Titanium Transportation Group Inc. — Management Reports 2024

Mar 19, 2024

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Management's Discussion & Analysis

F O R T H E T H R E E M O N T H A N D Y E A R E N D E D D E C E M B E R 3 1 , 2 0 2 3

D a t e d M a r c h 1 8 , 2 0 2 4

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

GENERAL INFORMATION

The following is Titanium Transportation Group Inc.'s management discussion and analysis dated March 18, 2024 ("MD&A"), which provides a comparative overview of the Company's performance for its three month period and year ended December 31, 2023 with the corresponding three month period and year ended December 31, 2022, and it reviews the Company's financial position as at December 31, 2023. Throughout this MD&A, any reference to "Company", "we", "us", "our" or "Titanium" shall mean Titanium Transportation Group Inc. and all of its direct and indirect wholly-owned subsidiaries. This discussion should be read in conjunction with the Company's audited consolidated financial statements and accompanying notes ("consolidated financial statements") as at and for the year ended December 31, 2023.

The consolidated financial statements of the Company and extracts from those consolidated financial statements contained in this MD&A were prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”). The Company's presentation currency is the Canadian dollar. All financial information presented has been rounded to the nearest thousand dollars, except per share amounts and where otherwise indicated. The Company's consolidated financial statements for the year ended December 31, 2023 were approved by its Board of Directors on March 18, 2024. Readers are cautioned that certain information included herein is forward-looking and based upon assumptions and anticipated results that are subject to uncertainties. Should one or more of these uncertainties materialize or should the underlying assumption prove incorrect, actual results may vary significantly from those expected. See "Forward Looking Statements" and "Risks and Uncertainties".

Unless otherwise indicated, the information in this report are as of March 18, 2024. Additional information relating to the Company, including the Company's annual information form, is available on SEDAR at www.sedarplus.ca.

OVERVIEW

Titanium is an asset-based transportation and logistics company servicing Canada and the United States with terminals in Bolton, Belleville, Bracebridge, Brantford, Cornwall, Napanee, North Bay, Windsor, ON, Oakwood, GA and Falkville, AL with additional parking/switch yards in Brockville and Trenton, ON and freight brokerage offices in Windsor, ON, Montreal, QC, Charlotte, NC, Nashville, TN, Chicago, IL, Denver, CO, Atlanta, GA and Fayetteville, AR. The Company has over 1,000 customers across various industries, including large multinational corporations. The Company has approximately 1,000 power units, 3,300 trailers, and over 1,300 independent owner operators and full-time employees.

The Truck Transportation segment provides transport of general merchandise by long-haul, dedicated and local trucking services throughout Canada and the United States with a variety of trailer types, including dry vans and flatbeds that support both climate-controlled and multi-axle services. Through its modern fleet, the Truck Transportation segment provides reliable and high quality service to various customers, attains a high asset utilization through its network of terminals and yards, and creates a platform for revenue growth and cost efficiencies through the integration of acquisitions.

The Logistics segment is a non-asset based third-party provider of ancillary transportation services, such as freight brokerage, North American and international freight forwarding, intermodal, special and expedited services. The Logistics segment's success is due in large part to the experience and expertise of the Company's dedicated personnel, cutting-edge and innovative information technology and systems, and strong strategic relationships with third-party providers.

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

The Company's operational results are influenced by industry-wide economic factors including freight demand, trucking capacity, fuel prices, driver availability, overall economic conditions, exchange rates, government regulation, weather, and by capital allocation including operating and spending decisions. The Company makes key decisions when allocating capital between its Truck Transportation and Logistics segments, hiring employees or contract for services of independent contractors and determining sustainable compensation structures, investing in new equipment and technology, and considering business acquisitions. Operating and spending decisions are made after the analysis of numerous important financial and operational metrics including EBITDA[1] and operating income, revenue generated per truck and per mile, empty miles, driver retention and fuel efficiency.

Q4 and Fiscal 2023 Key Highlights

• Consolidated revenue for Q4 2023 was $119.3 million -- a 7.6% increase over Q4 2022. The increase reflected the Crane acquisition which contributed revenue of approximately $20.6 million in the quarter. For 2023, annual consolidated revenue was $438.7 million, an 11.6% decrease from 2022, largely attributable to weaker transactional volumes and pricing due to soft market conditions.

• Operating income [(1)] was $5.0 million for Q4 2023, representing a 4.8% operating margin [(1)] -- a 2.3% percentage point decrease in margin, compared to $6.6 million and a 7.1% operating margin [(1)] in Q4 2022. For 2023, operating income [(1)] was $20.3 million - a decrease of 38.7% from 2022.

