OKOTOKS, Alta. – Mullen Group achieved record fourth quarter revenue of $219.7 million in its trucking/logistics segment, but a “market meltdown” hampered earnings in its oilfield services division.
“I am pleased to report that our fourth quarter results from an operating perspective were up year over year despite some significant challenges associated with the market meltdown in late 2018,” said Murray Mullen, chairman and CEO of Mullen Group. “We definitely saw the freight demand slow in the quarter as business adjusted to credit tightening. The major impact, however, was felt by our oilfield services segment, particularly those business units tied to drilling activity. The swift declines in crude oil pricing along with a blow-out in the price for Canadian crude oil virtually brought drilling activity to a halt in the fourth quarter as producers adjusted spending plans to align with cash flow.”
The trucking/logistics segment grew revenue by 6.3% in the fourth quarter, year-over-year, and total revenue climbed 12.6% to $333.3 million. Incremental revenue from acquisitions accounted for $7.9 million for the trucking/logistics group. Rate increases achieved early in 2018 also contributed, while demand for LTL and truckload services increased in Western Canada. Total net income decreased by $86.5 million, to a net loss of $81.1 million, due to a $100-million impairment of goodwill within the oilfield services segment.
Adjusted net income rose 119.5% to $16.9 million.
For the full year 2018, Mullen’s revenue increased 10.7% to $1.26 billion. The truckload segment saw revenue increase 14.7% to $873.3 million, setting a new record for the company. Its adjusted net income for 2018 was up 46.9% to $62 million.
Looking ahead to 2019, Mullen said the company is well positioned to survive the downturn in the oil and gas sector.
“We are taking a reasonably constructive view in our outlook and business plan for 2019,” he said. “We have a well-structured balance sheet, a diversified portfolio of business units distributed across Canada and we are seeing competitors, especially in Western Canada, forced out of business. The general economy, while not robust, is expected to show modest gains. Unfortunately, the oil and natural gas sector of the economy, especially drilling activity in Western Canada, will underperform for at least the first half of the year. It is for these reasons that on balance we believe 2019 will be a good year for the Mullen Group. And because of our business model we have the good fortune of being able to wait for a rebound in drilling activity along with gaining market share as our competition struggles.”