OKOTOKS,
AB, April 20, 2022 /PRNewswire/ - (TSX:
MTL) Mullen Group Ltd. ("Mullen Group", "We",
"Our" and/or the "Corporation"), one of
North America's largest logistics
providers today reported its financial and operating results
for the period ended March 31, 2022, with
comparisons to the same period last year. Full details of our
results may be found within our First Quarter Interim Report, which
is available on the Corporation's issuer profile on SEDAR at
www.sedar.com or on our website at www.mullen-group.com.
"Expanding our service offerings through the
acquisition of quality companies involved in the logistics space
remains our number one priority as we strive to increase market
penetration. This strategy is crucial to gaining future
market share as shippers adjust to a structural change in the
supply chain. No longer can logistics be taken for
granted. It takes companies with scale and size, like Mullen
Group, to handle the complexities associated with moving freight,
because regardless of whether the shipment originates globally the
freight must still be delivered locally," commented Mr.
Murray K. Mullen, Chair and CEO.
"Investors should not be surprised by the
strong growth year over year, as we have communicated our plan for
2022 on numerous occasions. What might not be as well known
is how well our Business Units handled a multitude of challenges
throughout the quarter. Issues like blockades and border
closures, abnormal absenteeism associated with the Omicron
breakout, and significant weather issues in key markets like
Ontario and Manitoba all contributed to low productivity
and higher costs. The most pressing challenge, however, was
surging inflation and higher fuel costs. Collectively these
issues hurt margins and profitability in the quarter, setting off
another round of pricing increases to our customers. These
are difficult discussions to have but are absolutely required to
drive margin improvement in future quarters," added Mr.
Mullen.
Key financial highlights for the first quarter of 2022 with
comparison to 2021 are as follows:
First Quarter Summary
(unaudited)
($ millions,
except per share amounts)
|
Three month periods
ended March 31
|
2022
|
2021
|
Change
|
|
$
|
$
|
%
|
Revenue
|
456.9
|
290.5
|
57.3
|
|
|
|
|
Operating income before
depreciation and amortization(1)
|
60.3
|
47.1
|
28.0
|
Adjusted operating
income before depreciation and
amortization(2)
|
60.3
|
41.1
|
46.7
|
Net foreign exchange
loss (gain)
|
3.3
|
(0.1)
|
-
|
Decrease (increase) in
fair value of investments
|
(0.2)
|
(0.4)
|
(50.0)
|
Net income
|
16.4
|
13.0
|
26.2
|
Net Income -
adjusted(3)
|
19.5
|
11.8
|
65.3
|
Earnings per
share(4)
|
0.17
|
0.13
|
30.8
|
Earnings per share -
adjusted(3)
|
0.21
|
0.12
|
75.0
|
Net cash from operating
activities
|
18.0
|
39.0
|
(53.8)
|
Net cash from operating
activities per share(4)
|
0.19
|
0.40
|
(52.5)
|
Cash dividends declared
per Common Share
|
0.15
|
0.12
|
25.0
|
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, and the change in fair
value of investments.
(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.
|
First Quarter Financial Results
(unaudited)
($
millions)
|
Three month periods
ended
March
31
|
2022
|
2021
|
Change
|
|
$
|
$
|
%
|
Revenue
|
|
|
|
Less-Than-Truckload
|
175.6
|
120.7
|
45.5
|
Logistics
& Warehousing
|
142.5
|
91.3
|
56.1
|
Specialized & Industrial Services
|
83.3
|
79.3
|
5.0
|
U.S. &
International Logistics
|
57.3
|
-
|
-
|
Corporate
and intersegment eliminations
|
(1.8)
|
(0.8)
|
-
|
Total
Revenue
|
456.9
|
290.5
|
57.3
|
Adjusted operating
income before depreciation and amortization
(1)
|
|
|
|
Less-Than-Truckload
|
23.1
|
18.3
|
26.2
|
Logistics
& Warehousing
|
25.5
|
14.7
|
73.5
|
Specialized & Industrial Services
|
13.3
|
11.2
|
18.8
|
U.S. &
International Logistics
|
1.1
|
-
|
-
|
Corporate
|
(2.7)
|
(3.1)
|
-
|
Total Adjusted
operating income before depreciation and amortization
(1)
|
60.3
|
41.1
|
46.7
|
(1) Refer to
notes section of First Quarter Summary
|
|
|
|
Revenue increased by $166.4
million, or 57.3 percent, to a record of $456.9 million and is summarized as
follows:
- LTL segment up $54.9 million, or
45.5 percent, to $175.6 million -
revenue improved by $54.9 million due
to $44.3 million of incremental
revenue generated from acquisitions, an $8.6
million increase in fuel surcharge revenue and from
$2.0 million of internal growth as
the continued strength in consumer spending was virtually offset by
severe winter conditions in certain markets.
- L&W segment up $51.2 million,
or 56.1 percent, to $142.5 million -
revenue improved by $51.2 million due
to $29.0 million of incremental
revenue from acquisitions, a $4.3
million increase in fuel surcharge revenue and from
$17.9 million of internal growth due
to higher spot market prices, an overall improvement in freight
demand at virtually all of our Business Units.