• The Company acquired all the outstanding shares of Crane Transport, Inc. ("Crane") on July 31, 2023. Crane is a truckload carrier based in Oakwood, GA with a satellite terminal in Falkville, AL. Crane contributed $35.0 million in revenue for the year.

• Truck Transportation segment revenue for Q4 2023 was $67.8 million, representing a 32.1% increase year-over-year, mainly reflecting the impact of the Crane acquisition. Operating income [(1)] was $1.4 million -- a 2.4% operating margin [(1)] , for Q4 2023. This compares to a Q4 2022 operating income [(1)] of $1.3 million and a 3.2% operating margin [(1)] .

 Logistics segment revenue was $52.0 million for Q4 2023, a 14.9% decrease compared to $61.1 million in Q4 2022 -- mainly reflection of lower transactional pricing due to industry overcapacity. Operating income(1)was $4.7 million, a $1.9 million decrease from $6.6 million in Q4 2022. Operating margin(1)for the same period was 9.9%, a 2.3% point decrease from 12.2% in Q4 2022. For 2023, logistics segment revenue was $212.4 million, a decrease of 26.0% from 2022. Operating income was $17.9 million in 2023, down 40.4% from the previous year. Operating margins decreased from 11.7% to 9.4% over the same period.

Revenue by Industry Manufactured goods 39.8% Food & Beverages 20.4% Logistics/Trucking 10.4% Retail 6.8% Services 5.2% Automotive 4.4% Metals & Mining 3.9% Recycling 3.2% Other 5.9% Based on Q4 2023 revenue

1 Refer to "Results of Operations" on page 3 and "Non-IFRS Financial Measures" on page 13 for more information about EBITDA and operating income and for a reconciliation of EBITDA and operating income to net income.

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

RESULTS OF OPERATIONS

Financial Highlights (unaudited)

(in '000 Canadian dollars)

Revenue Fuel surcharge Operating expenses EBITDA(1) EBITDA margin(1) Depreciation Amortization of customer lists Adjusted operating income(1) Adjusted operating margin(1) Gain on sale of property and equipment Finance costs Finance income Foreign exchange loss (gain) Transaction costs Loss/(Gain) on sale of marketable securities Income tax expense Net income and comprehensive income Net income per share - basic Net income per share-diluted	3 months 3 months 12 months 12 months 12 months ended ended ended ended ended Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 2023 2022 2023 2022 2021
	104,652 93,837 382,929 428,815 366,070 14,647 17,012 55,756 67,559 33,373
	119,299 110,849 438,685 496,374 399,443 104,422 95,937 385,750 435,686 368,139
	14,877 14,912 52,935 60,688 31,304 % 14.2 % 15.9 % 13.8 % 14.2 % 8.6 9,341 7,966 31,073 26,217 20,370 556 327 1,538 1,308 967
	4,980 6,619 20,324 33,163 9,967 % 4.8 % 7.1 % 5.3 % 7.7 % 2.7 (745) (1,038) (4,473) (6,876) (1,524) 3,341 1,696 9,419 4,883 3,045 (106) (56) (518) (204) (233) (861) (321) 125 1,570 266 - 200 1,285 200 835 - - - - (111) 1,953 1,338 4,257 8,708 2,654
	1,398 4,800 10,229 24,882 5,035 0.03 0.11 0.23 0.56 0.13 0.03 0.11 0.22 0.55 0.12

(1) Refer to "Non-IFRS Financial Measures"

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

EXECUTIVE SUMMARY AND OUTLOOK

In 2022, Titanium achieved record-breaking results, laying a solid foundation for future growth. Building upon this success, in 2023, despite significant market headwinds, Titanium demonstrated strong operational performance and exercised prudent financial management to deliver our second-best year in company history. In addition, Titanium completed its first-ever asset-based acquisition in the United States, establishing a foothold for continued North American-wide expansion.

Throughout 2023, the transportation and logistics industry was beset by unfavourable market conditions, reflecting overcapacity, rising interest rates, continued upward pressure on operating costs and the impact on supply chains from global geopolitical conflict. Titanium was not immune from these challenges. For example, the Company experienced a double digit decrease in pricing, largely driven by lower fuel surcharge revenue. Volumes declined, but slightly. Nevertheless., we proactively managed the market headwinds, and we were still able to achieve stable results overall.

Demonstrating our resilience, we continued to innovate and add new features to our best in class customer and supplier solutions, Titanium Fusion . Our talented team of freight transportation experts and data analysts consistently developed new ways to augment operations, allowing Titanium to purposefully navigate operating cost pressures and mitigate macroeconomic impacts to our business.

