Mullen Group Ltd. (TSX:MTL) ("
Mullen Group",
"
We", "
Our" and/or the
"
Corporation") announced today the business plan
for 2018 has been approved by the Board of Directors (the
"
Board"). The annual process encompassed an
extensive review of a wide range of issues including: the current
state of the North American economy and more specifically,
expectations for the Canadian economy; the impact of the recent
recovery in oil prices offset by the recent weakness in AECO
natural gas prices and the expected impact that these commodity
prices will have on drilling activity in western Canada; the
balance sheet of Mullen Group; and expected cash flows. Based
upon this review, the Board approved a capital budget of
$40.0 million for 2018, exclusive of corporate acquisitions,
with $30.0 million allocated towards the Trucking/Logistics segment
primarily to replace trucks, trailers and specialized equipment to
support the operations of these Business Units. In addition,
$10.0 million will be allocated to support the initial phase of our
replacement cycle within the Oilfield Services segment after
several years of under-investing in this segment. The Board
will continue to monitor both of the sectors of the economy we
serve and will adjust the capital budget as new opportunities
arise.
Highlights of 2018 Business
Plan
Trucking/Logistics Segment
We expect the Trucking/Logistics segment to
account for approximately 67.0 percent of Mullen Group's 2018
revenue, exclusive of any acquisitions made in 2018.
Generally speaking, this segment's results are closely correlated
to Canada's GDP growth. Our expectation for 2018 is that we
can achieve moderate growth as a result of the annualization of our
recent acquisitions as well as the continued expansion in the
overall economy. While the current trucking/logistics market
remains extremely competitive, our view is that these pressures
will ease throughout 2018 as demand for freight services grows.
The tightening of U.S. trucking capacity, as a result of
continued economic expansion accompanied by the impact of the
mandatory electronic log regulations, is setting the stage for a
rebalancing of pricing for freight services in 2018. The
Canadian economy is expected to continue to expand moderately year
over year. In addition, any further growth in the U.S.
economy could provide additional demand for Canada's exports,
thereby positively affecting the demand for freight services.
This, along with improving prospects for the Alberta economy, which
until recently has been the major drag on the overall economy,
should provide us with opportunities in 2018.
Oilfield Services Segment
We expect the Oilfield Services segment to
account for approximately 33.0 percent of Mullen Group's 2018
revenue. The oil and gas industry and drilling activity in
particular is closely tied to commodity pricing. Crude oil
prices have recently improved to levels that provide producers with
an incentive to reinvest in the industry. The weakness in the
value of the Canadian dollar as compared to the U.S. dollar has
also further provided Canadian producers with improved netbacks.
However, the price of natural gas has recently trended
downwards. This, combined with LNG project delays and
cancellations, has constrained the demand for oilfield
services. Recent industry reports indicate that capital being
allocated to drilling activity in western Canada will remain
relatively flat on a year over year basis. This will provide
our 11 Business Units leveraged to drilling activity with a stable
operating environment but with limited growth potential.
In terms of new capital projects, including oil
sands related development and the prospects of certain large
diameter pipeline projects, there are signs of optimism.
Several projects such as Keystone XL and Trans Mountain have a very
good chance of proceeding in 2018. While the approval of each
of these projects are positive developments, we cannot predict the
timing of them and as such we will maintain a cautious approach.
On balance, we expect our Oilfield Services segment will
generate slightly improved results in 2018.
Moveitonline – Online Logistics Marketplace
We continued to develop and make progress on the
build out of Moveitonline, our proprietary online logistics
marketplace. The Moveitonline load matching operating
platform connects shippers, carriers and the trucking industry,
providing price discovery and service capabilities within one
system. In 2017, we made great strides in developing
Moveitonline by releasing a new version of the system and by
onboarding approximately 160 carriers with over 12,000 active
trucks in the system. The Moveitonline application also
provides Mullen Group with new growth opportunities in third party
logistics, which remains the fastest growing part of the
freight/logistics business today.
"As we put closure to 2017 we will end the year
with working capital of $200.0 million, including over $135.0
million of cash. Long-term debt, including the $70.0 million
note due in June 2018, will be $535.0 million. So we will
enter 2018 in good shape from a balance sheet perspective and what
I would call a pretty stable outlook for both sectors of the
economy we are focused on – namely the overall Canadian economy,
the principal driver of our Trucking/Logistics segment, and the oil
and gas industry. Given this back drop we believe that 2018
will be sequentially better than 2017. If the economy stays
on its current trajectory; oil prices stay around current levels;
and we get a little good news on the natural gas front; then we
believe we could achieve gross revenue in excess of $1.2 billion
and OIBDA in the $190.0 to $200.0 million range – this assumes no
growth in the oilfield services sector", commented Mr. Murray K.
Mullen, Chairman of the Board and Chief Executive Officer.
