Q4 2021 Mullen Group Ltd Earnings Call

Thank you for standing by the Congress operator, welcome to the Mullen Group Limited 2021, yearend and fourth quarter earnings conference call and webcast.

Speaker 1: Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Limited 2021 year-end and fourth quarter earnings conference call and webcast.

Speaker 1: As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad.

A reminder, all participants are in a listen only mode and the conference is being recorded.

After the presentation there'll be an opportunity to ask questions to join the question queue. You May Press Star then one on your telephone keypad.

If you need assistance during the conference call. He may signal, an operator by pressing star zero.

Speaker 1: If you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Mr. Murray K. Mullen, Chairman, CEO , and President of the Mullen Group. Please go ahead, sir. Thank you. Welcome all to Mullen Group.

I mean I'd like to turn the conference over to Mr. Murray, K Mullen, Chairman CEO and president of the molecule.

Please go ahead Sir.

Thank you welcome all to Mullen group's quarterly conference call.

Speaker 2: On today's call, we will provide shareholders and interested investors with an overview of the fourth quarter financial results. We will discuss the main drivers impacting our operating performance and we will close with the Q&A session. Before I commence today's call, I will remind everyone that the presentation may contain forward-looking statements which are based on our current expectations and are subject to a number of risks and uncertainties. As such, actual results may differ materially. Further information identifying the risks, uncertainties and assumptions can be found in the disclosure documents.

So on today's call will provide shareholders and interested investors with an overview of the fourth quarter financial results, we will discuss.

The main drivers impacting our operating performance and we'll close with the Q&A session. So before I commence today's call I'll remind everyone that the presentation may contain forward looking statements, which are based on our current expectations and are subject to a number of risks and uncertainties and as such actual results may differ materially.

Further information identifying the risks uncertainties and assumptions can be found in the disclosure documents.

Speaker 2: which are filed on CDAR and at www.mullen-group.com. So with me this morning is the executive team. I have Safan Clark who's our CFO , Richard Maloney, Senior VP, Joanna Scott, Corporate Secretary and VP of Corporate Services. And I have Carson Ehrlacher who's our Corporate Controller.

Which are filed on SEDAR and at Www Mullen Hyphen group Dot com. So with me this morning.

As the executive team I have spent Clark who's our CFO , Richard Maloney Senior VP, Joanna Scott Corporate Secretary and VP of corporate services, and I have Carson Urlacher who's our corporate controller.

Speaker 2: First thing we'll start with is a review of the Q4 financial results and operating performance. What I'm going to do is give you a bit of a high-level overview of it and then Safan will get into the details.

First thing we'll start with is a review of the Q4 financial results and operating performance and what I'm going to do is give you a bit of a high level overview of it and then stfan will get into the details.

Speaker 2: a little more granular. So with the release of the 2021 annual financial review and today's call we'll officially put 21 in the history book.

A little more granular with the release of the 20 <unk> annual financial review on today's call. We will eventually put 21 in the history books are.

Speaker 2: As I said, today what we're going to do is focus on the fourth quarter. We'll provide insight and commentary on our results. A complete and full disclosure of the fourth quarter and four-year results can be found in the annual financial review which has been prepared, reviewed and approved by the auditors and the audit committee. This document can be found on CEDAR and on our website www.mullen-group.com. So a huge thank you to the entire team that worked just tirelessly to prepare this detailed document. Thanks team.

And as I said today, where we're going to do is focus on the fourth quarter.

We'll provide insight and commentary on our results are complete and full disclosure of our fourth quarter and full year results can be found in the annual financial review, which has been prepared reviewed and approved by the auditors and the audit Committee. This document can be found on SEDAR and on our website Www Dot Mullen group Dot com. So a huge thank you to the entire team that we're just tirelessly.

To prepare this detailed documents so thanks Jim.

Speaker 2: So clearly the number one highlight that anyone can glean out of the quarter has to be the 48% increase in revenues. And you'll recall that we completed a number of acquisitions earlier in the year, six to be exact. So we had the full benefit of these acquisitions during the quarter, 136 million of incremental revenues come from acquisition. So, Stephan will talk more about the numbers in a minute. So let me share with you a few comments about what these acquisitions actually mean to our company. So I'll stop.

So clearly the number one highlight that anyone can glean out of the quarter has to be the 48% increase in revenues.

Youll recall that we completed a number of acquisitions earlier in the year six to be exact.

So we had a full the full benefit of these acquisitions during the quarter of $136 million of incremental revenues come from acquisition.

So stfan will talk more about the numbers in a minute. So let me share with you a few comments about what these acquisitions actually mean to our company first off.

Speaker 2: Each of the companies we acquired last year will drive annual revenues of them. I think collectively they'll drive annual revenues of around $500 million.

Each of the companies we acquired last year will drive annual revenue. So I think they collectively drive annual revenues of around $500 million.

Speaker 2: So I'm always proud that when we're able to acquire good companies into our network, but bringing six on board in a year is pretty amazing. And let me tell you that these are all great companies. We've got immediate access to new customers, new markets, excellent leadership teams, and a quality workforce. And this is at a time when people are the most difficult obstacle to any organization's potential growth. So am I happy? You know it.

