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TTS Group’s Q1 2025 earnings call revealed a mixed financial picture. While the company reported a revenue increase to 161.4 million, it posted a negative earnings per share (EPS) of -0.02, missing expectations. This led to a 1.1% decline in stock price post-earnings, with further declines observed afterwards. According to InvestingPro data, the stock has shown remarkable resilience with a 75.86% year-to-date return, despite current challenges. The company maintains a market capitalization of $29.75 million, with a P/E ratio of 68.75.
Key Takeaways
- Revenue increased compared to the previous quarter.
- EPS was negative, missing expectations.
- Significant reduction in operational expenses.
- Stock price declined by 1.1% post-earnings.
- Market sentiment appears negative due to EPS miss.
Company Performance
TTS Group demonstrated a revenue increase compared to Q4 2024, maintaining an EBITDA margin of 9.5%. The company achieved a significant reduction in operational expenses, particularly within its river transport segment, which saw a 25% decrease. InvestingPro analysis reveals the company operates with a moderate level of debt and maintains strong liquidity, with a current ratio of 15.65, indicating robust short-term financial health. Despite these improvements, the negative EPS highlights ongoing challenges. InvestingPro subscribers have access to 7 additional key insights about TTS Group’s financial position.
Financial Highlights
- Revenue: 161.4 million, up from Q4 2024
- Earnings per share: -0.02, indicating a loss
- EBITDA margin: Maintained at 9.5%
- Operational expenses: Decreased by 16.3% at the consolidated level
Earnings vs. Forecast
TTS Group’s negative EPS of -0.02 fell short of expectations, indicating a challenging quarter. With no specific revenue forecast provided, the significance of the revenue increase remains unclear, but the negative EPS suggests an earnings miss.
Market Reaction
Following the earnings release, TTS Group’s stock price fell by 1.1%, closing at 4.94. The stock has continued to decline, currently trading at 4.66, reflecting investor concerns. Based on InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels. However, the company maintains a "GOOD" Financial Health score of 2.76, suggesting underlying stability despite market sentiment. Detailed valuation metrics and comprehensive analysis are available in the Pro Research Report, part of InvestingPro’s coverage of over 1,400 US equities.
Outlook & Guidance
Looking ahead, TTS Group expects potential revenue and cost increases in Q3, with anticipated improvements in grain harvests and monitoring of Liberty Gas production developments. Strategic focus remains on cost-rational optimization. While InvestingPro data indicates analysts anticipate a sales decline this year, they also predict the company will return to profitability, potentially supporting future stock performance.
Executive Commentary
- "We are no longer in the buyers’ market era," stated the primary presenter, highlighting a shift in market dynamics.
- "We are cutting costs rationally if possible," underscoring the company’s focus on cost optimization.
- "The crops seem to be from excellent going upwards," suggesting optimism in agricultural market conditions.
Risks and Challenges
- Reduced Ukrainian goods flows could continue impacting revenue.
- Low agricultural product demand may affect future earnings.
- Market recovery in transport tariffs remains uncertain.
- Potential supply chain disruptions could pose challenges.
- Macroeconomic pressures may affect overall market conditions.
Q&A
Analysts inquired about market conditions for river transport and potential barge market dynamics. The company addressed seasonal and agricultural market expectations, confirming budget alignment for Q1.
Full transcript - TTS Transport Trade Services SA (TTS) Q1 2025:
Primary Presenter/Executive, TTS: Hello, everyone. Today’s video conference is attended in addition to those you already know. Mr. Stefanos, former general manager Mr.
Sancho, current general manager Mrs. Nicoletta Floresco, financial manager. The new directors named in their position, missus Michailezco, development director, and mister Stefan, operational manager. So let’s begin. Let’s show you a brief presentation, short presentation of figures for the first quarter.