2018 Priorities
In order to meet our 2018 goals, we have
established the following five priorities:
1) CONTINUE TO PURSUE ACQUISITIONS –
acquisitions remain an important element of our growth plans and we
fully expect that we can use our strong well-structured balance
sheet to capitalize on the right opportunities.
2) INCREASE OUR CAPITAL EXPENDITURE TO OUR
BUSINESS UNITS TO NEUTRAL WEIGHTING – to provide our existing
Business Units with new equipment to remain competitive in their
respective markets.
3) ACCELERATE OUR INVESTMENT IN TECHNOLOGY – to
empower our employees with updated equipment including field smart
technology and mobile apps to enhance employee engagement and
productivity.
4) EXPAND OUR BMC PROGRAM – using a combination
of classroom and online training, we can achieve lower turnover and
improved productivity with our employees.
5) INVEST IN MOVEITONLINE – continue to develop
our proprietary online marketplace to enhance our users'
experience.
DIVIDEND – 2018
Mullen Group is also pleased to announce that
the Board has approved a 67.0 percent increase in the annual
dividend to shareholders from $0.36 per share to $0.60 per
share. Such dividend will continue to be paid on a monthly
basis, subject to Board approval.
"Over the course of the last couple of years we
have had our fair share of challenges. Business suffered as
we adapted to the collapse in the oil and gas industry.
Employees lost jobs, experienced reductions in their take home pay
and shareholders have lost value in their shares as well as a
reduction in the dividend. Today, however, I am pleased to
report that the business fundamentals are strong, employment levels
are back to pre-2015 levels, most employees are seeing a recovery
in their total pay and we have delevered the balance sheet.
In recognition of the turnaround in these fundamentals, the Board
has approved a very healthy increase in the annual dividend to our
shareholders", commented Mr. Mullen.
Advisories:
This news release includes certain statements
regarding Mullen Group's future plans and operations, including the
2018 Business Plan and Dividend Policy, and contains
forward-looking statements that we believe allow readers to better
understand our business and prospects. The use of any of the
words "expect", "anticipate", "continue", "estimate", "objective",
"ongoing", "may", "will", "project", "should", "believe", "plans",
"intends", "strategy" and similar expressions are intended to
identify forward-looking information or statements. More
particularly and without limitation, this news release contains
forward-looking statements and information concerning the 2018
Business Plan, Dividend Policy, capital budget, operating income
before depreciation and amortization, and anticipated revenues.
With respect to the forward-looking statements
and information concerning the 2018 Business Plan and Dividend
Policy, Mullen Group has provided such in reliance on certain
assumptions that it believes are reasonable at this time, including
but not limited to the allocation of 2018 capital budget, impact of
general economic conditions, volatility of commodity prices and
activity in the oil and gas industry in western Canada.
Accordingly, readers should not place undue reliance on the
forward-looking statements and information contained in this news
release. Readers are cautioned that the assumptions used in
the preparation of such forward-looking information and statements,
although considered reasonable at the time of preparation, may
prove to be imprecise and, as such, undue reliance should not be
placed on forward-looking statements. Our actual results,
performance, or achievement could differ materially from those
expressed in, or implied by, these forward-looking
statements. We can give no assurance that any of the events
anticipated will transpire or occur, or if any of them do, what
benefits we will derive from them.
Readers are cautioned that the foregoing list of
factors is not exhaustive. Additional information on other
factors that could affect the operations or financial results of
Mullen Group, are included in reports on file with applicable
securities regulatory authorities, including but not limited to
Mullen Group's annual information form dated February 8, 2017,
under "Principal Risks and Uncertainties" and in Mullen Group's
other filings available at www.sedar.com.
Mullen Group is a company that owns a network of
independently operated businesses. The Corporation is
recognized as one of the leading suppliers of trucking and
logistics services in Canada and provides a wide range of
specialized transportation and related services to the oil and gas
industry in western Canada - two sectors of the economy in which
Mullen Group has strong business relationships and industry
leadership. The corporate office provides the capital and
financial expertise, legal support, technology and systems support,
shared services and strategic planning to its independent
businesses.
Mullen Group is a publicly traded corporation
listed on the Toronto Stock Exchange under the symbol
"MTL". Additional information is available
on our website at www.mullen-group.com or on SEDAR at
www.sedar.com.
For further information, please contact:Mr.
Murray K. Mullen - Chairman of the Board, Chief Executive Officer
and PresidentMr. P. Stephen Clark - Chief Financial OfficerMr.
Richard J. Maloney - Senior Vice President
121A - 31 Southridge DriveOkotoks, Alberta,
Canada T1S 2N3Telephone: 403-995-5200Fax:
403-995-5296
Mullen (TSX:MTL)
Historical Stock Chart
From Aug 2024 to Sep 2024
Mullen (TSX:MTL)
Historical Stock Chart
From Sep 2023 to Sep 2024