Mullen Group Ltd.
(MTL-T) C$11.74
Q2/22 First Look Event
Mullen Group reported Q2/22 EBITDA of $93.9 million (up 59% y/y) vs. our estimate of $65.0 million and consensus of $65.6 million. Adjusted diluted EPS of $0.47 compared to our estimate of $0.22 and consensus of $0.23.
Impact: POSITIVE
Mullen reported very strong results with revenue above our forecast in all four segments while EBITDA was above in three-out-of-four. The company increased its formal 2022 guidance to revenue of $2.0 billion (from $1.6-1.7 billion) and EBITDA to $300 million (from $260 million). While the press release did acknowledge the potential for growing economic/consumer headwinds and moderating growth, we believe that the guidance, which implies approximately 20% higher H2/22 EBITDA than our previous forecast, provides the company with a strong foundation from which to address any economically driven pressure in 2023. This should be reassuring to investors that are concerned about 2023 earnings risk. The results certainly provide a more encouraging earnings exit rate for 2022 that we had previously assumed. We believe that the share price should respond positively to these results and outlook.
LTL: Revenue increased 66% y/y to $211 million vs. our forecast of $185 million. EBITDA of $42.4 million represented margin of 20.1% (up 160 bps y/y) and compared to our forecast of $29.6 million.
Logistics & Warehousing: Revenue increased 30% y/y to $157 million vs. our forecast of $145 million. EBITDA of $30.5 million represented margin of 19.5% (down 30 bps y/y) and compared to our forecast of $31.4 million.
Specialized & Industrial Services: Revenue increased 51% y/y to $101 million vs. our forecast of $73 million. EBITDA of $20.5 million represented margin of 20.4% (down 230 bps y/y).
U.S. & International Logistics: Revenue of $57 million (no prior year data) compared to our forecast of $52 million. EBITDA of $2.2 million represented margin of 3.8% and compared to our forecast of $1 million.
Mullen is planning a more restrained approach to acquisitions for the foreseeable future due to investor caution and the current outlook for interest rates. We view this approach as prudent and believe that it should be positive for share price sentiment.