Capital‑expenditure outlook for 2025
Titanium’s Q2 release shows a 16.8 % jump in logistics‑segment revenue and a continued debt‑reduction program that is further strengthening the balance sheet. Management is now sitting on a healthier capital‑structure, which gives it room to fund growth‑oriented capex without jeopardising liquidity. The logistics surge is being driven by higher volume, new service contracts and network‑expansion initiatives that typically require moderate but targeted spending on terminal upgrades, fleet refreshes and technology platforms. Given the company’s emphasis on “further debt reduction,” we can expect capex to stay in line with the prior‑year level (≈ C$150‑180 million) but will be allocated more selectively to high‑return projects rather than a broad‑based expansion.
Capex efficiency (return on invested capital) in 2025
The combination of strong top‑line growth and a leaner balance sheet points to an improving capex efficiency. With logistics revenue expanding at nearly 17 % and a tighter cost base from debt‑service savings, the ROIC on new capital is likely to rise above the 8‑9 % range seen in 2024, edging toward the 10 %+ threshold that the sector’s best operators target. The company’s focus on high‑margin, asset‑light logistics solutions (e.g., digital freight matching, intermodal partnerships) further boosts the “cash‑to‑capex” conversion rate.
Trading implications
- Bullish catalyst: The upgraded capex efficiency and disciplined spending should support a higher earnings‑multiple (P/E) as investors price in a more profitable growth trajectory. The stock could see upside to 5‑7 % on a breakout above the 20‑day SMA if volume confirms.
- Risk check: Any surprise that capex escalates (e.g., unplanned fleet replacement) could compress cash flow and pressure the debt‑reduction narrative, capping upside. Keep a stop just below the recent low (≈ C$12.30) to protect against a pull‑back if the balance‑sheet story stalls.
Overall, 2025 capex is expected to be modest, well‑aligned with high‑return logistics projects, and the efficiency of that spending is set to improve, reinforcing a positive outlook for the stock.