Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| We will be one of those companies who emerge stronger through this, and we should have a materially greater market share than we do now |
| Our financial results were also better than in prior periods |
| On TriumphPay, obviously, a very strong quarter |
| We remain excited about the possibilities and our progress in spite of that |
| And if the market ends up performing better than I expected in the short term, we will be more profitable and that would be great |
| Those included: First, TriumphPay’s momentum and financial performance has exceeded even our own expectations |
| And where we see really strong tenants, really strong borrowers, great risk-adjusted returns |
| They were exceptionally talented and smart people |
| Before turning it over for questions, let me explain that while my bearishness about the next 12 months or so is real, it also makes me extremely bullish on the long-term future for Triumph Financial |
| I suspect this technology will live on, and we’ll improve the industry for all of us I hope that these really talented people I’ve gotten to know will land places and continue to make the freight industry better |
| It was very profitable in the short term in 2021 in that time period |
| The EBITDA margin improvement on TPA comes at a nice time for you guys to be able to sustain investment in that business even if the factory business is a little light for the near term? Okay |
| And that would be a tremendous margin pickup for them |
| As we continue to look forward, if there are additional credits that need to be downgraded, we’ll go through the same analysis, but we’re already stress testing the portfolio and we feel very good about secondary sources of repayment |
| But we’re going to have to navigate these waters and something may surprise us along the way, but I feel very good about where we sit relative to the collateral position we have in our loan book and the underwriting we did when we were – 2 years ago when a lot of these credits would have showed up |
| So if we stay in a market that’s higher for longer, then we expect that revenue component to grow because we expect our float will grow as our payment volume grows and we definitely believe that will happen over the next 12 months |
| So I think Convoy did great things |
| And I believe that will serve us well |
| That is very high margin for us |
| I mean that is the brand promise that TriumphPay makes to the factoring industry |
| We made significant progress in the third quarter on several fronts |
| And finally, related to that, the things that make us uncomfortable in the short term, we believe will create value for us in the long term |
| We are having to – our own FMS had to be improved to be able to ingest that data – and so one of the things we talk about in this letter is we are thinking through how we can offer to the factoring industry, the ability – some of the technology we have built and the operational expertise we have, so that they can more easily ingest that data so that they can pick up the cost savings that is the brand promise of TriumphPay |
| Like if you think about what was traditional freight brokerage, it was contracting with shippers to move loads and then using people and using phones to find carriers to haul those loans and make a 15% margin, beautiful business model, highly scalable |
| A lot of freight brokers have done exceptionally well with that.Take the last 10 years, there has been this move to we should create digital freight marketplaces |
| I also believe that Triumph Financial and specifically what we’re doing at TriumphPay is bringing innovation to the industry |
| That is our promise to them |
| The execution is exceedingly hard – it’s exceedingly hard to get the scale and bring in all the dynamics that get priced into this very vibrant, very hard-to-predict trucking industry that is attached to the global supply chain |
| That is very valuable for us |
| But those specific spikes, that part of the expense base, I will take all day every day because I know over the long term, it creates a lot of value for us |
| Statement |
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| Third, the freight market has not rebounded and it could get worse before it gets better |
| And one of the reasons I am bearish on freight over the short term is because I believe that private equity and venture capital have artificially propped up some companies that were attempting to bring disruption to the industry without ever achieving profitability |
| We still see the freight market very soft |
| And that, plus just all of the things we see just leads me to believe we have excess capacity in the system |
| Additional stories have followed speculating that several more freight brokers and carriers could face a similar fate |
| I would think that many, a very significant number of small carriers are unable to earn their cost of capital, taking spot rate loads right now |
| That’s why I think you’re seeing softness across the market |
| And that is why you’re seeing the attrition in our own factoring client base |
| Companies that are not profitable will eventually fail |
| Second, we had a unique quarter from an expense perspective that is unlikely to repeat in the near term |
| Gary Tenner Aaron, I wanted to ask your comments in the letter regarding your pessimism or bearishness about the freight industry didn’t sound like it was universal, but certainly your view of the world |
| We had a strong third quarter and a lot of things break our way, but the quarter continued to present a challenging freight environment, one which we do not yet see improving |
| But at the end of the day, cool technology and really good marketing will not make up for the inability to earn your cost of capital |
| I’m friends with many people in this industry, and it saddens me to think about the disruption this will bring to many employees and customers |
| We are not seeing that |
| The problem that they and some of these other tech-enabled brokers have is that in order to build – go from just traditional brokerage |
| And I hope we’re wrong |
| And so it may be that the industry recalibrates more quickly than I would expect |
| I believe a significant amount of money will exit the stage in the freight industry and may not return anytime soon |
| Do I expect there to be material losses? I do not |
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