Swift action, government subsidies support Mullen Group rebound

OKOTOKS, Alta. – Mullen Group provided a mid-quarter update today, to update investors on how its business has been impacted by the Covid-19 pandemic. “The trend is up,” said Murray Mullen, chairman and chief executive officer of Mullen Group. Mullen Group quickly laid off 1,000 employees as the Covid-19 outbreak crushed freight demand.

It has now brought back about 20% of those employees, the company said, as freight volumes have begun to recover. Mullen revenues have fallen about 22% year-over-year over the past two months, but LTL revenues fell only about 15%, in line with competitors and the railways, Mullen said in a call with investors. EBITDA has fallen only 15% due to cost-containment measures.

“We are seeing the benefits of adapting quickly and decisively to the Covid-19 pandemic,” he said. “Not only did our business units implement effective measures at controlling costs, several actually gained market share and improved margins.” Mullen also benefited from about £10 million in Canadian Emergency Wage Subsidy payments, which helped support about 1,500 jobs in the segments most affected by the loss of business. That support, said Mullen, “virtually made us whole.”

Mullen, who earlier said the “wants economy” had disappeared, now sees consumers purchasing those nice-to-have items, which is stimulating freight growth, especially in the LTL segment.

“We think consumers have cash and are itching to spend,” he said. The warehousing and logistics segment was down 20%, due to a steep drop in cross-border traffic. That too is improving due to the reopening of factories, but has not yet returned to pre-Covid levels.

Mullen sees the segment improving over the remainder of the year. Mullen Group is projecting Q2 revenue of £240-£260 million and EBITDA of £40 million, before adjusting for government subsidies. “This is not what we want, but considering the circumstances, I feel pretty good about the performance of our business,” Mullen said.

The company has actually grown its cash balance to £115 million, up nearly £30 million from the end of March.

The company said it will “re-engage on the acquisitions front.”

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