So I'm always proud when we're able to acquire a good companies into our network, but bringing six onboard in a year is pretty amazing and let me tell you that these are all great companies, we got immediate access to new customers customers new markets excellent leadership teams and a quality workforce and this is at a time when people are the most difficult.

The obstacle to any organization's potential growth so while my happy you know it.

So those business units, we have owned for over a year, let me talk a little bit about them, let's call them, our legacy <unk> business units.

Speaker 2: So those business units we have owned for over a year, let me talk a little bit about them. Let's call them our legacy BU's business unit.

Speaker 2: They generated just over $305 million in revenues. And I just spoke about how the challenges to grow your business through the current state of the labor market. So this shows up in our year-over-year revenue numbers, which are up only $8 million after accounting for a drop of nearly $14 million at our pre-May pipeline group. And I'll talk a little bit more about that.

We generated just over $305 million in revenues and I just spoke about how the challenges to grow your business due to the current state of the labor market. So this shows up in our year over year number revenue numbers, which are up only $8 million after accounting for a drop of nearly $14 million at our <unk> pipeline group.

I'll talk a little bit more about that.

Later certain market segments, such as <unk> had some growth, but overall there wasn't much growth in the economy, which if you think about it makes perfect sense because.

Speaker 2: Later, certain market segments such as LTL had some growth, but overall there wasn't much growth in the economy, which if you think about it makes perfect sense because...

How can you grow an economy, if theres not a lot of people available and with all the supply chain issues. We had so let me be clear.

Speaker 2: How can you grow an economy if there's not a lot of people available and with all the supply chain issues we have? So let me be clear.

Speaker 2: What I'm saying is that this doesn't mean that the economy was bad. That's not what I'm saying.

What I'm, saying is that this doesn't mean that the economy was bad that's not what I'm, saying.

Well I'm reiterating is that the economic growth is difficult to achieve given the current labor markets and supply chain challenges.

Speaker 2: All I'm reiterating is that the economic growth is difficult to achieve given the current labor markets and supply chain challenges.

Speaker 2: because what we did with this was that the overall consumer spend was still pretty robust.

Because what we did with this was that the overall consumer spend was still pretty robust.

Speaker 2: providing solid freight demand for LTL logistics and warehousing in our newest segment, our US and international logistics.

Providing solid freight demand for RTL logistics, and warehousing and our newest segment, our U S and international logistics.

Speaker 2: I think what we saw, the big change that we started to see in emerging last quarter was in the capital investment part of the economy, especially the energy industry, as commodity prices have reloaded the balance sheets of these companies.

I think what we saw the big change that we started to see an emerging last quarter was in the capital investment part of the economy, especially the energy industry.

Commodity prices have reloaded the balance sheets of these companies.

Speaker 2: So if this trend continues, and I believe it will, then we're in for some solid long-haul, flat deck freight demand, and we'll see some improvement in everything to do with the energy business in our drilling services side.

So if this trend continues and I believe it will then we were in for some solid long haul flight deck freight demand.

We'll see some improvement in our AR and everything to do with the energy business and our drilling services side.

So productivity and demand for pipeline services delayed us, though there was a lot of.

Speaker 2: So productivity and demand for pipeline services delayed us. There was a lot of hurt last quarter, lots of delays, delays after delays, and the pipeline business got hurt. It is noteworthy that I should reiterate, and then in 2022, the pipeline business will most likely be about the same as what it is now. We've got to finish those big projects.

Hurt us last quarter lots of delays delays after delays.

And the pipeline business got hurt it is noteworthy that I should reiterate and then in 'twenty.

2022.

The pipeline business will most likely be about the same as what it is now we've got to finish those big projects, but they really started in earnest in 2020. So 2020 was just really robust for our pipeline side and thankfully. It is because that is the impetus to fuel for the drilling services side, the drilling side and all.

Speaker 2: but they really started in Ernst in 2020. So 2020 was just really robust for our pipeline side. And thankfully it is because that is the impetus to fuel for the drilling services side, the drilling side and all of our other ancillary services that we provide.

All of our other.

Ancillary services that we provide so.

In our business model when one area of filters and other steps up that's what we have in a diversified business model and strategy.

Speaker 2: In our business model, when one area falters, another steps up. That's what we have in a diversified business model strategy.

Speaker 2: So, Stefan will be providing additional details by segment shortly, but before he starts his presentation, I'll comment on the newest battle for business of that is the inflation trend. No denying that it exists. The challenge that everyone has is trying to stay ahead of the curve on this emerging issue.

So savannah will be providing additional details by segment shortly but before he starts his presentation I'll comment on the newest battle for business that is in is the inflation trend no denying that it exists. The challenge that everyone has its trying to stay ahead of the curve on this emerging issue.

Speaker 2: Our business units have raised pricing, which is why if you look at our margins, adjusted for our US and international logistics segment, which is a non-asset base 3PL.

Our business units have raised pricing.

Which is why if you look at our margins adjusted for our U S and internationally.

International Logistics segment, which is a non asset based <unk>.

Speaker 2: If we back them out, then you'll see that our business was pretty much in line with last year.

If we back them out then you'll see that our business was pretty much in line with last year.