A major highlight of the year was our acquisition of U.S. truckload carrier, Crane Transport, Inc. (“Crane”) of Oakwood, GA. With approximately 200 trucks in its fleet, generating about US$60 million revenue annually, the addition of Crane expands Titanium’s service offerings to current and new U.S. customers while complementing our existing freight brokerage services. We expect Crane to be a strategic asset driving growth in Titanium’s U.S.-based business. Our management team is pleased with the pace of the integration since closing on July 31, 2023, particularly noting the successful migration of Crane’s operations onto the Titanium technological and financial platform effective January 1, 2024. As is usually the case during integration following an acquisition and as we analyze Crane’s operational data and address areas for improvement, we anticipate a temporary adverse effect on margins. This was reflected in our Truck Transportation segment results during the quarter. EBITDA margins for the segment decreased by 3.5% compared to the same quarter in 2022. However, our medium and long-term outlook remains positive.

In the logistics segment, industry overcapacity exerted downward pressure on transactional pricing, which was reflected in a 14.9% decrease in revenue. Additionally, transactional and contract volumes decreased due to shifts in consumer behaviour. However, we are encouraged by the 9.3% volume growth year-over-year in Q4. This marks the second consecutive quarter of organic growth despite sluggish market conditions.

Overall, Titanium remains steadfast in our approach to sustainable growth focusing on profitability. We continue to strengthen our foundations of people and technology while remaining profitable. We are committed to social responsibility and safety. For the second year in a row the Company was a finalist in the Northbridge Safest Fleet Award and amongst the top 5% of the nation’s safest fleets. We entered 2024 from a position of strength and will focus our free cashflow on improving our balance sheet following the acquisition of Crane. We strongly believe, as we always have, that a prudent capital management strategy coupled with good governance is the backbone to current and future, long-term sustainable growth and profitability.

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

Selected Segmented Financial Information (unaudited) (in '000 Canadian dollars)

Truck Transportation Revenue Fuel surcharge Operating expenses Carriers and independent contractors Vehicle operating Wages and casual labour Other operating EBITDA(1) EBITDA margin(1) Depreciation Amortization of customer lists Adjusted operating income(1) Adjusted operating margin(1) Gain on sale of property and equipment Finance costs Finance income Transaction costs Income tax expense (recovery) Adjusted net income (loss)(1)	3 months 3 months 12 months 12 months ended ended ended ended Dec 31 Dec 31 Dec 31 Dec 31 2023 2022 2023 2022
	58,056 41,561 197,206 177,588 9,715 9,737 33,794 36,613
	67,771 51,298 231,000 214,201 24,496 15,276 76,261 64,071 13,274 13,653 51,968 61,297 15,145 11,638 54,951 48,093 3,795 1,332 8,959 6,245
	56,710 41,899 192,139 179,706
	11,061 9,399 38,861 34,495 % 19.1 % 22.6 % 19.7 % 19.4 9,133 7,749 30,324 25,618 556 327 1,538 1,308
	1,372 1,323 6,999 7,569 % 2.4 % 3.2 % 3.5 % 4.3 (745) (1,038) (4,473) (6,876) 2,852 1,404 8,024 4,257 (106) (56) (311) (204) - 200 1,285 200 (84) (675) 715 2,043
	(545) 1,488 1,759 8,149

(1) Refer to "Non-IFRS Financial Measures"

Titanium Transportation Group Inc. Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

Selected Segmented Financial Information (unaudited) , continued (in '000 Canadian dollars)

(in '000 Canadian dollars)
Logistics Revenue Fuel surcharge Operating expenses Carriers and independent contractors Wages and casual labour Other operating EBITDA/ Operating income(1) EBITDA/ Operating income margin(1) Depreciation(3) Finance costs(3) Income tax expense Adjusted net income	3 months 3 months 12 months 12 months ended ended ended ended Dec 31 Dec 31 Dec 31 Dec 31 2023 2022 2023 2022
	47,055 53,786 190,486 256,285 4,932 7,275 21,962 30,946
	51,987 61,061 212,448 287,231 42,554 48,255 172,322 230,000 4,309 5,421 18,965 23,038 455 797 3,301 4,225
	47,318 54,473 194,588 257,263
	4,669 6,588 17,860 29,968 % 9.9 % 12.2 % 9.4 % 11.7 208 217 749 599 489 292 1,395 626 2,007 1,980 4,476 7,811
	1,965 4,099 11,240 20,932

(1) Refer to "Non-IFRS Financial Measures"

Titanium Transportation Group Inc. Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

Revenue

(in '000 Canadian dollars)

