins compressed and it’s sitting kind of well below the 8% margins on an EBITDA basis that the division’s more or less used to.

I was hoping either Ted or Alex, if you can walk us through some of the costs that may be elevated at this stage and what your expectation is for margins for at least the balance of the year? Is it kind of stuck in status quo here at these current levels? Well, thanks, David. Typically, q one is a weaker quarter than the rest. We’re starting to see a little more normal seasonality in 2025, hopefully, for a for a longer time.

It’s been crazy last few years. So and for q one especially, we have had some really weird and and severe weather conditions that have driven the market to some extremes. So in both January and February, we saw margin compression that’s beyond what anyone expected. So that’s where the majority of the margin compression comes from. We saw better in March, and we expect that the rest of the year will demonstrate normal seasonality.

So we expect that to improve for the balance of year. Is it going to get to the 9%? I think in terms of the logistics market, we’re not quite there. Maybe with the recovery, if it does come, then we’ll see the 9%. But we do we we do expect to see the improvement over the next few quarters.

And I’ll pass it off to Marilyn for additional comments.

Nyeline Daniel, Chief Operating Officer, Titanium Transportation Group: Thanks, Alex. I think you covered most of the the thoughts that I was gonna add to it. Weather did have a big impact in the first quarter along with the noise of the recent US election and and the effects of the the noise of the tariffs even before they hit. So there was a lot of up and down in the months of January and February as we as the course started. So I think coupled together, that was a big impact on margins that may be a little bit more unique to the first quarter.

Ted Daniel, President and Chief Executive Officer, Titanium Transportation Group: Yeah. I and I wanna comment. I remember getting pictures in January and February of snow that literally shut down Georgia. So it was absolutely unbelievable to see snow in the Southeast, which was which was kinda funny because they don’t have any snowplow equipment, so they just shut down everything. Right.

Yeah. That I guess that that makes a lot of sense for other conditions, but that’s a Absolutely. On on margins. Ted, I think I heard correctly that 50% of your trucks right now are are company owned, 50% owner operated. Is that in the truck transport I’m guessing that’s the truck transportation division?

And then what do you guys think the the right level is going forward? Should we should we still continue to see a shift towards more asset light on on the on the truckload side? Yeah. So right now, we’re approximately fifty fifty on on our call it asset division. So again, top line, we are 54% a broker and only 46% a asset heavy asset medium division.

But on the fifty fifty side, yeah. So because of the leveraging and the fact that the rating and the trucking industry tends to be a very low ROIC division. Obviously, it’s a lot easier to to have a more owner operator centric model. It doesn’t mean that we’re going to shrink the company truck side necessarily at this point in time. In fact, most of our trucks at this point in time are seated and are rather busy.

So we’re kind of happy about that. But growth on the trucking side, be it probably somewhat limited because it’s real estate on wheels, it’s a very, very slow growth process, would be better to do owner operator because it’s not on your balance sheet. Right? So it’s just a better financial model. Yeah.

That’s that’s helpful there. And then maybe, Alex, I just wanted to dive into the free cash flow for the quarter. It seems like there’s a pretty sizable reduction in working capital, and it was mostly on the AP side. I I was wondering if we should expect a reversal throughout the year, or are you just getting better terms from from some of your customers? I would expect I would expect reversal throughout the year.

We do work closely with our vendors, but we don’t plan on pushing our vendors because we believe ourselves to be in good solid capital position already. This is more a reflection of timing and whatnot. Gotcha. And then last one, just on CapEx because you called it out, minimal spending for ’25 and ’26. Do you do you guys have a a number for for ’25 and ’26?

I imagine you guys are pausing all track and trailer orders of deferring business exam. So in ’25, we’re looking at really a call it an almost an immaterial number, you know, if I mean, if we need, you know, five trucks for a particular circumstance that, you know, perhaps we’re working on a on a certain customer contract or something along those lines, you know, that I mean, it may or may not be necessary, you know, but let’s just say 25 is for all intents and purposes 26 would be a minimal amount depending on growth opportunities. So, really, you know, I would consider both ’25 and ’26, given how young our fleet is, would be, you know, immaterial. I wouldn’t I wouldn’t wanna say zero, but but I would definitely call it, you know, virtually an immaterial amount. I guess I guess bigger question there.

