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Classified in: Transportation, Business, Covid-19 virus
Subject: ERN

Mullen Group Ltd. Reports Third Quarter Financial Results


OKOTOKS, AB, Oct. 21, 2020 /CNW/ - (TSX: MTL)  Mullen Group Ltd. ("Mullen Group", "We", "Our" and/or the "Corporation"), one of the leading suppliers of trucking and logistics services in Canada providing a wide range of service offerings including less-than-truckload, truckload, warehousing, logistics, transload, oversized and specialized hauling transportation, today reported its financial and operating results for the period ended September 30, 2020, with comparisons to the same period last year.  Full details of our results may be found within our Third Quarter Interim Report, which is available on SEDAR at www.sedar.com or on our website at www.mullen-group.com.

"Since the onset of COVID-19 important lessons have been learned.  At Mullen Group, for example, I believe the most obvious is the importance of a diversified business model.  We didn't anticipate this pandemic, however we were confident that we were positioned to manage through the disruptions.  We knew we had a good business focused on multiple segments of the economy and a well structured balance sheet, lessons we garnered from past market and economic breakdowns.  We also moved quickly to manage and control those things we could.  As a result, today we report another solid quarter, a testament to the strength of our diversified business model and the commitment displayed by our people," commented Mr. Murray K Mullen, Chairman and Chief Executive Officer.

"We continue to see a resurgence in economic activity driven thus far by a very resilient and ever demanding consumer.  How they spend has changed but how much they spend has not.  And since consumer spending is the primary demand source for the trucking and logistics industry, we witnessed a strong rebound from the lows earlier this year.  We see it in our LTL business and in our Logistics & Warehousing business.  And we see it in our employment levels where most, but not all, of our workforce has returned to full time employment.  Unfortunately, however, parts of the economy and certain geographic regions continue to be ravaged by changes in consumer trends and the economy.  The hospitality industry, air travel and the crude oil industry by way of example have been disrupted.  The Province of Alberta, where the crude oil and natural gas industries play a significant economic role has been hit hard.  A sustained recovery in capital goods and investment remains elusive at best.  But, and here is the good news, we did see some improvement in activity during the quarter.  Revenues have recovered nicely from last quarter, yet they remain a little softer as compared to last year.  All in all, I am very pleased considering how 2020 has unfolded thus far.

"Entering the fourth quarter we remain cognizant of the challenges associated with the COVID-19 pandemic.  No one knows with any certainty what happens next and with no clear evidence to suggest this health crisis can be resolved in the short term, we remain on high alert that our business could be negatively impacted, either from a financial or safety perspective.  Nevertheless, our current view is that consumer spending should remain strong entering the holiday season.  Our optimism is based upon a very nice recovery in the employment statistics and job market as well as recent announcements by the Federal Government to provide fiscal support and stimulus to ensure Canadians have the means to manage through this pandemic induced crisis.  As such we expect consolidated revenues to remain solid," added Mr. Mullen.

 

Key financial highlights for the third quarter of 2020 with comparison to 2019 are as follows:

HIGHLIGHTS


(unaudited)

($ millions)

Three month periods ended

September 30

2020

2019

Change


$

$

%

Revenue




   Less-Than-Truckload

112.7

115.9

(2.8)

   Logistics & Warehousing

86.2

98.8

(12.8)

   Specialized & Industrial Services

92.4

111.5

(17.1)

   Corporate and intersegment eliminations

(0.4)

(0.9)

-

Total Revenue

290.9

325.3

(10.6)

Operating income before depreciation and amortization (1)




   Less-Than-Truckload

22.4

19.2

16.7

   Logistics & Warehousing

17.7

15.2

16.4

   Specialized & Industrial Services

27.5

23.7

16.0

   Corporate

(2.4)

(2.5)

-

Total Operating income before depreciation and amortization (1)

65.2

55.6

17.3

(1) Refer to notes section of Summary




Mullen Group operates a diversified business model combined with a highly adaptable and variable cost structure.  The financial results for the three month period ended September 30, 2020, are as follows:

Repurchased 7,972,926 Common Shares in 2020 at an average price of $6.70 per share under the normal course issuer bid ("NCIB").  This completes the NCIB as the Corporation has now repurchased the maximum allowable number of Common Shares under the program.

Announced the reinstatement of the monthly dividend by paying $0.03 per Common Share on a monthly basis.

