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Mullen Group Ltd. (MTL.TO) reported its second-quarter 2025 earnings with a notable revenue increase but missed on earnings per share (EPS) expectations. The company posted an actual EPS of $0.28, falling short of the forecasted $0.3434, resulting in an 18.46% negative surprise. Despite the EPS miss, the company’s revenue exceeded expectations, reaching $540.9 million compared to the forecast of $529.78 million. In response, Mullen Group’s stock price dropped by 4.71% in pre-market trading. According to InvestingPro data, the company maintains strong financial health with an overall score of 3.65 (GREAT), supported by robust profitability and growth metrics.
Key Takeaways
- Mullen Group’s Q2 revenue grew by 9% year-over-year, driven by acquisitions.
- EPS fell short of forecasts, with an 18.46% negative surprise.
- Stock price declined by 4.71% following the earnings release.
- The company remains focused on cost management and margin protection.
- Executive optimism about future economic growth remains cautious.
Company Performance
Mullen Group demonstrated a solid revenue performance for Q2 2025, reporting a 9% increase year-over-year, primarily due to strategic acquisitions that contributed $52.6 million in incremental revenues. While same-store sales remained flat, indicating challenges in organic growth, InvestingPro analysis shows the company maintains a strong free cash flow yield and has consistently paid dividends for 26 consecutive years. The company’s diversified logistics services and focus on adaptable strategies are helping it navigate a competitive market with stagnant economic growth, supported by a healthy current ratio of 1.84 and liquid assets exceeding short-term obligations.
Financial Highlights
- Revenue: $540.9 million, up 9% YoY
- EPS: $0.28, down from the forecast of $0.3434
- OIBDA: $76.6 million, down $9.1 million from the previous year
- Cash from Operations: $117 million, stable compared to 2024
Earnings vs. Forecast
Mullen Group’s EPS of $0.28 missed the forecast by 18.46%, marking a significant earnings surprise. This miss is notable compared to the company’s historical performance, where it has typically aligned more closely with expectations. Conversely, the revenue of $540.9 million exceeded the forecast by 2.1%, showcasing strong top-line growth despite EPS challenges.
Market Reaction
Following the earnings announcement, Mullen Group’s stock price dropped by 4.71%, reflecting investor concerns over the EPS miss. The stock now trades closer to its 52-week low of $11.81, down from a recent close of $14. Based on InvestingPro’s Fair Value analysis, the stock appears to be currently overvalued. This movement suggests a cautious investor sentiment, influenced by the mixed earnings results and broader market conditions. Notably, the stock has demonstrated low price volatility historically, with a beta of -0.43, making it potentially attractive for stability-focused investors.
Outlook & Guidance
Looking ahead, Mullen Group remains focused on achieving $350 million in EBITDA, although this target may be delayed due to the timing of recent acquisitions. The company is optimistic about potential growth opportunities from infrastructure and resource projects, maintaining a cautious yet positive outlook on future economic developments. InvestingPro subscribers can access 8 additional ProTips and comprehensive valuation metrics to better understand Mullen Group’s growth potential and financial outlook. The company’s strong Piotroski Score of 7 and Altman Z-Score of 12.31 indicate robust financial health and stability.
Executive Commentary
Murray K. Mullen, CEO, emphasized the company’s commitment to margin protection over market share gains, stating, "We prefer to protect margins rather than attempting to gain market share when pricing is under attack." He also highlighted the company’s countercyclical approach, noting, "We’re a countercyclical thinker. We prefer to pursue acquisitions when internal growth is difficult."
Risks and Challenges
- Economic stagnation in Canada poses growth challenges.
- Competitive pricing pressures could impact margins.
- Integration of recent acquisitions requires careful management.
- Market volatility may affect investor confidence.
- Potential operational disruptions from external factors like wildfires.
Q&A
During the earnings call, analysts inquired about the impact of wildfires on operations, which the company acknowledged as a challenge. Discussions also focused on the strategic rationale behind the Coal Group acquisition and its expected contributions to customs and freight brokerage services. Additionally, concerns about competitive dynamics, particularly related to "Driver Inc.," were addressed, highlighting the complexities of the current market environment.
Full transcript - Mullen Group Ltd. (MTL) Q2 2025:
Conference Operator: Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Limited Second Quarter Earnings Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.
I would now like to turn the conference over to Murray K. Mullen, Chair, Senior Executive Officer and President. Please go ahead.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Thank you, and welcome to Mullen Group’s quarterly conference call. The format for today’s call will be similar to previous investor update calls. And this morning, we will once again cover three main subject matters before turning the call over to you for the Q and A session. Now I’ll provide a review of the macro environment. That’s a recap of Q2.
Carson Urlacher will provide an overview of the second quarter financial highlights. And for those interested in all the details, the Q2 interim report has been posted on our website at www.mullengroup.com as well as filed on SEDAR plus. And now this 60 page plus document contains all of the information you need as it relates to our Q2 financial results and balance sheet. Then I will close with our expectations and plans for Q3 and the balance of 2025. Now before I commence today’s review, I’ll remind everyone that our presentation contains forward looking statements that are based upon current expectations and are subject to a number of risks and uncertainties.
And as such, actual results may differ materially. Further information identifying the risks, the uncertainties and assumptions can be found in the disclosure documents. With me this morning, I’m joined in Okotoks with the entire senior executive team, that’s Richard Maloney, Senior Operating Officer Carson Urlecker, Senior Financial Officer and Joanna Scott, who’s a Senior Corporate Officer. First item is overview of the macro environment. So kind of in preparation for today’s presentation, I referred to my previous conference calls notes and no AI for me on this one, I read the transcripts.
And in summary, there are two major themes that have been repeatedly articulated to investors since the start of the year. The first was that we expected the overall 2025 economy to be generally in line with 2024. No growth, but significant decline no significant declines either, just let’s call it more of the same. In other words, we were not planning on our independently managed business units to generate any internally driven growth. Now the problem you have under this scenario is that when demand is not growing, the competition reverse to survival mode, which from my experience is not a healthy long term strategy, but it is a short term reality.
Furthermore, the longer the economy remains in a no growth territory, the more competitors succumb to lowering rates just to maintain some level of cash flow. This is precisely why we asked our business units to buckle up heading into 2025. Simply put, in the absence of any meaningful growth in the economy, the consumer gains the leverage advantage and one must adopt a lower cost structure as painful as it is to implement. The alternative is to chase internal growth by offering price concessions, which is a flawed strategy that Mullen Group does not embark upon, because honestly, this would require that we ask employees to take less or investors to make nothing. So we prefer to protect margins rather than attempting to gain market share when pricing is under attack.
