Triumph Financial(US:TFIN)2024-04-18 17:45Financial Data and Key Metrics Changes - The company's earnings were reported to be weaker than historically, with expectations of continued pressure due to the ongoing freight recession [4] - There was credit noise in the quarter, but the company is proactively managing through it [4] - TriumphPay achieved $1 billion in transactions during the weakest quarter in freight history, marking a 40% growth over prior quarters [8] Business Line Data and Key Metrics Changes - TriumphPay's network transactions increased significantly, with over 600,000 transactions in the current quarter, representing 16% of total payment volume [56] - The company has a pipeline of $5 billion to $10 billion in additional volume expected to be added, which includes both audit and payment volume [17][34] Market Data and Key Metrics Changes - The freight market is experiencing significant headwinds, with a noted historic length of the current slowdown [30] - The average invoice amount for carriers has decreased from $2,500 to $1,800, indicating a low-double-digit decline in overall volume [30] Company Strategy and Development Direction - The company is focused on long-term growth opportunities, particularly in expanding TriumphPay's market share and enhancing network density [57] - Management emphasized the importance of creating value for customers before monetizing the network, aiming for a sustainable growth model [57][58] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the freight recession continuing into 2024, with expectations that a significant amount of capacity needs to leave the system for recovery [67][83] - The company is preparing to ride out the recession and is focused on maintaining a strong capital position to capitalize on future opportunities [82] Other Important Information - The company is not expecting to see a peak in deposit costs in the near term, with upward pressure anticipated as long as market rates remain high [33] - Management highlighted the importance of maintaining strong relationships with clients to navigate the current economic challenges [92] Q&A Session Summary Question: Can you provide insights on the incremental payment volume contracted for TriumphPay? - The company expects to add $5 billion to $10 billion in additional volume, which includes both audit and payment volume [17] Question: What are the long-term EBITDA margins expected for TriumphPay? - Management indicated that EBITDA margins could settle between 50% and 70% as the network matures and scales [27] Question: How is the company addressing the current challenges in the factoring business? - Management acknowledged the significant decline in the factoring business and noted that the current environment is the worst they have seen, but they are managing through it with a focus on maintaining strong relationships [30][82] Question: What is the outlook for the freight market and capacity? - Management believes that approximately 15% or more of capacity needs to leave the system for a recovery to occur, and they do not expect a quick resolution to the current challenges [83]