Speaker 2: which I think is pretty commendable considering the loss of the high margin business we had in pre-May pipelines. So from my perspective, I'm very pleased. Now, however, as I've reiterated to all of our business unit leaders, this inflation issue is not going away and they must raise prices and I've had to be pretty firm on this. I don't want to have any debate on this with –

Which I think is pretty commendable considering the loss of the high margin business. We had in premade pipelines. So from my perspective, I am very pleased now however, as I read it to all of our business unit leaders. This inflation issue is not going away and they must raise prices.

<unk> had to be pretty firm on this.

I don't want to have any debate on this with me.

Speaker 2: So overall, a very solid quarter, which is precisely what I indicated on our last quarterly call, where I called for revenues to be strong and operating profits to track close to the Q3 results. So we were pretty spot on with that.

So overall, a very solid quarter.

Order, which is precisely what I indicated on our last quarterly call whenever I called for revenues to be strong and operating profits to track close to the Q3 results. So we were pretty pretty spot on with that and stfan I think what I'm going to do is call. Upon you now to provide some additional details on our fourth quarter financial results. So with all the details here.

Speaker 2: And Stefan, I think what I'm going to do is call upon you now to provide some additional details on the fourth quarter financial results. So with all the details, here's Stefan.

N.

Well, Thank you Murray and good morning fellow shareholders, Firstly Lake Mary I would like to thank the over 7000 people that made these results possible and a special shout out to all the people that joined our team this past year via acquisition.

Speaker 3: Well thank you Murray and good morning fellow shareholders. Firstly, like Murray, I would like to thank the over 7,000 people that made these results possible and a special shout out to all the people that joined our team this past year via acquisition. I trust your first experiences under the Mullen banner have been rewarding.

Trust your first experiences under the <unk> banner have been rewarding again, thank you.

Speaker 3: I'll get a little bit more granular, however, our 146 page annual financial review contains the details that fully explain our performance. As such, I will only provide some high-level commentary on the quarter.

I'll get a little bit more guarantee however, our 146 page annual financial review contains the details that fully explain our performance as such I will only provide some high level commentary on the quarter.

For the quarter, we generated.

Speaker 3: For the quarter we generated record fourth quarter results with revenue of $441.9 million. Again, this is a record revenue that far exceeded any previous Q4 by over $100 million. It was achieved through acquisitions and by modest, I'll call it same store sales growth.

Fourth quarter result record fourth quarter results with revenue of $441 9 million.

This is a rep record revenue that far exceeded any previous Q4 by over $100 million.

And it was achieved through acquisitions and by modest I'll call. It same store sales growth.

Speaker 3: within our LTL and logistics and warehousing segments, but this was somewhat offset by the decline in the specialized and industrial services sector.

Our <unk> and logistics and warehousing segments, but this was somewhat offset by the decline in the specialized <unk> industrial services segment.

Speaker 3: Year over year, revenue was up $144.2 million. In total, acquisitions contributed $136.1 million of new incremental revenue to the quarter. The remaining $8.1 million of growth was due to the net effect of about $7.8 million or about 0.9% of growth once adjusted for fuel surcharge fluctuations within the LTL section.

Year over year revenue was up $144 2 million in total acquisitions contributed $136 1 million of new incremental revenue to the quarter. The remaining $8 $1 million of growth was due to the net effect of about $7 8 million or about 9% of growth.

Once adjusted for fuel surcharge fluctuations within the <unk> section segment sorry.

Speaker 3: segment sorry, an $8.7 million or growth of about 5.9%

$8 7 million or growth of about five 9%.

Speaker 3: once adjusted for fuel surcharge fluctuations within the logistics and warehousing segment. And then a $4.5 million of growth within our drilling related businesses within the specialized and industrial services segment being offset by lower revenue from our construction divisions, namely Pre-May Pipeline, which was down $14.3 million, and SMUC, which was down by $3.3 million.

Once adjusted for fuel surcharge fluctuations within the logistics and warehousing segment, and then a $4 $5 million of growth within our drilling related businesses within the specialized <unk> industrial services segment being offset by lower revenue from our construction divisions, namely premade pipeline, which was down $14.

$3 million, and smooth, which was down by $3 3 million.

Speaker 3: That resulted in net segment decline for the specialized and industrial services segment of $6.7 million. Of course this is excluding acquisitions.

That resulted in net segment decline for the specialized <unk> industrial services segment of $6 $7 million of course this is excluding acquisitions.

Speaker 3: Revenue also rose because of higher fuel surcharge. Consolidated fuel surcharge revenue increased by $20.9 million to $37 million in total as compared to $16.1 million in 2020. With acquisitions contributing about $10 million of incremental fuel surcharge revenue and the remaining $10.9 million of increased fuel surcharge revenue being attributable to higher diesel fuel prices in our legacy businesses. I will-

Revenue also rose because of higher fuel surcharge consolidated fuel surcharge revenue increased by $20 9 million to $37 million in total as compared to $16 $1 million in 2020 with acquisitions contributing about $10 million.

Of incremental fuel surcharge revenue and the remaining $10 $9 million of increased fuel surcharge revenue being attributable to higher diesel fuel prices and our legacy businesses.