The second theme we highlighted was that acquisitions would drive growth. Here at Mullen, we’re a countercyclical thinker. We prefer to pursue acquisitions when internal growth is difficult. And this strategy allows our organization to grow regardless of the economy. When the economic growth is abundant, we grow with our customers.
When the economy struggles, like it has been for a couple of years now, we acquire good companies in verticals of the economy where we believe there is long term potential. Now to be clear, this is not a grow just to grow strategy. It is based upon expanding where we see long term opportunity in a solid customer happens that great opportunities are presented more frequently during times of stress, when others do not or cannot take a longer term view, we can and we do at Mullen Group. Now, this is a backdrop. Let me turn to a few highlights in the second quarter.
How does 9% growth in top line revenue sound? In this market, I say that is fantastic. Our business generated over $540,000,000 in consolidated revenues and this during a time of economic stagnation. In the second quarter, we reported headline GDP. We didn’t report, it was reported that headline Canadian GDP came in very soft for April and May.
And that corresponds directly to what we saw in our sales channels. Despite the economic headwinds, however, we grew revenues impressively. And the main reason is acquisitions, which added $52,600,000 in incremental revenues. But I don’t want to discount the hard work of all of the teams on our 41 business units. Collectively, they did a really nice job managing in the current economy.
I know it was not easy. And the discussions that many of our business units had with their customers were challenging as they too were dealing with their own set of issues. So to generate same store sales of $440,800,000 which is after adjusting for fuel surcharge revenues, it came in virtually flat year over year, which is impressive from my perspective. I got to say well done team. Another highlight, I have to point out is the issuance of the new long term bonds, approximately C400 million dollars which was finalized and closed in July.
Now, I’ll let Carson talk to the specifics. But let’s just say I’m pretty dang proud of the fact that we could close this bond deal at a time when there’s so much uncertainty. Not only did we put this organization in a great spot for the next decade, but we’ve also and we’ve now got over $100,000,000 in available cash to continue growing our business. Quite simply, there’s so much to like about this transaction. And I’d be remiss if I did not thank the investors who made such a meaningful investment in Mullen Group.
In terms of profitability, we did okay, but given especially within the context of the market and the circumstances, there was a lot of noise associated with big swing in the Canadian dollar versus the U. S. Dollar, which negatively impacted corporate costs associated with our U. S. Dollar holdings.
In addition, as I mentioned earlier, pricing remains under pressure. That’s never good for profitability. Our cost saving initiatives at the business unit level mitigated some of these pressures, but not all. And lastly, the last two acquisitions of size that we completed, they’re asset light businesses, and they don’t generate the same OIBDA margins as our heavy asset business units do. But here’s the number I really focus on.
Cash from operations remained a healthy $117,000,000 virtually the same as 2024. In terms of a little bit of segment discussion, I’m not going to repeat what’s presented in the MD and A and the press release documents that conclude a very detailed analysis, but I’ll offer some key highlights for each segment. Let’s start with the most stable and once again, our largest and that’s LTL. Revenues were up $11,000,000 over the same quarters last year, climbing to $200,000,000 impressive within the context of a no growth economy and the fact that fuel surcharge revenues were down by nearly $3,200,000 OIBDA, however, was declined slightly due to cost pressures and higher purchase transportation, but still came in at a very respectable $35,700,000 in the quarter. Now the LTL market is steady.
But as I noted earlier, price is what matters most today for shippers. So there were no price increases and some modest givebacks in the quarter and that led to lower margin. Logistics and warehousing is where we really saw a nice boost, primarily due to acquisitions, of course, rising by healthy 15% to $173,600,000 What is most impressive about the quarter in my view was that the segment business units held revenues close to last year despite no growth in the economy and issues associated with the trade tariffs stalemate. Customers it seemed were reacting to market conditions rather than forward planning. So OIBDA, it grew albeit margins fell by nearly 1%, but that’s primarily due to the cost structures we inherit with acquisitions.
There’s no doubt that we have some work to do with these new business units to tighten up on the cost side. And I was mentioning this, I’ll go off script a little bit now. When you invest, no different than moving into your if you build a house, it takes a little bit of time before you can move in and out. You got to put the investment up first. Acquisitions are exactly the same way.
You got to make the acquisition and just like all the other ones that we’ve done since we’ve acquired them, then you improve it over time. So which is exactly what our focus will be here at the corporate office. Now similar story in The U. S. And International Logistics segment, we grew the acquisition of COL USA boosted revenues by 36.7% to 64,000,000 And for the first time in a few quarters, OIBDA increased in the segment.
Margins are not where we want it, but this segment is characterized as it has no fixed assets other than technology. So margins on gross revenues will be smaller due to the nature of the business. What we will be looking at with these U. S.-based teams is improved margins on invested capital. Our Specialized Industrial Service segment, we struggled declined by $3,700,000 to $105,500,000 Drilling activity in Western Canada slowed as producers cut drilling programs due to declines in crude oil and natural gas prices during the quarter.
We also took the very necessary step of the marketing some project work when pricing fell below acceptable levels. Our response was to give up the business rather than invest new capital at unacceptable terms. We leave this to our undisciplined competition. One of the business units that did overachieve was our Canadian dewatering group. They opened a new facility in Northwest Ontario, let’s call that mining country where activity levels are accelerating.
The overall decline in business was primarily the reason Obi Dah fell on the quarter by $2,900,000 but our diversity of our service offerings and strong performance by Canadian dewatering definitely helped. So all in all, boy, we were busy at corporate office, an exciting group, it was exciting time for our group. And I would say it’s probably decent quarter given the circumstances. And along with when you do acquisitions, you have one time costs associated with acquisitions as I highlighted a little bit earlier. Most importantly, we’ve been positioned our company for better days.
We’ve expanded into a new vertical within the economy. We’re positioned to capitalize once the economy starts growing, that’s for sure. Now when this happens, I don’t know, but history tells us it will happen again, just as it has in the past and the Malone Group will be prepared. I’ll turn the call over to Carson for more of the second quarter quarterly financial performance and the impact of the new bond deal on our balance sheet. Carson, take it away.
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: Perfect. Thank you, Murray, and welcome everyone. I’ll provide some of the additional highlights from the second quarter, the details of which are fully explained in our second quarter interim report. Overall, despite a stagnant Canadian economy, we generated record revenues compared to any previous quarter at just over CAD540 million, an increase of CAD45.3 million or 9.1% from the same period last year. So acquisitions is what drove this revenue growth by adding CAD52.6 million of incremental revenue and consisted mainly from including one month of the results of Coal Group, one final month from the results of Container World and a full quarter from Pacific Northwest.
