OKOTOKS, Alta. – It was a challenging fourth quarter for Mullen Group, which saw its revenues and profits slide significantly, but chairman and CEO Murray Mullen is maintaining an optimistic outlook.
He said during a conference call with analysts to discuss Q4 and year-end results, that he’s seeing signs the oil and gas industry is recovering, as are the economies in Canada and Alberta. He’s also optimistic pricing pressure will ease through 2017.
“Generally speaking, the lack of demand created a demand-supply imbalance and put pressure on pricing across the majority of the markets we serve,” Mullen said of the fourth quarter. “I personally believe that’s starting to reverse. There was borderline ridiculous pricing in some markets. We will not take on business at ridiculous prices just to gain market share. We’ll leave this to our competition.”
Mullen believes the impending electronic logging device (ELD) mandate in the US, as well as the strained balance sheets many carriers are operating under, will be enough to bring supply back in line with demand and to ease pressure on pricing.
“Eventually supply and demand comes into balance, then you get pricing leverage,” Mullen said.
In Western Canada, there are signs of an oil and gas recovery. Drilling activity was up 50% year-over-year in January.
“Clearly the prospects are much better than when we entered 2016,” Mullen said.
He expects the Canadian economy to continue to see modest growth.
“More importantly, based on the recovery of oil and gas, it appears the Alberta economy is gaining some of its momentum back,” he said. “Increased investment by the oil and gas industry is good for the Alberta economy and it’s good for jobs and we’re seeing that already in 2017.”
Mullen Group continues to look at acquisition opportunities and it has the cash – about $270 million on hand – to make some deals. Mullen said there are three types of deals the company will consider: tuck-ins, individual businesses and transformational acquisitions.
“We are going to be active on the acquisition front in 2017 and we think that’ll help us accelerate our growth,” Mullen said.
The company is also reviving its MoveItOnline initiative, aimed at leveraging technology to facilitate freight shipments. It’s a business-to-business load matching platform that connects shippers with carriers. Mullen said it represents an opportunity to, at worst, accelerate and support the growth of its existing business units and at best, to open Mullen Group up to new markets altogether.
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