I will remind everyone. This flow through of higher diesel prices is actually detrimental to margin and I'll get into that a little bit more details later on.

Speaker 3: flow through of higher diesel prices is actually detrimental to margin and I'll get into that a little bit more detail later on.

A bit more granular on segment revenue in the <unk> segment revenue grew by $52 5 million to $168 8 million as compared to $116 3 million in 2020 acquisitions accounted for $44 7 million or 85% of the ryzen revenue the remaining increase of seven $8 million was due to.

Speaker 3: A bit more granular on segment revenue, the LTL segment revenue grew by $52.5 million to $168.8 million as compared to $116.3 million in 2020. Acquisitions accounted for $44.7 million or 85% of the rise in revenue. The remaining increase of $7.8 million was due to increases at all business units due to the rebound in the economy and fuel surcharge revenue.

Increases in all business units due to the rebound in the economy and fuel surcharge revenue increases on a same store basis again adjusted for acquisitions and fuel surcharge fluctuations. This segment experienced a 0.09% or nearly 1% increase as Colgate again, specifically the <unk>.

Speaker 3: on a same store basis. Again, adjusted for acquisitions and fuel surcharge fluctuations. This segment experienced a 0.09 percent or nearly one percent increase as COVID again, specifically the Omicron variant, slowed the economy again in December and we had challenges in November with flooding in the lower main.

<unk> slowed the economy again in December and we had challenges in November with flooding in the lower mainland Rhem.

Speaker 3: Revenue in the logistics and warehousing segment rose by $35 million to $131.8 million as compared to $96.8 million in 2020 due to the $26.3 million of revenue due to acquisitions as well as the $3.2 million increase in fuel surcharge revenue.

Revenue in logistics, and warehousing segment rose by $35 million to $131 8 million as compared to $96 8 million in 2020 due to the $26 $3 million of revenue due to acquisitions as well as the $3 2 million increase in fuel surcharge revenue.

So again on a same store sales basis adjusted for acquisitions and fuel surcharge fluctuations were up by five 9% during the quarter.

Speaker 3: So again, on a same store sales basis, adjusted for acquisitions and fuel surcharge fluctuations, we were up by 5.9% during the year.

Speaker 3: Specialized in an industrial services segment declined by $2.8 million to $82 million compared to $84.8 million in 2020, primarily again, to lower revenue at pre-made pipeline hauling that was down 14.3 million and SMUC again was down but it was partially offset by a returned strength in the drilling related BU's and the acquisition of babine in the spring of 2021. at both levels the

Specializing and industrial services segment declined by $2 8 million to eight.

$82 million as compared to $84 8 million in 2020, primarily again to lower revenue up pre made pipeline hauling that was down $14 3 million and smooth again was down but it was partially offset by a return to strengthen the drilling related views and the.

With that being.

In the spring of 2021.

Again.

More discreet numbers can be found on page 61 of the MD&A for the breakdown by category in the F&I segment here as for profitability operating income before depreciation and amortization, commonly referred to as EBITDA increased by $13 $6 million of $65. Eight. This however is somewhat.

Speaker 3: More discrete numbers can be found on page 61 of the MD&A for the breakdown by category in the SNI segment.

Speaker 3: As for profitability, operating income before depreciation and amortization, commonly referred to as EBITDA, increased by $13.6 million and $65.8 million. This, however, is somewhat a misleading indicator as our results included $5.2 million of queues, or government wage subsidies, in 2021 in the fourth quarter as compared to $5.3 million of queues in 2020.

This leading indicator as our results included $5 $2 million of queues are government wage subsidies in 2021 in the fourth quarter as compared to $5 $3 million of accused in 2020. So we measure the success of our strategic goals by measuring the underlying business performance without queues. So.

Speaker 3: So we measure the success of our strategic goals by measuring the underlying business performance without...

Speaker 3: So we included within our MD&A a non-GAAP measure we called adjusted EBITDA. This definition in reconciliation for 2EBITDA or OBD can be found on page 93, but essentially we adjusted OBD for cues. The underlying OBD number adjusted for cues was $60.6 million in the current quarter as compared to $46.9 million.

We included within our MD&A and non-GAAP measure we call. The adjusted EBITDA. This definition and reconciliation for two EBITDA or <unk> can be found on page 93, but essentially we adjusted OIBDA for Qs the underlying will be done number adjusted for Qs was $66 million in the current quarter as compared to $46.

<unk> 9 million.

Speaker 3: million dollars in 2020. So how did we adjust, how did we achieve growth of adjusted EBITDA by nearly 30%? From a high level it was the $13.9 million in new incremental OBDHA from our numerous acquisitions being partially offset by lower profitability at pre-made pipeline.

In 2020, so how did we adjust how did we achieve growth of adjusted EBITDA by nearly 30% from a high level. It was the $13 9 million in new incremental <unk> from our numerous acquisitions being partially offset by profit lower profitability at <unk> pipeline and smooth.

Speaker 3: More specifically, on a segment level, LPL, the adjusted OBDOT increased by $8 million to $25.7 million as compared to $17.7 million in 2020. This increase again was really due to acquisitions which accounted for the majority of the increase of $7 million being somewhat offset by higher costs due to the increase in the OBDOT.

Specifically on a segment level.

