Market Overview

Mullen's LTL Business Shines In Tepid Quarter

Mullen's LTL Business Shines In Tepid Quarter

Mullen Group (TSX:MLN) delivered a relatively flat third quarter as growth from the Canadian firm's less-than-truckload business shined amid weaker performance from its truckload and oil services segments.

Mullen reported an adjusted net income of C$16.5 million or C$0.16 per share on C$325.3 million in revenue (a Canadian dollar equals US$0.76.) The results came in just under analyst expectations of C$0.17 per share on C$334 million of revenue.

"As frustrating as this market is, our financial results continue to be very impressive," CEO Murray Mullen said in a statement accompanying the October 23 earnings release. 

Mullen framed his company's performance in the context of a soft freight market and a struggling oil and natural gas industry, noting, "we generated the best quarterly results of this fiscal year."

Revenue dropped by 4.2% percent compared to the third quarter of 2018. The decline was more dramatic in profits, with adjusted net income dropping by 19.5%.

Revenue from trucking and logistics declined by 2% to C$222.2 million, largely on weakness from truckload services. But Mullen got a C$6.7 million boost from less-than-truckload, primary from its Gardewine Group. 

Murray Mullen blamed the weaker freight market on lower capital investment in Canada. LTL, however, "is the most stable part of our business because it is tied to the consumer," Mullen said. 

Operating income from the segment held relatively steady, declining by 0.6% to C$35.8 million. Mullen noted that acquisitions and LTL performance added C$1.1 million to operating income. 

Mullen also reported an operating margin of 14.9% in its trucking and logistics segment, a 100-basis point improvement over 2018. 

Revenue from oilfield services declined by 9.3% to C$103.9 million compared to the third quarter of 2018. Operating income from the segment improved by 3.2% to 22.3 million.

While oil field services were weak, Mullen got a boost from increased pipeline-building activity, primarily related to natural gas projects in Western Canada. 

"This is extremely positive and one of the few signs that there is some hope for Canada's energy producers," Mullen said. 

Mullen also pointed to "significant" acquisition opportunities in the challenging market, noting that the company had a healthy balance sheet. 

"I am confident that we will gain market share as our competition struggles within the current macro environment," he said.

Mullen will discuss the results with analysts on October 24.

Image Sourced from Pixabay. Credit: Chabotphoto

Posted-In: Freight Freightwaves MullenEarnings News Global Markets General


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