Titanium Transportation reported its second consecutive quarter of positive operating income in both its trucking and logistics divisions, supported by stronger cash generation and continued debt reduction.
Q3 revenue totaled $115.7 million, down 2% year over year, while logistics revenue increased 3.3% to $63 million on higher U.S. volumes. Trucking revenue fell to $53.8 million, though the segment improved sequential profitability. EBITDA was $8.9 million, with an 8.7% margin.
Titanium generated $9.5 million in operating cash flow and reduced debt by $8.9 million, ending the quarter with $20.7 million in cash. Adjusted net income was $0.01 per share, compared with a loss a year earlier.
CEO Ted Daniel said the company is focused on margin protection, disciplined pricing and balance sheet strength.
On a conference call with analysts, Daniel said the company shed unprofitable lanes and turned in its “most efficient trucking quarter in nearly two years.”
Adding to that, chief operating officer Marilyn Daniel said cross-border freight has softened, but domestic opportunities on both sides of the border have increased.
The company continues to eye growth in its brokerage segment, but sees opportunities to gain share in its existing locations.
Asked about recent Canadian federal budget announcements promising to crack down on the misclassification of drivers, Marilyn Daniel said it’s too soon to determine what the impact will be.
“It’s way too early for that kind of effect to be known,” she said on the call. “Customers have talked about it over the years, it’s not something that’s completely new, but it’s definitely a positive for the industry. The impact will be over time. We don’t know all the details yet in terms of penalties, etc. We know it’s a source of attention for the government over the next four years with a good chunk of money allocated to it. How it all rolls out with enforcement and penalties, we don’t have details on that. But it’s definitely positive.”
Responding to questions about trucking capacity, Ted Daniel said there are positive signs it is contracting, but slowly.
“It’s improving slowly but surely,” he said.
Marilyn Daniel said U.S. enforcement of English language proficiency requirements and a crackdown on non-domiciled drivers is beginning to show up in pricing within certain regions.
“I think you will see carriers exit out of pure exhaustion over this period,” she said, citing costs, regulatory enforcement and technological advancements.
But for now, it remains a tough pricing environment, Ted Daniel added.
“You still see it in the RFQs,” he said. “It’s still a very competitive market from a pricing perspective. I don’t believe as an industry we’re out of the woods, but at this point in time, we’re seeing indicators that capacity is shrinking slowly, so we’re headed in the right direction.”
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