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.

(Photo: Greg Decker)

“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.”

Published at Fri, 12 Jun 2020 16:50:05 +0000


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