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Titanium CEO sees stable growth in 2019 following logistics decline

 Gains in Titanium’s trucking business couldn’t make up for weaker logistics performance. (Photo: Nate Tabak)
Gains in Titanium’s trucking business couldn’t make up for weaker logistics performance. (Photo: Nate Tabak)

Titanium Transportation Group (TSXV:TTR) expects a solid year despite first quarter weakness in its logistics division, the Canadian firm’s CEO told analysts.  

In results reported on April 30, Titanium’s revenue of C$39 million (a Canadian dollar equals US$0.75) and earnings per share of C$0.01 missed analyst expectations of $0.03 cents per share and revenue of C$45.27 million.

Revenue dropped by 14.3 percent compared to the first quarter of 2018, while net income declined by more than half, to $0.5 million, largely on declines in the company’s logistics division.

Trucking revenue increased by 7.9 percent to a record $C28.1 million; however, revenue from logistics dropped by nearly 41 percent, to C$12.1 million. Titanium attributed the drop in logistics revenue to a return to normal market conditions following elevated conditions in the first half of 2018.

Speaking to analysts on May 1, CEO Ted Daniel said he expected continued growth in Titanium’s trucking division and improved market conditions for logistics.

“Our trucking division is primarily contracted rates, so we’re expecting an extremely stable market,” Daniel said.

In regard to the U.S.-based brokerage, the company provided an update in the April release.

The brokerage will be based in Charlotte, North Carolina. Titanium secured the location during the first quarter, expects it to be operational in the second quarter and contribute to earnings in the fourth quarter of 2019.

Daniel told analysts that he expected 2019 to be an interesting year for mergers and acquisitions. He noted that the Titanium would consider buying a U.S. carrier.

“We would prefer to buy a Canadian carrier, but having said that, we opened a U.S. brokerage. We also not averse to considering a U.S. opportunity,” Daniel said.

Titanium also added 14 trucks in the first quarter, bringing its fleet to about 475 power units. It has 40 additional build slots for the year, which Daniel said the company would use depending on market conditions.

Daniel said Titanium would have little trouble filling those trucks. “We’re not experiencing a shortage of applicants,” he said.

Titanium’s earnings before taxes and other expenses, EBITDA, were C$5.4 million in the first quarter of 2019. Trucking contributed C$4.4 million, a 21.3 percent increase over the first quarter of 2018. EBITDA for logistics was C$0.5 million, a 73 percent drop.

The slower quarter followed record growth in 2018, with revenues increasing by 43 percent. Despite the miss, the company noted that the quarter was the second best in the company’s history in terms of revenue and earnings before taxes and other expenses.

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Nate Tabak, Canada Correspondent

Nate Tabak is a journalist, editor and producer in Toronto. He covers Canada for FreightWaves, with a keen interest on the cross-border economic relationship with the United States. Nate spent seven years working as an investigative editor and reporter based in Kosovo. He covered everything from corruption to the country’s emerging wine industry. He also reported across the Balkans and investigated Albania’s multibillion-dollar marijuana industry with a grant from the Pulitzer Center on Crisis Reporting. Nate grew up in Berkeley, Calif. He enjoys exploring Toronto with his wife and is always looking forward to his next meal.

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