OKOTOKS,
AB, July 21, 2022 /CNW/ - (TSX:
MTL) Mullen Group Ltd. ("Mullen Group", "We",
"Our" and/or the "Corporation"), one of
North America's largest logistics
providers today reported its financial and operating results
for the period ended June 30, 2022, with comparisons to
the same period last year. Full details of our results may be
found within our Second Quarter Interim Report, which is available
on the Corporation's issuer profile on SEDAR at www.sedar.com or on
our website at www.mullen-group.com.
"This was another exceptionally strong quarter for our
organization. Consolidated revenues reached record levels
driven by previously announced acquisitions, general pricing
increases, fuel surcharges and steady customer demand in all four
operating segments backstopped by consumer spending and overall
economic activity that remained at elevated levels throughout the
quarter. In addition, there was an overall increase in oil
and natural gas activity, a trend I believe will be sustained for
the foreseeable future given the high commodity pricing
environment. Our strong performance was achieved despite
overall economic activity continuing to be negatively impacted by
bottlenecks and supply chain disruptions, limiting growth in the
economy as well as being a major reason productivity has
deteriorated and inflationary pressures remain higher than
normal. In addition to the strong revenue gains, our business
generated higher operating profits, improved operating margins and
strong cash flow during the quarter, primarily due to general
pricing increases implemented earlier in the year. These
increases were required to offset significant inflationary
pressures that have emerged over the past year. Fuel expense,
for example, remains at record levels, doubling year over year due
to a combination of tight crude oil markets and refining
capacity," commented Mr. Murray K.
Mullen, Chair and Senior Executive Officer.
"There is a case to be made that economic activity will begin
to slow given the impact inflationary pressures are having on
consumers. In addition, steps initiated by the central banks
to reduce liquidity in the financial markets accompanied by rising
interest rates will also dampen economic growth. I do not,
however, expect a significant decline in freight demand, provided
employment levels remain strong. Consumers will, in my
opinion, simply adjust their spend. Furthermore, I am still
of the view that capital investment will remain strong, most
notably in energy related projects including oil and natural gas
activity, supporting our Specialized & Industrial Services
segment. Overall, our pace of growth will moderate over the
next quarters as we delay future acquisitions. Investors are
cautious given the current outlook for interest rates and, as such,
we are reluctant to aggressively pursue growth within this
environment. Recall that in 2021 we acquired six quality
companies that have contributed significantly to the growth of our
organization over the last 12 months. These companies will
continue to play an important role in Mullen Group, however, year
over year growth will slow. Our short term strategy will be
to manage the business we have, invest capital in new efficient
operating equipment that will improve margins and prudently manage
the balance sheet, initiatives that have us on target to
achieve $2.0 billion in consolidated
revenues and $300.0 million in OIBDA
this year," added Mr. Mullen.
Key financial highlights for the second quarter of 2022 with
comparison to 2021 are as follows:
Second Quarter Summary
|
|
|
|
(unaudited)
($ millions,
except per share amounts)
|
Three month periods
ended
June
30
|
|
Six month periods
ended
June
30
|
2022
|
2021
|
Change
|
|
2022
|
2021
|
Change
|
|
$
|
$
|
%
|
|
$
|
$
|
%
|
Revenue
|
521.5
|
312.5
|
66.9
|
|
978.4
|
603.0
|
62.3
|
|
|
|
|
|
|
|
|
Operating income before
depreciation and amortization(1)
|
93.9
|
59.0
|
59.2
|
|
154.2
|
106.1
|
45.3
|
Adjusted operating
income before depreciation and
amortization(2)
|
93.9
|
52.6
|
78.5
|
|
154.2
|
93.7
|
64.6
|
Net foreign exchange
loss (gain)
|
1.2
|
(1.2)
|
(200.0)
|
|
4.5
|
(1.3)
|
(446.2)
|
Decrease (increase) in
fair value of investments
|
0.1
|
(0.7)
|
(114.3)
|
|
(0.1)
|
(1.1)
|
(90.9)
|
Net income
|
42.7
|
21.7
|
96.8
|
|
59.1
|
34.7
|
70.3
|
Net Income -
adjusted(3)
|
44.1
|
19.9
|
121.6
|
|
63.6
|
31.7
|
100.6
|
Earnings per share -
basic(4)
|
0.46
|
0.23
|
100.0
|
|
0.63
|
0.36
|
75.0
|
Earnings per share -
diluted(5)
|
0.43
|
0.23
|
87.0
|
|
0.61
|
0.36
|
69.4
|
Earnings per share -
adjusted(3)
|
0.47
|
0.21
|
123.8
|
|
0.68
|
0.33
|
106.1
|
Net cash from operating
activities
|
48.8
|
55.9
|
(12.7)
|
|
66.8
|
94.9
|
(29.6)
|
Net cash from operating
activities per share(4)
|
0.52
|
0.58
|
(10.3)
|
|
0.71
|
0.98
|
(27.6)
|
Cash dividends declared
per Common Share
|
0.17
|
0.12
|
41.7
|
|
0.32
|
0.24
|
33.3
|
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) Adjusted OIBDA is
calculated by subtracting the Canada Emergency Wage Subsidy from
OIBDA.
