Mullen Group Ltd. Announces 2024 Fourth Quarter Financial Results and Filing of Disclosure Documents

OKOTOKS, Alberta, Feb. 13, 2025 (GLOBE NEWSWIRE) -- (TSX: MTL) Mullen Group Ltd. ("Mullen Group", "We", "Our" and/or the "Corporation"), one of Canada's largest logistics providers today reported its financial and operating results for the quarter and year ended December 31, 2024, with comparisons to the same period last year. Full details of our financial and operating results may be found within our 2024 Annual Financial Review, which is available on the Corporation's issuer profile on SEDAR+ at www.sedarplus.ca or on our website at www.mullen-group.com.

"Looking at our financial performance in the fourth quarter, in fact for the entire year, you might conclude that not much was happening at the Mullen Group last year. But that was not the case at all. It took a lot of hard work by everyone in our 40 Business Units and at Corporate Office to mitigate the very challenging market conditions. Not only was demand soft, but pricing pressures intensified, due to undisciplined competition. These were difficult issues to deal with, so for Mullen Group to accomplish what we did last year, keeping revenues flat and improving operating income before depreciation and amortization, is something all of our business associates and teams can be proud of. I fully expect we can build from all this hard work in future years," commented Mr. Murray K. Mullen, Chair and Senior Executive Officer.

"From a demand perspective, I do not believe that 2025 will be any better than last year. The Canadian economy remains rangebound, at best, with downside risks emerging due to the potential for trade disruptions between Canada and the U.S. And, when you couple trade disruptions along with the fact that Canada is lagging in terms of capital investment, the only conclusion that I come to is that the demand for freight services will continue to underwhelm. We will monitor these events carefully and will adapt our business as required. Thankfully, however, we maintain a very strong balance sheet and we have a diversified portfolio of Business Units, two competitive advantages during uncertain times. There will undoubtably be acquisition opportunities available for our review, but we will only pursue ones that add value to Mullen Group shareholders," added Mr. Mullen.

• Generated revenue of $499.1 million - up slightly on incremental revenue from acquisitions being offset by less capital investment in Canada, continued soft freight demand and lower fuel surcharge revenue.
• Operating income before depreciation and amortization ("OIBDA") of $85.0 million - up 7.3 percent from prior year due to incremental OIBDA from acquisitions and a positive variance in foreign exchange within Corporate.
• Operating margin¹ improved to 17.0 percent from 15.9 percent last year due to lower direct operating expenses ("DOE") as a percentage of consolidated revenue despite more competitive pricing conditions in certain markets and a reduction in higher margin specialized business.

• LTL segment down $0.6 million, or 0.3 percent, to $189.4 million - the slight decline in revenue is attributable to a $5.3 million decrease in fuel surcharge revenue being offset by $5.8 million of incremental revenue from acquisitions. Revenue from Business Units (excluding fuel surcharge and acquisitions) declined slightly due to a softening in the overall demand and from demarketing underperforming business.
• L&W segment up $20.1 million, or 14.3 percent, to $160.9 million - acquisitions added $30.9 million of incremental revenue which is somewhat offset by a lack of capital investment in Canada, and a softer environment for freight and logistics demand as suppliers and manufacturers continued to remain reluctant on increasing inventory levels in 2024. Fuel surcharge revenue decreased by $2.4 million due to lower diesel fuel prices.
• S&I segment down $18.7 million, or 15.3 percent, to $103.8 million - the decline is driven by an $11.1 million reduction in revenue for pipeline hauling and stringing services at Premay Pipeline Hauling L.P. ("Premay Pipeline") due to the substantial completion of the Trans Mountain Expansion Project and the Coastal GasLink Pipeline Project. Smook Contractors Ltd. also experienced lower demand for civil construction services in northern Manitoba. Fuel surcharge revenue decreased by $0.5 million as compared to the prior period.
• US 3PL segment down $0.2 million, or 0.4 percent, to $47.5 million - the 3PL industry experienced lower freight demand for full truckload shipments and lower pricing per shipment resulting from the ongoing competitive operating environment.

