OKOTOKS, AB, Feb. 9, 2022 /CNW/ - (TSX: MTL)
Mullen Group Ltd. ("Mullen Group", "We",
"Our" and/or the "Corporation"), one of
North America's largest logistics
providers with a wide range of service offerings including
less-than-truckload, truckload, warehousing, logistics, transload,
oversized, third-party logistics and specialized hauling
transportation, today reported its financial and operating results
for the quarter and year ended December 31, 2021, with
comparisons to the same period last year. Full details of our
results may be found within our 2021 Annual Financial Review, which
is available on the Corporation's issuer profile on SEDAR at
www.sedar.com or on our website at www.mullen-group.com.
"This is the second consecutive
quarter that we achieved record revenue. Earlier this year we
acquired six quality companies. They have driven, not only,
revenue growth, we have expanded into new markets that we believe
there is the potential for continued growth, gained access to an
expanded customer base and added to our workforce at a time when
recruiting new employees has turned into a real challenge.
Suffice to say, I am most pleased with these investments.
"Aside from our strong
financial performance, which could not have been attained without
the commitment of a dedicated workforce, I was so impressed with
how our entire team of logistics professionals handled the ongoing
challenges associated with COVID-19. Our people responded in
ways that I could not have imagined even a year ago. There
were so many stress points, so much uncertainty and challenges, yet
they still persevered to get the freight moved to customers.
I am so proud to represent these hardworking essential
workers," commented Mr. Murray K.
Mullen, Chairman and Chief Executive Officer.
Key financial highlights for the fourth quarter of 2021 with
comparison to 2020 are as follows:
HIGHLIGHTS
|
|
(unaudited)
($
millions)
|
Three month periods
ended
December 31
|
2021
|
2020
|
Change
|
|
$
|
$
|
%
|
Revenue
|
|
|
|
Less-Than-Truckload
|
168.8
|
116.3
|
45.1
|
Logistics
& Warehousing
|
131.8
|
96.8
|
36.2
|
Specialized & Industrial Services
|
82.0
|
84.8
|
(3.3)
|
U.S. &
International Logistics
|
61.2
|
-
|
100.0
|
Corporate
and intersegment eliminations
|
(1.9)
|
(0.2)
|
-
|
Total
Revenue
|
441.9
|
297.7
|
48.4
|
Adjusted operating
income before depreciation and amortization
(1)
|
|
|
|
Less-Than-Truckload
|
25.7
|
17.7
|
45.2
|
Logistics
& Warehousing
|
23.3
|
18.9
|
23.3
|
Specialized & Industrial Services
|
12.3
|
14.6
|
(15.8)
|
U.S. &
International Logistics
|
2.0
|
-
|
100.0
|
Corporate
|
(2.7)
|
(4.3)
|
-
|
Total Adjusted
operating income before depreciation and amortization
(1)
|
60.6
|
46.9
|
29.2
|
(1) Refer to notes section of
Summary
|
|
|
|
Mullen Group generates cash in excess of its operating needs
through a diversified business model combined with a highly
adaptable and variable cost structure. The financial results
for the three month period ended December
31, 2021, are as follows:
⇒ generated record quarterly revenue of
$441.9 million, an increase of
$144.2 million, or 48.4 percent, as
compared to $297.7 million in 2020
due to $136.1 million of incremental
revenue generated from acquisitions and internal growth resulting
in:
- an increase of $52.5 million to
$168.8 million in the
Less-Than-Truckload segment
- an increase of $35.0 million to
$131.8 million in the Logistics &
Warehousing segment
- a decrease of $2.8 million to
$82.0 million in the Specialized
& Industrial Services segment
- added $61.2 million of revenue in
our new U.S. & International Logistics segment
⇒ earned adjusted operating income before
depreciation and amortization ("Adjusted OIBDA") of
$60.6 million, an increase of
$13.7 million as compared to
$46.9 million in 2020 resulting
in:
- an increase of $8.0 million to
$25.7 million in the
Less-Than-Truckload segment
- an increase of $4.4 million to
$23.3 million in the Logistics &
Warehousing segment
- a decrease of $2.3 million to
$12.3 million in the Specialized
& Industrial Services segment
- added $2.0 million of Adjusted
OIBDA in our new U.S. & International Logistics segment
Fourth Quarter Financial Results
Record quarterly revenue increasing by
$144.2 million, or 48.4 percent,
to $441.9 million and is summarized as
follows:
- Less-Than-Truckload segment up $52.5
million, or 45.1 percent, to $168.8
million - revenue improved by $52.5
million due to $44.7 million
of incremental revenue generated from acquisitions, a $6.9 million increase in fuel surcharge revenue
and from the continued strength in consumer spending.
