管理層發言
Good morning. It's 9:30 in Dallas, and we're ready to get started. Thanks for joining us this morning and for the interest in our second quarter results. We're glad you're here. With that, let's get to business. Aaron's letter last evening outlined an outstanding quarter. We saw material expansion on our core initiatives against the market backdrop that finally gave us some tailwinds. The positive momentum is palpable and the results of that are visible in Aaron's comments in the shareholder letter. That quarterly shareholder letter published last evening and the quarterly results will form the basis of our call today. However, before we get started, I would like to remind you that this conversation may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. The company undertakes no public obligation to revise any forward-looking statement. For details, please refer to the safe harbor statement in our shareholder letter published last evening. All comments made during today's call are subject to the safe harbor statement. With that, I'd like to turn the call over to Aaron for a welcome and to kick off our Q&A.
Good morning, everyone, and thank you for joining us. Before we begin, I'd like to welcome Ben Volkwyn, our Head of Enterprise Data and Intelligence, who is joining us for today's discussion. I hope you'll ask Ben more questions than me because his accent is certainly more pleasing to listen to than mine. In the Q&A on the last earnings call, I referred to the freight market with the statement that the market may be changing. And as we sit here today, I think I can say definitively that the market has changed. We are in a different market. And this market is good for many, but it is also difficult for some. We tried to explain that in the letter we published yesterday. If you look through the noncore expenses and the noise in the quarter, what you will find for Triumph is a business model that is performing materially ahead of its recent history. More importantly to me, we are seeing validation that our value chain is working and delivering what it's promised to the market. With that brief introduction, I will turn the call over for questions.
分析師問答
Our first question will come from Joe Yanchunis with Raymond James.
So in the shareholder letter, you noted that the original 4Q '26 EPS target of roughly $0.50 to $2 run rate assumed average transportation invoice prices of about $1,800. Based on the sensitivity you've previously provided, today's $2,200 invoice environment seems to imply an incremental $0.20 to $0.25 to that quarter on top of that guide. Two-part question: One, is that the right way to think about your outlook? And two, aside from higher noninterest expenses and a slower contribution from the Intelligence segment, what are some of the other things that have changed that would impact this outlook since you originally provided it?
Joe, the way you characterized the impact of invoice prices is solid. We do have about a $7 million annualized pretax income change for a $100 change in invoice prices over the course of the year. That math is pretty straightforward, so yes, you've characterized it correctly. As far as other things that might impact the outlook, any changes in invoice prices would be the biggest mover. But the core trends are pretty well in place. I think the continued momentum of our penetration and sales is what drives us from where we are today through the rest of the year. You shouldn't see a whole lot of volatility in expenses beyond what we've already called out. We are continuing to seek ways to get more efficient, looking for about $99 million in Q3 and about $98 million in Q4. Beyond that, you can expect us to maintain that discipline going forward.
Okay, I appreciate that. Now I want to shift over to a more strategic question. Amazon has been steadily expanding Amazon Freight and recently introduced Amazon Supply Chain, bringing logistical capabilities under a single platform. As Amazon continues to build a more integrated logistics ecosystem, how do you think about the potential impact on the brokered freight market? Does that represent a competitive threat to Triumph over time, or could it ultimately create additional opportunities for your payments and intelligence platforms?
Great question. There are several people in the market who actually move freight who are better equipped to speak to whether Amazon is truly a competitive threat to the established brokerage community, so I will defer to those experts. What I can say is Triumph moves data and money. Amazon, like anyone else, needs somebody to move money on their behalf when they hire a carrier. If somebody is going to be active in brokered freight, we're going to be talking to them and trying to meet their financial, liquidity, and data needs. Our approach doesn't change whether it's Amazon or any other broker: we're going to give them our best efforts to help them achieve their business goals.
Your next question will come from Timothy Switzer with KBW.
Is there any update on the 20% transportation revenue growth year-over-year you guys are expecting for Q4? It seems like you'll at least beat the mid-teens factoring guide you gave. Curious if there are any updated numbers you can provide on that.
