Titanium Transportation’s move into the U.S. asset-based trucking market helped it grow its Q4 revenue against the backdrop of an ongoing freight recession, while net income slid 71% year over year.

Consolidated revenue grew 7.6% to $119.3 million in the fourth quarter. Truck transportation revenue jumped 32% year over year, thanks to contributions from the company’s purchase of Crane Transportation in the U.S. Titanium also marked its second straight quarter of organic growth in logistics, with a 9.3% volume increase year over year, but a 15% decrease in revenue.

For the full year 2023, revenue was down 11.6% to $438.7 million, and net income slid 59% to $10.23 million, marking the company’s second best year in its history, behind an abnormally strong market in 2022.

“In 2023, the freight transportation industry faced a challenging market including excess capacity, downward pressure on pricing and escalating operating costs,” CEO Ted Daniel said in a release. “Despite these headwinds, Titanium delivered sustainable and profitable growth.

“We enter 2024 from a position of strength as our recent strategic acquisition of Crane positions us to drive growth in our U.S.-based logistics business,” Daniel added. “Moreover, with a recently completed fleet refresh we will have a reduced need for capital expenditures.”

The company said the headwinds it experienced in 2023 have persisted through the first two months of this year.

Second half improvement

“Nonetheless, we believe conditions will improve in the second half of 2024 and are beginning to see signs of excess capacity exiting the market,” Daniel said in a release.

In an earnings call with analysts, chief operating officer Marilyn Daniel said Crane Transport has been integrated, and now the company is moving onto the next stage of optimizing the fleet and growing its margins. That company operates about 200 trucks generating about US$60 million in annual revenues.

Titanium gave 2024 guidance of $490-$510 million in revenue with an EBITDA margin of 10-12%.

“While we anticipate continued macroeconomic uncertainty in the first half of 2024, our expectation is the market will improve toward the latter part of the year with a reduction in capacity in the freight market, enabling additional organic growth,” Ted Daniel told analysts.

The company says it will focus this year on improving its balance sheet, but Daniel also said there are attractive acquisition opportunities at hand.

M&A opportunities

“I think there are a lot of opportunities out there right now,” he said on the call. “I think there are a lot of companies that are struggling and if they lived entirely off the spot market, definitely they’re struggling. But there is no point in buying a company where the entire company is broker freight. You’re really just buying equipment at that point in time.”

Companies that come with attractive contracts and good people, whose financial performance can benefit from synergies and the implementation of newer technology are a more attractive option, Daniel added.

“There are a lot of different options out there,” he said.

Titanium also anticipates being able to take advantage of turning freight market dynamics thanks to the fact it has refreshed its fleet and has a low capex budget as result.