Titanium Transportation Group Inc.

Good morning and welcome to Titanium Transportation Group Q2 2024 conference call. On today's call, we have Ted Daniel, President and Chief Executive Officer, Alex Fu, 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 CDAR. Please note that this call is being recorded today, Tuesday, August 13, 2024. A replay of this call will be made available until midnight on August 27, 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. The second quarter of 2024 saw persistent industry-wide pricing pressures, particularly in the full truckload segment. Muted economic activity overcapacity inflationary input costs, geopolitical and market uncertainties continue to impact freight demand and industry-wide volume. Despite these challenges, we prioritize our strategic plan and are focused on optimizing and working with the constraints of the current marketplace through our technology-driven navigation systems. This approach translated into solid results Titanium generated $115 million in revenue, a 14.7% increase over Q2 of 2023, and a $10.2 million in consolidated EBITDA from continuing operations. It is important to note that titanium's ability to generate consistent results despite challenging market conditions is a testament to our diversified business model and our team's operational strength. Now turning to our segmented results. Our trucking business continued to drive growth. We delivered revenue from continuing operations of 59.5 million in Q2 2024, a 20.7% increase year over year. EBITDA margin came in at 15.5%, a decline from Q2 of 23. This short-term decline in profitability can be attributed to two key factors. First, the segment continued to absorb the majority of integration costs from the acquisition in Okra, Georgia, during an environment of economic headwinds. While we're leveraging advanced in-house analytics to identify and harness synergies in areas such as asset tracking, safety, routing, and asset utilization, some of these solutions have been slow to impact profitability. the truckload freight environment continued to exert downward pricing pressures into the first half of 2024. In particular, the full truckload segment faced significant headwinds due to reduced end market demands, leading to a 6% decrease in pricing year over year in the truck transportation segment, despite our efforts to shift capacity towards sustainable rates. Truck transportation saw an increase in volume of 24%, primarily attributable to our OCA Georgia acquisition. We're encouraged by these developments and are confident that increasing targeted volume will exponentially drive profitability once market conditions improve. Aligned with our previous commentary, titanium's commitment to scale our business in the U.S. market will 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 Transport 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've been experiencing temporary adverse effects on margins during this period of integration. That continued into the second quarter of 2024. Looking ahead, we expect Titanium American Trucking 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 Georgia acquisition, we focused our efforts towards delivering sustainable long-term shareholder growth within this challenging environment. Hence, turning to the logistics segment, we generated revenue of $56.2 million, up 6.6% compared to Q2 of 2023, with EBITDA coming in at $3.1 million in Q2 of 2024. EBITDA margins for logistics during the quarter were 6.2% in Q2 2024, compared to 8.7% in Q2 of 2023, a 250 basis point decrease. I would like to highlight that even with persistent pricing pressures during the first half of this year, continued sales efforts ensured that both our operating segments recorded volume growth year over year. Logistics volumes improved by 22% year over year. However, soft consumer sentiment weighed on transactional pricing, offsetting the revenue growth for the segment to approximately 7%. We're pleased with the strong growth of our logistics segment and we remain committed to grow this asset-light segment regardless of market conditions, particularly in the U.S. freight brokerage market. In alignment with our strategic goals, we divested redundant assets in the first half of the year and continued to evaluate our business units, which resulted in reduced operations for specific geographic areas, reducing our asset offerings in these areas. This decision was driven by a thorough assessment of current profitability and future growth prospects. Through the reduction of underperforming assets, we are better positioned to focus on more promising opportunities and markets. More specifically, we continue to actively explore opportunities to monetize non-core assets, which will contribute to an accelerated reduction in our long-term debt. In terms of cost control initiatives, we were able to find efficiencies by centralizing certain operational functions. Our use of technology allows us to continue to pursue additional opportunities for efficiencies as we deploy technological investments in artificial intelligence in our processes. We believe that AI will have a significant impact on the industry. With a refreshed fleet and reduced need for capital expenditures, we expect to generate substantial free cash flow over the next 18 to 24 months. Additionally, we're focused on monetizing underperforming equipment, which will help us further reduce debt. Our priority remains on meeting the growing needs of our customers, scaling for future growth, and generating long-term value for our shareholders. We're taking this opportunity to revise our 2024 full-year revenue guidance range of $440 to $460 million and EBITDA margins of 8% to 10%. With that, I'll turn it over to Alex for a more detailed discussion of our financial results for Q2 2024. Alex?

Thanks, Ted. In the second quarter of 2024, on a consolidated basis, titanium generated revenue of $115.1 million. compared to $100.4 million in Q2 of 2023, a 14.7% increase. We delivered EBITDA of $10.2 million with EBITDA margin of 10.1%. Diving deeper into segment performances, the truck transportation segment saw revenue of $59.5 million, an increase of 20.7% over Q2 of 2023, and EBITDA of $7.9 million with an EBITDA margin of 15.5%. As Ted mentioned, it's important to note that these results are despite this segment having absorbed a significant portion of continued integration costs resulting from our U.S.-based acquisition. We expect this to last for the next couple of quarters. The logistics segment generated a revenue of $56.2 million, an increase of 6.6 percent compared to $52.7 million in the imperative period. EBITDA was $3.1 million, but a margin of 6.2%. As part of our ongoing capital strategy, we continue to take meaningful steps to identify redundant assets in our portfolio and proceed to divest of these assets. For instance, during Q1, we sold approximately 21 acres of unused land in Cornwall. The proceeds from these asset sales, along with the free cash we generated from our operations, will be directed towards reducing debt. This disciplined approach to capital allocation underscores our commitment to strengthening our balance sheet and enhancing our capital position. By prioritizing debt reduction, we are ensuring that we have the capacity to invest in future inorganic growth opportunities and steer through current economic uncertainties. Given the strength of our business and our confidence in the earnings outlook, we maintain our dividend declaring a dividend of $0.02 per common share. I would now like to turn the call back over to Ted.