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February 10, 2022 1:46 PM, EST

Acquisitions Fuel Mullen’s Record Q4 Revenue Growth

APPS Transport truckMullen acquired APPS Transport Group in 2021. (APPS Transport Group)

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Mullen Group Ltd. reported a doubling of profits and record revenue for the fourth quarter.

The Okotoks, Alberta-based company said net income rose 100% to C$20.2 million compared with C$10.1 million in Q4 2020. Earnings per share increased to 21 Canadian cents from 10 cents.



Revenue for the quarter rose 48.4% to C$441.9 million from C$297.7 million.

 

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Much of the revenue growth — about C$136 million — came from six recent acquisitions, CEO Murray Mullen said in a Feb. 10 conference call with industry analysts and investors.

For the full year, Mullen said net income jumped 13.1% to C$72.4 million compared with C$64 million in 2020. Earnings per share rose to 75 Canadian cents from 64. Revenue grew 26.9% to C$1.48 billion from C$1.16 billion.

The acquisitions allowed the company to expand into new growth markets.

“When you think about the tightness in the labor market, acquiring good companies with great teams may be the best way that anybody can grow additional capacity to service their existing customers,” Mullen said. The company continues to examine opportunities and may make more acquisitions this year, he added.

He said the company’s other focus is to raise prices, especially in the Canadian market. “This is how we are going to grow profitability,” he said. Rates in Canada have lagged the U.S. by about 20%, he noted.

Murray Mullen

Mullen

“That explains why U.S. carriers have experienced such a great run over the last couple years, with strong earnings and outstanding stock prices. But in Canada, we did not see that same market adjustment,” Mullen said.

He noted while the company has a “ballpark” goal of raising rates by about 10%, it also is creating a varied rate structure built around shipper preferences. Within it, the carrier will charge more to shippers looking for guaranteed service and delivery times and less to those willing to be flexible with delivery times and use intermodal services instead of only trucking.

Across the carrier’s business segments, Q4 less-than-truckload revenue rose 45.1% to C$168.8 million. A combination of revenue from the acquisitions, strong consumer spending and increasing fuel surcharges contributed to the gain. The segment’s operating income before depreciation and amortization, a measure of operating profit, increased by 45.2% to C$25.7 million.

Revenue at its logistics and warehousing segment reached C$131.8 million, a 36.2% gain. This segment also benefited from the impact of acquisitions, along with higher freight demand. The segment’s measure of operating profit rose 23.3% to C$23.3 million.

Mullen’s specialized and industrial services revenue fell 3.3% to C$82.0 million. The decline came from a C$14.3 million reduction in revenue from the Premay Pipeline Hauling division and a $3.3 million decrease at Mullen’s Smook Contractors Ltd. unit. Both were hurt by a drop in pipeline activity and civil construction projects.

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The dip was partially offset by increased revenue from drilling-related services as higher crude oil and natural gas prices led to greater drilling-related activity in western Canada, the company said. The segment’s measure of operating profit fell 15.8% to C$12.3 million.

Revenue at Mullen’s U.S. and international logistics segment added $61.2 million in new business. Mullen said the segment was added in the last year and there are no comparable figures to the same period in 2020. It had an operating profit of C$2 million.

Mullen Group ranks No. 60 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.