Somewhat offsetting this growth was a $7,700,000 decline in fuel surcharge revenue on lower diesel fuel prices. Collectively though, revenue from our existing business units excluding acquisitions and fuel surcharge increased slightly year over year. Revenue per working day in the quarter averaged out at $8,600,000 The best month in the quarter in terms of revenue was the month of June, where we generated almost $200,000,000 worth of revenue or $9,400,000 of revenue per working day, largely from adding the financial results of Coal Group. So we finished the second quarter with solid results as we head into Q3, which in terms of seasonality over the past couple of years has typically been our strongest quarter of the year. We generated OIBDA of $76,600,000 a decrease of $9,100,000 compared to the prior year.
However, most of this decrease was associated with the impact of foreign exchange. Excluding the impact of foreign exchange gains and losses on U. S. Dollar denominated debt held within our corporate segment, a term we’ve now called OIBDA adjusted was CAD83.8 million, down slightly by $1,800,000 compared to last year. We experienced lower OIBDA from our existing business units and higher corporate costs as we expanded our team in anticipation of future growth.
Somewhat offsetting these declines was $6,700,000 of incremental OIBDA from acquisitions. Operating margin on acquisitions was 12.7% due to the non asset based nature of the operations and from how IFRS accounting standards require us to recognize revenue on a gross basis. OIBDA adjusted as a percentage of consolidated revenues was 15.5%, down from 17.3% due to cost escalation, foreign exchange losses experienced at the segment level, competitive pricing conditions and a reduction in higher margin specialized business. Despite lower operating margins generated by our recent acquisitions, they still generate free cash. In terms of cash, we continue to generate strong free cash in excess of our needs as evidenced by the $77,800,000 of net cash generated from operating activities in the quarter.
Now let’s take a look at how we performed by segment. First, our largest segment revenues in the LTL segment were just over $200,000,000 an increase of $11,300,000 from last year due to $11,800,000 of incremental revenue from acquisitions, being somewhat offset by a $3,200,000 decline in fuel surcharge revenue. Revenue from our existing business units excluding acquisitions and fuel surcharge increased by $2,700,000 due to steady customer demand and from some market share gains. OIBDA was $35,700,000 down slightly by $1,800,000 last year. This decline was due to the combination of both competitive pricing and cost pressures, which resulted in lower OIBDA at our existing business units, which somewhat was offset by $2,500,000 of incremental OIBDA from acquisitions.
Operating margin decreased by 2% to 17.8%, primarily due to the tight market conditions whereby additional cost pressures could not be passed along through customer rate increases. Our second largest segment is our L and W segment. Revenues in the L and W segment were $173,600,000 up $22,700,000 or 15% from last year. Acquisitions added $24,300,000 of incremental revenue, reflecting the one month of results from Container World and one month from Coal Group’s Canadian operations, which was somewhat offset by a slight $3,400,000 decline in fuel surcharge revenue. Revenues from our existing business units, excluding acquisitions and fuel surcharge increased modestly by $1,800,000 and was mainly due to certain project work associated with an oil processing facility in Alaska that led to higher revenues at Mullen Trucking.
OIBDA was $31,900,000 up $2,900,000 or 10% from the prior year with acquisitions adding $3,200,000 of incremental OIBDA, while our business units excluding acquisitions generated relatively consistent results compared to last year. Operating margins decreased by 0.8% to 18.4%, primarily due to the acquisitions and the resulting change in our revenue mix. Coal Group is a non asset based business that generates free cash, but at a lower margin. Excluding the impact of acquisitions, operating margins would have been 19.2 which is virtually flat compared to prior year’s results. So our existing business units excluding acquisitions did a great job in protecting margin.
Moving to our S and I segment, revenues were 105,500,000.0 down $4,100,000 or 3.7% due to a lack of large capital projects being sanctioned in Canada, depressed commodity prices and wildfires that negatively impacted our customers’ drilling and production plans. These factors led to a decline in revenue from our production services and drilling related services business units. We also demarketed certain customers due to pricing, as we will not compromise the safety of our people or put expensive equipment to work at unprofitable rates. Fuel surcharge also decreased by $1,200,000 compared to the prior year. Somewhat offsetting these declines were revenue gains made by our specialized services business units tied to infrastructure and mining as Canadian dewatering experienced greater demand for their services.
OIBDA was $20,600,000 down $2,900,000 from prior year as our production services business units experienced a decrease in OIBDA due to a reduction in facility maintenance and turnaround projects. The specialized services business units experienced a decrease in OIBDA mainly due to lower demand for civil construction services at Smooth Contractors, while our drilling related services business units recognized a decline due to lower customer demand. Operating margins decreased by 1.9% to 19.5%, which was mainly due to a reduction in higher margin business. Within our non asset U. S.-based 3PL segment, revenues were $64,100,000 up nicely by $17,200,000 or 36.7 percent from last year as Coal Group’s U.
S. Operations added $16,500,000 of incremental revenue in the month of June. Holistic also experienced slightly higher revenues compared to last year. OIBDA was $1,200,000 up $400,000 from the prior year with Coal Group’s U. S.
Operations adding $1,000,000 of incremental OIBDA, while Holistic’s results were impacted by a $500,000 negative variance in foreign exchange. Operating margin on a net revenue basis was 20.3%, which was slightly higher than last year due to higher margins experienced at Cold USA. Now moving to the balance sheet. On July 10, we announced the closing of a $400,000,000 private placement debt transaction. There was strong demand from the bond markets and the offering was significantly oversubscribed, mainly due to our disciplined approach to acquisitions, our large real estate portfolio and our ability to generate free cash through all business cycles.
These twelve year long term notes match our long term investment strategy and once again provides us with a well structured balance sheet for the next decade. We use some of these funds to prepay approximately $237,000,000 of private notes that were set to mature in October 2026 and $2.00 $7,000,000 of amounts that were drawn on our bank credit facilities, which was mainly derived from funds that we used to acquire the Coal Group. Today, we now have over $80,000,000 of cash on hand, a derivative with a cash value of close to $30,000,000 and access to $525,000,000 of undrawn bank lines and we continue to generate free cash. The blended interest rate on our new private placement debt going forward is now approximately 6.1% per annum. In terms of our debt covenants, total net debt to operating cash flow would have been 2.57 to one had the July debt refinancing and the repayments occurred in the month of June.
In summary, our balance sheet is well structured with long term financing. We have ample short term liquidity and debt covenant ratios that are acceptable and within management’s coverage, allowing us to be opportunistic going forward when the right opportunities come along. So with that, Murray, I will pass the conference back to you.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Hey, thanks, Kars. Well done again. Just before the Q and A session, I’m going to provide some thoughts on how the balance of 25,000,000 is looking now. I’m not going to refer to this as guidance because there are so many unknowns today. But let me start with a few of the issues that I watch really closely and intently.
