Mullen Reports Profit Gain on Lower Revenue in Q3
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Mullen Group Ltd. posted a gain in profit during the third quarter, helped by COVID-19-related economic subsidies, an improving economy and strong e-commerce business.
The Okotoks, Alberta-based company said net income jumped 27.8% to C$26.2 million from C$20.5 million in the same quarter of 2019. Diluted earnings per share rose to 26 Canadian cents from 20 cents.
Revenue declined by 10.6% to C$290.9 million from C$325.3 million in the third quarter of last year.
Mullen
The motor carrier’s results varied greatly by market segment CEO Murray Mullen said in an Oct. 22 conference call with financial analysts.
“This economy is all about the consumer, how much they are spending and where and how,” Mullen said in a conference call with industry analysts and investors.
Other parts of the economy and some geographic regions where Mullen Group does business have not recovered, including the oil patch in Alberta and the travel industry.
“[But ] activity is improving even in the beaten-up oil services sector. It might take a year or two, but the industries hurt the hardest today will not stay down forever,” Mullen said.
The company, which furloughed 1,000 workers at the start of the pandemic, has recalled almost all of its workforce to full-time employment, he said.
Revenue in the less-than-truckload division dipped 2.8% to C$112.7 million. Sales in its specialized and industrial services business fell 17.1% to C$92.4 million as oil companies reduced drilling and capital expenditures. Revenue in its logistics and warehousing unit fell 12.8% to C$86.2 million because of business closures and project cancellations.
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However, the declines represented an improvement from the second quarter. And revenue improved month-over-month during the third quarter, Mullen told investors.
Operating income during the third quarter rose in all three segments. It gained 16.7% to C$22.4 million in the less-than-truckload segment. Operating income rose 16% to C$27.5 million in specialized and industrial services and 16.4% to C$17.7 million in logistics and warehousing.
Mullen Group’s profits were bolstered by lower fuel costs and payments from the Canada Emergency Wage Subsidy, a program designed to help businesses during the recession caused by the pandemic. Without the subsidy program, operating income would be about level with the third quarter of 2019, the company said.
“We will use the proceeds from CEWS to maintain employment levels and invest in the future,” Mullen said.
The company ended the quarter with C$235 million in working capital, including C$105.4 million in cash.
Mullen said the company has been “inundated” with acquisition opportunities of other carriers that have not fared as well during the recession but that there are no deals to announce at this time.
“The roller-coaster ride continues,” Mullen said. “What amazes me is how the economy has adapted. We see it real time in our business.”
Mullen Group ranks No. 54 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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