Very briefly, the 2025 can be characterized as follows. So mainly an increase of revenues in relation to Q4 twenty twenty four. And of course, this reflects an increase in terms of operated and transported volumes, but in profitability conditions that continued to decrease overall due to tariffs, which were incredibly low on the market. And in light of the efforts actually, our efforts in terms of increasing market share, especially in what concerns the river transport market. Aggregated volumes as I stated were or grew.
The market showed stabilization tendencies after decreases support sustained last year. There are still variations amongst the good categories. And an important aspect to mention and what concerns our adaptability to market conditions, we had a significant decrease in terms of expenses on main expense categories at group level. Let’s move on Just a second, please. We have a small technical issue.
Secondary Participant/Executive, TTS: Okay.
Primary Presenter/Executive, TTS: Great. In terms of financial results, individual financial results, revenues increased as compared to Q4 twenty twenty four as a result of increase of volumes. Profitability decreased. EBITDA maintained its level at 9.5%. Actually, decreased, but it’s still at 9.5%, a profit margin of 6.2%.
These results stem from a significant reduction of operational expenses and the balance sheet is showing a slight increase, we still have a very low indebtedness degree. The same development happened in terms of consolidated financial figures at group level. EBITDA margin was slightly lower as compared to
Secondary Participant/Executive, TTS: the TTS margin. But overall, the balance sheet is solid, a low level
Primary Presenter/Executive, TTS: of indebtedness. Now a couple of mentions related to the measures to reduce expenses that were conducted in 2024. As you can see, as compared to Q1 twenty twenty four, expenses decreased significantly average of 16.3% at consolidated level. A more accentuated decrease was in the segment of river transport and it also has a higher weighting in overall expenses. This decrease amounts to approximately 25%.
As compared to Q4, there are slight increases in terms of transport and at consolidated level. These mainly stem from variable expenses that appear due to the increase of volumes and activity level overall. If we analyze the two main segments, operation and river transport, well, our discussion our efforts concentrated were concentrated on the four expense chapters that cover over 80% of expenses at consolidated level. Salary expenses, subcontractor expenses, consumables and energy here, the main cost is fuel and reparation expenses. Now in terms of Now in terms of the of the operation segment.
Secondary Participant/Executive, TTS: There
Primary Presenter/Executive, TTS: seems to be an issue with the display?
Secondary Participant/Executive, TTS: So
Primary Presenter/Executive, TTS: our main focus was on the river transport segment because as I stated before, it is a segment that occupies the highest weighting in terms of overall expenses. So in this segment, there were a lot of reductions based on two categories in terms of variable expenses, so subcontractor and fuel. Of course, the volumes were lower as compared to Q1 twenty twenty four, so these costs decreased as well. We also operated significant reductions in terms of salary expenses And we actually reached a level or so now we are entering an optimization stage because we have to maintain a level of the work force that allows us to tackle competition on the market. What is significant what was significant for this development relates to reduction of repair expenses at the bare minimum strictly necessary level for fleet functioning adapted in terms of barge numbers as per and pushers for as per the market requirements.
Next slide, please. In Q1, we recorded an increase of the market share measured in terms of transit via the Danube Black Sea Channel. So it was a significant increase from 23.9% in 2024 to 31% in Q1. And percentage wise, it’s higher than the volume growth. So the market share growth was approximately 30% as compared to 2024, but volumes increased by only 20% as compared to Q4 twenty twenty four.
This gives us an indication in relation to the fact that volumes achieved by other fleets were decreasing and our volumes were increasing. We expect to record an increase in terms of margin for operation activities. But right now, we don’t have available data from the Port Of Constanta in what concerns the quarter. So we can only calculate the share for the Danube Black Sea Channel. Moving forward to volumes, aggregated volume increased as compared to Q4 twenty twenty four on both segments per total, per transport and per operation, port operation.