The adjusted OIBDA increased by $8 million to $25 seven as compared to $17 7 million.

In 2020. This increase again was really due to acquisitions, which accounted for the majority of the increase of $7 million being somewhat offset by higher costs due to inflation as a percentage of revenue adjusted operating margin remained stable at 15, 2% in the fourth quarter of 2021 and.

Speaker 3: As a percentage of revenue, adjusted operating margin though remains stable at 15.2% in the fourth quarter of 2021 and in the fourth quarter of 20...

In the fourth quarter of 2020, adjusted it will be done in the logistics and warehousing segment increased by $4 4 million $23 3 million as compared to $18 nine in 2020. The majority again of the rise of EBITDA or <unk> was due to our recent acquisitions as they added $4 $7 million of incremental EBITDA being again.

Speaker 3: Adjusted OBDOT in the logistics and warehousing segment increased by $4.4 million to $23.3 million as compared to $18.9 million in 2020. The majority again of the rise of OBDOT was due to our recent acquisitions as they added $4.7 million of incremental OBDOT being again offset primarily by inflation but you would see that manifesting in fuel and purchase transportation costs.

Offset primarily by inflation, but you would see that manifesting in fuel.

Fuel and purchased transportation costs because of inflation adjusted op.

Speaker 3: Because of inflation, adjusted OB-GYN margin decreased to 17.7 compared to 19.5 in 20.

Margin decreased to $17 seven compared to $19 five in 2020.

Again, $17 seven being a pretty respectable margin for a trucking company, though and specialized and industrial services segment adjusted EBITDA decreased by $2 3 million to $12 three as compared to $14 6 million largely due to $5 $1 million decline and there will be data generated by premium pipeline adjust.

Speaker 3: Again, 17.7 being a pretty respectable margin for a truck.

Speaker 3: In the specialized and industrial services segment, adjusted OBDOT decreased by $2.3 million to $12.3 million as compared to $14.6 million, largely due to the $5.1 million decline in OBDOT generated by Pre-May Pipeline.

Speaker 3: adjusted operating margin decreased by 2.2% to 15% as compared to 17.2%. Again, this is without cues, so this is just comparing apples to apples. And it declined again due to that change in revenue mix, essentially the reduction of pre-made pipeline and smooks revenue.

Operating margin increased decreased by two 2% to 15% as compared to $17. Two again. This is without Qs. So this is just comparing apples to apples and it declined again due to that change in revenue mix essentially a reduction of <unk> pipeline and smooth set revenue, but more specifically the $2 3 million.

Speaker 3: But more specifically, the $2.3 million year-over-year decrease in adjusted OBDOT in the specialized and industrial services segment could be attributed to a $3.5 million decrease in the adjustedhead outstanding VATs too.

Year over year decrease in adjusted EBITDA in the specialized <unk> industrial services segment can be attributed to a $3 $5 million decrease.

Speaker 3: relating to the business units providing specialized services, including pre-may and spook, a $0.3 million or $300,000 decrease in those business units involved in the transportation of fluids and servicing and wells, but a $1.5 million increase in the business units tied to the drilling related act.

Relating to the business units, providing specialized services.

<unk> premium spook.

$8.3 million $300000 decrease in those business units involved in the transportation of fluids in servicing and wealth.

A $1 $5 million increase in the business units tied to the drilling drilling related activity. So looking at adjusted EBITDA as a percentage of revenue or adjusted operating margin as we find it within our document it's down to 13, 7% as compared to $15 eight in 2020 again this is.

Speaker 3: So looking at adjusted OBDOT as a percentage of revenue or adjusted operating margin as we've defined it within our document.

Speaker 3: It's down to 13.7% as compared to 15.8%.

Speaker 3: in 2020. Again this is adjusted without cues. So trying to compare apples to apples.

Adjusted without Qs, so trying to compare apples to apples.

Speaker 3: That appears to be alarmingly low, but we are comfortable with these results given that

That appears to be alarmingly low, but we are comfortable with these results given that $61 $2 million of our revenue was generated by our new U S and international logistics segment that achieved a three 3% operating margin, but without this segment's lower operating margin consolidated adjusted operating margin again with.

Speaker 3: $61.2 million of our revenue was generated by our new US and international logistics segment that achieved a 3.3% operating margin, but without the segment's lower operating margin, consolidated adjusted operating margin, again without queues.

Queues.

Speaker 3: would have been, and without the U.S. and international logistics segment, would have been 15.4% as compared to 15.8% in 2020. So just a small decline in margin.

Would have been without the U S.

And international Logistics segment would have been 15, 4% as compared to $15 eight in 2020. So just a small decline in margin and I would remind the listeners that our U S and international logistics segment generated $4 9 million and will be done in the first six months of operations under our banner.

Speaker 3: And I would remind the listeners that our US and international logistics segment generated $4.9 million of OB-DAH in the first six months of operations under our banner. That's not a bad return on a $49.6 million investment.

That's not a bad return on a $49 $6 million in fact investment in fact, it's about a 20% annualized return and we expect margin to improve over time, we have some work to do there but.

Speaker 3: In fact, it's about a 20% annualized return and we expect margin to improve over time. We have some work to do there, but

Speaker 3: that will improve over time. So in other words, this segment has low margin and is pulling our average down, but terrific returns on capital.