Revenue (in '000 Canadian dollars)
Truck Transportation Revenue Fuel surcharge	3 months 3 months 12 months 12 months ended ended ended ended Dec 31 Dec 31 Dec 31 Dec 31 2023 2022 2023 2022
	58,056 41,561 197,206 177,588 9,715 9,737 33,794 36,613
	67,771 51,298 231,000 214,201
Logistics Revenue Fuel surcharge	47,055 53,786 190,486 256,285 4,932 7,275 21,962 30,946
	51,987 61,061 212,448 287,231

For the three-month period and year ended December 31, 2023, the Company's consolidated revenues increased by $8.5 million or 7.6%, but decreased by $57.7 million or 11.6% when compared to the year ended December 31, 2022. Included in Q4 consolidated revenue was an injection of $20.6 million from the acquisition of Crane, and $35.0 million for the full year. Soft market conditions resulted in volume decreases in the Truck Transportation segment and pricing decreases in the Logistics Segment offset the increase in revenue from Crane.

The Truck Transportation segment experienced an increase in revenue of $16.5 million or 32.1%, for the threemonth period ended December 31, 2023 and an increase of $16.8 million or 7.8% for the year ended December 31, 2023, compared the same periods in 2022. The acquired revenue from Crane is reflected in this segment. The increase due to Crane was offset by a decrease in organic freight volumes of 1% year-over-year. In addition, fuel surcharge revenue fell, reflecting lower diesel fuel prices.

The Logistics segment reported a decrease in revenue of $9.1 million or 14.9%, for the three-month period ended December 31, 2023 and a decrease of $74.8 million, or 26.0%, for 2023 in total, compared to 2022. Despite a 24% decrease in pricing year-over-year, the segment volume grew by over 9% reflecting the Company's strategic investments in new Freight Brokerage offices in Montreal, QC, Fayetteville, AR and Atlanta, GA.

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

Operating Expenses

Operating Expenses
(in '000 Canadian dollars) Truck Transportation Revenue Operating expenses EBITDA(1) EBITDA margin(1) Depreciation and amortization Adjusted operating income(1) Operating margin(1)	3 months 3 months 12 months 12 months ended ended ended ended Dec 31 Dec 31 Dec 31 Dec 31 2023 2022 2023 2022
	67,771 51,298 231,000 214,201 56,710 41,899 192,139 179,706
	11,061 9,399 38,861 34,495 % 19.1 % 22.6 % 19.7 % 19.4 9,689 8,076 31,862 26,926
	1,372 1,323 6,999 7,569 % 2.4 % 3.2 % 3.5 % 4.3
Logistics Revenue Operating expenses EBITDA/ Operating income(1) EBITDA margin/ Operating margin(1)	51,987 61,061 212,448 287,231 47,318 54,473 194,588 257,263
	4,669 6,588 17,860 29,968 % 9.9 % 12.2 % 9.4 % 11.7
Corporate Operating expenses	853 1,076 3,785 3,776

(1) Refer to "Non-IFRS Financial Measures".

Operating expenses in the Truck Transportation segment, increased by $14.8 million or 35.3%, for the threemonth period ended December 31, 2023 and increased by $12.4 million or 6.9%, for the year ended December 31, 2023, compared to the same periods in 2022 - primarily reflecting the Crane integration, offset by decreases in volume. For the three month and year-to-date periods, the segment operating margin was 2.4% and 3.5%, compared to a margin of 3.2% and 4.3% respectively, for the same periods in 2022. Operating margin typically softens in the months post-acquisition but is expected to normalize upon completion of integration. We expect the integration to last until the end of Q2 2024.

In the Logistics segment, operating expenses decreased by $7.2 million, or 13.1% for the three-month period ended December 31, 2023, and by $62.7 million or 24.4%, for the year ended December 31, 2023, when compared to the same periods in 2022. Transactional freight rates continued to face downward pressure stemming from soft market conditions and over-capacity. Operating income and operating margins declined by $1.9 million, or 29.1%, for the three-month period, and $12.1 million for the full year -- in line with the drop in segment revenue.