In terms of port operation, a huge factor was the integration of Decirom. Decirom had a great a very good quarter and decreased compared to Q1 twenty twenty four, both in relation to operation and transport. So the decrease in terms of transport and operation as compared to 2024 stem from the disappearance of Ukrainian good flows. The volume that was transported was lower as compared to Q1 twenty twenty one as an effect a consequence of the overall reduction trend in terms of mineral flows. Moving forward to product category, in terms of agricultural products, the volume remained at a low level in Q1 twenty twenty five as well.
Low demand for services has which was reflected also in the annual report. So farmers are unwilling to sell on international markets and this has influenced significantly port operation activities. Flows for transport are less volatile and slightly increasing as compared to Q4 twenty twenty four and as compared to Q1 twenty twenty one. In terms of minerals, the increase as compared to Q4 was recorded on segments and to overall values. The most significant came from Constanta Port.
The most significant was recorded in terms of port operation. This showed an increase in the growth trend. The volumes are higher as even as compared to 2021, Q1 twenty twenty one. And in terms of chemical products, they had the least volatile development. They are constantly growing overall as compared to Q4 twenty twenty four.
They grew both in terms of operation and transport. And there was a slight decrease as compared to Q1 twenty twenty four. Otherwise, all the other figures show growth overall. And I would like to highlight the fact that at the level of Q1 twenty twenty five, the volumes are almost double as compared to Q1 twenty twenty one. So indeed, this activity in terms of port operation has shown constant growth.
This was a brief presentation of the main information available in the report.
Secondary Participant/Executive, TTS: Hello? Yesterday. Drove by Liberty Gas. This was the start. Today, we had the first part.
It’s a start. The residues have been collected from the last for from the panel. The estimates are very good considering the discussions we had. But also with the traffic in Constanta. In Constanta storage, we we have these
Primary Presenter/Executive, TTS: 1,000,000 tons per year. And current estimations for this year, I would place them, I don’t know, proportionally speaking, we are getting closer to 1,000,000 ton quantity. This is in relation to Liberty. So within two, three weeks time, that’s when we will be able to move towards production of laminated product. Then, of course, maybe river transport on the Danube will commence with various destinations.
This is the overall idea. We have to mention that right now we are commencing a program that will be conducted as per desires or it will be changed depending on the context
Secondary Participant/Executive, TTS: of course.
Primary Presenter/Executive, TTS: Next question, will port activity for TTS be influenced or are these goods intermediated by other port operators? There is a possibility, in terms of laminate products. We might make the shift towards port operations in terms of expert of laminated products that should arrive via Constanza. We are of course, we have been discussing this topic for quite some time. Would like to intervene.
Secondary Participant/Executive, TTS: Yes. Yes, please. He’s not here. So He doesn’t hear. Can you hear us, please?
Hello? Hello?
Primary Presenter/Executive, TTS: Can you hear me now? That was it.
Secondary Participant/Executive, TTS: Yes. We can hear you. I’m sorry. Thank you, first of all, for this presentation, and congratulations to the new members of the team. They would have wanted to ask a question.
Each of them That’s yes. It’s the same question, actually. From the new position that you hold currently within the group. How do you see the influence? How what do you what are your objection objectives for the development of the group and which to you believe are the directions that to take for better outcomes in the company?
Thank you. It’s a good question. I have an ongoing plan. I would note only the first idea, a better integration, and to be able to optimize within the group of companies. On the development side, we are considering various options.
We are looking at the market, and we are trying to choose the best solutions. That’s your. So you’re talking about development from from a conversion point of view.
Primary Presenter/Executive, TTS: Yes. Thank you.
Secondary Participant/Executive, TTS: We are trying together with the colleague Zina Vrom to be a bit more aggressive in the market, not from a tariff point of view, but via the cost that we have to attract more flows of goods. This means that we are trying to to work it in full on the river transport. We are also in discussions with new partners on the Danube and we’re working with them, but we’re trying to develop and increase the flows of goods and also to integrate with the port operations in Constanta, with our companies or with other partners in Constanta, Dechelon or others. Thank you. A question for everybody.