- Logistics & Warehousing segment up $35.0 million, or 36.2 percent, to $131.8 million - revenue improved by $35.0 million due to $26.3
million of incremental revenue from acquisitions, a
$3.1 million increase in fuel
surcharge revenue and from a $5.6
million increase in same store sales as economic activity
continued to improve resulting in greater demand for freight
services.
- Specialized & Industrial Services segment down $2.8 million, or 3.3 percent, to $82.0 million - revenue declined by $2.8 million mainly due to a $14.3 million reduction in revenue from Premay
Pipeline Hauling L.P. ("Premay Pipeline") and a $3.3 million decrease at Smook Contractors Ltd.
("Smook"), resulting from a drop in pipeline activity and
civil construction projects, respectively. These decreases were
partially offset by a $4.6 million
increase in revenue from drilling related services as higher crude
oil and natural gas prices led to greater drilling related activity
in western Canada and from
$3.9 million of incremental revenue
from acquisitions.
- U.S. & International Logistics segment added $61.2 million - this segment generated
$61.2 million of gross freight
revenue from freight tendered through the company's logistics group
or to contracted Station Agents. Revenue was above expectations due
to the strong U.S. freight market and new business generated from
the addition of new regional Station Agents.
Adjusted OIBDA increased by $13.7 million, or
29.2 percent, to $60.6 million and is summarized as
follows:
- Less-Than-Truckload segment up $8.0
million, or 45.2 percent, to $25.7
million - Adjusted OIBDA improved due to $7.0 million of incremental Adjusted OIBDA from
acquisitions and strong demand being somewhat offset by higher
purchased transportation costs. Adjusted operating margin remained
consistent at 15.2 percent as compared to the same period in
2020.
- Logistics & Warehousing segment up $4.4 million, or 23.3 percent, to $23.3 million - Adjusted OIBDA improved due to
$4.7 million of incremental Adjusted
OIBDA from acquisitions and from the improved performance by most
Business Units. These increases were somewhat offset by higher
purchased transportation costs, which was mainly associated with
the new acquisitions. As a result, adjusted operating margin
decreased to 17.7 percent as compared to 19.5 percent in 2020.
- Specialized & Industrial Services segment down $2.3 million, or 15.8 percent, to $12.3 million - Adjusted OIBDA declined due to a
$3.5 million decrease relating to
those Business Units providing specialized services including
pipeline hauling and stringing services being somewhat offset by a
$1.5 million increase from those
Business Units tied to drilling and drilling related activity.
Adjusted operating margin decreased by 2.2 percent to 15.0 percent
as compared to 17.2 percent in 2020 due to a change in revenue mix
associated with large diameter pipeline projects.
- U.S. & International Logistics segment added $2.0 million of Adjusted OIBDA in the quarter,
which represents a margin of 3.3 percent of gross revenue. This
margin is lower than our asset based segments due to the nature of
the business.
Net income increased by 100.0 percent to $20.2 million, or $0.21 per Common Share due to:
- A $13.6 million increase in
OIBDA, a $5.1 million decrease in the
loss on sale of property, plant and equipment, a $1.1 million decrease in amortization of
intangible assets and a $1.1 million
increase in earnings from equity investments.
- The above was partially offset by a $4.5
million increase in income tax expense, a $2.8 million increase in depreciation of
right-of-use assets, a $2.1 million
increase in depreciation of property, plant and equipment, a
$0.7 million increase in finance
costs and a $0.7 million negative
variance in net foreign exchange.
