Major trucking lender Triumph’s earnings reflect robust market

Presumably driven by higher freight rates, the size of the average transportation invoice was higher as well. It rose in the first quarter to $2,097 from $2,070 in the prior quarter, while year-on-year comparisons show an increase from $1,651. 

Given that second-quarter invoices averaged $1,524 during the period that included April into early May, when the pandemic slammed freight rates, the average size of the invoice has risen roughly 37% in just three quarters from the depths of the market.

The book of business for Triumph — 90% of which is in transportation — came in at more than $1 billion for the second consecutive quarter. It rose to $1.188 billion from $1.036 billion in the final quarter of last year. In the first quarter of 2020, it was $878.7 million. 

In the third quarter of 2020, which was the first full quarter with the Covenant assets under Triumph’s control, the book was $948.9 million.

The sale of Covenant’s factoring book to Triumph ran into a dispute over several accounts, in particular one with the U.S. Postal Service. 

That dispute, which arose from the Postal Service paying fees to an unidentified trucking company rather than Triumph, under a contract that came with the Covenant acquisition, is still in litigation, Triumph said in its earnings report. There is a $19.2 million receivable at issue. 

Triumph said it is “probable that we will prevail in such action and that the USPS will have the capacity to make payment on such receivable.” Triumph has not reserved for any loss because of that transaction, but the amount is carried on the books as nonperforming. 

However, there were other loans in the Covenant portfolio that had been “over-advanced.” The size of that was $62.1 million at the end of December but has been reduced to $10.6 million.

Wyse said the decline in the over-advance figure is a result of the company charging off the largest customer relationship that came with Covenant, along with reserves. But Covenant also reimbursed Triumph for $35.6 million. 

In other data in the report:

— The charge-off rate was 3.95%. That looks high, compared to 0.02% a quarter earlier, but Wyse said it includes the charge-offs related to the Covenant acquisition. 

— Yield on the average receivable was 13.85%. That is little changed from the first quarter but is down from the 16.13% of the first quarter of last year. 

— The 90% concentration in transportation of the receivables book of business is up 10 percentage points from last year’s first quarter.

Triumph holds a call with analysts Thursday morning. The company’s stock has been on an incredible roll, rising 275% in the past 52 weeks. 

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