What’s the true maintenance level for your current level of fleet, whether it’s tractors and trailers in a more normal year without any So you’re talking maintenance CapEx? Yeah. So we’re kind of Yeah. I mean, Alex is gonna take most of this question. I’m gonna say that we’re kind of working through some adjustments at this point in time in terms of the type of, you know, split that we want between our asset light, asset medium, and and asset heavy divisions.

So maybe I’ll let him dive deeper into that. So with that qualifier, at this current moment, our replacement CapEx is about 20 to $25,000,000 per year, replacing some of our trucks on schedule and replacing our trailers. Of course, with the COVID and post COVID craziness, we have pushed that schedule ahead of time. That’s why in ’25, ’20 ’6, we don’t have any. But going into maybe the tail end of ’26 and maybe ’27, we’ll probably see start to see some replacement back to normal.

Okay. That’s helpful. I’ll hop back in a few. Thanks a lot, everyone. Thank you.

Conference Call Operator: Thank you. And once again, if you would like to ask a question, please press the star one. Your next question comes from the line of Gianluca Tucci with Haywood Securities. Please go ahead.

Ted Daniel, President and Chief Executive Officer, Titanium Transportation Group: Hey, guys. Good morning. Morning, James. At a high level, Ted, with this ninety day high that’s on reciprocal tariffs, do you expect inventory restocking cycle to be accelerated in this window? Just wondering how your customers are thinking about this opportunity over the next ninety days.

We so I’m gonna kind of back into that answer, if you don’t mind. I’m gonna say that titanium has a lot of CPG. So I I think cleverly, you’ve also asked what is what q two look like. So so I think that because we’re more of a rather CPG consumables necessities type And during the recession or not recession, during the pandemic, I was saying, we’re pandemic proof. You know, people need a lot of what we ship just to live day to day, which kinda makes us resilient.

And then, you know, after that, it was more, you know, recession proof and so on. So, I mean, yeah, there’s fluctuations within that. But I’m gonna say that our customer base and the diversification that we have in particular, we’re not gonna see as much of a fluctuation. Perhaps there might be certain circumstances where yeah. But I I can’t speak for the rest of the industry.

I just know that titanium in this particular case is rather resilient. And, you know, other than the fact that the weather was so severe and so horrible in January and February and with such a strong impact, you know, we’re not really seeing a huge difference between March and April. So I don’t know if what’s happening right now geopolitically is really going to have as much of an impact on us either. So just to let you know, actually, I’m gonna just deliberately send this over to Marilyn right now to to add some comments because she’s actually in Chicago. So at oh, Chicago is brokerage.

Yeah. Where the weather is better there right now, I hear.

Nyeline Daniel, Chief Operating Officer, Titanium Transportation Group: It it’s pretty warm, but it might be it looks like it’s gonna rain.

Ted Daniel, President and Chief Executive Officer, Titanium Transportation Group: Yeah. But

Conference Call Operator: anyway okay.

Nyeline Daniel, Chief Operating Officer, Titanium Transportation Group: I just wanted to add to that that our our customers, like so many, are also uncertain in terms of where the times are, and none of them have halted their business. They are careful with how they’re moving their freight at the moment and the volumes of it because, as you know, every day is a little different and every week is drastically different. So everyone’s a little uncertain of of of timing, and there’s certainly an element of chaos. So we’re we’re not seeing our our customers are continuing largely or cautiously rather on a version of normal. Hope that helps.

Ted Daniel, President and Chief Executive Officer, Titanium Transportation Group: Okay. And and I guess, Marilyn, just just on the claim side of things, like, in your planning for that business, how do you think about expansion plans or adding to the fleet, shrinking the fleet, adding customers or or, like, you know, in this crazy environment we have, how do you go about planning for the next few years of crane and expanding that business?

