OKOTOKS, ALBERTA--(Marketwired - Oct. 1, 2015) - Mullen Group Ltd. (TSX:MTL) ("Mullen Group" and/or the "Corporation") is pleased to announce that effective October 1, 2015, it closed its acquisition of Courtesy Freight Systems Ltd. ("Courtesy"), a privately owned transportation company based in northwestern Ontario (the "Transaction"). Concurrent to the closing of the Transaction, Mullen Group entered into an agreement to acquire the majority of the facilities, subject to satisfactory environmental reports.
Courtesy provides regional less-than-truckload ("LTL") services primarily in northwestern Ontario and parts of Manitoba operating a fleet of approximately 68 power units and 48 trailers through a network of six terminals, employing 113 employees.
"This acquisition, while not significant in terms of size or revenue, is important to our organization for two fundamental reasons. Firstly, from a strategic perspective we continue to invest in regional LTL opportunities. With the acquisition of Courtesy, we will own and operate six regional LTL businesses in Canada, providing regional service to customers from Ontario right through to British Columbia. Secondly, Courtesy is an excellent complement to Gardewine Group Limited Partnership ("Gardewine"), which we acquired in January, 2015. Those two companies operate in similar geographic markets serving communities and customers in Manitoba and northwestern Ontario. I fully expect that we can realize operational synergies ensuring all customers continue to receive the very best service and value options," said Mr. Murray K. Mullen, Chairman and Chief Executive Officer.
"Investing in regional carriers with strong ties to the communities they serve is an important element of our business model. Ron Speziale, the owner of Courtesy, has built a company that is respected by their customers and employees alike. I am delighted to add Courtesy to our organization. We now have to ensure we build on Ron's past successes," added Mr. Mullen.
Mullen Group expects the Transaction will contribute additional annual revenue in excess of $10.0 million and will be immediately accretive. Courtesy generates margins that are in line with Mullen Group's existing Trucking/Logistics segment and management believes that once synergies are realized, accompanied by focused capital allocation initiatives, margins will improve.
Strategic Rationale:
- Courtesy is a stable, profitable well managed business;
- The acquisition will further expand the geographic coverage of Mullen Group's network of regional LTL business into northwestern Ontario. With this acquisition, Mullen Group will own and operate six regional LTL businesses in Canada allowing it to provide enhanced services to all customers;
- The acquisition is expected to be accretive, adding approximately $2.0 million in annual operating income, with the potential to increase as synergies are realized;
- The acquisition will be accretive on various financial metrics, providing support to Mullen Group during a time when the oil and natural gas industry in western Canada is currently experiencing a cyclical downturn due to low commodity pricing; and
- The acquisition represents an effective use of excess cash on Mullen Group's balance sheet.
Courtesy Key Metrics:
Area of Operation: Courtesy delivers to over 35 communities in northwestern Ontario along with parts of Manitoba.
Services Provided: Courtesy's primary service offering is LTL General Freight hauling.
Operating Assets: 68 power units, 48 trailers which include straight vans and reefer units.
Terminal Network: Courtesy operates from a network of six terminals with its head office located in Thunder Bay, Ontario.
Personnel: 113 people of which 69 are drivers and 44 are warehouse, dock, maintenance, operations and administrative personnel.
Mullen Group is a company that owns a network of independently operated businesses providing a wide range of specialized transportation and related services to the oil and natural gas industry in western Canada and is recognized as one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen Group has strong business relationships and industry leadership. The corporate office provides management and financial expertise, technology and systems support, shared services and strategic planning to its independent businesses.
Mullen Group is a publicly traded corporation listed on the Toronto Stock Exchange under the symbol "MTL". Additional information is available on our website at www.mullen-group.com or on SEDAR at www.sedar.com.
Advisories:
This news release includes certain statements regarding Mullen Group's future plans and operations with respect to the Transaction, and contains forward-looking statements that we believe allow readers to better understand our business and prospects. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "strategy" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward-looking statements and information concerning: the anticipated benefits of the acquisition of Courtesy to Mullen Group (including its shareholders), including anticipated synergies and other matters set forth under "Strategic Rationale", anticipated accretion levels, anticipated incremental revenues, operating income and the description of the assets and other business matters expected to be acquired pursuant to the Transaction.
Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Readers are cautioned that the assumptions used in the preparation of such forward-looking information and statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Our actual results, performance, or achievement could differ materially from those expressed in, or implied by, these forward-looking statements. We can give no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits we will derive from them.
This news release contains the term "operating income" which does not have a standardized meaning prescribed by Canadian generally accepted accounting principles and therefore may not be comparable with the calculation of similar measures by other companies. Operating income is defined as net income before depreciation of property, plant and equipment, amortization of intangible assets, finance costs, net unrealized foreign exchange gains and losses, other (income) expense and income taxes. Management relies on operating income as a measurement since it provides an indication of the results generated by Mullen Group's principal business activities and the performance of its operations prior to depreciation and amortization, financing, or taxation in various jurisdictions. Net income is also an indicator of financial performance; however, net income includes expenses that are not a direct result of Mullen Group's operating activities. These measures have been described and presented in this news release in order to provide readers with additional information regarding Mullen Group's liquidity and its ability to generate funds to finance its operations and dividends.