Mullen Group earns $21.7-million in Q2 2021
2021-07-21 18:19 ET - News Release
Mr. Murray Mullen reports
MULLEN GROUP LTD. REPORTS 2021 SECOND QUARTER FINANCIAL RESULTS
Mullen Group Ltd. has released its financial and operating results for the period ended June 30, 2021, with comparisons with the same period last year. Full details of the company's results may be found within its second quarter interim report, which is available on SEDAR or on the company's website.
"We just completed one of our most active quarters in the history of our company, finalizing the acquisition of five real quality businesses. These are strategic fits in our expanding network, strengthening our Canadian less-than-truckload service offering and logistics capacities, along with our first investment in the very large U.S. 3PL market. Collectively, these businesses will add incremental annualized revenue in excess of $400.0-million, putting us well ahead of our long-term plans to achieve $2.0-billion in revenue per year, along with ensuring we maintain our position as one of the largest and most respected logistics providers in North America. We welcome all of the new dedicated employees, dedicated contractors and partners to our growing organization, a company that values its people, focuses on a quality and safe work environment for all, and invests in leading-edge technology solutions.
"From a positioning perspective, these are great acquisitions especially given the current market context, where health restrictions are being lifted and economic expansion is poised to return. June was the first full month in quite some time that freight demand was strong across virtually all business lines. Consumer demand, which has been one of the steadiest segments of the economy, continued at a robust pace throughout the quarter, and finally we witnessed strength in the demand for 'freight of all kinds' beginning in June, a sign of a more positive outlook for business investment and capital deployment. Acquisitions along with a recovering economy were the primary reasons for the improved financial performance year over year, a trend we believe will continue as the year progresses," commented Murray K. Mullen, chairman and chief executive officer.
Key financial highlights for the second quarter of 2021 with comparison with 2020 are as shown in the attached table.
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 June 30, 2021, are as follows:
- Generated consolidated revenue of $312.5-million, an increase of $55.0-million, or 21.4 per cent, as compared with $257.5-million in 2020 due to a combination of incremental revenue generated from acquisitions and internal growth resulting in:
- An increase of $24.8-million to $126.7-million in the less-than-truckload segment;
- An increase of $37.8-million to $120.6-million in the logistics and warehousing segment;
- A decrease of $7.1-million to $66.4-million in the specialized and industrial services segment.
- Earned consolidated operating income before depreciation and amortization (OIBDA) of $59.0-million, an increase of $4.0-million as compared with $55.0-million in 2020 despite a $4.5-million reduction in the Canada Emergency Wage Subsidy (CEWS) resulting in:
- An increase of $3.0-million to $23.5-million in the less-than-truckload segment;
- An increase of $6.3-million to $23.8-million in the logistics and warehousing segment;
- A decrease of $4.7-million to $15.1-million in the specialized and industrial services segment.
Second quarter financial results
Revenue increased by $55.0-million, or 21.4 per cent, to $312.5-million and is summarized as follows:
- Less-than-truckload segment up $24.8-million, or 24.3 per cent, to $126.7-million -- revenue improved by $24.8-million due to strong consumer spending relative to 2020, from the $6.4-million of incremental revenue generated from the acquisition of Pacific Coast Express Ltd. (PCX) and from $5.5-million of higher fuel surcharge revenue.
- Logistics and warehousing segment up $37.8-million, or 45.7 per cent, to $120.6-million -- revenue improved by $37.8-million due to $25.0-million of incremental revenue from acquisitions, a $2.5-million increase in fuel surcharge revenue and from a 13.1-per-cent increase in same store sales as government-mandated restrictions were reduced driving higher demand for freight with the month of June, 2021, being noticeably stronger.
- Specialized and industrial services segment down $7.1-million, or 9.7 per cent, to $66.4-million -- revenue declined by $7.1-million due to a $12.6-million reduction in revenue from Premay Pipeline Hauling LP as COVID-19 restrictions and environmental concerns have delayed certain major pipeline construction projects until later this year. This decrease was partially offset by stronger demand for fluid hauling and drilling related services as higher crude oil and natural gas prices led to greater oil and natural gas drilling activity in Western Canada.
OIBDA increased by $4.0-million, or 7.3 per cent, to $59.0-million and is summarized as follows:
- Less-than-truckload segment up $3.0-million, or 14.6 per cent, to $23.5-million -- OIBDA improved due to strong results from Gardewine Group LP and from $1.2-million of incremental OIBDA generated by PCX. These increases were partially offset by a $1.4-million reduction in CEWS. Excluding CEWS, the operating margin was consistent at 18.2 per cent as compared with 18.3 per cent in 2020.
- Logistics and warehousing segment up $6.3-million, or 36.0 per cent, to $23.8-million -- OIBDA improved due to $6.2-million of incremental OIBDA from acquisitions and from internal growth. These increases were partially offset by a $1.6-million reduction in CEWS. Excluding CEWS, the operating margin improved to 18.8 per cent as compared with 17.9 per cent in 2020.
- Specialized and industrial services segment down $4.7-million, or 23.7 per cent, to $15.1-million -- OIBDA declined due to a $3.1-million decline in OIBDA generated by Premay Pipeline and from a $1.5-million reduction in CEWS. Adjusted for CEWS, operating margin was 15.5 per cent as compared with 18.4 per cent in 2020 due to a change in revenue mix associated with large diameter pipeline projects.
Net income decreased by $1.3-million to $21.7-million, or 23 cents per common share due to:
- A $4.0-million negative variance in net foreign exchange, a $1.8-million increase in amortization of intangible assets, a $1.2-million decrease in earnings from equity investments and a $300,000 increase in depreciation of right-of-use assets.
- The above was partially offset by a $4.0-million increase in OIBDA, an $800,000 decrease in depreciation of property, plant and equipment, a $700,000 decrease in the loss on sale of property, plant and equipment, and a $500,000 positive variance in the fair value of investments.
A summary of Mullen Group's results for the three and six month periods ended June 30, 2021, and 2020 are as shown in the attached table.
Financial position
The following summarizes our financial position as at June 30, 2021, along with some key changes that occurred during the second quarter of 2021:
- Working capital of $62.6-million including $70.3-million of amounts drawn on the company's $150.0-million bank credit facility.
- Total net debt ($572.0-million) to operating cash flow ($224.8-million) of 2.54:1 as defined per the company's private placement debt agreement (threshold of 3.50:1).
- Private placement debt of $454.0-million with no scheduled maturities until 2024 (average fixed rate of 3.93 per cent per annum). Private placement debt decreased by $4.2-million due to the foreign exchange gain on the company's $229.0-million (U.S.) debt.
- Book value of derivative financial instruments down $3.0-million to $31.4-million, which swaps the company's $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 $982.4-million, which includes $621.3-million of carrying costs of owned real property.
- Year to date, the company repurchased 1,430,720 common shares at an average price of $12.81 per share under our normal course issuer bid.
About Mullen Group Ltd.