A summary of Mullen Group's results for the quarter and year
ended December 31, 2021, are as
follows:
SUMMARY
|
|
|
|
(unaudited)
($ millions,
except per share amounts)
|
Three month periods
ended
December
31
|
|
Twelve month periods
ended
December
31
|
2021
|
2020
|
Change
|
|
2021
|
2020
|
Change
|
|
$
|
$
|
%
|
|
$
|
$
|
%
|
Revenue
|
441.9
|
297.7
|
48.4
|
|
1,477.4
|
1,164.3
|
26.9
|
|
|
|
|
|
|
|
|
Operating income before
depreciation and amortization(1)
|
65.8
|
52.2
|
26.1
|
|
236.4
|
217.6
|
8.6
|
Adjusted operating
income before depreciation and
amortization(2)
|
60.6
|
46.9
|
29.2
|
|
218.7
|
191.1
|
14.4
|
Net foreign exchange
loss (gain)
|
0.8
|
0.1
|
700.0
|
|
(0.7)
|
(2.4)
|
(70.8)
|
Decrease (increase) in
fair value of investments
|
(0.4)
|
(0.4)
|
-
|
|
(1.2)
|
1.0
|
(220.0)
|
Net income
|
20.2
|
10.1
|
100.0
|
|
72.4
|
64.0
|
13.1
|
Net income -
adjusted(3)
|
20.9
|
9.3
|
124.7
|
|
70.4
|
62.4
|
12.8
|
Earnings per
share(4)
|
0.21
|
0.10
|
110.0
|
|
0.75
|
0.64
|
17.2
|
Earnings per share -
adjusted(3)
|
0.22
|
0.10
|
120.0
|
|
0.73
|
0.62
|
17.7
|
Net cash from operating
activities
|
65.8
|
52.5
|
25.3
|
|
198.0
|
224.8
|
(11.9)
|
Net cash from operating
activities per share(4)
|
0.69
|
0.54
|
27.8
|
|
2.06
|
2.23
|
(7.6)
|
Cash dividends declared
per Common Share
|
0.12
|
0.09
|
33.3
|
|
0.48
|
0.33
|
45.5
|
Notes:
|
(1)
|
Operating income
before depreciation and amortization ("OIBDA") is defined as
net income before depreciation of right-of-use assets and of
property, plant and equipment, amortization of intangible assets,
finance costs, net foreign exchange gains and losses, other
(income) expense and income taxes.
|
(2)
|
Adjusted OIBDA is
calculated by subtracting the Canada Emergency Wage Subsidy
("CEWS") from OIBDA.
|
(3)
|
Net income -
adjusted and earnings per share - adjusted are calculated by
adjusting net income and basic earnings per share by the amount of
any net foreign exchange gains and losses, the change in fair value
of investments, the gain on the fair value of equity investments
and the gain on contingent consideration.
|
(4)
|
Earnings per share
and net cash from operating activities per share are calculated
based on the weighted average number of Common Shares outstanding
for the period.
|
|
Non-GAAP Terms -
Mullen Group reports on certain financial performance measures that
are described and presented in order to provide shareholders and
potential investors with additional measures to evaluate Mullen
Group's ability to fund its operations and information regarding
its liquidity. In addition, these measures are used by
management in its evaluation of performance. These financial
performance measures ("Non-GAAP Terms") are not recognized
financial terms under Canadian generally accepted accounting
principles ("Canadian GAAP"). For publicly accountable
enterprises, such as Mullen Group, Canadian GAAP is governed by
principles based on IFRS and interpretations of IFRIC.
Management believes these Non-GAAP Terms are useful
supplemental measures. These Non-GAAP Terms do not have
standardized meanings and may not be comparable to similar measures
presented by other entities. Specifically, Adjusted OIBDA,
adjusted operating margin, operating margin, net revenue, net
income - adjusted and earnings per share - adjusted are not
recognized terms under IFRS and do not have standardized meanings
prescribed by IFRS. Management believes these measures are
useful supplemental measures. Investors should be cautioned
that these indicators should not replace net income and earnings
per share as an indicator of performance.
|
Year End Financial Results
Record revenue increasing by
$313.1 million, or 26.9 percent, to
$1.5 billion and is summarized as follows:
- Less-Than-Truckload segment up $141.5
million, or 31.9 percent, to $585.3
million - revenue improved by $141.5
million due to $104.9 million
of incremental revenue generated from acquisitions, a $17.5 million increase in fuel surcharge revenue
and from the continued strength in consumer spending.
- Logistics & Warehousing segment up $103.6 million, or 28.6 percent, to $465.6 million - revenue improved by $103.6 million due to $82.4 million of incremental revenue from
acquisitions, a $6.8 million increase
in fuel surcharge revenue and a $14.4
million increase in same store sales as economic activity
continued to improve throughout the year resulting in greater
demand for freight services.
- Specialized & Industrial Services segment down $48.6 million, or 13.4 percent, to $313.4 million - revenue declined by $48.6 million mainly due to a $46.2 million reduction in revenue from Premay
Pipeline and a $14.8 million decrease
at Smook, resulting from a drop in pipeline activity and civil
construction projects, respectively. Revenue from the
transportation of fluids and servicing of wells also declined by
$9.0 million. These decreases were
partially offset by a $13.3 million
increase in revenue from drilling related services as demand for
services improved in the last half of 2021 and from $10.4 million of incremental revenue from
acquisitions.