But, Dzankowski is is the closest to the operation. What is going on with the barges in the Danube? The the fleet increased. Everybody has their own barges. What are we gonna do with them?
Will them will we cover them? Will they shut them? A few weeks ago, we went in Selves and we met some of our partners, one of our main partners talking about the transport operations in in fertilizers. And what is going on, he asked us, about this market and this large number of bodies. The idea is that recently, the amateurs are starting to sell their bodies.
If you go alongside the Danish oil, but also in Cemapodo, you can see on both sides and units that are staying there without activity for weeks or even months. Another partner is already in the process to open an area in on the day in order to cut these units, some of these units. So they don’t resist anymore. I will say two other ideas. If in 2024,
Primary Presenter/Executive, TTS: a lot
Secondary Participant/Executive, TTS: competing unrealistically in the pricing area. There were areas that we’re wondering how do they pay the taxes of Canal and port taxes? How are they able to afford it? This went on for some time, but on long term basis and on a medium term, you cannot compete only by pricing. Of course, if you are very solid from a financial perspective and you can endure losses with the purpose to be in the market.
So this period is kind of over. And this is why one of the reasons that we increased in market share on the canal. So there are actually players who are exiting the market. And the result is the barges awaiting to be sold to be or to be cut at some at a very low pricing. And it’s it’s very hard not to buy them at they are so cheap.
After a boom in ’23, you may want to sell those barges, but who will buy them? Who has the flows to load those
Primary Presenter/Executive, TTS: barges? So we will
Secondary Participant/Executive, TTS: see reversal of the trend. So the barge is the key. We’ll be we’ll be put up for sale at a very low price. So there was a low demand for for services, and that’s why the price decreased. So the terms, how do you believe When do you believe?
Are going to strengthen? Leaving the stocks aside, we’re not talking about that. Actually, a few words more stated on that. If we look at these tariffs, upstream ones, they’re stabilizing. As minerals, Those are stable ones on only one year time frame.
But at grade And chemicals where the tariffs are are spot based. We are also in an area of stabilization in grades from June. We barely signed the contracts for the ring. They’re they’re close to being finished. As as we wanted, we signed the lease agreement.
We have some increases. Acceptable. Let’s not say appropriate. Let’s let’s say good. If the flows are good on the.
We have the ports in Constanta. We’ll follow the estimates of the harvest. So if we see we will see an increase also in the fertilizer, but not in minerals. So I believe we are in a stable at the bottom of the pit. And we hope to recover the difference and as fast as we can.
Starting from the from July when the transport of grains will be.
Primary Presenter/Executive, TTS: So Caius, we are right now seeing the finalization of the buyers’ market period. I believe we are no longer in the buyers’ market era. Last year, it was full fledged because it was arbitration. You received a phone call from someone and this person was discussing with two other people and was trying to arbitrate the tariffs in order to obtain the best price. Of course, this created pressure on the market and all suppliers partook in this game, but this pressure has decreased significantly right now.
So naturally speaking, you can’t talk about tariffs and their development, but it’s natural for you to think that they will reach long term levels deemed as normal. So not the levels from last year, which were very low. Thank you. It was very clear. Now let’s move on to Kotvin Parasiv’s question.
Hello. Thank you for the presentation. Question one, what measures to reduce costs are you envisioning for the following period? Mainly the same measures that we have started last year in the summertime. So on the same business lines, but with fine tuning elements of course, because certain costs will appear constantly and a very important focus for us.
We are not going to cut costs just so we show that we have no cost. We are cutting costs rationally if possible. And if those cost cuts don’t prejudice or damage our overlying position. Our costs may increase for example, because if we have an activity as estimated and if volumes start from Ukraine, minerals, grains, which could be in line with the crops that we estimate. So it’s obvious that we are going to need more exploitation costs.
This entails higher costs overall. We are going to have more canes operating in Constancia. So that’s fuel, additional fuel. So maybe not Q2, but Q3 will show an increase in terms of revenues, but also an increase in terms of costs. So these are rational reasons why the entire process is delicate.
