Titanium Transportation Group Inc. (TTNM) Earnings Call Transcript & Summary

Will someone second the motion?

I second the motion.

Each registered shareholder or proxy nominee who has not previously voted can vote his or her vote in respect of the auction currency resolution can do so by voting on the electronic ballots on their screen. You have heard the motions and have had the opportunity to cast your ballots in respect of each of today's resolution on the virtual meeting platform. As a reminder, if you have already submitted a proxy, there is no need to vote today. Balloting will be closed momentarily, so please submit your final ballots now. Once electronic ballot closes, the voting page may disappear and your ballots will be automatically submitted. [Voting]

I ask that -- the scrutineer to please close the polling. Thank you. The voting is now closed. In relation to the election of the directors, I have been advised by the scrutineers that the preliminary tabulation for the meeting have been overwhelmingly voted for each of the director nominees. Therefore, I declare Ted Daniel, Lu Galasso, Bill Chyfetz and David Bradley to be elected as your Board of Directors to serve in that capacity until the company's next Annual General Meeting or until their successors have been elected or appointed. On the resolution to reappoint MNP LLP Chartered Accountants, I declare the resolution carried. On the ordinary resolution authorizing and approving the corporation's rolling stock option plan, I declare the resolution as carried. As there is no further business, I will ask that someone move and someone second a motion at this time -- that this meeting now terminate.

I so move.

Will someone second the motion?

I second the motion.

You have heard the motion as moved and I declare this meeting is now terminated. At this time, I would like to thank our audience, guests and shareholders who have attended today. I will now turn the call over to Ted Daniel, who will provide us with a short company update. Afterwards, we will have time for a Q&A session. Ted, please go ahead.