- S&I segment up $4.0 million,
or 5.0 percent, to $83.3 million -
revenue increased by a modest $4.0
million due to $4.5 million of
incremental revenue from the acquisition of Babine Truck &
Equipment Ltd. and a $1.1 million
increase in fuel surcharge revenue. Revenue from our established
Business Units declined by $1.6
million due to a $9.3 million
decrease in pipeline hauling and stringing services revenue that
was somewhat offset by greater revenue from those Business Units
involved in the transportation of fluids and servicing of wells and
from greater demand at Canadian Dewatering L.P. ("Canadian
Dewatering").
- US 3PL segment added $57.3
million - HAUListic LLC ("HAUListic") generated
$57.3 million of gross freight
revenue, which 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 $19.2 million, or 46.7 percent, to $60.3 million and is summarized as
follows:
- LTL segment up $4.8 million, or
26.2 percent, to $23.1 million -
Adjusted OIBDA improved due to $6.8
million of incremental Adjusted OIBDA from acquisitions
being somewhat offset by lower Adjusted OIBDA from Gardewine Group
Limited Partnership. Adjusted operating margin decreased to 13.2
percent as compared to 15.2 percent in 2021, due to rising costs
and reduced productivity.
- L&W segment up $10.8 million,
or 73.5 percent, to $25.5 million -
Adjusted OIBDA improved due to $5.1
million of incremental Adjusted OIBDA from acquisitions and
from $5.7 million of internal growth
due to the strong performance at several of our Business Units.
Adjusted operating margin increased to 17.9 percent as compared to
16.1 percent in 2021 as higher spot market prices more than offset
inflationary costs.
- S&I segment up $2.1 million,
or 18.8 percent, to $13.3 million -
Adjusted OIBDA increased due to improved commodity prices resulting
in greater activity levels in the Western Canadian Sedimentary
Basin as well as the strong performance at Canadian Dewatering.
These increases were somewhat offset by a $2.0 million decline at Premay Pipeline Hauling
L.P. Adjusted operating margin increased by 1.9 percent to 16.0
percent as compared to 14.1 percent in 2021 due to the strong
performance at Canadian Dewatering.
- US 3PL segment generated $1.1
million of Adjusted OIBDA in the quarter, representing a
margin of 1.9 percent of gross revenue. Operating margin as a
percentage of net revenue was 23.4 percent. Margins were negatively
impacted by higher than normal Contractors expense as availability
was extremely tight throughout most of the quarter, contributing to
significantly higher spot market pricing. In addition, HAUListic
incurred one-time administrative expenses related to the transition
agreement with the previous owners.
Net income increased by $3.4
million to $16.4 million, or
$0.17 per Common Share due
to:
- A $13.2 million increase in
OIBDA, a $1.0 million increase in
earnings due to the strong performance from equity investments and
a $0.4 million decrease in
amortization of intangible assets.
- These increases were somewhat offset by a $3.4 million negative variance in net foreign
exchange, a $3.3 million increase in
income tax expense, a $2.7 million
increase in depreciation of right-of-use assets, a $1.0 million increase in finance costs and a
$0.5 million increase in depreciation
of property, plant and equipment.
Financial Position
The following summarizes our financial position as at
March 31, 2022, along with some key
changes that occurred during the first quarter of 2022:
- Working capital of $56.4 million
including $111.2 million of amounts
drawn on our $250.0 million of bank
credit facilities.
- Total net debt ($638.4 million)
to operating cash flow ($250.4
million) of 2.55:1 as defined per our Private Placement Debt
agreement (threshold of 3.50:1).
- Private Placement Debt of $456.5
million with no scheduled maturities until 2024 (average
fixed rate of 3.93 percent per annum). Private Placement Debt
decreased by $4.2 million due to the
foreign exchange gain on our U.S. $229.0
million debt.
- Book value of Derivative Financial Instruments down
$7.5 million to $29.9 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 $983.0 million, which includes $627.0 million of carrying costs of owned real
property.
- Repurchased and cancelled 926,961 Common Shares at an average
price of $12.01 per share under our
normal course issuer bid.
Officer Appointment
Carson Urlacher has been
appointed as Senior Accounting Officer of Mullen Group which aligns
with his current roles and responsibilities managing the
Corporation's disclosure compliance and internal controls.
Additionally, we advise that Stephen
Clark has been on leave for the majority of the first
quarter. In his absence, Mr. Urlacher has assumed Mr. Clark's
CFO responsibilities and will continue to do so until his
return.
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
- Chair, Chief Executive
Officer and President
Mr. Richard J. Maloney - Senior Vice
President
Ms. Joanna K.
Scott - Corporate Secretary & Vice President, Corporate
Services
Mr. Carson
Urlacher - Senior Accounting Officer
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 statements that
are subject to risk factors associated with the overall economy and
the oil and natural gas business. Mullen Group believes that
the expectations reflected in this news release are reasonable, but
results may be affected by a variety of variables. 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. Additional information
regarding the forward-looking statements is found on pages
28 and 29 of Mullen Group's Management's Discussion and
Analysis.
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SOURCE Mullen Group Ltd.