The CEO of Mullen Group (TSE:MTL) said the Canadian trucking and logistics company is currently “inundated with acquisition opportunities” as other firms look to sell during the economic turmoil of the COVID-19 pandemic.
“I ask myself, ‘Why are so many companies all of a sudden on the block?’” Murray Mullen told financial analysts during a conference call on Thursday. “My instincts are telling me that 2021 is going to be a great year of opportunity, especially as government support payments start to run out. Then it’s back to basics. And you better have a good business model like we do.”
Mullen made the comments while discussing Alberta-based Mullen Group’s third-quarter financial results. While the company is well positioned to emerge from the pandemic stronger — with millions of dollars of cash and a small debt load — the pandemic still weighed on its performance.
Mullen had net income of C$26.2 million, or 26 cents per share, on C$290.9 million revenue during the quarter. Net income increased by 27.8% while revenue dropped 10.6% compared a year earlier.
The increase in profits came in large part from over C$10 million from the Canadian government via the Canada Emergency Wage Subsidy (CEWS) program to Mullen’s subsidiaries, concentrated in western Canada. Without them, Mullen would have been slightly lower compared to a year ago.
As Mullen noted during the call, the company didn’t need the subsidies, but they allowed its subsidiaries to retain more employees than otherwise.
Few Canadian trucking failures – so far
Canada hasn’t seen a large wave of trucking failures during the pandemic even as carriers — especially those hauling auto parts and industrial equipment — struggled. The combination of CEWS and other government aid to the companies themselves, businesses and consumers has helped keep them afloat.
The government aid has been targeted, by design, to minimize shoring up businesses that already were struggling for other reasons. Case in point: The two small trucking companies in Manitoba that were forced into receivership by Toronto-Dominion Bank owed C$2.2 million.
Mullen, for its part, has been conserative on acquisitions in 2020. It acquired the remaining shares of Pacific Coast Express Ltd., a carrier in British Columbia, and it has an agreement to acquire International Warehousing and Distribution near Toronto.
“It should be pretty obvious that cash of C$100 million-plus and an untapped line of credit provides a lot of dry powder. But you should all know me by now: I do not chase growth for the sake of growth,” Mullen said.