Titanium Transportation Group Inc. Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

SUMMARY OF QUARTERLY RESULTS

(in '000 Canadian dollars)

The following table sets out quarterly financial information for the Company's eight most recently completed quarters:

	Q4'23	Q3'23	Q2'23	Q1'23	Q4'22	Q3'22	Q2'22	Q1'22
Revenue	119,299	112,685	100,379	106,322	110,849	113,356	136,183	135,987
EBITDA(1)	14,877	13,456	12,025	12,576	14,912	15,524	16,335	13,917
EBITDA margin(1)	% 14.2	% 13.6	% 13.6	% 13.8	% 15.9	% 16.0	% 14.0	% 11.5
Operating income(1)	4,980	5,066	4,997	5,282	6,619	8,267	10,131	8,146
Operating margin(1)	% 4.8	% 5.0	% 5.6	% 5.8	% 7.1	% 8.5	% 8.7	% 6.7
Net income (loss) and
comprehensive income (loss)
attributable to the owners of
the Company	1,398	2,558	4,163	3,588	4,800	6,537	7,577	5,969
Per share - basic	0.03	0.06	0.09	0.08	0.11	0.15	0.17	0.14
Per share-diluted	0.03	0.06	0.09	0.08	0.11	0.14	0.17	0.13

(1) Refer to "Non-IFRS Financial Measures".

Changes from quarter-to-quarter mainly reflect the seasonality of operations, changes in industry conditions and acquisitions. Historically, the Company experiences weaker demand in the first quarter, moderate demand in the third and fourth quarters and stronger demand in the second quarter. After the initial economic slowdown during to the COVID-19 pandemic, consumer activity gradually began to resume as health restrictions eased. However, the supply chain struggled to keep pace with the higher levels of aggregate demand. This, combined with monetary measures introduced during the pandemic and the geopolitical impacts of Russia's invasion of Ukraine, were reflected in significant inflationary pressures in the North American and global economies. Operating costs rapidly increased starting in Q2 2021 and continued through to Q4 2022. Fuel prices rose, with global political unrest adding to market uncertainty, putting further upward pressure on operating costs. This, combined with tight capacity, created the conditions for upward adjustment in freight rates.

Interest rates rose steadily in 2022 as central banks moved to stem inflation. Demand and production in China deteriorated during the lockdowns associated with the country's zero-COVID policy. In turn, the favourable freight market conditions that had existed up to that point, began to soften in the second half of 2022 and through the remainder of that year.

In addition, there has historically been an increase in revenue and a decrease in margins in quarters following an acquisition. Revenues have often decreased, stabilized, and then increased while EBITDA margins have increased in the quarters after a business acquisition. For example, following the acquisition of ITS in 2021, the Truck Transportation segment EBITDA was significantly impacted by integration costs to bring the acquired fleet up to Titanium standards. Acquired revenue also followed the historical trend as we rebranded the fleet within Titanium. Margins and EBITDA steadily recovered after Q4 2021, when the integration process was completed. In contrast, the BSC acquisition, in Q1 2022, did not have the same impact on the Truck Transportation segment as the integration costs were absorbed by improvements in margin reflecting favourable market conditions prevailing at the time. We expect the Crane integration, which began Q3 2023, to follow pattern similar to the ITS integration.

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

LIQUIDITY AND CAPITAL RESOURCES

(in '000 Canadian dollars)

Working capital (deficit)(1) Total assets Net debt(2) Shareholders' equity Net debt to equity ratio(3)	December 31 December 31 December 31 2023 2022 2021
	(19,228) 31,469 4,126 355,995 281,142 233,666 191,545 91,288 83,067 104,549 98,220 73,714 1.83 0.93 1.13

(1) Working capital (deficit) is defined as current assets less current liabilities.

(2) Net debt is defined as bank indebtedness, acquisition loan, loans payable and finance lease liabilities, net of cash, finance lease receivables and assets held for sale, both current and long-term portions.

(3) Net debt to equity ratio is defined as net debt divided by shareholders' equity.

The Company's working capital position was negatively impacted while the net debt position and net-debt-toequity ratio increased as at December 31, 2023 compared to December 31, 2022, primarily as a result of the acquisition of Crane for cash consideration of $36.0 million and $40.8 million in assumed debt and vendor takeback loan. Titanium also separately purchased all real estate related to Crane's operations including the head office terminal in Georgia and the satellite terminal in Alabama for cash considerations of $4.0 million and vender takeback loan of $4.0 million. This transaction represents our most significant acquisition to date, and was accomplished without the necessity of raising additional capital due to our strong capital position. Consequently, we utilized our working capital to finance this transaction and we expect to return to positive working capital within one year from operating cashflow and sale of excess aged equipment.

In terms of rolling stock expenditures, we have committed $10.0 million towards the purchase of 120 trailers over the next year. In addition, we expect to realize proceeds from the sale of excess aged equipment of approximately $5.0 million. Our rolling stock replacement policy is to replace trucks after 6 years, van trailers after 10 years and flatbed trailers after 15 years. We believe there is sufficient financing available to fund planned capital expenditures in the future and to provide for further organic and inorganic growth of the business.

