Mullen Group (TSX: MTL) is a leading logistics company providing a variety of trucking and logistics services in Canada. The company also provides specialized services to the energy, mining, forestry and construction industries in Western Canada.

The Mullen Group conducts its business through the operation of 34 business units. The company’s new operating segments are Less-Than-Truckload, Logistics & Warehousing and Specialized & Industrial. The LTL segment comprises nine business areas, 12 service centers, more than 75 terminals and over 5000 service points. It has over 3 million in annual broadcasts. The Logistics & Warehousing segment comprises 11 business areas and 20,000 contract trucks.

In addition to its subsidiary MT Investments, Mullen’s corporate headquarters owns a network of real estate holdings that are rented to its divisions. It operates an extensive network of terminals for the collection, handling and delivery of a wide range of cargo. The Mullen Group’s operations are supported by a fully integrated transportation management system, bespoke inventory management and warehouse systems along with the proprietary Moveitonline and Haulistic technology platforms.

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Plant data

Sales growth & market presence

The Mullen Group offers a wide range of services, including general cargo, truck loading, warehousing, logistics, transshipment, oversize and specialty transportation. It owns a network of independently operated companies. Transport service accounts for almost 75% of total sales and logistics service accounts for more than 10%.

About a fifth of the company’s sales are directly related to oil and gas drilling and oil sands development in western Canada. Mullen’s companies have become more diversified over the years and have an adaptable and variable cost structure.

Mullen Group serves customers in the United States and Canada. It also serves Canada’s natural resources and infrastructure sectors. The company continues to invest in advanced technologies aimed at shortening delivery times and providing customers with greater transparency for their shipments in transit. The company is known for its temperature-controlled delivery service, its cutting-edge technology and its extensive terminal network.

As one of the leading Canadian logistics and warehouse companies in North America, the Mullen Group operates various business units and integrated technology platforms. It provides specialized services to the oil and gas, environmental, construction, pipeline, utility, telecommunications and civil industries.

Mullen saw sales declined more than 8% (yr) in the most recent quarter, with declines in both the Logistics & Warehousing and Specialized & Industrial Services segments. The company benefited from strong consumer demand in e-commerce, which resulted in Y / Y growth in its LTL business. The company reported a negative impact on freight demand. Mullen expects fiscal year 21 revenue of $ 1.2 to $ 1.3 billion.

Dividends

The Mullen Group has a dividend yield of 3.7% and a payout ratio of 67%. The company temporarily suspended its dividend in the first quarter of fiscal 2020, but has now reintroduced it. Mullen’s dividends are up more than 45% over the past year. The Mullen Group repurchased more than 0.3 million common shares in the last quarter.

Mullen ended the quarter with ~ $ 118 million in cash, $ 150 million in unused credit and net debt of ~ $ 459 million. Fiscal year 21 operating income is expected to be between $ 200 million and $ 220 million. The Mullen Group has deployed capital to facilitate internal growth and acquisitions.

For future growth, the company is concentrating on the Less-Than-Truckload and Logistics & Warehousing segments. Mullen announced the acquisitions of Bandstra Transportation Group and APPS Transport Group in early 2021, which are expected to be completed by the end of the second quarter of 21. These acquisitions are expected to accelerate growth in the short term and increase opportunities for market share gains.

Mullen’s revenues are diversified between oilfield services and trucking, both hit by the slowdown in Canada’s oil and gas industry and the pandemic lockdowns. Most of the Mullen Group’s contracts are based on fixed prices and do not involve any post-duty obligations, which makes their returns fairly predictable and secure.

In addition, the top ten customers are well-known companies that further increase the transparency and security of cash flows. In addition, Mullen’s specialty business units are focused on providing advanced technology solutions and world class service.

Historic Mullen Group (MTL) Returns
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competition

The Mullen Group operates in a highly competitive industry. The company’s competitors include both small local and regional companies and large international companies. It competes with other logistics and brokerage companies.

In addition, the company is very vulnerable to macroeconomic and geopolitical risks. However, high capital, specialized equipment and skilled labor as well as security and information systems act as strong barriers to entry. Mullen is well positioned to benefit from consolidation in the logistics and freight industries.

Bottom line

The trucking industry is a major contributor to the Canadian economy, growing as the dominant mode of transport, and the Mullen Group is well positioned to benefit from an evolving supply chain.

The Mullen Group is in a good position to take advantage of its diversified operations and markets, with solid margins and cash flow in a recovering economy. The company expects to return to consolidated sales growth due to the acquisitions of Bandstra and APPA. Mullen is also excited about future consolidation opportunities in the trucking and logistics sectors. However, investments in the oil and gas industry in western Canada are expected to remain limited in 2021.

In the long term, the company should benefit from its strong brands in the warehouse and transshipment business as well as technology investments in the changing supply chain scenario.

MTL vs. TSX vs. SP500 2021
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Mullen Group (MTL) historic PE
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