Third Quarter Financial Results

Revenue decreased by $34.4 million, or 10.6 percent, to $290.9 million and is summarized as follows:

OIBDA increased by $9.6 million, or 17.3 percent, to $65.2 million and is summarized as follows:

Net income increased by $5.7 million to $26.2 million, or $0.27 per Common Share due to:

A summary of Mullen Group's results for the three and nine month periods ended September 30, 2020, and 2019 are as follows: 

SUMMARY




(unaudited)

($ millions, except per share amounts)

Three month periods ended

September 30


Nine month periods ended

September 30

2020

2019

Change


2020

2019

Change


$

$

%


$

$

%

Revenue

290.9

325.3

(10.6)


866.6

963.9

(10.1)









Operating income before depreciation and amortization(1)

65.2

55.6

17.3


165.4

151.0

9.5

Net foreign exchange (gain) loss

(0.1)

(3.9)

(97.4)


(2.5)

(11.8)

(78.8)

Decrease (increase) in fair value of investments

0.1

0.3

(66.7)


1.4

0.3

366.7

Net income

26.2

20.5

27.8


53.9

63.8

(15.5)

Net Income - adjusted(2)

25.6

16.5

55.2


53.1

42.6

24.6

Earnings per share - basic(3)

0.27

0.20

35.0


0.53

0.61

(13.1)

Earnings per share - diluted(3)

0.26

0.20

30.0


0.53

0.61

(13.1)

Earnings per share - adjusted(2)

0.26

0.16

62.5


0.52

0.41

26.8

Net cash from operating activities

47.4

46.5

1.9


172.3

116.4

48.0

Net cash from operating activities per share(3)

0.48

0.44

9.1


1.69

1.11

52.3

Cash dividends declared per Common Share

0.09

0.15

(40.0)


0.24

0.45

(46.7)

Notes:

(1)  Operating income before depreciation and amortization ("OIBDA") is defined as net income before depreciation of right-of-use assets and of property, plant and equipment, amortization of intangible assets, finance costs, net foreign exchange gains and losses, other (income) expense and income taxes.

(2)  Net income - adjusted and earnings per share - adjusted are calculated by adjusting net income and basic earnings per share by the amount of any net foreign exchange gains and losses, the gain on fair value of equity investment and the change in fair value of investments.

(3)  Earnings per share and net cash from operating activities per share are calculated based on the weighted average number of Common Shares outstanding for the period.


Non-GAAP Terms - Mullen Group reports on certain financial performance measures that are described and presented in order to provide shareholders and potential investors with additional measures to evaluate Mullen Group's ability to fund its operations and information regarding its liquidity.  In addition, these measures are used by management in its evaluation of performance. These financial performance measures ("Non-GAAP Terms") are not recognized financial terms under Canadian generally accepted accounting principles ("Canadian GAAP").  For publicly accountable enterprises, such as Mullen Group, Canadian GAAP is governed by principles based on IFRS and interpretations of IFRIC.  Management believes these Non-GAAP Terms are useful supplemental measures.  These Non-GAAP Terms do not have standardized meanings and may not be comparable to similar measures presented by other entities.  Specifically, operating margin, net income - adjusted and earnings per share - adjusted are not recognized terms under IFRS and do not have standardized meanings prescribed by IFRS.  Management believes these measures are useful supplemental measures.  Investors should be cautioned that these indicators should not replace net income and earnings per share as an indicator of performance.


 

Financial Position

The following summarizes our financial position as at September 30, 2020, along with some key changes that occurred during the third quarter of 2020:

About Mullen Group Ltd.

Mullen Group is a company that owns a network of independently operated businesses.  The Corporation is recognized as one of the leading suppliers of trucking and logistics services in Canada providing a wide range of service offerings including less-than-truckload, truckload, warehousing, logistics, transload, oversized and specialized hauling transportation.  In addition, we provide a diverse set of specialized services related to the oil and natural gas industry in western Canada, water management, fluid hauling and environmental reclamation.  The corporate office provides the capital and financial expertise, legal support, technology and systems support, shared services and strategic planning to its independent businesses.

Mullen Group is a publicly traded corporation listed on the Toronto Stock Exchange under the symbol "MTL".  Additional information is available on our website at www.mullen-group.com or on SEDAR at www.sedar.com.

Disclaimer

This news release may contain forward-looking statements that are subject to risk factors associated with the oil and natural gas business and the overall economy.  Mullen Group believes that the expectations reflected in this news release are reasonable, but results may be affected by a variety of variables.  The forward-looking information contained herein is made as of the date of this news release and Mullen Group disclaims any intent or obligation to update publicly any such forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable Canadian securities laws.  Mullen Group relies on litigation protection for "forward-looking" statements.  Additional information regarding the forward-looking statements is found on pages 1, 56 and 57 of Mullen Group's Management's Discussion and Analysis.

SOURCE Mullen Group Ltd.


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