- U.S. & International Logistics segment added $118.2 million - this new segment generated
$118.2 million of gross freight
revenue from freight tendered through the company's logistics group
or to contracted Station Agents during the second half of 2021.
Revenue was above expectations due to the strong U.S. freight
market and new business generated from the addition of new regional
Station Agents.
Adjusted OIBDA increased by $27.6 million, or
14.4 percent, to $218.7 million and is summarized as
follows:
- Less-Than-Truckload segment up $23.6
million, or 33.6 percent, to $93.9
million - Adjusted OIBDA improved due to $16.1 million of incremental Adjusted OIBDA from
acquisitions and strong demand. Adjusted operating margin increased
modestly to 16.0 percent as compared to 15.8 percent in 2020.
- Logistics & Warehousing segment up $17.9 million, or 27.3 percent, to $83.4 million - Adjusted OIBDA improved due to
$16.9 million of incremental Adjusted
OIBDA from acquisitions and from the improved performance by most
Business Units. Adjusted operating margin decreased slightly to
17.9 percent as compared to 18.1 percent in 2020.
- Specialized & Industrial Services segment down $17.3 million, or 25.9 percent, to $49.4 million - Adjusted OIBDA declined due to a
$19.1 million decrease relating to
those Business Units providing specialized services including
pipeline hauling and stringing services and a $2.6 million decrease from those Business Units
involved in the transportation of fluids and servicing of wells
being somewhat offset by a $4.4
million increase from those Business Units tied to drilling
and drilling related activity. Adjusted operating margin decreased
by 2.6 percent to 15.8 percent as compared to 18.4 percent in 2020
due to a change in revenue mix associated with large diameter
pipeline projects.
- U.S. & International Logistics segment added $4.9 million of Adjusted OIBDA in the last two
quarters of 2021, which represents a margin of 4.1 percent of gross
revenue. This margin is lower than our asset based segments due to
the nature of the business.
Net income increased by $8.4
million to $72.4 million, or
$0.75 per Common Share due
to:
- An $18.8 million increase in
OIBDA, a $5.3 million increase in the
gain on sale of property, plant and equipment, a $2.2 million positive variance in the fair value
of investments and from a $0.2
million gain on contingent consideration.
- The above was partially offset by a $6.3
million increase in depreciation of right-of-use assets, a
$5.3 million increase in amortization
of intangible assets, a $1.9 million
increase in finance costs, a $1.7
million negative variance in net foreign exchange, a
$1.5 million increase in income tax
expense, a $0.8 million increase in
depreciation of property, plant and equipment, a $0.4 million negative variance in the fair value
of equity investment, and a $0.2
million decrease in earnings from equity investments.
Financial Position
The following summarizes our financial position as at
December 31, 2021, along with some
key changes that occurred during the fourth quarter of 2021:
- Working capital of $50.8 million
including $89.0 million of amounts
drawn on our $250.0 million of bank
lines of credit consisting of our RBC Credit Facility and our CIBC
Credit Facility.
- Total net debt ($598.4 million)
to operating cash flow ($237.2
million) of 2.52:1 as defined per our Private Placement Debt
agreement (threshold of 3.50:1).
- Private Placement Debt of $460.7
million with no scheduled maturities until 2024 (average
fixed rate of 3.93 percent per annum). Private Placement Debt
decreased by $1.4 million due to the
foreign exchange gain on our U.S. $229.0
million debt.
- Book value of Derivative Financial Instruments down
$2.2 million to $37.4 million, which swaps our $229.0 million of U.S. dollar debt at an average
foreign exchange rate of $1.1096.
- Net book value of property, plant and equipment of $986.0 million, which includes $630.7 million of carrying costs of owned real
property.
- Year to date, we repurchased and cancelled 3,469,869 Common
Shares at an average price of $12.78
per share under our normal course issuer bid.
2022 – Another Year of Growth
"Clearly acquisitions were the main driver of our revenue
growth last year, in fact I suspect this may be the case for some
time due to the current state of this economic cycle. The
economy is running at near full capacity. We have virtually
no way to add additional equipment to our fleet due to OEM
allotments and there is a shortage of available workers, all of
which explains why inflation has taken hold. In this
environment we see growth through acquisition as the most plausible
outcome. The other outcome will be higher pricing, feeding
the inflation spiral. The worker shortage, higher wages,
along with some serious productivity losses associated with new
health and safety protocols, supply chain bottlenecks all
contribute to a period of rising costs. We must adapt to
these changing market conditions.
