Mullen talks 2021 business plan, dividend increase
2020-12-09 19:43 ET - News Release
Mr. Murray Mullen reports
MULLEN GROUP LTD. ANNOUNCES BUSINESS PLAN AND INCREASE IN DIVIDEND FOR 2021
Mullen Group Ltd.'s business plan for 2021 has been approved by the company's board of directors.
"We are pleased to provide an overview of the business plan and budget for 2021, a plan that reflects the current realities associated with COVID-19. Generally speaking, we are of the view that the 'consumer-driven economy' will continue to evolve and adapt as long as the health care crisis dominates the headlines. Within this context our business will remain quite stable in 2021, in fact similar in most respects to 2020. It is our expectation that the second wave of COVID-19 will impact many people, the supply chain across the globe and the economy. The stability of our results is primarily due to the strength of the many business units we have that are leveraged to consumer spending. Longer term, once the medical experts find the solution to this pandemic, the opportunity for growth will return again and the Mullen Group will be both prepared and positioned to capitalize on the economic recovery. Until then we will be prudent and focus on the issues we can control and influence," commented Murray K. Mullen, chairman and chief executive officer.
Highlights of 2021 business plan
Today the board conducted its annual budget meeting. The annual process encompassed an extensive review of a wide range of issues including: the current state of the North American economy and the COVID-19 pandemic. More specifically, expectations for the Canadian economy, the impact of an anticipated vaccine, the recent recovery in commodity prices, as well as the balance sheet of Mullen Group and expected cash flows.
Financial expectations
Mullen expects revenue for 2021 to be in the $1.2-billion to $1.3-billion range with each segment to account for approximately 33.0 per cent of Mullen Group's 2021 revenue, exclusive of any potential acquisitions made in 2021. Mullen bases this expectation on the continued economic recovery and stable consumer spending. In addition, the company expects infrastructure projects, such as the Coastal Gas and Trans Mountain pipelines, to continue and positively contribute to Mullen Group's bottom line in 2021. As such, in our plan, operating income before depreciation and amortization will be in the $200.0-million to $220.0-million range.
Capital expenditures
The board approved a capital budget of $60.0-million for 2021, exclusive of corporate acquisitions or investment in facilities, land and buildings, with $50.0-million allocated toward maintenance capital primarily to replace trucks, trailers, specialized equipment and technology to support the operations of the business. In addition, Mullen will allocate $10.0-million to finance growth and create jobs in Canada.
In 2020 the federal government implemented the Canada Emergency Wage Subsidy program. Mullen will be directing the vast majority of the funds it received to create opportunities and employment for Canadians.
Dividend increase
Mullen is pleased to announce that the board has approved an increase in the annual dividend to shareholders from 36 cents per common share to 48 cents per common share. Such dividend will continue to be paid on a monthly basis, subject to board approval.
Share buyback
Earlier this year Mullen announced a plan to allocate $100.0-million over the course of three years to repurchase common shares in Mullen Group via an authorized share buyback program. In 2020 Mullen repurchased the maximum allowed by the Toronto Stock Exchange. In April, 2021, Mullen intends on requesting approvals from the TSX to renew a share buyback program.
Acquisitions
Mullen maintains a very healthy cash balance in excess of $100.0-million on the balance sheet as of today's date, funds that will be used to pursue strategic acquisitions. The company's focus will be in the less-than-truckload and logistics and warehousing segments of its business.
About Mullen Group Ltd.