Thank you, Lu, and good morning, everyone, and thank you all for joining us on this call. As I reflect on 2020, while it was a very challenging operating environment, it was a year of record accomplishments and progress for Titanium. At the very least, it was an extremely eventful year. Certainly, we can all appreciate the volatility of a year like 2020. However, what stands out the most, and what really excites me over and over about Titanium is the outstanding group of people that rise to the occasion, especially during times of disruption. In light of that, Titanium delivered impressive operational progress and achieved several new milestones. In the midst of such unpredictable conditions, our results demonstrated the strength, magnitude and flexibility of Titanium's technological and innovative strategy. In 2020, Titanium achieved a number of financial records. 2020 revenues were a record at just over $200 million, a 20% increase over prior year. EBITDA was $23.1 million, a near 25% increase over 2019. And net income per share was $0.17 a share for the year, up substantially from prior years. We also continued to improve our capital position and balance sheet strength. Debt-to-equity ratio dropped to 1.14 as at December 31, 2020, which was down from 1.63 at the end of 2019. Net debt decreased by $12.7 million from prior year. And our working capital position at the end of 2020 improved by $13.6 million compared to the prior year. With the underlying strength of our financial results, Titanium took another important step last November. We declared the first quarterly dividend, which demonstrates the confidence management and the Board have in the operating and earnings outlook for Titanium against the backdrop of ongoing challenging economic conditions. We are very proud of our financial achievements in 2020. While our strong financial performance continued into 2021, equally important was the significant operational progress and execution of our priorities that continue to further strengthen our business and position us to deliver continued growth. A clear demonstration of this was Titanium's acquisition of International Truckload Services Group. This achievement marks our largest acquisition to date and positions Titanium among the top truck transportation companies in Canada. We closed this transformational acquisition on Feb 1 of this year, and increased our asset-based trucking business by about 2/3. ITS added an additional 330 power units, 1,600 trailers, 470 employees and drivers and about $80 million in annual revenue to our top line. As part of the transaction, we are also able to buy the real estate, specifically 30 acres in Belleville and 21 acres in Cornwall, both strategically located. Belleville has a large customer base of manufacturers located not too far from the GTA, and Cornwall is home to 3 large DCs located right across from this newly acquired location. Nearly 5 months into the integration, we have made significant progress in our operational objectives. To date, we have converted all the terminals, except Belleville to Titanium systems and authorities. Our last terminal, Belleville, is on track to integrate into our systems by end of June. The integration of 330 trucks and 1,600 trailers into our systems in such a short time is a testament to the capabilities of our team and the sophisticated systems utilized to run our business. We also continued to digitize their fleet operations. By the end of June, we will have completed all the conversions of their trucks to our ISAAC Instruments' satellites with integrations through our branding and our systems. Additionally, we're in the process of digitizing their trailer fleet with the Blackberry radar trailer-tracking technology. This will have a significant impact on both profitability and utilization. However, I'll note the shortage of computer chips and shipping container bottlenecks is causing some delays in procuring some of that equipment. I'm pleased to report that feedback from their customers and our new partners has been very positive. Many of the customers are beginning to experience and enjoy our integration and visibility platforms. We remain optimistic with respect to the financial and operational targets we laid out at the time of the acquisition. We expect that post-integration, starting July 1 and onwards, we will begin to run the combined fleets on our systems using our purpose-built systems and tools. This is where investors will see the most benefit from this transaction. Titanium trucking now stands at over 800 trucks and 3,000 trailers. Overall, an outstanding demonstration of our discipline and patience with respect to making growth-oriented and value-added acquisitions for Titanium. Moving on to the U.S. side of our company. In 2019, we strategically entered the U.S. market and established our U.S. logistics operations, an asset-light business model where our operational experience and focus on technology offers significant and scalable advantages. We established our first office in Q2, 2019. And we have since launched 2 additional offices, Nashville in 2020 and Chicago in Q1 of 2021. During our first 2 years of operations, results have been very strong, reflecting a strong U.S. market environment. And equally important has been our ability to capture a meaningful share of business as we successfully deliver for our customers. We see substantial additional opportunities for U.S. -- for Titanium outside our domestic Canadian market and are excited about our growth in the U.S. A top priority for us is to continue to strategically expand our footprint in the U.S. We expect to add another 2 additional offices in 2021. The COVID-19 pandemic has presented challenges with the closing of the borders and lockdowns. Having said that, we are well into the process of our next office and expect to complete that process over the next 1 to 2 months with the phased reopening of the Canadian economy and also the opening of the borders in a short time, we're excited to continue to execute on this strategy. Our goal is to continue to open several offices each year. This will significantly increase the asset-light proportions of our top line and will also add significant EBITDA on nonlevered business. We're targeting the opening of a minimum of 10 and potentially as many as 15 locations across the U.S. Conditions in the U.S. for truck transportation are expected to be favorable for the rest of 2021 and 2022. Truck and trailer orders, albeit were high during the early part of 2021. The numbers are tapering off due to a shortage of parts and components. This capacity crunch is expected to persist with no short-term end in sight. And we entered 2021 with an even stronger platform. We have added to our bench strength as we continue to build our infrastructure. I'm pleased to announce that we have added a number of key roles to our leadership team that will help steer Titanium up to the next level. We have the right people on the bus, or in this case, you can say on the truck. Furthermore, Titanium has a very strong corporate culture with an industry low turnover rates and a deep sense of ownership. I believe that this is a result of many factors, including our share purchase program. We're the only trucking company in Canada that has such a program that is available to everyone, including all staff, company drivers and owner operators. We have a clear growth-oriented focus in our core business. We have the operational expertise and technology platform that allows us to grow our business, deliver on customer expectations and achieve scale and productivity enhancements. We believe our current infrastructure can well support continued growth. In addition to scaling our existing operations, we have communicated and more importantly, demonstrated our disciplined patient approach to pursuing value-added acquisitions for our shareholders. Future acquisitions will continue to be evaluated in the same manner. Focusing on synergies, accretion and fit. We will pursue and deliver additional acquisition opportunities at the right time. Titanium's growth-oriented strategy and ability to execute is translated to increased financial strength and flexibility. This supports our focus on delivering increased shareholder returns with what we expect to be a growing dividend over time. I want to once again thank our Board and every member of our organization for their efforts and contributions with a special thank you and welcome to our newest members joining us with the ITS transaction. Lastly, I want to thank all of our shareholders. We greatly appreciate your continued support and look forward to creating lasting shareholder value for your company and Titanium. Now I'd like to open up the line for questions from registered shareholders.

As we have no further questions from registered shareholders, we will end the meeting. Thank you.

The meeting has now concluded. You may now disconnect.