(3) 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 change in fair
value of investments, and the gain on contingent
consideration.
(4) Earnings per share - basic and net cash from
operating activities per share are calculated based on the weighted
average number of Common Shares
outstanding for the period.
(5) Earnings per share - diluted is calculated based on
the diluted 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, Adjusted OIBDA,
adjusted operating margin, operating margin, net revenue, 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.
|
Second Quarter Financial
Results
(unaudited)
($
millions)
|
Three month periods
ended
June
30
|
2022
|
2021
|
Change
|
|
$
|
$
|
%
|
Revenue
|
|
|
|
Less-Than-Truckload
|
210.7
|
126.7
|
66.3
|
Logistics
& Warehousing
|
156.7
|
120.6
|
29.9
|
Specialized & Industrial Services
|
100.5
|
66.4
|
51.4
|
U.S. &
International Logistics
|
57.2
|
-
|
-
|
Corporate
and intersegment eliminations
|
(3.6)
|
(1.2)
|
-
|
Total
Revenue
|
521.5
|
312.5
|
66.9
|
Adjusted operating
income before depreciation and amortization
(1)
|
|
|
|
Less-Than-Truckload
|
42.4
|
23.0
|
84.3
|
Logistics
& Warehousing
|
30.5
|
22.7
|
34.4
|
Specialized & Industrial Services
|
20.5
|
10.3
|
99.0
|
U.S. &
International Logistics
|
2.2
|
-
|
-
|
Corporate
|
(1.7)
|
(3.4)
|
-
|
Total Adjusted
operating income before depreciation and amortization
(1)
|
93.9
|
52..6
|
78.5
|
(1) Refer
to notes section of Second Quarter Summary
|
|
|
|
Revenue increased by
$209.0 million, or 66.9 percent, to
$521.5 million and is summarized
as follows:
- LTL segment up $84.0 million, or
66.3 percent, to $210.7 million -
revenue improved by $84.0 million due
to $59.0 million of incremental
revenue generated from acquisitions, a $17.9
million increase in fuel surcharge revenue and from
$7.1 million of internal growth as
freight volumes held steady on the continued strength in consumer
spending along with rate increases implemented in March 2022 and market share gains.
- L&W segment up $36.1 million,
or 29.9 percent, to $156.7 million -
revenue improved by $36.1 million due
to $16.7 million of internal growth
resulting from price increases implemented earlier in the year and
an overall improvement in freight demand, a $12.6 million increase in fuel surcharge revenue
and from $6.8 million of incremental
revenue from acquisitions.
- S&I segment up $34.1 million,
or 51.4 percent, to $100.5 million -
revenue increased by $34.1 million
due to $29.5 million of internal
growth as higher commodity prices led to a recovery in the oil and
natural gas service sector resulting in greater demand and price
increases within several of our Business Units. Demand continued to
strengthen in all service offerings and was highlighted by the
strong performance at Canadian Dewatering L.P. ("Canadian
Dewatering"), along with an increase in pipeline related
activity. Fuel surcharge revenue increased by $3.5 million while incremental revenue of
$1.1 million from the acquisition of
Babine Truck & Equipment Ltd. accounted for the remaining
increase in segment revenue.
- US 3PL segment added $57.2
million - HAUListic LLC ("HAUListic") generated
$57.2 million of gross freight
revenue as freight demand in the second quarter remained strong,
particularly for less-than-truckload and air freight shipments.
Incremental revenue was also generated from the addition of new
regional Station Agents.
