TSX:MTL - Post Discussion
Post by
retiredcf on Feb 10, 2022 7:31am
TD
Mullen Group Ltd.
(MTL-T) C$12.28
Q4/21 Results
Event
Mullen reported Q4/21 results.
Impact: POSITIVE
Q4/21 Results: Mullen reported Q4/21 EBITDAS of $60.7 million, after adjusting for $5.2 million in Canadian Emergency Wage Subsidy (CEWS) proceeds that we were not forecasting, in line with our estimate of $60.6 million and consensus of $60.8 million. Logistics & Warehousing segment revenue (+10%) came in above our estimate, due to greater demand for freight services, whereas Specialized & Industrial Services segment revenue (-4%) came in below expectations, due to lower high-margin pipeline hauling revenue (-$14.3 million Y/Y). Details on page 2.
Focused on Integration in 2022: In light of limited opportunities to grow organically, due to the ongoing supply-chain constraints and labour shortages as well as high current valuation expectations from recent acquisition targets, management's focus in 2022 will be to "integrate last year's acquisitions, streamline business to capture synergies and focus on a new differentiated pricing model to ensure, at the very least, that margins are maintained".
Estimate Update: In its outlook commentary, management highlighted what it expects will be a slow start to the year due to "government mandates, blockades, coupled with a multitude of issues associated with the supply chain", but noted that "it is our expectation that these issues will be temporary in nature" and an economic slowdown is "not expected to materially change our business outlook for 2022". In light of this commentary and the company's in-line quarter, we are not making any material changes to our estimates and note that our 2022 EBITDAS estimate of $260.6 million remains in line with management's unchanged corporate guidance of $260.0 million that it announced on December 9, 2021 as a part of its 2022 business plan (full report).
Conference Call: Management will host a conference call at 11:00 a.m. ET today; dial: 1-800-319-4610.
TD Investment Conclusion
Mullen Group has consistently generated strong financial performance throughout the COVID-19 pandemic, highlighting its resilient, diversified, and consumer-focused business, and we expect this to continue despite emerging concerns about broader inflationary pressures. With the quarter effectively in line, we are maintaining our BUY rating and $17.00 target price.
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