The most updated numbers you can find are in the shareholder letter. One of the things I wanted to point out is that if you pull apart the increase in invoice sizes we've seen as a result of supply constraints, I peg our organic growth in the mid-teens, which is pretty much right on par with what we told the market our North Star metric was for transportation revenue growth. My view is that we are organically growing across almost all of our segments by deepening relationships with existing customers and delivering more value, which then delivers more value to us. Most encouragingly, we are winning new business, especially in our factoring business, and winning new customer relationships in a marketplace that is shrinking should not be overlooked. Put all that together, that's the mid-teens organic core growth we held ourselves accountable to. Add on top of that the market forces—what's going on in the Middle East, supply reductions due to litigation, legislation, regulation—and that's how you get to that roughly 30% growth. It's very difficult for me to see how we won't eclipse the growth target for transportation revenue by a material amount at the end of this year. Some of that we deserve credit for because of our execution; some of it is appropriately attributable to the market changing. One last point: the market was never going to stay at $1,800 invoices in perpetuity because carrier input costs have risen so much carriers could not earn their cost of capital. I'm not smart enough to have predicted exactly when that would change, but we knew the market would change. What's gratifying is we built a business model that we believed would do very well when the market normalized and returned toward equilibrium. I don't think we're anywhere close to where we were in 2021 inflation-adjusted, but the business model is working largely as we predicted. So we're organically winning business and benefiting from market normalization.
Okay, that was very helpful. I have a few questions on LoadPay. It looks like great trends there, especially revenue per active carrier getting really close to the $750 number you guys have talked about. If I recall, you were finalizing new features and products within LoadPay by the end of Q2 and then planned to push growth harder. Are all those features in place, and should we expect an acceleration in growth in that business?
Absolutely. We're proud of the work completed in the first half of the year. We've added the ability to do factoring, banking, integration with fuel, and integrations with some of our intelligence all within a single tool for our carrier population. We've seen that come through in account growth numbers and revenue per account. What's really encouraging is our revenue is growing faster than our account growth. Looking into the back half of the year, we think we're uniquely positioned in three ways to keep winning share: distribution across the number of carriers we touch across our payments network, integrations across 400-plus brokers making LoadPay the best place for carriers to receive payments, and differentiated economics by being a bank at the end of the day. We're confident about the back half of the year and expect trends to continue.
One more on the expense outlook. Given some of the noise with incentive accruals at the end of the year, setting those aside, how should we think about the outlook for 2027? Is it down from the roughly $98 million run rate with more cost saves, or is there modest growth? Hard to tell given the incentives.
It likely trends a little bit higher. Any incentive accruals that hit in the back half of this year would reset at the beginning of next year, so the bar will be reset higher than it was this year. Any incremental incentive payments next year would have to be because we outperformed our targets. We do always have compensation resets and so forth, and there will be churn as we deploy resources into the most effective areas. I would expect those numbers to trend modestly higher next year.
I understand why analysts focus on expenses. I'm focused on operational leverage. If expenses increase next year, that can only happen if we grow revenue more than expenses. We've generated significant expense savings over the last few quarters by doubling down on efficiency, technology deployment, and streamlining. We have intentionally redeployed some of those savings into a stronger sales organization and other investments we believe will create long-term investor value. As we get to the back half of this year, we'll be more explicit about 2027 expense expectations. I think those expenses will be slightly up, but underneath that a lot of things are happening: material expense savings in places and investments in others. Importantly, each of the North Star metrics includes margin expansion, not just revenue growth. We'll only deploy dollars if we think they can grow margin and revenue and push results to the bottom line for investors.
Your next question will come from Matt Olney with Stephens.