The following table sets out the Company's contractual obligations, excluding future interest payments:

(in '000 Canadian dollars) Loans Finance leases	After Total 1 Year 2 Years 3 Years 4 Years 5 Years 5 Years
	155,325 35,835 34,584 33,578 25,295 14,132 11,901 27,465 7,263 5,699 4,842 2,209 2,169 5,283
	182,790 43,098 40,283 38,420 27,504 16,301 17,184

Titanium actively seeks debt refinancing when possible, especially for debt acquired through business acquisitions, to the extent that penalties for early retirement of debt are not significant and lower cost financing is available. We believe the Company's operating cash flows are sufficient to fund daily operating activities and meet regular debt repayment obligations.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

Titanium Transportation Group Inc.

LIQUIDITY AND CAPITAL RESOURCES - continued

The portion of the Company's bank credit facilities which were unused as of December 31, 2023 include approximately $36.6 million under the revolving demand operating facility, and $12.5 million under a finance lease loan facility. In addition, the Company has $19.0 million available in finance leasing and loan facilities through other institutions.

The Company's credit facility and finance leasing agreements require Titanium to maintain three covenants on a quarterly basis. These covenants are measured on a consolidated rolling twelve-month basis. We were in compliance with all covenants as of December 31, 2023 and we believe the Company will be in compliance with all required covenants for the next twelve months. The first covenant requires the Company's debt to tangible net worth ratio to be less than 3.5. Debt to tangible net worth is a ratio of total liabilities plus future minimum lease payments on non-realty operating leases to shareholder's equity less goodwill, customer lists and deferred tax assets. The second covenant requires the Company's debt service coverage ratio to be greater than 1.15. Debt service coverage is a ratio of net income before interest income and expenses, gains on sale of equipment, depreciation, amortization and non-cash items, less unfinanced capital expenditures, plus proceeds of sale of equipment, to contractually required principal and interest payments made over the prior twelve months. The third covenant requires the Company's fixed charge coverage ratio to be greater than 1.00. Fixed charge coverage is a ratio of net income before interest income and expenses, gains on sale of equipment, to contractually required principal and interest payments made over the prior twelve months.

Common Shares

The Company offers a share purchase plan (the "Plan"), which allows all employees and independent contractors, but excluding insiders of the Company, to contribute up to 5% of their compensation to a maximum of $9,600 per year, towards the purchase of Titanium common shares. Contributions are matched at a rate of 100% by the Company and shares are issued from treasury in order to fund the Plan. In the case of employees, matched shares are subject to a three year vesting period. In the case of independent contractors, matched shares are issued after three years of service. The maximum number of shares approved for issuance under the Plan is reviewed by the Board of Directors annually. Of the shares issued to date, 570,259 (2022 - 495,947) have not vested.

On October 18, 2023, we renewed Titanium's normal course issuer bid, allowing the Company to purchase up to 2,236,184 of its common shares (the "NCIB"), representing 5% of its issued and outstanding common shares.

For the year ended December 31, 2023, the Company did repurchase 987,745 (2022 - nil) common shares at a weighted average price of $2.65 and a total purchase price of $2.6 million. The excess of the purchase price paid over the carrying value of the shares repurchased, totaled $1.0 million and was charged to retained earnings as a share repurchase premium.

As of March 18, 2024, there are 44,671,754 common shares of the Company outstanding. In addition, there are 2,851,200 stock options outstanding, of which 1,424,200 are exercisable.

During the year ended December 31, 2023, dividends of $3.6 million or $0.08 per common share (2022 - $3.6 million) was declared and paid by the Company to its shareholders.

Subsequent to the reporting date, the Company declared dividends of $0.02 per common share payable on March 15, 2024 to shareholders as of end of business on February 29, 2024.

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

TRANSACTIONS WITH RELATED PARTIES

The Company provides truck transportation services to companies related to a shareholder with significant influence, Trunkeast Investments Canada Limited. These companies include Vision Extrusions Group Limited and Vision Profile Extrusions Ltd. Aggregate revenues from these companies totaled $17.1 million for the year ended December 31, 2023 (2022 - $19.1 million).

These transactions are in the normal course of operations materially under the same commercial terms and conditions as transactions with unrelated companies and are measured at fair value.

FORWARD LOOKING STATEMENTS

This MD&A contains forward looking statements that reflect the Company's current expectations and projections about its future results. When used in this MD&A, forward looking statements can be identified by the use of words such as "may", or by such words as "will", "intend", "believe", "estimate", "consider", "expect", "anticipate", "objective" and similar expressions or variations of such words. Forward-looking statements are, by their nature, not guarantees of the Company's future operational or financial performance and are subject to risks and uncertainties and other factors that could cause the Company's actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. No representation or warranty is intended with respect to anticipated future results or that estimates or projections will be sustained.