Number one, and this is what I tell all of our people. There’s no reason to worry, doesn’t help anything, just tighten up. And why? Because the Canadian economy is not in a bad place. It just happens that any significant growth is sometimes somewhere into the future.
Now I know there are Canadian politicians that are of the view that Canada is an economic superpower. But from my perspective, this is at odds with the current no growth economic statistics or what we see in terms of freight demand. If however, they can lead Canada into a high growth economy, clearly Mullen Group, our employees, our shareholders, like so many others would be a major beneficiary. Now, and I want to emphasize many Canadians would benefit if Canada becomes a high growth economy. We like most businesses don’t believe the nation building projects should be delayed by endless talks.
Action is what is required. The main issue of course, is that in Canada, these types of economic decisions are often debated for years by those with different views and agendas. In the meantime, other countries capitalize as we debate. Number two, technology and the rapid scent of AI are deflationary tools. But we need to be mindful and on a high alert as to how AI will change the economy.
Everyone knows that AI is powerful. The question left unanswered at this moment is, can AI actually improve our own financial performance? We’re not sure.
Cameron Doerksen, Analyst, National Bank Financial: Number three,
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: how will countries and economies adapt to the new protectionist policies being spearheaded by The United States? There’s a massive change occurring in terms of trade, no longer will the low cost nations provider automatically win market share. Buy local appears to be the new theme. Number four, and this one is really specific to the trucking industry. It’s this, is will the labor laws and safety standards established by the governments be applied equally to all carriers?
Or will they continue to turn a blind eye to what is really happening? There’s no doubt that shippers are more than willing to take advantage of this inequity as they chase the lowest rate. Competition is not equal or fair when the rules are not applied consistently. Now with these issues front and center, we still have a job to do to ensure that shareholders are compensated investing in our company. Here’s a summary of what shareholders can expect.
Firstly, the investments we’ve made in acquisitions over the last year, they’re going to drive revenue growth for at least the next year. Few in our industry can make such a bold statement. Secondly, we took every prudent step we could to ensure the balance sheet is well structured for the next decade. Take risk off the table was our guiding principle. Third, our current focus is margins regardless of market dynamics.
Today, we’re working on protecting margins. And as soon as economic growth returns, we will pivot to improving margins. Margins over market share is how we believe shareholders ultimately win. These three initiatives are designed to ensure that the dividend coveted by so many of our loyal shareholders is safe and sound and that we remain an excellent company for employees to apply their skills. Over the course of three decades, we’ve wisely invested in shareholders’ capital and business opportunities within the ever changing logistics and supply chain.
Nothing ever stays the same. Today, we have a portfolio of companies on our network that are first class. We have a network that is virtually impossible to replicate in this current market. So I’ll now turn that over the call over to the Q and A session. Operator, please open the lines.
Thank you.
Conference Operator: Certainly. We’ll now begin the question and answer session. Our first question is from David Ocampo with Cormark Securities. Please go ahead.
David Ocampo, Analyst, Cormark Securities: Thanks for taking my questions. Good morning, Murray.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Good morning.
David Ocampo, Analyst, Cormark Securities: I guess when it comes to the supply demand imbalance that’s been going on for quite a bit of time here and you talked about some health initiatives that could change that equation. I’m just curious what you what’s going to cause the more shift to a balance or more balanced conditions? Is it going to be an increase in demand or supply exiting the market? I think you highlighted that some of your competitors are still in survival mode right now.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Yes. I think David that’s the real Pandora’s box here. We know that demand would be a major help, because currently nobody’s adding supply currently. But in saying that, Dave, I’ll tell you that the supply has been stubborn and has not really exited the market, even though it’s ultra competitive. But you got to remember those small carriers don’t have the same cost structures have been layered into bigger companies by government policies and rules and regulations and trying to do what’s fair for people.
So we have a different cost structure, if you’re trying to run a professional business, then a very large portion of the market. And I know that that’s been referred to as Driver Inc. Or whatever. Those are small independent entrepreneurs. And I’ll tell you, they are tough as nails.
So we need to see demand increase. It appears, if I listen to the politicians and we do, I mean, and if you believe that what they’re saying, then I think demand is going to improve. I think we saw a decent June, did we not personally? We did, yes. Not just because we did acquisitions, but June was not was the best month of our quarter for sure.
But we in the absence, let’s just say that demand doesn’t improve. We wanted to, but if it doesn’t, we still have to watch the cost, right, team? And that’s what we’re focused on here, just in case it doesn’t, we want it to happen. We’re watching it intently, David, but I from what I’ve seen in the last little bit, I haven’t seen a whole bunch. But hey, the government’s spending money, it’s got to help demand eventually, think.
That’s our thesis.
David Ocampo, Analyst, Cormark Securities: Yes. I tend to agree
Walter Spracklin/James McArthur, Analyst, RBC Capital Markets: with you on
David Ocampo, Analyst, Cormark Securities: that one. It’s just a matter of time.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: And until that happens though, I think that and here’s what I said is that, it’s the Achilles heel of our industry right now, you’re seeing it across the board. Everybody is saying it is that the issue is pricing. And it’s not going to be like this forever, but it’s like this for now is that customers all they have the leverage right now.
David Ocampo, Analyst, Cormark Securities: Yes, that makes sense. And then just the last one for me before I turn the call over. You guys have been operating coal now for the last two months and just given all the uncertainty around trade. Month.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: We only got it in June on coal, right? We thought we were going to have it for a quarter, but unfortunately as we go to sign the deal, Mr. Lucky passed on the night before, so that delayed the deal. And then the Competition Bureau that we did not count on the Competition Bureau would want to oversee this transaction when we didn’t have any customs business before, but they chose to delay it for an extended period of time. I think it took at least six weeks to do not team and then it just delayed everything.
So we only had coal for one month. That’s all that shows up on our numbers is one month. Truthful, we were kind of counting on having that done for the whole quarter, but out our hands. But it’s done now. And we’re already well on our way to make sure that we put a good structure in place and get the teams focused on what we have to do as a public company.
David Ocampo, Analyst, Cormark Securities: Yes. I guess you’re wrapping up month two now with that under your portfolio. I’m just curious how that business is performing just given all the trade uncertainty versus your initial expectations when you contemplated the acquisition and maybe how that compares to previous year performance?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Richard, do you Yes. So
Richard Maloney, Senior Operating Officer, Mullen Group Limited: David, it’s Richard Maloney. Richard Maloney, guys. So when we bought the organization, as we articulated in our press release, we were of the view, and this holds back to many years actually, that trade is not an easy thing to do. And there’s a lot of complexities to trade and certain rules of engagement need to be done. And as we were going down the road buying coal, things got a little more complicated as we all know.
