Mullen Group posts record Q2 results, sees no sign of ‘freight recession’


Mullen Group loved a report second quarter, with income hovering 67% to $521.5 million, and revenue almost doubling to $42.7 million 12 months over 12 months.

The strongest beneficial properties got here within the LTL section, the place income was up 66%. The specialised and industrial companies section was up 51%, because of elevated oil and gasoline drilling exercise buoyed by larger oil costs.

Acquisitions and a capability to move alongside value will increase have been the drivers behind the sturdy development, mentioned Murray Mullen, chairman and senior government officer. (The corporate has eradicated the time period ‘chief’ from job titles.)

(Picture: Greg Decker)

“Consolidated revenues reached report ranges pushed by beforehand introduced acquisitions, common pricing will increase, gasoline surcharges and regular buyer demand in all 4 working segments backstopped by client spending and total financial exercise that remained at elevated ranges all through the quarter,” Mullen mentioned in a launch.

“As well as, there was an total improve in oil and pure gasoline exercise — a development I imagine will probably be sustained for the foreseeable future given the excessive commodity pricing setting. Our sturdy efficiency was achieved regardless of total financial exercise persevering with to be negatively impacted by bottlenecks and provide chain disruptions, limiting development within the financial system in addition to being a serious purpose productiveness has deteriorated and inflationary pressures stay larger than regular.”

Nevertheless, Mullen added there’s purpose to imagine financial exercise will start to sluggish as inflationary pressures influence client spending. “Total, our tempo of development will reasonable over the following quarters as we delay future acquisitions,” Mullen mentioned, including he anticipates the sturdy job market will preserve client spending from crashing.

On a convention name with analysts, Mullen supplied extra coloration into the present freight market.

What freight recession?

“What about this freight recession traders are spooked about? I don’t see it,” Mullen mentioned. “Demand is just not collapsing. There’s much less capability to maneuver out there freight…our outcomes needs to be simply positive, particularly with sticky freight charges.”

Mullen mentioned he hears the identical sentiment from friends within the trade on each side of the border.

“Now we have not seen any significant decline in demand,” he mentioned. “I do know the markets are anticipating the freight recession, and as soon as social media will get a maintain of it, all people thinks it is going to occur till new information comes out that challenges the brand new thesis.”

Nevertheless, Mullen cautioned, “We don’t see any development. We will’t add development as a result of we are able to’t get gear, can’t get individuals, and we’ve misplaced productiveness.”

He feels there’s extra supply-side threat than demand-related threat.

“Our warehouses are plugged, we are able to’t get rail service, we’re shedding trucking capability due to excessive gasoline costs.”

M&A on the again burner

Mullen Group made six acquisitions in 2021 however is placing purchases on pause, regardless of loads of alternatives.

“My In-Basket is plugged,” Mullen mentioned, noting he hears of two alternatives per day. “That tells you there’s stress out there. It tells you that possibly some sellers suppose they will catch the client asleep on the wheel. You don’t catch us asleep on the wheel.”

Sellers are displaying sturdy margins and making an attempt to capitalize, Mullen mentioned, however he feels higher alternatives will come alongside sooner or later and that sleepy capital markets aren’t rewarding acquisitions. “We’re not biting. I’ll wait it out…I’m not fishing proper now – I don’t prefer it.”

Provide chain points

The corporate continues to be struggling to acquire new gear as a consequence of provide chain backlogs, and can battle to fulfill its cap-ex goal of $60 million invested this 12 months.

“We can’t develop our fleet proper now since you can’t get [new equipment],” Mullen mentioned. “At finest you’re capable of exchange. There’s not sufficient capability within the system for us so as to add extra firm vehicles, and by the best way, there aren’t any drivers anyhow so it doesn’t matter.”

However what actually worries Mullen is the influence provide chain challenges have on unbiased contractors, particularly in the case of components shortages.

“The place unbiased contractors are at actual threat is the provision of components,” he mentioned. “They aren’t simple to get proper now. If an unbiased contractor’s truck goes down as a result of a clutch went out, it may be down fairly some time and that’s 100% of your fleet.”


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