So that’s why we talk with our colleagues from Navroms. So as my colleagues stated before, we want to continue the reduction within the group And we want the measures to be consolidated and we want us to act and implement measures as rationally as possible. Two, what expectations do you have for the agricultural segment in the following period? I think I already answered. So briefly in the last weeks and last week actually we had a meeting with the biggest or top two, three exporters in terms of grains from Romania.
And we are periodically in consultation with all of the players, high rollers in the market. So the crops seem to be from excellent going upwards. So we’re talking about, of course, the summer harvest. So we had a record production in terms of grains, but so there was a huge surface that was used for sowing. And in July towards August, we are expecting to see the actual harvest what it will look like.
Right now everything looks great. So both sides are seem to be great, but we are waiting for the heat waves at the July and June. We have to see. Overall, generally speaking, the harvest, the crops seem to be going great. Hopefully, record levels.
This happened last year or two years ago. We have to
Secondary Participant/Executive, TTS: see once
Primary Presenter/Executive, TTS: the harvest begins. But grains are not selling right now, but that doesn’t mean they won’t start to sell tomorrow. So we have enough time until next summer to see how the situation will develop. Question from Mr. Are the results for Q1 in line with what was budgeted?
So there is a seasonal aspect ever since the COVID era. Ukraine destroyed our seasonality. So as per the traditional budget line, we are in line in terms of good volumes. It’s difficult to comment right now if we are achieving economical efficiency. We are waiting for Q2.
So at the middle point of the year, we are going to conduct a budgetary projection for the entirety of the year. Mrs. Daniela Popov, the same question. Hello, thank you for the presentation. How are
Secondary Participant/Executive, TTS: yourself in a reported annual budget with the results from Q1? Do you believe the budgeted revenues are achievable? So yes, we can clearly state yes, but we have room for
Primary Presenter/Executive, TTS: same discussion by the end of the year. Let’s talk in August. So in August, we will be closer to the end of the year, not only in terms of time, but also in terms of flavor, in terms of grains in Q3 and how they will develop in the next quarters. And we will also see if Liberty acts and produces as per the projections. That’s one approach.
So if they achieve the budgeted output, we’ll have one approach. If they only achieve half, we’ll have another approach and so on. So it depends. Tariffs were still very low in Q1. How did they transform in April and May?
So in terms of mineral products, which entail long term contracts are stable for the year period. For spot minerals spot market minerals, there is a stabilization tendency in terms of grains. Everything is stabilized right now. We are waiting for the harvest to see. Did grain flows improve in April and May?
Of course, the harvest seems to be okay, but the crops collected last year are still in the storage units and haven’t actually had a lot of movement due to low price. There’s still demand right now. The prices are still low, but so good prices. We’re talking about goods prices. From Mr.
Kishmaris, transport for Ukraine has completely disappeared from the market? I think we only had one grain trip transport from August. I think that was it. Right now, we have 2,000 tons that left from Ukraine. So they are still on the market.
So in terms of grains, no, of course. But other goods from Ukraine are still being moved lower quantities, very small quantities, but they’re still active. What are the mineral levels at a non EU level? So Serbia, we’re talking about Serbia. So in terms of minerals, the quantities are, let’s say, growing.
In what concerns port operations. And starting from that point, maybe we could say the same thing about river transport as well. At the same time, for non EU countries, there are new good flows on the metallurgical side. So they are arriving in Constanta with destinations Serbia or Yugoslavia, Bosnia And Montenegro. At the same time, there is a flow that is created right now with raw materials, minerals via Constanta for non new destinations.
We are working on this type of product and transportation. There are no questions right now? Let’s not wait so there are no more questions. As such, we can conclude the video conference. Thank you, everyone, for participating.
And of course, we will meet again at the August to discuss the first half of the year, and we are also going to present assessments related to budget execution for 2025. Once again, thank you, and hopefully, we will see you again in August. Thank
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