OKOTOKS, Alta. — Last year was one to forget for trucking companies serving the oil patch and 2016 is looking equally tenuous, but if there was a bright spot for Mullen Group it was the performance of its trucking/logistics companies, and in particular their safety records.
Speaking on a conference call with analysts Thursday, Mullen Group CEO and chairman Murray Mullen said “You can measure this by any statistic – injury frequency, lost time claims, cargo and equipment damage – they’re not just down in each measurement, they’re down significantly. In fact, I’d say they’re world class.”
Mullen also said the company improved its processes to maintain its operating margins.
“These are the things we can control here at Mullen Group,” he said. “ I want to acknowledge the hard work and dedication of our entire team. Our people did us proud last year.”
What Mullen – and other oilfield services providers – can’t control, is the crashing of commodity prices.
“The entire industry ecosystem is a total mess,” Mullen said of the oil and gas sector.
Interestingly, Mullen’s trucking/logistics business, which traditionally contributed about 40% of total revenue, this year chipped in 60% while oilfield services dropped to 40%.
Despite the challenges, Mullen said the company was able to maintain its strong balance sheet and will be conservative moving forward. It’s not actively pursuing acquisitions in the trucking industry and is even less interested buying companies serving the oilfields.
“We’ll still do a great acquisition but I’m playing defense right now, I’m not playing offense,” Mullen said. “I will never put the company at risk by trying to play offense. This is a year of positioning.”
However, he said Mullen isn’t interested in buying its struggling oil patch competitors.
“They’re a bunch of zombies out there,” he said.
Mullen said he’s seeing some signs of stress in the general economy – especially in Alberta – but nothing too disconcerting yet.
Mullen said the integration of Gardewine has gone well and he singled out Kleysen Transport as a top performer within the group.
Mullen characterized the rate environment in the oil patch as “total chaos” but he reiterated his company won’t run equipment at a loss just to keep the wheels turning.
“We do not go to work to lose money,” he said. “Everybody knows it in our organization. If we’re going to lose money, we’ll do it because we don’t go to work, not because we go to work.”
Mullen said low commodity prices should benefit consumers in the form of lower energy prices, but he’s not seeing much of a silver lining.
“Unfortunately, the benefit from the commodity price decline is probably being eaten up by higher food costs because the dollar has been crushed,” he said. “The consumer is kind of stuck.”
You can read about Mullen’s fourth quarter and year-end results here.