OKOTOKS, Alta. – Mullen Group’s trucking and logistics segment achieved record revenue and profit in the third quarter.
The segment now makes up about 70% of Mullen Group’s revenue, a stark contrast to its traditional model where it represented about 30% while its oilfield services segment contributed the rest. And it’s a good thing too, as oil and gas continues to face headwinds.
“The natural gas sector here in Canada is a total mess, including the service industry,” chairman, president and CEO Murray Mullen said in a conference call with analysts. While commodity prices are strong, Mullen said Canada’s policies prohibit it from getting oil and gas to new markets.
The Canadian consumer economy, however, is doing okay, Mullen said, which is allowing its trucking/logistics segment to reach record profitability. The segment achieved Q3 revenue of $226.7 million, up 18.9%, establishing a new record. Of that, $12.5 million was attributable to acquisitions, including the recent addition of Number 8 Freight, a B.C.-based final mile delivery company.
Adjusted net income was $20.5 million, up 57.7% year-over-year.
“Our latest results once again reflect what is a set of recurring themes,” Mullen said. “The Canadian economy continues to be okay but certainly not robust, and Western Canada’s oil and natural gas industry remains burdened by the lack of takeaway capacity, regulatory delays and is quite simply out of favor with the capital markets.”
Mullen said growth opportunities in trucking/logistics are limited to acquisitions.
“Since we have limited exposure to the U.S. market, we are left with one viable means to grow our business and that is by acquisition, which is how we achieved double digit growth in our third quarter,” Mullen said.
He said he expects trucking/logistics to continue dominating its results in the near future, but noted there are cost pressures related to the supply chain and labor markets. As such, Mullen said the company will be focused on productivity. Mullen sees a trucking market that’s fairly balanced.
“We are back now to more balanced market conditions,” he said. “I don’t see, when we look at all the data, we don’t see the markets out of balance right now. We don’t see them down but we don’t see huge demand happening right at the moment.”
Mullen told analysts the company will be eyeing further trucking acquisitions.
“There are always plenty of opportunities that come around,” he said. “We look at them every week.”
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