Aaron, similar to your last point, I want to ask more about the factoring business. Operating margin there looked great this quarter, but as you mentioned in the letter, much of that's from improved invoice pricing. Where is the company in moving down this cost structure with technology? I'm trying to understand if longer-term margin could be significantly better than your goals if higher invoice pricing continues and cost structure improves. Also, switching gears to the banking segment, we saw positive trends in Q2. It seems the banking segment has been more volatile than expected this year. Any more color on what we saw in Q2 and your expectations from here?
If you're asking from an enterprise technology and efficiency standpoint, we're in the early innings of a game we never intend to end. Triumph's journey has generally been good at growing revenue and being creative. During the down cycle after 2021 and 2022, we focused on value delivery to customers. What I should have emphasized more then was using technology to improve internal efficiency. That is no longer lower on the priority list. I expect Kim's leadership in factoring to continue driving automation, which will increase invoices per FTE and create operating leverage while improving customer experience. All things being equal in this cyclical business, I would expect margin to continue to increase because we will get more efficient. We have a playbook to run. I would expect revenue in factoring to grow because we have a great sales team and the best distribution platform in the marketplace for both our own business and factoring-as-a-service. Forty percent operating margin is a great place to be—it's an exceptionally high margin in a business like this. I want to see factoring get above 40% and stay there, which would equate to roughly a 5% to 7% return on average assets—that's very profitable. Also importantly, factoring is now the entrance into the Triumph transportation technology platform: factoring customers become LoadPay customers, equipment finance customers, intelligence customers. That is a material change from 12 years ago and an important part of our long-term strategy. So you'll see margin expansion in the segment and intangible benefits across the enterprise.
Yes. Great points. Appreciate the color on that.
We're a bank. Ask it. Yes, it's great.
We saw some nice positive trends in the second quarter, and coming into the year we expected the banking segment to be relatively stable with less volatility, but it's been more volatile so far. Any more color on what you saw in Q2 and your expectations from here?
I view the second quarter as a quarter of progress, not volatility. We earned some new business in the second quarter that might have looked like volatility in the results, but as we set the stage for Q3 and Q4, we've created additional efficiencies. We feel good about the business we've put on the books, and our core deposit costs continue to be very stable. I think the outlook is pretty smooth from here.
Your next question will come from Eric Bedell with Bloomberg Intelligence.
I was wondering if we could unpack the factoring segment a little more, particularly around invoice size. Could you tell us how much fuel surcharges changed the price of the average invoice in the quarter?
Do you want to take that one, or would you like me to? I think you should answer it.
We know that, for a carrier specifically, about 25% of the carriers' cost goes to fuel. So if you think about that against our invoice price, about 25% of the increase can be attributed to fuel. The spot market includes everything—diesel, tightness in the market, seasonality—so it's difficult to isolate precisely. Diesel might be up 30% year-over-year, but that's only 25% to 30% of the carrier's cost, so the impact on invoice size is that percentage multiplied by that weight and then added to other inputs in the market. We can give directional visibility but not precise isolation.
Yes, exactly. What Kim pointed out is what people often miss: diesel is a piece of carrier cost, not the entire driver of invoice increases.
That is helpful. I'm also curious about the large carrier mix. You mentioned about 75% of invoice volume on the factoring side is large carriers. How much of that is more contract-rate focused, and how can we expect that rate to change as we get into the back half of the year?
This is not a precise calculation, but when we looked at the portfolio, about 70% of our paper is broker-related and 30% is shipper-related. We estimate roughly 65% to 70% of our invoices are from the large carrier segment. Regarding contract rates, when RFPs come around, we would expect them to increase and negotiate higher rates to be more in line with spot rates.
In the back half of the year we'll likely see a similar pattern to what we've seen: a reset happening in the RFP cycle and a breakdown of routing guides as we move through the back half. There are carriers who run for brokers on dedicated lanes, which function more contractually than the spot market, so there are many moving parts underneath. The data points Kim gave combined with broader market data should help form a clearer picture.
Lastly, could you give an update on how factoring-as-a-service has helped new client generation for you?