OIBDA: Generated $85.0 million of OIBDA, an increase of $5.8 million, or 7.3 percent due to incremental OIBDA from acquisitions and a positive foreign exchange variance within Corporate. Operating margins¹ improved to 17.0 percent from 15.9 percent.

• LTL segment up $1.5 million, or 5.0 percent, to $31.4 million - the increase is due to more efficient operations, most notably from the restructuring of B.& R. Eckel's Transport Ltd. ("B&R") LTL operations. Operating margin¹ increased by 0.9 percent to 16.6 percent primarily due to lower DOE as a percentage of segment revenue.
• L&W segment up $4.1 million, or 14.1 percent, to $33.2 million - acquisitions added $5.4 million of incremental OIBDA which was somewhat offset by a decrease in OIBDA generated from our legacy Business Units due to revenue declines resulting from lower freight volumes and more competitive pricing. Operating margin¹ decreased slightly by 0.1 percent to 20.6 percent primarily due to higher selling and administrative ("S&A") expenses.
• S&I segment down $8.4 million, or 34.1 percent to $16.2 million - the decrease was due to lower OIBDA at Premay Pipeline on reduced activity levels and from lower OIBDA at Mullen Oilfield Services L.P. and B&R. Operating margin¹ decreased by 4.5 percent to 15.6 percent on higher DOE due to a reduction in higher margin business and from higher S&A expenses.
• US 3PL segment up $0.7 million, or 175.0% to $1.1 million - primarily due to lower S&A expenses which were driven by a positive variance in foreign exchange. Operating margin¹ increased to 2.3 percent from 0.8 percent primarily due to lower S&A expenses as a percentage of segment revenue. Operating margin¹ as a percentage of net revenue¹ was 28.2 percent as compared to 9.8 percent in 2023.

• A $9.5 million negative variance in net foreign exchange and a $4.4 million increase in depreciation of right-of-use assets which is mainly associated with the acquisition of ContainerWorld Forwarding Services Inc.
• These decreases were somewhat offset by a $5.8 million increase in OIBDA and a $1.5 million decrease in income tax expense.

The following summarizes our financial position as at December 31, 2024, along with some key changes that occurred during the fourth quarter:

• Repaid $217.2 million of Private Placement Debt (net of Cross-Currency Swaps) on October 22, 2024, the original maturity date.
• Undrawn New Bank Credit Facilities with a borrowing capacity of $525.0 million.
• Working capital at December 31, 2024, was $281.5 million including $126.3 million of cash.
• Total net debt¹ ($850.1 million) to operating cash flow ($339.2 million) of 2.51:1 as defined per our 2014 Notes agreement (threshold of 3.50:1).
• Total net debt¹ ($758.2 million) to operating cash flow ($339.2 million) of 2.24:1 as defined per our 2024 Notes agreement (threshold of 3.50:1).
• Net book value of property, plant and equipment of $1.0 billion, which includes $659.3 million of carrying costs of owned real property.

Non-IFRS Financial Measures

Mullen Group reports its financial results in accordance with International Financial Reporting Standards ("IFRS"). Mullen Group reports on certain non-IFRS financial measures and ratios, which do not have a standard meaning under IFRS and, therefore, may not be comparable to similar measures presented by other issuers. Management uses these non-IFRS financial measures and ratios in its evaluation of performance and believes these are useful supplementary measures. We provide shareholders and potential investors with certain non-IFRS financial measures and ratios to evaluate our ability to fund our operations and provide information regarding liquidity. Specifically, net income - adjusted, earnings per share - adjusted, and net revenue are not measures recognized by IFRS and do not have standardized meanings prescribed by IFRS. For the reader's reference, the definition, calculation and reconciliation of non-IFRS financial measures are provided in this section. These non-IFRS financial measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Investors are cautioned that these indicators should not replace the forgoing IFRS terms: net income, earnings per share, and revenue.

Net Income - Adjusted and Earnings per Share - Adjusted

The following table illustrates net income and basic earnings per share before considering the impact of the net foreign exchange gains or losses, the change in fair value of investments and the gain or loss on fair value of equity investments. Management adjusts net income and earnings per share by excluding these specific factors to more clearly reflect earnings from an operating perspective.