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July 24, 2020 4:45 PM, EDT

Mullen Reports Decline in Q2 Net Income

MullenMullen Group

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Mullen Group Ltd. posted a second-quarter profit, albeit at a lower level than a year earlier, as it benefited from e-commerce shipments even as the motor carrier’s sales to the energy industry declined.

The Okotoks, Alberta-based company said net income dropped 27.4% to C$23 million ($17.2 million) from C$31.7 million in the same quarter of 2019 because of the effects of the COVID-19 recession. Diluted earnings per share fell to 23 Canadian cents (17 U.S. cents) from 30 cents.

Revenue declined by 19.3% to C$257.5 million from C$319 million in the second quarter of last year.

The company’s results were bolstered by continued e-commerce-based consumer spending, lower diesel fuel prices and Canada’s emergency wage subsidy, Murray Mullen, the motor carrier’s CEO, said in a July 23 conference call with financial analysts.

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“Consumers still consumed, and that means the freight still had to move,” Mullen said.

But that wasn’t enough to offset problems in Canada’s oil patch.

“The energy industry in western Canada was one of those sectors hit the hardest and was the primary reason our revenue fell during the quarter,” Mullen said.

Mullen said he was encouraged by rising commodity prices and believes that the energy industry will recover from current lows.

All of Mullen’s business lines shrunk during the quarter. Revenue in the less-than-truckload division dipped 9.3% to C$101.9 million. But the declines slowed during the quarter from nearly 16% in April to 3% in June after adjusting for recent acquisitions, the company said.

Sales in its specialized and industrial services business fell 30.1% to C$73.5 million as oil companies reduced drilling and capital expenditures. Revenue in its logistics and warehousing unit fell 18.9% to C$82.8 million.

Operating income increased in all three segments as government subsidies, lower diesel prices, furloughs and cost-cutting measures offset lower sales. Operating income in the less-than-truckload segment rose 5.1% to C$20.5 million. It grew 12.9% in the logistics and warehousing division to C$17.5 million. Operating income in the specialized and industrial services division rose 9.4% to C$19.8 million.

 

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The economy has improved enough for Mullen to recall about half the workers it let go, and the company is hopeful it can rehire the remainder in the coming months.

Mullen also plans to resume its acquisition strategy. It has signed two letters of intent to buy companies and is eyeing other opportunities, Mullen said.

“Don’t be surprised if they are on the consumer side and in big markets,” Mullen said.

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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