Readers are cautioned not to place undue reliance on these forward-looking statements, which are necessarily based on a number of estimates and assumptions that, while considered reasonable by management as of the date of this MD&A, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The following factors could cause the Company's actual financial performance to differ materially from that expressed in any forward looking statement: highly competitive market conditions, the Company's ability to recruit, train and retain qualified drivers, the Company's ability to identify, successfully complete and integrate suitable acquisitions, fuel price variation and the Company's ability to recover these costs from its customers, foreign currency fluctuations, the impact of environmental standards and regulations, changes in Canadian and US government regulations applicable to the Company's operations, changes in key personnel, adverse weather conditions, accidents and litigation, the market for used equipment, changes in interest rates, changes in the cost of liability insurance coverage, downturns in general economic conditions affecting the Company and its customers and availability of financing on reasonable commercial terms. The Company expressly disclaims any obligation to update forward looking statements if circumstances or management's views or estimates change, except as otherwise required pursuant to applicable law.

From time to time, we will disclose our current annual run rate revenue and EBITDA. Although not intended as such, this may be interpreted as forward-looking information. Run rates are presented to provide investors with insight into the current size of the Company and do not consider expected future growth or changes in economic conditions. Historical figures may not be a good indicator of the Company's size, due to acquisitions and the time that it takes to fully realize synergies. We estimate we will deliver consolidated revenue between $490 million to $510 million and between EBITDA Margins of 10.0% to 12.0% for fiscal 2024.

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

NON-IFRS FINANCIAL MEASURES

This MD&A includes the following financial measures and ratios that do not have any standardized meaning under IFRS and may not be comparable to similar measures employed by other companies:

"Adjusted net income" is calculated as net income before items that are not in the normal course of business, such as accelerated customer list amortization and goodwill impairment.

"Adjusted operating income" is calculated as operating income before items that are not in the normal course of business, such as accelerated customer list amortization and goodwill impairment.

"Earnings before interest, income taxes, depreciation and amortization" ("EBITDA") is calculated as net income before depreciation, amortization, asset impairments, gains or losses on the sale of equipment, finance income and costs, gains or losses on foreign exchange, income tax expense, transaction costs, accelerated customer list amortization and goodwill impairment.

"EBITDA margin" is calculated as EBITDA as a percentage of revenue before fuel surcharge.

"Net debt" is defined as bank indebtedness, acquisition loan, loans payable and finance lease liabilities, net of cash, finance lease receivables and assets held for sale, both current and long-term portions.

"Operating income" is calculated as net income before asset impairments, gains or losses on the sale of equipment, finance income and costs, gains or losses on foreign exchange, income tax expense, transaction costs, accelerated customer list amortization and goodwill impairment.

"Operating margin" is calculated as operating earnings as a percentage of revenue before fuel surcharge.

We believes that these financial measures are useful for investors and other readers, when used in conjunction with other IFRS financial measures, as they are used internally by management to evaluate performance. However, these financial measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures of financial performance prepared in accordance with IFRS.

RISKS AND UNCERTAINTIES

The Company's business is subject to a number of risk factors which are described in our most recently filed annual information form. Additional risks and uncertainties not presently known to us or that we currently consider immaterial also may impair our business and operations and cause the price of the common shares to decline. If any of the noted risks actually occur, our business may be harmed and the financial condition and results of operations may suffer significantly. In that event, the trading price of the common shares could decline, and shareholders may lose all or part of their investment.

CHANGES IN ACCOUNTING POLICIES

The following new standards and amendments to standards are not yet effective for the year ended December 31, 2023 and have not been applied in preparing the consolidated financial statements:

IAS 1, Presentation of Financial Statements

The following new standards, interpretations and amendments to standards became effective for the period beginning January 1, 2023. The full description of each of these changes in accounting policies is available in our consolidated financial statements. The adoption of these amendments did not have a material impact on the consolidated financial statements.

IAS 8, Accounting Policies , Changes in Accounting Estimates and Errors IAS 12, Income Taxes

Titanium Transportation Group Inc. Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

DISCLOSURE CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

In compliance with the provisions of Canadian Securities Administrators' National Instrument 52-109, the President and Chief Executive Officer ("CEO"), and the Chief Financial Officer ("CFO") of the Company, have designed, or caused to be designed under their supervision, disclosure controls and procedures as well as internal controls over financial reporting in order to provide reasonable assurance over reliability of financial reporting and material information relating to the Company's annual financial statements and other reports filed and submitted under securities legislation.

