Mullen Group’s earnings slipped in Q3, but acquisitions helped drive revenue gains.
Revenue grew 5.6% to $561 million in the quarter, but profit slipped 13.2% to $33.2 million. The company delivered adjusted earnings per share of 38 cents, down 7.3% from 41 cents/share for the same period last year.
“Our acquisition strategy continued to drive top line growth in the quarter. This is especially satisfying given the current state of the Canadian economy, which continues to struggle with a number of trade and tariff related issues, along with a lack of private capital investment,” Murray Mullen, chairman and senior executive officer of the company, said in a press release.
“The ‘nation building projects’ announced by the federal government would boost economic activity and create new jobs for many Canadians. The issue is, from our perspective, when will these economic drivers and job creators begin? It is precisely for this reason that we continue to rely upon acquisitions to grow our business today.”
Focusing on growth-through-acquisition allows the company to grow revenues, expand offerings to existing customers, and expand into verticals within the economy where the company sees new opportunities, Mullen said.
Segment-wise, Mullen saw revenue gains in LTL (up 4.8%), logistics and warehousing (up 23.2%), and its U.S. 3PL operations (up 17.9%). These were partially offset by a 20.3% decline in specialized and industrial revenue.
Acquisitions path to future growth
On a call with analysts, Mullen gave an overview of market conditions and why acquisitions are the only currently viable path to growth.
“When we take a view that the economy is strong, when economic activity is robust, when capital is being invested, we work with our business units to take advantage of these trends, to expand service offerings,” Mullen explained. “We aggressively deploy capital and we raise rates. In other words, this is when we rely upon internal growth. Now I suspect that you’re all well aware that we do not believe that Canada’s economy is currently in a growth mode.”
While not in growth mode, Mullen said he feels the Canadian economy isn’t in decline, but is stable.
“In the absence of growth in the economy the balance of negotiating power shifts to the customer. And I will tell you, the customers are demanding these days. Why? Because they can,” Mullen said. “So, given the current market conditions, we cannot rely upon increased rates to mitigate cost pressures.”
Acquisitions remain the fastest way to grow, he added, noting tuck-ins are the preferred type of deal.
“We really like the tuck-in model because this is how we can improve margins quickly,” Mullen said. “We just roll them into one of our best-in-class business units, and we’ve got 41, so we have lots of really good talent out there that we can roll in tuck-in acquisitions and when you do that, you can reduce overall costs and improve density quickly.”
Signs capacity could begin to tighten
Looking ahead, Mullen feels pricing leverage could return to carriers as early as next year, especially if the U.S. carries through with threats to eliminate the operation of 195,000 non-domiciled CDL holders over the next two years.
“I’m starting to see some emerging signals that could impact supply, especially as it relates to the availability of certified drivers in the U.S.,” Mullen said. “If the U.S. Department of Transportation is accurate in their analysis and they remove over 190,000 CDL-authorized drivers from the market, there will be a shortage of professional drivers in the U.S. We’re watching this very carefully, because once the market tightens in the U.S., it will also tighten in Canada.”
And he added he’s becoming more hopeful that compliance crackdowns in both the U.S. and Canada will force illegal operators to shut down or become compliant. This, combined with weak Class 8 truck orders suggest that capacity could be in the early stages of tightening.
“We will know in early 2026 if the market tightens enough for our business units to start having a little more leverage with customers and having some thoughtful discussion about what the rates should be,” said Mullen. “But this is not the case today. As such, we continue to ask our business units to focus on controlling costs and look at ways to improve productivity.”
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