Factoring-as-a-service is an embedded distribution offering for us with a strong partnership with the two companies in our portfolio. They continue to grow along with our portfolio. It's a continued distribution offering with a very low acquisition cost, which helps margin. The value of factoring is not just the revenue alone; when you're talking about factoring-as-a-service and our partners who move freight, the financial relationship in addition to the transactional relationship makes it a much more holistic relationship. Their ability to win business and attract carriers looks different than Triumph's because we don't move freight. It's going well and is one of our strategic growth initiatives going forward.
Your next question will come from Gary Tenner with D.A. Davidson.
You mentioned in the shareholder letter, Aaron, that you expect to recast the Payments EBITDA target at some point inclusive of LoadPay. Specific to LoadPay, given its growth trajectory, do you have any sense or projection as to when that part of the Payments segment alone will hit an EBITDA breakeven number?
We're going to continue to invest in the product and embed additional Triumph offerings for carriers within the LoadPay experience. As we move through 2027, we expect LoadPay to be breakeven.
My history of predicting the timing of profitability isn't perfect, so I won't give you a precise date, but I agree with David: by the end of 2027 is our expectation. As LoadPay becomes a more material part of our story and Intelligence becomes more embedded, we will update the North Star metrics to reflect that. Gross margin for Intelligence should stay high due to the structure of that business; for LoadPay, we've seen 49% quarter-over-quarter revenue growth. Ultimately, LoadPay must earn the right to continue receiving capital, and I would love to see it breakeven by the end of next year and continue to grow. It's a balance-sheet-light business, you don't take credit risk in that product, and it's a natural extension of the customer experience and liquidity injection where needed. I expect 2027 North Star metrics to be updated accordingly. On a GAAP basis for the Payments segment, if you add LoadPay back in, we're trending toward over a 25% EBITDA margin—things are trending well. We break out the pieces so you can judge each individual part of the business.
Fair enough. Since you mentioned Intelligence, revenue there has been relatively flat for the last four quarters. Anything surprising in terms of revenue or interest in the product? Could you talk about the Intelligence segment and what the last year has looked like there?
I'll start and then hand it to Ben. We've done many acquisitions since Triumph was founded, and they never quite earn out exactly how you think. Whatever you underwrite is probably not what will happen. It is disappointing to me that Intelligence did not scale faster in the first four quarters, and I'll own that disappointment. But I can isolate that disappointment from the long-term value opportunity. The industrial logic is clear: Triumph touches more invoices across audit, payment, and factoring than anyone in brokered freight. The industrial logic for us to provide real-time data back to the marketplace is as strong as ever. We needed to make that offering an enterprise product, and we are doing that. I can see things ahead that may not be visible in the backward-looking numbers today. The race isn't always won by those who start fastest; it's won by those who increase their pace over time. We're committed to that and you can hold us accountable. Intelligence also has intangible benefits in discussions across payments, audit, factoring, and other parts of the business, but that alone is not enough to justify the investment. Ben, talk about where we're going operationally.
We've taken a deep look at the last 12 months. Demand for our data has been strong across tier 1 through 5 customers. There's clear demand for the way we package and productize the data. We're focused on taking a tool that was initially pricing-focused and unpacking it into a complete platform that provides intelligence across pricing, capacity, and market insights. The goal is to give brokers the toolset to truly capitalize on our data set. We have work ahead to increase retention, ensure perfect market fit, listen to client needs, and grow ARR. That is our focus and where we'll be building our foundational product.
Our next question will come from Hal Goetsch with B. Riley Securities.
Deposit growth and bank loan growth has been flat as expected, and most asset growth was in factoring. On the core banking side, the interest rate on your average loan was up 80 to 90 basis points sequentially. Any color on that?
The interest rate you're seeing includes the impact of factoring growth. That blended effect is contributing to the increase; it's not core loan rate growth alone.
There are no more questions at this time. I'd now like to turn the call over to management for closing remarks.
Thank you all for joining us today. We'll talk to you soon.