"As we start the new year COVID-19 continues to dominate the
headlines and impact business, especially in Canada.
Throughout our system, we are experiencing government mandates,
blockades, coupled with a multitude of issues associated with the
supply chain. It is our expectation that these issues will be
temporary in nature and that the economy, along with our business,
will recover as the year unfolds," added Mr. Mullen.
About Mullen Group Ltd.
Mullen Group is one of North
America's largest logistics providers. Our network of
independently operated businesses provide a wide range of service
offerings including less-than-truckload, truckload, warehousing,
logistics, transload, oversized, third-party logistics and
specialized hauling transportation. In addition, we provide a
diverse set of specialized services related to the energy, mining,
forestry and construction industries in western Canada, including water management, fluid
hauling and environmental reclamation. The corporate
office provides the capital and financial
expertise, legal support, technology and systems support,
shared services and strategic planning to its independent
businesses.
Mullen Group is a publicly traded corporation listed on the
Toronto Stock Exchange under the symbol "MTL".
Additional information is available on our website at
www.mullen-group.com or on the Corporation's issuer profile on
SEDAR at www.sedar.com.
Contact Information
Mr. Murray K.
Mullen - Chairman of the Board,
Chief Executive Officer and President
Mr. P.
Stephen Clark - Chief
Financial Officer
Mr. Richard J.
Maloney - Senior Vice President
Ms. Joanna K. Scott - Corporate Secretary & Vice
President, Corporate Services
121A - 31 Southridge
Drive
Okotoks, Alberta,
Canada T1S 2N3
Telephone:
403-995-5200
Fax: 403-995-5296
Disclaimer
This news release may contain forward-looking information that
is subject to risk factors associated with the oil and natural gas
business and the overall economy. This information relates to
future events and Mullen Group's future performance. All
information and statements contained herein that are not clearly
historical in nature constitute forward-looking information, and
the words "may", "will", "should", "could", "expect", "plan",
"intend", "anticipate", "believe", "estimate", "propose",
"predict", "potential", "continue", "aim", or the negative of these
terms or other comparable terminology are generally intended to
identify forward-looking information. Such information
represents Mullen Group's internal projections, estimates,
expectations, beliefs, plans, objectives, assumptions, intentions
or statements about future events or performance. This
information involves known or unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
information. Mullen Group believes that the expectations reflected
in this forward-looking information are reasonable; however, undue
reliance should not be placed on this forward-looking information,
as there can be no assurance that the plans, intentions or
expectations upon which they are based will occur. In
particular, forward-looking information and statements include but
are not limited to the following: (i) we believe there is potential
for continued growth in 2022; (ii) acquisitions were the main
driver of our revenue growth last year and we suspect this may be
the case for some time due to the current state of this economic
cycle; and (iii) the economy, along with our business, will recover
in 2022 as the year unfolds. These forward-looking
information and statements are based on certain assumptions and
analysis made by Mullen Group in light of our experience and our
perception of historical trends, current conditions, expected
future developments and other factors we believe are appropriate
under the circumstances. These assumptions include but are
not limited to the following: (i) earlier this year we acquired six
quality companies whereby we have expanded into new markets and
gained access to an expanded customer base and added to our
workforce at a time when recruiting new employees has turned into a
real challenge; (ii) the economy is running at near full
capacity, we have virtually no way to add additional
equipment to our fleet due to OEM allotments and there is a
shortage of available workers, all of which explains why inflation
has taken hold; and (iii) COVID-19 continues to dominate the
headlines and impact business, especially in Canada.
Throughout our system, we are experiencing government mandates,
blockades, coupled with a multitude of issues associated with the
supply chain, however, we expect that these issues will be
temporary in nature. For further information on any strategic,
financial, operational and other outlook on Mullen Group's business
please refer to Mullen Group's 2021 Management's Discussion and
Analysis available for viewing on the Corporation's issuer profile
on SEDAR at www.sedar.com. The risks and other factors are
described under "Principal Risks and Uncertainties" in Mullen
Group's Annual Information Form and Management's Discussion and
Analysis. The forward-looking information contained in this
news release is expressly qualified by this cautionary
statement. The forward-looking information contained herein
is made as of the date of this news release and Mullen Group
disclaims any intent or obligation to update publicly any such
forward-looking information, whether as a result of new
information, future events or results or otherwise, other than as
required by applicable Canadian securities laws. Mullen Group
relies on litigation protection for "forward-looking"
statements.
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SOURCE Mullen Group Ltd.