Titanium Transportation Group Inc.

Good morning, and welcome to Titanium Transportation Group's Q1 2024 conference call. On today's call, we have Ted Daniel, President and Chief Executive Officer, Alex Foote, Chief Financial Officer, and Marilyn 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 on Cedar. Please note that this call is being recorded Tuesday, March 19th. Tuesday, May 14, 2024. A replay of this call will be made available until midnight on May 28, 2024. The details of the replay can be found on Titanium's website under the Investors section. I would now like to turn the call over to Titanium's President and CEO, Ted Daniel. Please go ahead, sir.

Good morning. Thank you, Operator, and thank you all for joining us. During the first quarter of 2024, unfavorable market conditions persisted within the transportation logistics industry. Muted economic activity, overcapacity, inflationary input costs, geopolitical and market uncertainties continued to impact freight demand and volume. I'm pleased to share that our team was able to successfully navigate through these disruptive industry conditions and deliver another profitable quarter. In the first quarter of 2024, we generated $115 million in revenue, an 8.3% increase over Q1 of 2023, and $9.5 million in consolidated EBITDA. As outlined on our previous conference call, we had anticipated these market conditions, and our diversified business model positioned us well to steer through them Once again, these results reiterate Titanium's proven ability to deliver consistent results through an unrelenting focus on operational excellence, prudent capital allocation, and a strategic model of almost equal asset and asset light business segments. Turning to our segmented results, our trucking business continued to drive growth. We delivered revenue of $59.6 million in Q1 2024. a 15.5% increase year over year. EBITDA margin came in at 12.6%, a decline from Q1 2023. As I mentioned previously, this 570 basis point decline in EBITDA was mainly due to the segment absorbing the majority of integration costs from the acquisition of Crane, as well as soft economic conditions. we expect to see growth in the second half of the year. The current freight environment continued to exert downward pressures on the logistics segment of our business. Despite these unfavorable conditions, logistics generated revenue of $56.2 million flat compared to Q1 of 2023, with EBITDA coming in at $3.1 million in Q1 2024. EBITDA margins for logistics during the quarter were 5.5% in Q1 of 24, compared to 9.3% in Q1 of 23, a 320 basis point decrease. I would like to highlight that even with continued pricing pressure during the first three months of the year, our team was able to grow volumes organically across both our segments. Truck transportation saw an increase in volume of 23%, mainly attributable to the acquisition, which offset losses in volume due to strategic pricing decisions. On the logistics side, volumes increased approximately 28% year over year. Our growth, notwithstanding economic challenges, is not only a testament to the strength of our technology and people, but it's a reminder that we're uniquely positioned to take advantage of an eventual market improvement with the foundations we have built over the years, regardless of economic conditions. Speaking of foundational platforms, titanium's commitment to scale our business in the U.S. market would be the major driver for our next stage of growth. As of Jan 1, 2024, we started to see the benefits of our acquisition of Crane. As their operations were migrated onto the titanium technology and financial platforms, This directly contributed to significant growth within our truck transportation segment. As discussed, we anticipate a temporary adverse effect on margins during this period of integration, which was experienced during Q1. Looking ahead, we expect crane to be a core asset in our business and enable customers to access a comprehensive freight management offering driving growth in titanium's U.S.-based logistics business. In addition to capitalizing on the benefits of our crane acquisition this quarter, we have directed considerable focus to identifying innovative solutions to achieve profitability within this environment. As we evaluated pricing concessions requests from our customers, we opted to remain committed to responsible rates to operate in this environment, which resulted in a loss of unprofitable volume. Furthermore, through advanced data analytics, we purposefully allocated capacity to sustainable or flexible markets. Overall, Titanium's steadfast commitment to deliver sustainable and profitable growth is the driving force behind every action we took during the quarter and continues to be our top priority as we navigate this market. Despite the current economic challenges, we remain focused on strengthening our foundation of people and technology, all while enhancing our capital position. We're also committed to operating responsibly whether through sustainable contractual pricing or unyielding fleet safety standards. Our capital allocation strategy prioritizes debt reduction while maintaining dividend payments and opportunistic buybacks via our NCIB. Our continued focus remains on scaling for future growth and generating long-term value for our shareholders. With a refreshed fleet and reduced capital expenditures, we expect to generate substantial free cash flow over the next 18 to 24 months. We strongly believe, as we always have, that a prudent capital management strategy coupled with good governance is a backbone to to current and future long-term sustainable growth and profitability. Due to significant pricing pressures from ongoing adverse economic factors, we're revising our 2024 full-year revenue guidance. New range is $470 to $490 million, and our EBITDA margin target percentage has remained the same. Despite market conditions with the acquisition of Crane, as well as our developing freight brokerage offices, we remain resolute in preparing titanium for future growth. We also anticipate the addition of at least one more brokerage office this year. With that, I'll turn it over to Alex for a more detailed discussion of our financial results for Q1. Alex, take it away.

Thanks, Ted. In the first quarter of 2024, on a consolidated basis, titanium generated revenue of $115 million, compared to $106 million in Q1 2023, an 8.3% increase. We delivered EBITDA of $9.5 million, with EBITDA margin of 8.2%. Diving deeper into segment performances, the truck transportation segment saw revenue of $59.6 million, an increase of 15.5 percent over Q1 of 2023, and EBITDA of 7.5 million, with an EBITDA margin of 12.6 percent. As Ted mentioned, it is important to note that these results include the segment having absorbed a significant portion of continued integration costs resulting from the acquisition of Crane. We expect this to last for the next few quarters. The logistics segment generated revenue of $56.2 million compared to the same period last year. EBITDA was $3.1 million compared to the $4.6 million in Q1 2023 with an EBITDA margin of 5.5 percent. During the quarter, we took meaningful steps to identify redundant assets in our portfolio. These measures include the sale of about 21 acres of unused raw land in Cornwall, which closed earlier this month. This aligns with our capital allocation strategy, reinforcing our commitment to strengthen our balance sheet, rapidly paying down debt, and improving our overall capital position. Given the strength of our business and our confidence in the earnings outlook, we maintain our dividends. declaring a dividend of $0.02 per common share. To conclude, I would like to highlight that we have a strong balance sheet, which will continue, as always, to be our focus as we navigate these economic headwinds. I would now like to turn the call back over to Ted.