Mullen Group Ltd.
(MTL-T) C$14.67
Q3/22 First Look Event
Mullen Group reported Q3/22 EBITDA of $98.1 million (up 52% y/y) vs. our estimate of $86.9 million and consensus of $90.2 million. Adjusted basic EPS of $0.51 compared to our estimate of $0.36 and consensus of $0.40.
Impact: SLIGHTLY POSITIVE
Mullen reported strong results due primarily to strength in TL, Logistics & Warehousing, and lower-than-expected corporate and intersegment eliminations. The y/y increase in EBITDA and EBITDA margin was largely due to general rate increases and strong demand within all segments, with the exception of the smaller U.S. & Intl Logistics segment. The y/y decline in US & Intl. Logistics revenue and EBITDA margin is due to softening freight demand for full truckload shipments, as well as higher Contractors and SG&A expense. The market should be encouraged by the stronger-than-expected results, continuation of rate increases, expectations for strength in Q4, and the specific mention of plans for adapting to any weakness that may emerge in 2023. However, we believe that commentary regarding a softening demand environment in 2023 could limit the share-price upside that would otherwise be likely with results of this quality.
LTL: Revenue increased 19% y/y to $202 million vs. our forecast of $208 million. EBITDA of $41.1 million represented margin of 20.4% (up 450 bps y/y) and compared to our forecast of $37.6 million.
Logistics & Warehousing (L&W): Revenue increased 28% y/y to $156 million vs. our forecast of $148 million. EBITDA of $32.7 million represented margin of 20.9% (up 230 bps y/y) and compared to our forecast of $28.7 million.
Specialized & Industrial Services (S&I): Revenue increased 27% y/y to $109 million vs. our forecast of $122 million. EBITDA of $24.6 million represented margin of 22.6% (up 430 bps y/y) and compared to our forecast of $25.0 million.
U.S. & International Logistics (US 3PL): Revenue decreased 4.0% y/y to $55 million (in-line with our forecast). EBITDA of $1.5 million represented margin of 2.7% (down 240 bps y/y) and compared to our forecast of $2.1 million.
Outlook: There were no specific references to 2022 guidance of $2.0 billion in revenue and $300 million in EBITDA.