Adjusted OIBDA
increased by $41.3 million, or
78.5 percent, to $93.9 million
and is summarized as follows:
- LTL segment up $19.4 million, or
84.3 percent, to $42.4 million -
Adjusted OIBDA improved due to $10.0
million of incremental Adjusted OIBDA from acquisitions and
from $9.4 million of internal growth,
highlighted by the strong performance at Gardewine Group Limited
Partnership. Adjusted operating margin increased to 20.1 percent as
compared to 18.2 percent in 2021, due to rate increases implemented
in March 2022 and improved lane
density.
- L&W segment up $7.8 million,
or 34.4 percent, to $30.5 million -
Adjusted OIBDA improved due to $6.4
million of internal growth due to the strong performance at
virtually all of our Business Units and $1.4
million of incremental Adjusted OIBDA from acquisitions.
Adjusted operating margin increased to 19.5 percent as compared to
18.8 percent in 2021 as freight rates remained elevated and more
than offset inflationary costs.
- S&I segment up $10.2 million,
or 99.0 percent, to $20.5 million -
Adjusted OIBDA increased due to greater demand and price increases
implemented within several Business Units as improved commodity
prices resulted in greater activity levels in the Western Canadian
Sedimentary Basin as well as the strong performance at Canadian
Dewatering. Adjusted operating margin increased by 4.9 percent to
20.4 percent as compared to 15.5 percent in 2021 due to greater
demand, price increases and the strong performance at Canadian
Dewatering.
- US 3PL segment generated $2.2
million of Adjusted OIBDA in the quarter, representing a
margin of 3.8 percent of gross revenue. Operating margin as a
percentage of net revenue was 43.1 percent. Margins were negatively
impacted by higher than normal Contractors expense. In addition,
inflationary pressures continued with selling and administrative
expenses increasing at HAUListic.
Net income increased by
$21.0 million to $42.7 million, or $0.46 per Common Share due to:
- A $34.9 million increase in
OIBDA, a $2.7 million increase in
earnings from equity investments due to the strong performance from
certain investments, and a $0.8
million decrease in amortization of intangible assets.
- These increases were somewhat offset by a $7.9 million increase in income tax expense, a
$2.8 million increase in depreciation
of right-of-use assets, a $2.4
million negative variance in net foreign exchange, a
$1.6 million increase in finance
costs, a $1.3 million increase in
loss on sale of property, plant and equipment, a $0.8 million negative variance in the change in
fair value of investments and a $0.4
million increase in depreciation of property, plant and
equipment.
Financial Position
The following summarizes our financial position as at
June 30, 2022, along with some key
changes that occurred during the second quarter of 2022:
- Working capital of $58.1 million
including $142.2 million of amounts
drawn on our $250.0 million of bank
credit facilities.
- Total net debt ($675.7 million)
to operating cash flow ($285.4
million) of 2.37:1 as defined per our Private Placement Debt
agreement (threshold of 3.50:1).
- Private Placement Debt of $465.5
million with no scheduled maturities until 2024 (average
fixed rate of 3.93 percent per annum). Private Placement Debt
increased by $8.9 million due to the
foreign exchange loss on our U.S. $229.0
million debt.
- Book value of Derivative Financial Instruments up $7.7 million to $37.6
million, which swaps our $229.0
million of U.S. dollar debt at an average foreign exchange
rate of $1.1096.
- Net book value of property, plant and equipment of $985.0 million, which includes $633.3 million of historical cost of owned real
property.
- Repurchased and cancelled 579,285 Common Shares at an average
price of $12.47 per share under our
normal course issuer bid during the second quarter of 2022.
About Mullen Group Ltd.
Mullen Group is one of North
America's largest logistics providers. Our network of
independently operated businesses provide a wide range of service
offerings including less-than-truckload, truckload, warehousing,
logistics, transload, oversized, third-party logistics and
specialized hauling transportation. In addition, we provide a
diverse set of specialized services related to the energy, mining,
forestry and construction industries in western Canada, including 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 the Corporation's issuer profile
on SEDAR at www.sedar.com.
Contact Information
Mr. Murray K. Mullen
- Chair, Senior Executive
Officer and President
Mr. Richard J. Maloney - Senior Operating
Officer
Mr. Carson P.
Urlacher - Senior Accounting Officer
Ms.
Joanna K. Scott - Senior Corporate
Officer
121A - 31 Southridge
Drive
Okotoks, Alberta,
Canada T1S 2N3
Telephone:
403-995-5200
Fax: 403-995-5296
Disclaimer
This news release may contain forward-looking statements that
are subject to risk factors associated with the overall economy and
the oil and natural gas business. 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 31 and 32 of Mullen
Group's Management's Discussion and Analysis.
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SOURCE Mullen Group Ltd.