It is the responsibility of management for the establishment and maintenance of adequate disclosure controls and procedures, as well as internal controls over financial reporting. Effective disclosure controls and internal controls ensures the Company's consolidated financial statements are presented fairly and free of material misstatements. In addition, management conducts an evaluation of the effective of its internal controls over financial report and disclosure controls and procedures as at December 31, 2023, under the supervision and with the participation of the CEO and CFO.

Based on the evaluation performed, the CEO and CFO concluded that internal controls over financial reporting, as well as disclosure controls and procedures, were effective as at December 31, 2023, to provide reasonable assurance over the Company's consolidated financial statements for external reporting purposes prepared under these controls. The control framework used to design the Company's internal controls over financial reporting is based on Internal Control - Integrated Framework (2013 framework) as issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

Due to its inherent limitations, internal control over financial reporting and disclosure may not prevent or detect all misstatements. Further, the effectiveness of internal control is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may change.

As permitted under relevant securities rules under 52-111, the Company have excluded Crane's internal controls over financial reporting and disclosure controls and procedures in its evaluation and certification of the Company's internal controls over financial reporting and disclosure controls and procedures as it was acquired on July 31, 2023, within 365 days before the end of the financial period relating to the CEO and CFO's certification. For the year ended December 31, 2023, Crane constituted 21.2% current assets, 26.2% long term assets, 15.0% current liabilities, 17.6% long term liabilities, 8.0% revenue and contributed -31.3% net income.

The Company is require to include Crane in its internal controls over financial reporting and disclosure controls and procedures beginning in Q3 2024. Management intend to include Crane in the first half of 2024.

There were no changes in the Company’s internal control over financial reporting during the year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Titanium Transportation Group Inc.

Management's Discussion and Analysis for the fourth quarter and year ended December 31, 2023

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Company’s consolidated financial statements requires management to make judgments, assumptions and estimates that affect the reported amounts of revenues and expenses, the carrying amounts of assets and liabilities and disclosures regarding contingent assets and liabilities. The following describes critical accounting estimates management used in preparing the consolidated financial statements:

Impairment test of intangible assets and goodwill – An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. The determination of value in use requires the estimation and discounting of expected future cash flows which involves key estimates related to future growth rates, terminal growth rate, post-tax discount rate.

Impairment of trade and other receivables – An allowance for lifetime expected credit losses is established based on a combined approach of specific account identification and the use of a provision matrix. Management regularly analyzes its approach and exposure to credit loss based on an analysis of all relevant current information as well as historical trends.

Depreciation and impairment of property and equipment and Right of Use Assets – Estimates of useful lives for straight line depreciation are based on management’s historical experience and are reviewed on an ongoing basis. Property and equipment, as well as Right-of-Use Assets, is assessed for impairment when events or changes in circumstances indicate that the Company may not be able to recover its carrying value.

Amortization and impairment of intangible assets – Amortization periods for customer lists are based on management’s past experience and regular assessments of customer attrition. Goodwill and customer lists are assessed annually for impairment by comparing future discounted expected cash flows for cash-generating units against carrying values. Cash flows are estimated based on past performance and future expected conditions. Discount rates are estimated based on industry averages, company size and capital structure.

Business combinations – Tangible assets acquired as part of a business combination are valued based on management estimates of current market values, recent selling activity and third-party valuations. Intangible assets are valued based on future discounted expected cash flows, customer attrition and workforce turnover. Discount rates are estimated based on industry averages, company size and capital structure.

Lease contracts – Lease contracts with extensions, terminations or early buyout options are evaluated based on management judgement on whether it is reasonably certain that the option will be exercised. Management considers all relevant factors and economic incentives such as current market values of underlying asset, recent market renewals and third-party valuations. In addition, management also evaluate relevant factors such as bank mortgage rate, interest rates and borrowing conditions when assessing the incremental borrowing rate to measure the lease liability.

Income Taxes – Future tax balances are estimated based on expected future tax rates and the probability of future taxable income needed to realize deferred tax assets. Expected future tax rates are based on currently enacted tax rates or pronounced changes. Future taxable income is based on past performance and future expected conditions.

Share based payments – Management estimates expected volatility, the expected life of the instrument and expected forfeitures when valuing share-based payments. Volatility is estimated based on historical trading data. The expected life of the instrument and expected forfeitures is based on past experience.

Provisions – Estimates of expected settlements arising from matters involving litigation or accident claims are based on information provided by legal counsel or insurance professionals.