Titanium Transportation Group secured $100.8 million in revenue in the second quarter of the year, marking its fourth consecutive record quarter and surpassing $100 million for the first time.
The fleet credits growth in both its truck transportation and logistics segments — as well as gains realized through integrating the recently acquired International Truckload Services (ITS).
“These results reflect the impact of Titanium’s focused strategic investment in growth initiatives and the ability of our team to execute the strategy through a challenging operating environment” said CEO Ted Daniel. “We are making strong progress on the integration of the ITS Group, which contributed $15.9 million to our trucking revenue.”
The integration process is on track, he told industry analysts on a related conference call. About $2.5 million was invested in the second quarter to upgrade the acquired fleet’s digital infrastructure, rebrand the fleet, upgrade rolling stock, and restructure personnel. Profitability is expected to increase in the second half of the year, thanks to the scaled fleet and increased capacity.
“Our strategic decision and investment to date in three U.S. freight brokerage centers over the last 27 months continues to deliver exceptionally strong growth,” Daniel added. “We are exceptionally pleased with the results to date and remain on track with our expansion plans to open two additional new centers in 2021 for a total of five.”
“In all likelihood, you’ll see the first of those two hopefully very soon,” he told analysts in a related conference call.
The goal is to have 10 offices open by 2024. They’ll typically average about $25 million in revenue each, but there will be some moderation where smaller regions are involved, he said.
Rising rates, equipment delays
In the meantime, economic activity in various markets has been uneven depending on government Covid-19 measures, Daniel said. While select U.S. jurisdictions are exceeding expectations, some key Canadian markets are improving as well.
“We are seeing definitely an appetite for price increases across our customer base,” added chief operating officer Marilyn Daniel. “In some cases double digits are happening.”
But capacity remains a challenge. In the context of mergers and acquisitions, the CEO sees upward pressure on multiples when it comes to valuations. “It’s a lack of drivers, driver shortage, and a lack of equipment,” he said. “Companies are willing to pay more money in order to be able to get more equipment and drivers.”
Equipment prices are up 10-25%, but even then there’s a question of when the assets are going to be available because of manufacturing challenges including microchip shortages.
“It’s a matter of how many delays are you going to get before you’re finally going to get delivery,” he said, noting that Titanium took the delivery of 40 trucks in the first half of 2021, and that he’d be thrilled to get 80 ordered power units this year, particularly given the values paid for used equipment.
“It’s an extremely opportunistic time to work that differential,” he said.