That will improve over time. So in other words. This segment has low margin, but and is pulling our average down but terrific returns on capital again without our U S.

Speaker 3: segment, our adjusted operating margin was a healthy 15.4%, down just a little bit from the 15.

Segment, our adjusted operating margin was a healthy 15.4% down just a little bit from the $15 eight the.

Speaker 3: The other impacts on that margin though was the detrimental effect of the operating margins associated with the $20.9 million increase in fuel surcharge that I mentioned earlier. That resulted in a corresponding increase in fuel expense. That fuel surcharge now represented 8.4% of revenue. That generates little or no margin as it is a flow through to compensate us for rising diesel fuel.

The other.

Impacts on that margin, though was the detrimental effect of the operating margins associated with the $29 million increase in fuel surcharge that I had mentioned earlier that resulted in a corresponding increase in fuel expense.

And that fuel surcharge now represented eight 4% of revenue that generates little or no margin as it is a flow through to compensate us for rising diesel fuel prices, so taking adjusted EBITDA and dividing it by revenue excluding fuel surcharge revenue in the U S.

Speaker 3: So taking adjusted EBITDA and dividing it by revenue, excluding fuel surcharge revenue, and the U.S. and international logistics segment, margin was 17%. So take those two anomalies out, 17% is actually pretty good on a historic basis. This reinforces the underlying strength of our Canadian...

And international Logistics segment margin was 17% so take those two anomalies out 17% is actually pretty good on a historic basis. This reinforces the underlying strength of our Canadian business.

Speaker 3: Further, the $14.3 million reduction at pre-made pipeline revenue that resulted in a $5.1 million decrease in adjusted EBITDA. You can clearly see that the margins there pulled us up in the past. But essentially this change in revenue mix had a large negative drag on our operating margin.

Further the $14 $3 million reduction at premium pipeline revenue that resulted in a $5 $1 million decrease in adjusted EBITDA, you can clearly see that the margins there.

Pulled us up in the past, but essentially this change in revenue mix had a large negative drag on our operating margin and I know this sounds like a lot of yes, and yes, but but these factors really explain the degradation in margin, it's not as bad as it appears in fact I would tell you that it's on par.

Speaker 3: And I know this sounds like a lot of yeah buts and yeah buts, but these factors really explain the degradation in margin. It's not as bad as it appears. In fact I would tell you that it's on par, in fact without fuel surcharge even better.

In fact without fuel surcharge, even better and some of these factors.

Speaker 3: And some of these factors that I mentioned that helped bring the margin down were offset by productivity improvement.

Mentioned that helped bring the margin down were offset by productivity improvements and the tireless effort by all of us to maintain or improve our margin in an inflationary cost environment and.

Speaker 3: and the tireless effort by all of us to maintain or improve our margin in an inflationary cost environment.

Speaker 3: And if you make it to page 146 of our document, you will see, without falling asleep, you will see our geographic disclosure information.

And if you make it to page 146 of our document.

You will see falling asleep, you will see our geographic disclosure information and so that essentially carves out our Canadian operations from our new U S operations and you will see that our Canadian operations again Youll.

Speaker 3: And so that essentially carves out our Canadian operations from our new U.S. operations. And you will see that our Canadian operations again, you'll see that discreetly in the document where we achieved that 17% mark.

Youll see that discreetly in the document where we achieved that 17% margin.

So hopefully that's a good understanding on why margin is down a little bit now looking at some other notable items net cash from operating activities for the period was up $13 3 million to $65 8 million.

Speaker 3: So hopefully that's a good understanding on why margin is down a little bit. Now looking at some other notable items, net cash from operating activities for the period was up $13.3 million to $65.8 million.

Speaker 3: So our borrowing on our credit facilities though did increase by $3.8 million to $89.

So our borrowing on our credit facilities, though did increase by $3 8 million to 89.

Speaker 3: million dollars despite that great cash generation. But I would remind you all that we acquired direct IT for $9.2 million and we purchased another great facility in Edmonton for our apps, newly acquired apps acquisition for $8.5 million. So essentially we would have been very cash positive and repaying that line of credit if we didn't make these long term investments on our line of credit.

Despite that great cash generation, but I would remind you all that we acquired direct.

For $9 $2 million and we purchased another great facility in Edmonton for our apps newly acquired apps acquisition for $8 5 million. So essentially we would've been very cash positive and repaying that line of credit if we didn't make these long term investments on our line of credit so we.

Speaker 3: So we acquired another great company, another great facility and really would have been cash positive without that. Bottom line is we generate a lot of free cash.

You acquired another great company, another great facility and really would have been cash positive without that.

Bottom line is we generate a lot of free cash and lastly, our basic earnings per share was up to 21 <unk> compared to <unk> 10 in Q4 of last year in part because of the reduced share count as we bought back $3 5 million.

Speaker 3: And lastly, our basic earnings per share was up to $0.21 as compared to $0.10 in Q4 of last year, in part because of the reduced share count as we bought back 3.5 million shares in the last 12 months.