And as we’ve seen first look one month as we reported and like you say another half a month or so into it as well. We’re seeing and we’re on the customs side, there’s still the activity and the work that they do is still kind of on the fairway as we thought it would be. There’s going to be complexities to this. The rules are changing regularly and shippers need people with this expertise. And we’re early innings, but yes, we’re pleased with
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: what we got certainly on the customs side we’ll be continuing to work with them to improve our operating results. Yes. I think that we’ve when we talk with the leaders of the custom side of business, they’re swamped because the rules are so complex and they’re changing and they’re trying to help and provide consulting services So support to their their results have not disappointed from what we had anticipated. Correct. Yes, would agree with that.
Yes.
David Ocampo, Analyst, Cormark Securities: Okay. That’s perfect. I’ll hand the line over. Thanks everyone.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Thank you.
Conference Operator: The next question is from Cameron Doerksen with National Bank Financial. Please go ahead.
Cameron Doerksen, Analyst, National Bank Financial: Yes, thanks. Good morning. Wonder if I could just maybe follow-up on the Coal Group, kind of just looking at the contribution in the one month that you owned it, I guess, line $32,000,000 If I kind of run rate that for a full year, we get to a full year revenue number, which is higher than what you’d kind of indicated when you closed the business and put out the press release. But obviously, there’s seasonality to the business. I’m just wondering if you can maybe talk a little bit about the seasonality and kind of the run rate revenue that we’re seeing right now and how that compares to what you’d put in the press release, the kind of $300,000,000 back when you announced the deal?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Well, it’s difficult to get the seasonality of it right now spot on Cameron because we’ve only had it really in our group for a month. But I got to tell you, we’re pleasantly surprised by revenue side that they’ve been able to generate that the team. So they’ve been busy that’s and That’s what we hear in our channel checks from other customs brokerage too is that they’ve been pleased with the revenue side. And so it’s probably more likely now that it’s going to beat that original $300,000,000 of guidance that we had on revenue side, right, Karsten? I don’t know.
We don’t know yet, Cameron, whether that first six months or since the start of the year is indicative of the whole thing. We’re just cautioning. But we’re just telling you what they did in the first six months and that’s an economy that wasn’t growing. So I think you can probably surmise they’re probably going to do better than what we’d originally thought.
Cameron Doerksen, Analyst, National Bank Financial: Okay. That’s fair enough. Just a second question just on, I guess, the kind of the financial targets you’d put out going back to, I guess, late last year and then kind of reiterated earlier this year. I mean, I guess, how are you feeling about the EBITDA sort of target that you had there, $350,000,000? I know some of that was predicated on acquisition and maybe the coal group, as you mentioned, didn’t close quite as soon as you were hoping for.
So just any commentary on how you’re feeling about those original 2025 financial targets for the company?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Yes, that’s a question that we actually anticipated, right, Carson? And I think our general is, look, on a run rate, we feel really, really confident of what we had originally set on a twelve month run rate, but we aren’t getting twelve months full of coal this year. So I think we’re okay on the revenue side. We might be a little bit behind because as I said, we’re the coal wasn’t done on time for this year. But on a full twelve year forward looking basis, I think we’re still pretty comfortable with it with the what we had originally articulated.
The general economy continues to do okay. What we don’t see Cam is we just don’t see any pricing leverage. So you’ve got to really be focused on cost today to make sure you maintain those margins. That is a that’s a message that we take to every one of our business units now. And I said to you, our business units, I think they’ve done a pretty good job, but it’s evident that the job is not done.
We have some work to do and probably we’ll get some corporate costs down now because we have a lot of lawyers and a lot of people on our payroll here in the last little bit to get this very complex deal done. So those are hopefully those are one time costs. I’d reiterate that to the corporate team all day long. But I think on the run on a twelve month run rate, I think we’re in really good shape. Are we going to I think there’s still a chance we could meet it, but I can’t say we’re going to meet it today, because we lost a good chunk of time that we had originally planned.
But the thesis is still intact. We’ve got a much bigger business. We’re in the right vertical and they’re going to do fine.
Cameron Doerksen, Analyst, National Bank Financial: Okay. That’s very helpful. I’ll pass it on. Thanks very much.
Conference Operator: The next question is from Kevin Chiang with CIBC. Please go ahead.
Kevin Chiang, Analyst, CIBC: Hey, good morning everybody. You mentioned maybe some optimism just given some of the initiatives from the current Canadian government to accelerate some of these energy resource projects, which obviously benefit the broader Canadian economy and yourselves as well. Just when you look at what’s in the pipeline or what’s being discussed, one is, is there anything that you think you need to add to the portfolio if you want to be more competitive in onboarding that revenue stream? Or have any of your customers or clients have they started talking about potentially, I guess, securing contractors or anything along those lines, even if it’s early days to ensure they secure enough capacity if they do if these projects do move forward or some of these projects move forward?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Boy, that’s a loaded question Kevin. But let me try and break that into this. Number one is, we don’t really need to add too much more to our portfolio. We really like where we’re positioned. What we would need to do, Kev, is ramp up capacity, which is invested capital in assets to if these projects do go as they plan.
And then you would have to add people, because we’re not sitting here with people or with the assets if it ramps up as they say. But the words the politicians are articulating are really they’re good words, but they’re not investable words. When we get the discussions, I would say this, there’s more discussion from our customers and people are price checking. They’re asking for bids. We haven’t had that for a long time.
So but there’s we got to move from debate to action. And that’s up to the governments and First Nations in our opinion.
Kevin Chiang, Analyst, CIBC: Right. That makes sense. Obviously, we’re Yes. Still very early I’m sorry, go on.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Kevin, if those projects go, our shareholders and our company would be a major beneficiary of that for sure. And that we’re not factoring any of that into anything we’ve told you or our numbers or whatever. That would be all internal growth. And that’s your highest margin business if you get it.
Kevin Chiang, Analyst, CIBC: Right. Yes, it seems like it’d be very incremental to you. Maybe just a comment you made on the coal deal maybe taking a little bit longer to close and maybe the Competition Bureau taking a closer look more so than you anticipated because you didn’t have a competing business. I’m not exactly sure to your point why it would have taken so long. But has the oversight from the Competition Bureau changed at all?
And has that impacted how you think about your own M and A pipeline? Like maybe potential targets that you thought would be easier to cross the line here? Maybe they’re taking a little bit longer or maybe the government is saying there’s a level of market concentration that they’re uncomfortable with?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: We’re not sure on that. Well, first of all, we’re not sure why they had to go to the long form competition review, Joanna.
Conference Operator: Hi, Kevin. What we were told is that they had some new people that joined their team, and they were using our files as an education and training file. And that’s why they had changed the timeline to a complex. That’s what we were told.
