Mullen Group Reports Lower Revenue for Q1

Total Revenue Decreased by 7.1% to C$462.6 Million From C$497.8 million.
Mullen fleet
(Mullen Group via Facebook)

[Stay on top of transportation news: Get TTNews in your inbox.]

Mullen Group experienced a decrease in revenue and earnings during the first quarter of 2024, the company reported April 25.

The Okotoks, Alberta-based company posted net income of C$22.2 million, or 25 cents a diluted share, for the three months ending March 31. That compared with C$31.7 million, 33 cents, during the same time the previous year. Total revenue decreased by 7.1% to C$462.6 million from C$497.8 million.

Mullen Group ranks No. 37 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

“We expected some challenges in the freight market, in the economy, and more importantly, in the demand for freight to start the year,” Murray Mullen, chairman and senior executive officer at Mullen Group, said during a call with investors. “Economic activity was muted, but more importantly to the logistics and warehousing industry, freight demand was pretty soft, and this was the case in most verticals. You have less freight to handle accompanied by the increase in capacity.”

See more transportation stock listings

Mullen added that this dynamic led to competitive and, sometimes, predatory pricing. The company had forecasted that the first half of the year would be soft in its 2023 annual financial review in February. But it also noted that economic activity could gain momentum if interest rates were lowered.

“Quite simply, there just wasn’t a lot of demand and our results, however, on a comparative basis held up reasonably well because, truthfully, we were prepared for this market softness, and we have a diversified business model,” Mullen said. “For example, our emphasis on investing in the LTL segment provides a solid base of revenue, and it’s not as competitive as the longhaul full truckload business. This is, and will continue to be, a significant competitive advantage.”

Mullen believes this business setup creates opportunity while competitors struggle with soft demand and overcapacity. But he stressed the importance of acquisitions when it comes to weathering these market conditions.

“The strong, the nimble, they’ll not just survive, they’ll capitalize on opportunity,” Mullen said. “And the most effective way to capitalize on this market is by acquisitions. It’s the only bright spot for our organization really in the first quarter. So, for example, we added C$20.5 million of incremental revenues from acquisitions that we completed in 2020.”

Mullen added these gains were primarily driven by the acquisition of B&R Eckel’s Transport in May 2023. The company specializes in LTL, full truckload and general oil field hauling.

“This didn’t show up in our first-quarter results: We announced the acquisition of ContainerWorld,” Mullen said. “Now that gets us into a new vertical, on the West Coast primarily, but they’re in the distribution, the handling and the logistics warehousing of the liquor business. So I’m pleased to report that we have now received all regulatory approvals to proceed with that acquisition, meaning that we will close on May 1.”

Mullen noted in the earnings report that the revenue decline was due to softer freight and logistics demand, a lack of capital investment and projects, competitive pricing in certain markets and lower fuel surcharge revenue.

Less-than-truckload segment revenue decreased 5.3% to C$182.5 million from C$192.8 million during the same time last year. This decline was mostly due to a change in working days compared to last year, a slight decline in revenue per working day on lower freight demand and a decrease in fuel surcharge revenue that was offset by incremental revenue from acquisitions. Operating income declined 3.1% to C$30.8 million from C$31.8 million a year ago.

Logistics and warehousing segment revenue decreased 12.4% to C$126.3 million from C$144.1 million during the year-ago period. This was driven by lower freight volumes and logistics demand, a lack of capital investment and competitive pricing in certain markets. Operating income declined 13.8% to C$22.5 million from C$26.1 million.

Want more news? Listen to today's daily briefing above or go here for more info

Specialized and industrial services segment revenue decreased 0.8% to C$111.9 million from C$112.8 million. Lower demand for pipeline hauling and stringing services at Premay Pipeline Hauling accounted for an C$8.1 million reduction in revenue, while Smook Contractors experienced a C$4.6 million decline in revenue on lower demand for civil construction projects in northern Manitoba. The production services business units experienced a decline in revenue due to inclement weather delaying the start of certain projects. Operating income fell 18.1% to C$16.7 million from C$20.4 million.

U.S. and international logistics segment revenue declined 12.9% to C$44.4 million from C$51 million. The earnings report noted that the third-party logistics industry continues to experience a notable decline in activity levels due to slowing freight volumes and excess trucking capacity. Operating income in that segment fell 58.3% to C$500,000 from C$1.2 million.