Three 5 million shares in the last 12 months, but also we finalized our purchase equation during the fourth quarter and you would've seen a change in the amortization. So we reduced the amortization we over booked it in the third quarter.

Speaker 3: But also we finalized our purchase equations during the fourth quarter and you would have seen a change in the amortization. So we reduced the amortization.

Speaker 3: We overbooked it in the third quarter, but once we did the analysis and finalized those purchase equations, we had trued up or adjusted fourth quarter down a little bit. So a little bit of an anomaly there when it comes to amortization, but nonetheless...

But once we did the analysis and finalize those purchase equations, we had true up our adjusted fourth quarter down a little bit so a little bit of an anomaly there when it comes to amortization, but nonetheless a healthy.

Speaker 3: a healthy pace where we continue to increase our earnings per share on a continuous basis, fourth quarter included.

Pace, where we continue to increase our earnings per share.

Continuous basis fourth quarter included.

Lastly.

Speaker 3: A quick word on ESG, which I've been summarizing quickly for everybody on the calls here lately.

A quick word on ESG, which I have been summarizing quickly for everybody on the call here lately.

Speaker 3: I'd like to maybe just address our carbon intensity. So we've made these acquisitions, APPS being one of them, an intermodal player, and we have intermodal freight moving at Clayson and others.

I'd like to maybe just address our carbon intensity. So we've made these acquisitions apps being one of them and intermodal player and we have intermodal freight moving at placing and others and.

And Tri Pointe This has really resulted in our carbon intensity being down.

Speaker 3: and tri-point, this has really resulted in our carbon intensity being down to about 20 grams per dollar of revenue from about 23 grams per dollar of revenue in 2020. So again, we are managing everything well, profitability, and keeping an eye on ESG and reducing our carbon footprint and our carbon intensity yet again in 2021. So with that, Murray, I'll pass the conference.

About 20 grams per dollar of revenue from about 23 grams per dollar of revenue in 2020. So.

Again, we are managing everything well profitability and keeping an eye on ESG and reducing our carbon footprint in our carbon intensity yet again in 2021.

So with that Murray I'll pass the conference back to you. Thank you.

Okay.

Speaker 3: Well, this is where Murray usually gives us a nice summary of the quarter and opens up for Q&A.

While this is where Murray usually gives us a nice summary of the quarter and opens up for Q&A.

Speaker 2: appears we've perhaps lost him off the call here. Here he is back. I was on mute, sorry folks. So thank you, Steph, for that. As we look, as I summarize this, there's a lot of granular information that Stephen gave us there. But if you look at 2020, 2020 was a year in which we were able to...

Peers.

Perhaps lost him off the call here.

Areas back I was on mute sorry folks so thank you Seth for that.

As we look as I summarize this just theres a lot of granular information that's been gave us there.

But if you look at 2000 22020 was a year in which we were able to.

Speaker 2: you know, COVID first hit and what we slashed expenses, we didn't know what was happening, nobody knew it and this is across nearly every business but and specifically to ours.

Covid first hit and we slashed.

Expenses, we didn't know what was happening nobody knew it and this is across nearly every business, but specifically to ours.

And so we did that and then we were very fortunate to have this.

Speaker 2: And so we did that and then we were very fortunate to have this really quality company called Pre-Mate Pipelines and they just did a fantastic job in 2020. In 2021, everything changed. We brought people back, but not only brought people back, you started to see this inflationary spiral really take hold. So what we took away in 2020, it came back with a vengeance in 2021.

This really quality company called Premade pipelines and they just did a fantastic job in 2020 and 21 everything changed we brought people back but normally brought people back you're starting to see this inflationary spiral.

So really take hold so what we took away up in 2020. It came back with a vengeance in 'twenty, one and I think that ends up being the I think the biggest step change if you will.

Speaker 2: And I think that ends up being the, I think, the biggest.

Speaker 2: step change, if you will, between 20 and 21.

Between 2020 one.

Speaker 2: Then of course on the corporate side, we did a number of acquisitions. I think that is really the two big themes that somebody can take away from the change on a year-over-year basis.

And then of course on the.

Corporate side, we did a number of acquisitions. So I think thats really the two big themes that somebody can take away from the change on a year over year basis.

No.

Take a look at the outlook.

There's really not much I can add I have got a lot of people on the a lot of questions queued up here, so I'm going to I'm going to be short on the outlook. There is not much more that I can add that's kept not contained in the press release and the annual financial report.

Speaker 2: There's really not much I can add. I've got a lot of people on the, a lot of questions cued up here, so I'm going to be short on the outlook. There's not much more that I can add that's not contained in the press release, in the annual financial report, or truthfully in our December press announcement, which referenced our 22 business plan, which by the way included an increase in the dividend. United States of America, Nationalentially Un Infantry steeped China.

Truthfully in our December press announcement, which referenced R 22 business plan.

Which by the way included an increase in the dividend but.

I think what I'll just summarize the 2022.

Speaker 2: I think what I'll just summarize the 2022 outlook is we're going to achieve record revenue.

<unk>, we're going to achieve record revenues.

Speaker 2: This is going to be driven by the full year results from the six acquisitions we completed in 20

This is going to be driven by the full year results from the six acquisitions, we completed in 'twenty one.

