Mullen Group Reports Mixed Q3 Results

Earnings Were Up, While Revenue Fell
Mullen Group truck
Total revenue decreased by 2.8% to C$504 million from C$518.4 million. (Mullen Group)

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Mullen Group posted an increase in earnings despite a decline in overall revenue during the third quarter, the company reported Oct. 19.

The Okotoks, Alberta-based company posted net income of C$39.1 million, or 42 cents a diluted share, for the three months ending Sept. 30. That compared with C$38 million, 39 cents, during the same time the previous year. Total revenue decreased by 2.8% to C$504 million from C$518.4 million.

“Throughout the first nine months of 2023 the economy has endured a period of adjustment due to the rapid rise in interest rates and tighter monetary policy, a deliberate attempt by central bank authorities to rein in inflationary pressures,” Murray Mullen, chairman and senior executive officer at Mullen Group, said in a statement. “These measures have been somewhat successful, but they have also directly impacted economic growth and the demand for freight services.”

Mullen added the transportation and logistics market in North America is also experiencing a period of adjustment as retailers, shippers and manufacturers have embarked upon an inventory rebalancing strategy after two years of excessive ordering. He also noted that consumers have changed their spending patterns this year toward services and leisure.

“Despite these headwinds, our business generated very strong results, differentiating the Mullen Group from many of our peers,” Mullen said. “Most impressively, in the recent quarter ended Sept. 30, 2023, revenues reached the half a billion mark once again, which I attribute to the diversification of service offerings our 40 business units provide, accompanied by a well thought out acquisition strategy.”

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Mullen added that there is a growing consensus that the economy may avoid tipping into recession territory. He noted that this implies that consumer demand can remain at or near current levels for the balance of 2023. He also believes there are a few trends suggesting that inventory levels are back in balance.

“These are positives for the transportation and logistics industry, and more importantly for our organization,” Mullen said. “In addition, we forecast another solid quarter for the specialized and industrial services segment given the outlook for the Canadian energy and mining industries, verticals in which we have a meaningful presence. And lastly, we continue to evaluate a number of quality acquisition opportunities.”

The less-than-truckload segment reported that revenue decreased 3.7% to C$194.2 million from C$201.6 million during the same time last year. The report noted revenue declined due to a C$12.3 million decrease in fuel surcharge revenue and a C$6.4 million reduction in revenue resulting from lower freight volumes. These decreases were somewhat offset by C$11.3 million of incremental revenue from acquisitions. Operating income for the segment fell 16.1% to C$34.5 million from C$41.1 million.

The logistics and warehousing segment reported that revenue decreased 12.3% to C$137.1 million from C$156.3 million last year. The revenue was down due to the continuation of the inventory rebalancing cycle and softer freight demand as consumers shift their spend toward leisure and travel versus buying goods. The report also cited a C$5.7 million decline in fuel surcharge revenue. Operating income for the segment decreased 18% to C$26.8 million from C$32.7 million.

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The specialized and industrial services segment reported revenue increased 15.3% to C$125.4 million from $108.8 million. The increase was due to C$16.3 million of incremental revenue from acquisitions and from greater demand for drilling-related services, transportation of fluids and servicing of wells. Operating income increased 20.7% to C$29.7 million from C$24.6 million the previous year.

The U.S. and international logistics segment saw revenue decrease 10.8% to C$48.8 million from C$54.7 million during the same quarter last year. The revenue decreased due to lower freight demand for full truckload shipments. Operating income fell 26.7% to C$1.1 million from C$1.5 million last year.

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