I suspect that’s crap.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Yes. I’ll be honest with you. Because at the end
Cameron Doerksen, Analyst, National Bank Financial: of the day, the Canadian
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: government through post office or pure later acquired the largest customs brokerage company in Canada called Livingston. I suspect they didn’t want to have two separate rules because that one was put under scrutiny by the Competition Bureau. But we knew it was going to happen because the Canadian government approved the biggest one to go to the Canadian government. So that’s our biggest competitor. So I’ll just leave it at that.
I think I said my piece.
Kevin Chiang, Analyst, CIBC: I appreciate the candid response there. Maybe just a quick one here. You called out wildfires, and I see smoke in Northern Manitoba, a slightly lower work. Obviously, we’ve had unfortunate wildfires in that province. Just wondering when those issues when those natural disasters occur, is that revenue that gets shifted or is that revenue that’s generally lost and you almost have to wait till the next I guess next year to kind of restart some of that civil work.
Just wondering, on your own experience, is that something that might get shifted later this year? Or that just something we have to look forward in 2026?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: I think that it just pushes it out,
Kevin Chiang, Analyst, CIBC: We to be honest with
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: know they couldn’t start the projects that they had going. But it wasn’t just smoke, it was guard wind. We had to evacuate most of our Northern facilities. And we had some additional costs that are built into that. We’re not these are things that you do.
You look after your people and those were additional costs to make sure that they weren’t in harm’s way in that. But that cost us, but for the most part, most of the wildfires are over now. I suspect those projects still have to go and they’ll just push them up by a quarter, probably a quarter and
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: a half year, I think,
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: and those kind of things. And a
Kevin Chiang, Analyst, CIBC: lot of it
Richard Maloney, Senior Operating Officer, Mullen Group Limited: is just kind of freight related too, like Gardewine. So they’re going into Northern Manitoba,
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: but they also haul all the food stuffs and everything.
Richard Maloney, Senior Operating Officer, Mullen Group Limited: So that got delayed. So they got pushed over the following week or into the next quarter. So things typically just get pushed.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Yes. I think things just pushes out a bit and those kind of things. And so we don’t think anything structurally has happened at that Schmuck or in our Gardewine. It just we understand why and our business units did a good job of making sure that their people were protected and the assets, I think they did a good job on that. It wasn’t just in Northern Manitoba.
We lost some business up in Northern Alberta also in British Columbia and So it was kind of in the North, really an anomaly is in terms of that. South, In we got too much water and that’s helping our Canadian dewatering group, but those things kind of always happen. But we’re not making a big deal out of it, Kev. We’re just highlighting is that, hey, it didn’t help us. I can tell you that in the quarter.
Kevin Chiang, Analyst, CIBC: No, I appreciate that. No, just yes, that’s great color and that’s good to hear that the revenue probably shows up in a quarter and a half or two here. That’s it for me. Best of luck as you get to the back half of Thanks for taking my questions.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Yes. Thanks, Ghislav. Appreciate it. The
Conference Operator: next question is from Konark Gupta with Scotiabank. Please go ahead.
Konark Gupta, Analyst, Scotiabank: Thanks, operator. Good morning, Maria and team. Just maybe wanted to kind of follow-up on the coal first. You talked about how these guys are pretty busy on the custom side and maybe they are tracking perhaps a little bit ahead of what what you said previously on the revenue outlook for for this company. You know, with respect to the tariff on off that’s going on right now and, nobody knows what’s gonna happen next, You know, how do you think these guys will see maybe any sort of volatility, you know, in the business?
I mean, I guess, is there a is there a business right now that they are seeing because of these tariffs being super noisy and, you know, some of that business might go away or there’s stickiness to that? How should we think about sort of the long term here for coal?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: That is the unknown. But I think and this is how we’re looking at it, Connor. I don’t know how anybody else looks at it. And our team at Coal doesn’t really know how it’s going to be. They pick up the phone, they bid projects, they do whatever.
So they’re just reactionary to the market. But how do we think at it strategically? We’re not afraid of the tariff issues. We know it’s going to change. And we think once there’s clarity, the market adjusts.
How does it adjust? Let the market, the market is going change the way it wants to change. But there’s no way that trade is going to stop. It might shift. I don’t see that happening.
So the good news about our coal businesses, they’re not just North American freight, they do international freight as well. So we think they’re well positioned to they’re going to get the top line because we got a heck of a team over there on the top line. The one thing that’s happened in the freight business is it’s ultra competitive. So they have to work on the cost side and make sure that they’re aligning their costs with the revenue. But they’re busy on the revenue side on moving freight.
And customers have just gone away from planning to reacting. I think once you get the once we get some clarity, I wouldn’t be surprised to see some capital start moving again. I know we’ve cut back on capital, Conor. I mean, said we got to wait and see what happens. So we cut back on capital.
So if everybody cuts back on capital investment, that’s just a sign of uncertainty. And we just have too much uncertainty right now, but that’s not going to last forever. I don’t suspect.
Konark Gupta, Analyst, Scotiabank: Okay. That’s fair. With respect to guidance, Cam, kind of question on EBITDA run rate wise, you’re hitting probably the $350,000,000 mark, I would think. But with respect to hitting the guidance potentially this year, what would you need? Like, do you need, an m and a because, you know, maybe that’s how you accelerate things?
Or or do you do you anticipate any any significant rebound in in one of your organic businesses that might potentially help you hit the three fifty mark for the full year?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: I’m not personally expecting any significant rebound. I think steady is going to be the rule of the day. And under that, we’ve got our work to do to make sure that we just are managing the margin and we’ll be highly focused on that. Conor, go over this next on the rest of the year with our business What we of course, I think that’s our that’s what we’re focused on here. We’ve already taken care of the growth.
That’s what I’m trying to articulate this year. We’ve already taken care of growth. We’ve already taken care of the balance sheet. Now we just want to focus 100% of our efforts on taking care of the margin on behalf of our shareholders and improve that for them. But we’ve taken all the risk off the table and we’ve got growth.
So we just have to work on margin. That’s not
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: I would say for the balance of 2025, Conor, even if we get approval on some of these nation building projects, those aren’t we’re not going to see the benefit of that and the demand from it until 2026 and beyond. It doesn’t happen just we don’t get approval and then next week we start generating revenue from it. So there will be a delay and we’re cautiously optimistic that we can get some of these done.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Connor, I’ll leave you with this. The consumer part of the economy has turned ultra competitive. And the consumers are very, very cost conscious today. We know you just have to go to the parking lots and you’ll see the malls are busy and Walmart’s busy and Costco’s busy and Winners is busy Dollarama. But that’s the consumer side of the economy and that’s very, very competitive.
Where you have high margin is when you have capital going to work and you have projects that happen. That’s when demand that’s where we need demand to increase. I don’t need more business going to winners or Dollarama. They made it, but we don’t need that. We want to see these, what we call shovel ready projects or nation building projects, whatever you want to call them.
