Titanium achieves record revenue, but inflation weighs on profit
Titanium Transportation achieved record revenue in the third quarter, but inflationary pressures and integration costs associated with its acquisition of ITS weighed on profit. The company reported record revenue for the fifth straight quarter, at £101.7 million, an increase of 93.2% year over year. Year-to-date revenue was a record £288.1 million.
The logistics segment contributed £59.4 million in the third quarter, up 128.7%, including £42 million from its U.S. brokerage operations. Truck transportation revenue climbed 55.7% to £42.8 million. However, inflationary pressures and the cost of integrating ITS, acquired early this year, saw net income drop 49% year over year to £1.4 million.
But Ted Daniel, CEO of Titanium, said integration of the company’s largest acquisition is progressing well, margins are improving, and they’ll continue to do so as synergies are achieved. “We are seeing the impact of general inflationary pressures, tighter labor markets, and delays with the availability of new equipment,” Daniel said, noting repair costs are creeping up as trade cycles are extended due to supply chain challenges facing truck and trailer makers.
Titanium truck in front of head office (Photo: James Menzies)
The company plans to open its fifth U.S. freight brokerage office by the end of the year, and Daniel said it plans to grow that segment at a pace of about 2.5 new locations per year. Titanium is pursuing rate increases with customers to offset rising business costs, and is finding most customers are more concerned about maintaining capacity than the cost.
“We have been very involved, and progressively working with all of our customers with the mathematics of the conditions we’re dealing with,” Daniel said. “Inflation is a big issue. It hit everybody, the entire business world, very hard and very quickly. It came a little harder than everyone expected it to and at a much faster pace.”
Chief operating officer Marilyn Daniel added “We are addressing customers almost on a one-by-one basis. The appetite out there is very expectant of pricing increases. Nobody is shocked.”
Ted Daniel said the key is to raise prices while respecting the business needs of the customer. “Getting them to understand the ingredients have changed.
We don’t think this is over, there will be more increases several times over the next one to two years,” he added.
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