Titanium Transportation Group Inc.

Good morning and welcome to Titanium Transportation Group Q3 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 findings made by Titanium on CDAR. Please note that this call is being recorded today, Tuesday, November 12, 2024. A replay of this call will be made available until midnight on November 26, 2024. And the details of the replay 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.

Good morning. Thank you, operator. And thank you all for joining us. The third quarter of 2024 continued to be an environment of significant challenges for the industry. with overcapacity as the key issue, especially in the full truckload segment. While we're starting to see signs of improvement, capacity rebalancing remains a work in progress. Within this backdrop, we remain focused on what we can control amidst a challenging freight environment, including managing costs, delivering exceptional service to our customers through our technology-driven solutions, and maintaining our commitment to safety. This approach translates into steady results. Titanium generated $118 million in revenue, a 5% increase over Q3 of 2023, and $10.3 million in consolidated EBITDA. 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 excellence. Having said that, let's turn to our segmented results. Our trucking business delivered revenue of $58 million in Q3 2024. Dividend margin came in at 15.5%, a decline from Q3 2023. This short-term decline in profitability can be attributed to soft contract pricing, reflecting the extended pressure on transactional prices as a result of this freight recession. Despite these headwinds, our team continued to mitigate rising costs by utilizing real-time analytics in both operating costs and revenue. The logistics segment continued to demonstrate resilience with volume growth of 24%, translating to revenue of $61 million, up 18.3% compared to Q3 of 2023. with EBITDA coming in at 3.6 million in Q3 2024. EBITDA margins for logistics during the quarter were 6.5% compared to 9.7 in Q3 of 2023. These results demonstrate our active focus on acquiring sustainable future opportunities, notwithstanding the significant market pressure on transactional pricing. We're pleased with the strong growth in this segment and have been focused on growing this asset-light division regardless of market conditions, particularly in the U.S. freight brokerage market. As I've outlined on previous conference calls, titanium's commitment to scale our business in the U.S. market will be the major driver for our next stage of growth. During the third quarter of 2024, U.S. revenue increased 24%. Aligned with this, We secured our newest freight brokerage office in Virginia, marking titanium's eighth U.S. location. Expanding our U.S. footprint with the NASA light model in strategic markets has been central to our growth strategy, and our Virginia operation is set to be a vital gateway into our key consumer markets. We're also continuing to see benefits from the integration of our U.S. acquisitions. while experiencing temporary adverse effects on margins during this period of integration. In 2025 and beyond, we expect our U.S. assets to be a core part of our cross-selling strategy and enable customers to access a comprehensive freight management offering driving growth in Titanium's U.S.-based logistics business. During the quarter, we continue to divest redundant assets and continue to evaluate our business units we necessarily see certain operations for specific geographic areas and specific asset offerings in areas we remained operational. This decision was driven by a thorough assessment of current profitability and future prospects in those areas. By shedding these underperforming assets, we're better positioned to focus on more promising opportunities and markets. As we prepare for a potential shift in the freight market, Our focus remains on operational excellence, a strengthened balance sheet, and delivering unmatched value to our customers. With a young fleet and limited capital expenditure needs, we expect to generate substantial free cash flow over the next 24 months. Additionally, we're focused on monetizing underperforming assets, which will help us accelerate our debt pay down while maintaining dividend distributions. Our priority remains on meeting the growing needs of our customers, scaling for future growth, and generating long-term value for our shareholders. As a result, we're maintaining our 2024 full-year revenue 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 Q3. Alex? Thanks, Ted.

In the third quarter of 2024, on a consolidated basis, titanium generated revenue of $118.3 million, compared to $112.7 million in Q3 of 2023, a 5% increase. We delivered EBITDA of $10.3 million, with an EBITDA margin of 9.8%. Diving deeper into the segment performances, the truck transportation segment saw revenue of $58.1 million and EBITDA of $7.9 million. with an EBITDA margin of 15.5%. Soft contract pricing reflecting the extended market pressure on transactional prices continue to be the main factor contributing to this segment's weakened profitability. The logistics segment generated revenue of $60.9 million, an increase of 18.3% compared to $51.5 million in the comparative period. EBITDA was $3.5 million compared to $4.5 million in Q3 2023. with an EBITDA margin of 6.5%. Logistics demonstrated momentum with volume growth of over 24%. This supports Titanium's active focus on acquiring sustainable future opportunities, notwithstanding the significant market pressure on transactional pricing currently. In addition to navigating the challenging economic environment, we maintain our focus on strengthening our balance sheet. During the third quarter of 2024, we continued our sales of redundant assets from discontinued or ceased operations, which generated $4.1 million of free cash flow used towards repayment of long-term liabilities. We also continued to prioritize debt repayment following our U.S. acquisition as fortifying our capital position remains an essential component of our strategy. In the quarter, we repaid over $12 million in net debt through the use of our free cash flow. This disciplined approach to capital allocation underscores our commitment to strengthening our balance sheet and enhancing our financial flexibility. 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 2 cents per common share. I would now like to turn the call back over to Ted. Thank you, Alex.