You get that going, those are high margin for our organization. Great jobs for Canadians, a lot of people would benefit. And I think the governments are going to need it to be honest with you because they need tax revenues and that only comes from wealth. Tax revenues don’t come from modest jobs. So we’re optimistic that it’s going to come, but we just don’t know the timing.
Konark Gupta, Analyst, Scotiabank: Right. That’s a great comment for sure. And last one before I turn over. In terms of seasonality, if we look at the back half, I mean, the first half has kind of trended relatively in line if I exclude that FX noise in the USD cash you had. But the back half, it sounds like given with the coal, three months full contribution and maybe flattish environment, would you not expect the second half to be slightly better than the second half of last year?
And is there any role for the F and I segment here in the second half that could swing the needle in one direction?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Not unless we see drilling activity improve, that’s high margin business. It’s stabilized. Most of that activity would happen if you get if we get natural gas projects approved and that would improve drilling. So I think it’ll be similar to last year. I don’t know if it’s going to we’re not predicting we’re not putting capital work because it’s growth.
But I think it’ll be relatively stable to last year. That’s our best analysis at the moment, Conark.
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: One other way you could look at it Conark is looking at our revenue per day and kind of projecting that out over the next couple of quarters. You can kind of see within our MD and A and our documents what we’ve disclosed as to where we’re sitting at now. And that would probably get you a reasonable indication of what that back half might look like, all things being equal.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Just for all the listeners that would mean I think that we bumped up to revenue per day. We think that’s approaching the $10,000,000 per day. It not? Yes. In June, we were
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: at $9,400,000 So that’s that would include coal’s results.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: So then you just take how many revenue per day, how many days you’ve got that are revenue producing days and you can see some pretty we’ll be just fine on the top line. And then it’s just a matter of making sure that we really watch the costs. I think, Conor, that’s the main thing that everybody I’m talking to in our industry, you got to watch costs very carefully. And that’s what we’re focused on.
Konark Gupta, Analyst, Scotiabank: Yes. That’s great. Thanks for the time. Appreciate it.
Conference Operator: The next question is from Benoit Poirier with Desjardins. Please go ahead.
Benoit Poirier, Analyst, Desjardins: Hey, good morning, Marie, and good morning, the Mullen team.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Morning.
Benoit Poirier, Analyst, Desjardins: Yes. Marie, we’ve seen some positive news flow in the recent months. If you look at the potential for new pipelines, the Ring Of Fire railway in Ontario, but also the passing of the Bill C5. I was curious to know more about how do you get to prepare for this potential optic? And what do you foresee in terms of potential in terms of timeline and the potential demand that could impact mullein down the road?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Boy, I tell you sit waiting patiently for words to turn into action. I would tell you there’s been way more positive meetings and questions from our customers coming our way about, okay, what if, what about this, what about that? That never happened for quite some time. So there’s lots of chatter about it Benoit, but I haven’t seen anybody until we actually know for sure that we can get this done, then private capital will go to work. I hope these nation building projects aren’t just social programs and socially funded.
I’d love to be able to see that the private money has come back in. And that is a real sign that there’s confidence that it makes business sense, not nation building sense. I don’t know how to address it any different than that as to whether these are going to be publicly funded, nation building projects or privately funded. I just hope they go.
Richard Maloney, Senior Operating Officer, Mullen Group Limited: Benoit, if I can add, it’s Richard. So to the extent there’s any new pipeline activity, we have pipeline we are heavily involved with any large transmission pipeline. So if that goes, we will be well situated. Any drilling activity, Northern BC and North Wett and the Montney, we are well situated to support all aspects of the drilling activity. We can support that.
If there’s to the extent there’s mining activity in Ontario, we heard we went into Northern Ontario, Canadian dewatering. And Gardewine. And Gardeinweiner. We are well situated there in Northern BC with Banstras. So to the extent these things become a reality, we are well situated there.
We will ramp it up accordingly. So I think Benoit,
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: it’s optimistic, but not the timeline. We just can’t put a pin on it yet.
Benoit Poirier, Analyst, Desjardins: Okay. That’s great color gentlemen. Moving to some spirits, we’ve seen some reports that Canadian provinces boycott of U. S. Spirits have caused drop in all spirits sales in Canada.
I was just curious whether you’ve seen some impact at Container World in the quarter so far this year?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Yes, spot on. Yes, Container World, we did not plan on them getting hit by do not you can’t bring in liquor from The U. S. That was a big part of why we missed on the revenue side with our Container World group. So that market’s got to adjust in terms of that.
I don’t think it’s going to be it’s just a one quarter thing Benoit, I think, because I think the consumers either going to adapt to something else or we’ve already some change in that, like for example, in Alberta, the liquors U. S. Is coming back, U. S. Liquor and wine spirits, that’s now back on the shelves again.
And it’s up to consumers whether they want to buy U. S. Liquors. I don’t know what this whole prohibition thing that the Canadian government comes up with or the governments, why they have to do that. It’s up to the consumers.
If they want to buy it, they’ll buy it. If they don’t, they’re going to buy something else rather than politicians say what you can or you can’t buy. That’s why I call it prohibition.
Benoit Poirier, Analyst, Desjardins: Okay. That’s great. And last one for me, Carson, when we look at the leverage, it’s been sequentially up a bit slightly above your target. Any thoughts on your capital allocation priority for the balance of the year now that you have closed your notes offering?
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: Yes. I would say that our current run rate is 2.57, which is slightly above our target of 2.5. But the reality of it is, is we’ve got some debentures that we’re going to deal with. That includes the debentures. That includes the debentures that’s sitting in on the debt number right now.
But if you factor the debentures out of that equation, now you’re down to about 2.23, which is well within our comfort range. So I would say that by the end of the year, we’ll be even leverage less than we are today.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: I think the other thing that I’d highlight too Benoit is that look, those leverage is also are leaving us with about $100,000,000 of cash to go either grow business or give it back to shareholders in a different
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: way, I. E.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Buying debentures or whatever we decide to do, that’s up to the Board. But we’re situated pretty good. They love it. It’s all long term. It’s all fixed risk off the table, just run the business now for the next ten, twelve years.
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: Yes. We’ve got lots of optionality, Benoit, with sitting by end of year, we’ll have over $100,000,000 of cash on the balance sheet. You can either grow the business and your debt covenant comes down or you lower the debt number and the debt covenant comes down. So it’ll all depend on how the market plays out and what the Board decides with respect to allocating that capital.
Benoit Poirier, Analyst, Desjardins: Okay. Great color. Thank you very much for the time.
Cameron Doerksen, Analyst, National Bank Financial: Thanks Benoit.
