CEO’s letter boasts of lots of arrows pointing up at Triumph Financial

It was hard not to read the quarterly letter to shareholders by Aaron Graft, the CEO of Triumph Financial, and not get a sense that he was taking the first few steps into a victory lap. Triumph’s message to investors for years has been consistent, and it has been amplified every three months in Graft’s multi-page letter to shareholders, unique among CEOs.

That message has been that Triumph Financial (NYSE: TFIN), while still being a bank at its most basic definition, was building an infrastructure to become the supplier of a vast array of financial support services to the trucking community, all the way down to independent owner operators. window. googletag = window. googletag || {cmd: []}; googletag. cmd.

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Ever since Triumph Financial bought HubTran in 2021, it has been building its Payments system to process invoices. Intelligence? It bought Green Sheets last year. How about what amounts to a digital wallet for drivers and small fleets? It launched LoadPay in 2024 for that purpose. While this was going on, it hasn’t been an easy ride for investors.

Triumph Financial stock is down about 43. 5% over the last five years. But the data released in the company’s third quarter earnings report featured numbers that were almost universally positive and suggested those years of investment–which pinched profitability–are starting to pay off.

More importantly are the company’s North Star Metrics, which Triumph Financial set two quarters ago. Those North Star metrics in the third quarter broke down as follows: Transportation Revenue Growth: Long-term target is above 15% growth, third quarter was 37. 8%.

About a third of it is organic, so it is not just being pushed higher on the back of a stronger freight market and higher diesel prices. Factoring operating margin: Long-term target is above 40%, third quarter was 43%. Payments EBITDA, exclusive of the LoadPay wallet offering: More than 50%, 39% in the third quarter after being 34% in the second quarter.

Intelligence Gross Margin: Above 85%, but Graft said in his letter that metric will be dropped from its North Star goals. Intelligence revenue was a mere $2. 4 million, down slightly sequentially. “We told investors we would invest through the freight cycle, and we did exactly that,” Graft wrote in his letter.

“Not everyone agreed with the strategy, but we were true to our word.” Triumph will now look to “translate that potential into earnings performance consistent with our historical results and beyond,” Graft wrote. “Doing so will demonstrate the returns on the investments we have made.” window. googletag = window. googletag || {cmd: []}; googletag. cmd.

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Even if the linehaul portion of a freight invoice stays flat, if the price of diesel rises, that number goes into the invoice it factors or processes (or both), which as Graft conceded in his letter has always led to the question: “How sensitive (is) our average invoice prices…to the cost of diesel?”

Graft’s answer was complicated and simple at the same time: it depends. Factors that would go into answering that question can vary widely among customers, including such things as the carrier’s fuel surcharge formula. But Graft did seek to answer the question.

Year-on-year, he said, dry van revenue is up 40% but diesel costs, as measured at the pump (as opposed to trucker fuel discounts) have risen by 67% during that time. Driver costs have risen, with Graft putting a figure of 70 cents/mile on current levels. Throw in insurance, interest costs and equipment, and Graft laid out an inflationary landscape.

We don't know what % of invoices processed at $TFIN are #diesel costs, so it's not easy to draw a conclusion from 3Q earnings that avg size of invoices rose