Triumph Bancorp, based in Dallas, stated in its second-quarter earnings report that the bank — a top provider of money to the trucking sector through factoring — saw “a lengthy runway of development on the horizon,” despite certain difficulties in the near term.
“While there is definitely softening on dry van lanes most closely associated with consumer demand, we are not seeing changes in tonnage or volumes on a flatbed, refrigerated units, or nonconsumer dry van lanes,” Triumph’s founder, vice chairman, and CEO, Aaron P. Graft, said in a letter to shareholders published Wednesday ahead of an earnings call with analysts on Thursday.
“Thinly funded trucking companies may struggle or fail in the second part of this year, but we expect supply remains tight and new equipment is scarce owing to supply chain concerns.” Given these considerations, we are (very) cautiously optimistic about the market is essentially flat through the end of the year.”
Triumph (NASDAQ: TBK) will now begin each earnings release with a shareholder letter in which he will highlight key takeaways from the quarter, while continuing to host a conference call the following morning, according to Graft.
TriumphPay, the bank’s payment arm, handled over 4.3 million invoices in the second quarter, representing a 38% increase over the same quarter in 2021. TriumphPay processed over $6 billion in payments during the quarter, a 76 percent increase over the same period last year. The yearly run rate was $24.1 billion in the second quarter.
Company officials said they see TriumphPay as more than just an outsourced payments provider.
“It’s on track to become the transportation industry’s payments network,” Graft added. “In my opinion, TriumphPay is the golden ticket to driving future shareholder value development.”
Triumph Business Capital (TBC), the bank’s factoring division, purchased $4 billion in the second quarter, a 31 percent increase from the previous year. The average trucking invoice size in the third quarter was $2,176, up 4% year on year. In addition, the company purchased around 1.7 million invoices in the quarter, a 21 percent increase over the same time in 2021.
According to company authorities, trucking invoice sizes will remain stable for the rest of 2022.
“I think we’ve benefited from higher diesel costs, and that feeds into the average invoice size,” Triumph Business Capital CEO Geoff Brenner said during the company’s earnings call on Thursday.
“We believe the inferred higher diesel prices in these invoices have kept them from returning to what we had requested, which is a gradual return to normal.” Looking ahead to Q3, assuming diesel prices remain at or near current levels and utilization remains at or near current levels, which is about 96 percent, we predict a cautiously hopeful return or holding flat, followed by a return to what you saw several years ago.”
Graft stated on the results calls that he anticipates additional clients to join the TriumphPay ecosystem this year. TriumphPay services are now used by 566 freight brokers, 48 shippers, and 69 factors.
“We have a steady trickle of clients coming into the TriumphPay ecosystem every quarter.” “It’s just that the ones that really move the needle are the ones we call tier ones because they control so much business – each one individually and certainly collectively,” Graft explained.
TriumphPay has approximately $15 billion in annualized volume to add to the network, according to the results statement. TriumphPay authorities have established a goal of processing $75 billion in freight market payment volume through TriumphPay by the end of 2024, with a revenue of $100 million.
“Given where we are in the year and where we are in the integration timetable, I would actually estimate gross payment volume to be flat to slightly down in Q3 if invoice prices moderate even further,” Graft stated on the earnings call. “We anticipate a significant increase in Q4 when we go live with the first of this group of new clients in the pipeline.” Because of their size, it’ll be chunky from there or a step function each time a new one comes on.”