Conference Operator: The next question is from Walter Spracklin with RBC Capital Markets. Please go ahead.
Walter Spracklin/James McArthur, Analyst, RBC Capital Markets: Hey, this is James McArthur on. I’m on for Walter this morning. Good morning.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Good morning. Good morning.
Walter Spracklin/James McArthur, Analyst, RBC Capital Markets: Yes. I just wanted to ask on the June, you mentioned it was your best month in the quarter. I thought that was pretty impressive just given all the data that we looked at kind of pointed to a really tough June, in particular, some RBC cardholder data and some PMI data that we’re looking at. So can you just give us some color on what drove that? Was that some share gain?
Any subsidiaries that were particularly strong? And any color you can give us on how Q3 is trending within that backdrop?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Well, I think the one that was particularly strong that we highlighted was Canadian dewatering. They were strong because of they opened a new terminal and facility in Northwest Ontario, which is let’s call that mining country. We also had a pretty strong performance by our Mullen Trucking Group that worked on a capital project. And so unfortunately, that capital project was going to Alaska, not into Canada. But they were that’s an example when capital projects go, man, do we do well.
So this economy is okay in terms of the consumer side of the economy. It’s still kind of going along okay. But there’s no high performance side on capital investment. That might be coming. That’s what highlighting to people.
Is it just be patient? We think got to turn. And when that turns, the consumer part will be just fine, very competitive, but just fine. But most of our margin improvement will come because of capital when capital goes to work. That’s when you make higher margin.
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: Think the other impact that we saw in June as well too is LTL started to come back and stabilize and that’s probably a function of people getting back into their communities in the northern parts of the provinces and us driving a little bit more lean density as those fires and stuff started to subside. We had issues with respect to getting into town. So you’re changing lanes and rerouting trucks and those sorts of things and some communities that just were evacuated. So I think that volume started to come back in the month of June.
Walter Spracklin/James McArthur, Analyst, RBC Capital Markets: I appreciate the color there. And I had another question. I made a presentation to the Manitoba Trucking Association a few months back. And some of my conversations with the truckers in the audience surrounded Driver Inc. And how tough it made to compete for truckers like yourself who follow the rules.
So do you have any update there with regard to getting this issue fixed? Any color you can share with your conversations with regulators or officials who could potentially help fix this issue going forward?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Well, good comment. And now you know why that’s my number four issue that I watch intently, because it is a drag on not just our results, it’s a drag on our people, because if we if the rules aren’t equal, then it’s very difficult on our people because we’re not competitive. So I don’t personally spend any time talking to the regulators about this because I’m wasting my time. They know what the issues are. It’s time for them to do their job.
And that’s fair for all Canadians, including the people that are being taken advantage of by Driver Inc. Model. I’ll leave it at that.
Walter Spracklin/James McArthur, Analyst, RBC Capital Markets: All right. I appreciate it. I’ll turn the line over. Thank you.
Conference Operator: The next question is from Tim James with T. B. Cowen. Please go ahead.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited0: Thanks very much. Really appreciate the time here. I’ll try and keep it quick. Just want to circle back or try and frame the performance of the legacy business here as you think about the year. If we exclude Coal Group and the two month delay in closing and the FX impact that you called out as an adjustment in Q2.
If we exclude those items, the rest of the business, the Mullen Group business, is it tracking towards that original $350,000,000 Obviously, it’s some component of that, but that original EBITDA guide for 2025?
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Well, it’s not no. If you back out coal, we’re not tracking to $350,000,000 Correct. Right? And last year we were at $330,000,000 how much? $330,000,000 Yes, $330,000,000.
So we said to get to $350,000,000 we needed to do acquisitions. We did the acquisitions, but the timing is off. We would have been probably not too far off, but then the trade issues accelerated this year and all the drama that’s gone with that. So we’re probably behind on the $3.30, $3.25 for on our same store sales. But I honestly think that’s just timing, Tim, is that these are events that are outside your control and they just push it out.
But our core businesses are doing as we’ve disclosed, they’re holding their own. They’re not revenues flat, margins down a little bit because of the cost pressures. But really most of the noise that we had in the quarter was all corporate stuff The balance sheet, we’re ready with our Ross holding a large U. S. What do we hold?
I think we hold 100 and some million of U. S. Dollars. Yes, we do. That’s what got us now.
The good news is, it also the Canadian dollar went up in value is that our U. S. Debt went down by a similar amount. So one was income statement and one was balance sheet. But that’s why we just took that noise out.
But on same store sales, we’re probably behind flat or a little bit to last year. And mostly that is due to tariff and trade talk and just kind of uncertainty.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited0: Okay. That’s actually a helpful answer to my poorly worded question because you did answer what I was looking for despite my wording. Second and final question, just going back to Coal Group. You were asked about it earlier. There was a reference to Customs business.
Can you just remind us how much of Coal Group or approximately of the revenue is from the Customs business?
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: They were about a sixty-forty split.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Yes, it’s somewhere between a third and sixty-forty somewhere in there
Carson Urlacher, Senior Financial Officer, Mullen Group Limited: in that ballpark.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Yes. As a private company, they bundled everything together in a bucket in our world, of which by the way, we’ve got a corporate executive is going to sit and run across from me, Joanna Scott, that’s really going to be spearheading that initiative. Is it we’re going to fine tune them so that they report customs and then freight brokerage as separate buckets. And we’re going to get them focused. They’re going to go from a private company where they could run it the way they wanted to.
That’s up to the previous owner. But under us, we’re a public company and we measure everything. That’s going to be Joanna And is going head that initiative up and she’s already chosen a new leader to join with her to help with that initiative. And Richard Maloney is working with the gentleman in The U. S.
To accelerate on the custom side. That’s our primary focus. We want to focus on customs because that’s the margin business. The freight forwarding business, that’s tough business right now. Everybody that reports just freight forwarding and that’s not a great business.
We’ll have to we got our work to do on that side. But it’s I’d say it’s about a third to a little bit more, it’s customs. But that’s on the margin side, flip that around. Yes. Yes, Maybe two thirds on the top side.
So you know where our focus will be, is grow the customs side.
David Ocampo, Analyst, Cormark Securities: That’s very helpful. Thank you.
Cameron Doerksen, Analyst, National Bank Financial: Thank you.
Conference Operator: This concludes the question and answer session. I’d like to turn the conference back over to Mr. Mullen for any closing remarks.
Murray K. Mullen, Chair, Senior Executive Officer and President, Mullen Group Limited: Nothing from me folks. Thanks very much for joining us. Enjoy the rest of your summer. As I said, we got lots of work to do on the margin side. We’re 100% focused on our senior team.
Thank you very much for joining us. We’ll talk to you in the fall. Cheers.
Conference Operator: This brings to a close today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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