Nyeline Daniel, Chief Operating Officer, Titanium Transportation Group: Well, we definitely believe in the asset model we added into The US for for allowing us to put boots on the ground or trucks on the road in The US and the and the effect it will have on our brokerage services and our overall transportation services. We’re not looking to shrink that fleet. We are definitely looking to be steady as it goes. And then as the markets turn, we’re ready to expand on that program. But again, we are still focusing on our asset light model even within the even within the trucking segment rather on more of an asset light model for growth there.

In terms of, you know, how do we navigate through this, that’s where sort of our strength and teams, our tech and our operational sales strength that we have. Hard to hard to see it in these times, but it’s still there. We continue to be offensive in our sales strategies. And I am happy to say that although if these are struggling times and and the results aren’t where we would like them to be, we’re actually growing on our customer bandwidth, adding new business as we go, you know, in this marketplace where you do see some stability or or or retraction or just uncertainty, our offense is growing business, adding new business, adding new customers and so on.

Ted Daniel, President and Chief Executive Officer, Titanium Transportation Group: That’s helpful. Thank you, Marilyn. And then just one final one perhaps for Ted and Alex. Good continued growth in asset light. Can you give us an update on your roadmap there near term?

And if you think about the company out five years from now, how big as a percentage of sales are you aspiring logistics to be? Yes. So we we definitely expect logistics to be a much larger over the next few years, a much larger division only as a matter of capital practicality. Right? It’s a much, much higher ROIC business.

Right. And it’s a lot more agile. And with our digital capability and our our technological platforms, it’s it’s very scalable. So from that perspective, we we certainly expect it to grow relatively speaking on a much, much faster level. You know, trucking is a lot harder to grow because it is it is very, very taxing on your balance sheet.

So, you know, we have to be mindful of that and, you know, and that that does that does cut into shareholder value. And so we’re obviously gonna be, you know, extremely careful and and definitely very conservative in the future on, you know, on on the amount of leveraging that we’ve got versus the what we expect to be exponential growth in our in our asset light divisions and locations. To add to that yep. Sure. Yeah.

Of course. And to to that and to add to that, we have the last three offices we opened are still relatively young. So while I can’t speak to a longer term, near term, these three offices needs to get up and running to the to our target average mark about twenty, twenty five million dollars per office. Yeah. So in the near term, you can see at least that growth from our logistic division as also our Canadian offices gets to where it needs to be.

So there’s a couple offices that’s not at maturity. And then past that, then it’s we then we really are looking at the expansion of our current offices, and that depends on our customers at the time. We’ll we’ll see where we will end up. Yeah. I mean, the same thing yeah.

Sorry. So this is Ali. We’re gonna use our tech, right, to to keep exponentially growing growing our our brokerages. And and, of course, the people behind us have to continue to execute on all that. Thanks, Ted.

So so, like, I just wanna confirm the road map for this year. No more offices on the brokerage side for now? No. We’re gonna get the Virginia and the Texas offices going. They’re essentially done.

We’re just, as we speak, we’re currently installing our technology. And we’ve got the managers, you know, they’re they’re actually they’ve been at it chomping at the bit. So, yeah, they’re they’re ready to go to get going. Alrighty. Thanks, guys.

Talk soon. Thanks, Oliver. Appreciate it. Thanks, g. Operator.

Conference Call Operator: Sorry. We have no further questions at this time. I would like to turn it back to Mr. Todd Daniel for closing remarks.

Ted Daniel, President and Chief Executive Officer, Titanium Transportation Group: Okay. Sounds good. Thank you very much, and thank you all for joining us today. We appreciate your interest in our company. I look forward to providing an update on our progress and all of our priorities as discussed today when we report our Q2 results in August.

If there are any further questions, please feel free to contact us. Thank you again for joining us today on the call.

Conference Call Operator: Thank you for that, Artis. And ladies and gentlemen, this concludes today’s conference call. Thank you all for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.