Titanium Transportation ended 2022 with a 24% increase in revenue to $496 million, and net income of $22.8 million, a 394% increase even after weathering Q4 challenges such as rising costs.
It was a milestone year for the company which, when it went public in 2015, targeted becoming a $500-million revenue business.
“As such, this team has set its sights on becoming a significantly larger company,” CEO Ted Daniel told analysts on a conference call to discuss results.
Macro-economic challenges, however, are expected to persist through 2023. Daniel said the company leveraged technology to perform well in a challenging environment.
“Fourth quarter results topped off a third consecutive year of growth and profitability highlighted by a record top line revenue of $496 million, reflecting effective execution of our operational strategy and continuous deployment of new technology across our logistics and trucking segments,” Daniel said in a release. “This enabled us to drive consolidated EBITDA margin expansion, exceeding expectations.”
He added: “We successfully offset persistent inflationary cost and pricing pressures that emerged in Q3 2022 and continued into the balance of Q4 by focusing on growth in our U.S. and Canadian logistics capacity.”
The company added brokerage offices in Atlanta, Ga., Fayetteville, Ark., and Montreal in 2022. It plans to add two more U.S. locations later this year.
Supply chain disruptions that limited the industry’s ability to procure new tractors have eased, and Titanium now has a tractor fleet averaging just 1.5 years old. This year it plans to add 80 tractors – 40 replacement units and 40 for growth – while refreshing the trailer fleet.
The company projects $500-$520 million in revenue, not including any acquisitions, and Daniel said the company will continue to grow its logistics business in this environment, noting “offense is the best defence.”
“Looking ahead to 2023, we expect ongoing upward pressure on interest rates by central banks in response to high inflation will continue to have a dampening effect on aggregate demand and therefore on the demand for freight and logistics services,” Daniel said in the release. “Although timing remains uncertain, we expect industry growth to moderate, leading to lower volumes and persistent price and cost pressure.”
Asked about the current rate environment, chief operating officer Marilyn Daniel said, “I don’t see a year of growing pricing, I see it rather stable where we’re at.”
Those same industry-wide challenges will create merger and acquisition opportunities, Ted Daniel added.
“Generally speaking, it feels like we’re back to a normalized M&A environment,” he said, noting valuations were “quite frankly, in the stratosphere” in late 2021 and early 2022. “Our pipeline is good. We’re very confident in what we’re going to achieve this year.”
Chief operating officer Marilyn Daniel expanded, noting smaller Canadian tuck-ins are a realistic possibility, but so too is a larger asset-based U.S. acquisition.
“We are interested in the U.S. marketplace,” she said. “We’re not opposed to having an asset-based company in the U.S.”