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Titanium continues acquisition hunt

Posted: August 11, 2017 by John G. Smith

BOLTON, ON – Titanium Transportation Group continues its search for companies to acquire, focusing mainly on Ontario-based truckload fleets with cross-border van or flatbed business.

“With our current infrastructure, we can double in size,” Chief Executive Officer Ted Daniel said in a call with analysts on Thursday. And he expects one deal to be completed before the end of 2017.

Titanium has about $36 million in undrawn credit facilities at its disposal, and Daniel stresses that the company is looking for acquisitions that are the “right fit on many levels”. In many cases, fleets haven’t been replacing equipment as quickly as they should, he said, referring to the investments that would be needed to update them. “A lot of these balance sheets are lacking to be able to deal with the new price of trucking.”

While expressing “no interest” in the Less than Truckload segment, he didn’t rule out a business that had some of that business which could later be sold.

In the meantime, there are opportunities for organic growth as well. Titanium has been introducing rate increases as contracts come up for renewal. It will also invest $2.5  million in 10 more flatbeds and as many Volvo tractors before the year is done.

 “There’s still some headwinds,” he said of the current economic climate. Still, the Chief Executive Officer expects capacity to gradually tighten as the business of trucking becomes more sophisticated.

Fleets that are focused entirely on domestic freight can expect their rates to erode next year, Daniel predicted, referring to the way mandated Electronic Logging Devices could cause some operations to pull back from the U.S. “You’re going to see more drivers that want to do domestic.”

The evolving market and technology didn’t seem to worry him, though. “We thrive on disruption, we thrive on innovation, and we thrive on technology,” Daniel said. Recent Titanium investments, for example, have included Blackberry Radar, which have allowed trailers to be more highly utilized.

The company’s growth has not been limited to trucking alone. The logistics segment has grown over three quarters, and Titanium has the “bandwidth” to handle more, Daniel said.

And he repeatedly referred to the value of a share purchase plan introduced in the second quarter, unique in the Canadian trucking sector. Businesses on the Toronto Stock Exchange that have such programs tend to outperform their counterparts, he said.

There are still some undeniable business challenges, though. As an Ontario-based fleet, Titanium faces the cost of the carbon tax not introduced in other jurisdictions. “The basic cost of running a business year over year has increased,” he said.

Titanium’s stock price reflects an asset-valued reality, he added. “I don’t love the price, but on the other hand I love the opportunity.”

 

 

 

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