Speaker 2: In addition, I fully expect we're going to complete additional acquisitions during 2022, which will drive additional revenue growth. So, you know, we're going to have record revenues in 2022.

In addition, I fully expect we're going to complete additional acquisitions during 'twenty, two which will drive additional revenue growth.

We're going to have record revenues in 'twenty two.

We have a balance sheet that has over $150 million of available credit available.

Speaker 2: We have a balance sheet that has over $150 million of available credit available. And then truthfully, when you think about the tightness in the labor market.

And then truthfully when you think about between this and the labor market.

Acquiring good companies with great teams may be the best way that anybody can grow and add additional capacity.

Speaker 2: acquiring good companies with great teams may be the best way that anybody can grow at additional capacity.

Speaker 2: to service their existing customers. From that perspective, we will do acquisition so we can service our customers but, and I reiterate with the but.

To service their existing customers and from our perspective.

<unk>, we will do acquisitions, so we can service our customers, but I reiterate with the Bud.

Speaker 2: We need to see some pretty significant rate increases of customers on service. And speaking of rate increases, I tell you this is how we're going to grow profitability. So this message has been delivered loud and clear to all of our Canadian-based companies.

We need to see some pretty significant rate increases of customers want service on speaking of rate increases I would tell you. This is how we're going to grow profitability.

So this message has been delivered loud and clear to our all of our Canadian based companies.

Speaker 2: And I deliberately mentioned Canada because rates here in Canada have lagged US rates by a significant amount. I'm thinking in the range of 20%, which explains why the US carriers have experienced such a great run over the last couple of years, strong earnings, outstanding stock prices. But in Canada, we did not see that same market adjustment.

And I have deliberately mentioned, Canada because rates here in Canada have lagged U S rates by a significant amount.

I'm thinking in the range of 20%, which explains why the U S carriers.

We have experienced such a great run over the last couple of years strong earnings outstanding stock prices.

But in Canada, we did not see that same.

Same market adjustment.

Speaker 2: So we live in envy of our friends in the US, which ultimately means, this is what I expect from our business here in Canada, as long as the fundamentals of freight demand stay as they are and the labor markets remain tight, I suspect that will happen. So we're going to have record revenue.

So we live in view of our friends in the in the U S, which ultimately means this is what I expect from what our businesses here in Canada.

As long as the fundamentals of freight demand stay as they are in.

Labor markets remain tight and I suspect that will happen. So we're going to have record revenues.

Speaker 2: I can tell you we're going to focus on raising prices because that's the step change that we fundamentally see happening in the Canadian marketplace. It's going to happen throughout 2022. I think whenever you look at change, what's the change?

And I can tell you we're going to focus on raising prices because thats. The step change that we fundamentally see happening in the Canadian marketplace, that's going to happen throughout 2002.

And I think whenever you look at change what's the change well.

Speaker 2: There it is. If I look at it from the logistics business, it's going to be on pricing. If I look at it in the commodity business for the energy space, the step changes pricing increases. That's providing the impetus for the step change there. I think exactly the same thing is going to happen in the Canadian logistics transportation business.

There it is.

If I look at it from there.

Just sticks business, it's going to be on pricing if I look at it in the commodity business for the energy space the step change as pricing increases.

Providing the impetus for the step change there and I think exactly the same thing is going to happen in the Canadian logistics transportation business.

Speaker 2: and our job is to manage that and to make sure that we drive margin improvement for our shareholders. So that's kind of what we've got for...

Our job is to manage that and to make sure that we drive margin improvement for our shareholders. So.

That's kind of what we've got.

Speaker 2: for the outlook. Now what I'd like to do now, we've got some new opportunities that we're working on.

For the outlook.

No what I expect what I'd like to do now we've got some new opportunities.

But we're working on.

Speaker 2: What I want to do now is call upon Richard Maloney to speak to the joint press release we have with our trusted business partner, Canadian National here, that we just did on Tuesday. I know, Rich, I've asked you to just give an overview of what that really means and some of our initiatives, what we're going to do on the intermodal business. Richard Maloney, I'll turn it over to you and then I'll finish with closing comments before we go to the Q&A session. Richard?

And what I want to do now is call upon Richard Maloney to speak to the joint press release, we have with our our trusted business partner Canadian National here that we just did on Tuesday, and rich I've asked you to kind of just give a give an overview of what that really means in some of our initiatives.

What we're going to do on the intermodal business. So Richard Maloney I'll turn it over to you and then ill finish with closing comments before we go to the Q&A session Richard.

Okay. Thank you Murray.

Speaker 3: Okay, thank you, Murray. So on February 8, 2022, we announced that our apps transport group entered into a multi-year agreement with CN in which the railway would continue to provide intermodal service to apps. So why did we do that?

On February eight 2022, we announced that our apps transport group entered into a multiyear agreement with CN in which the railway we'd continue to provide intermodal service taps. So why did we do this well, it's about messaging and communicating to our shareholders and the investment community that this strategic shift.

Speaker 3: Well, it's about messaging and communicating to our shareholders and the investment community that the strategic shift we made a number of years ago to becoming a North American logistics leader is still Mullen Group's priority.

We made a number of years ago to be coming in North American logistics leader is still Mullen group's priority.

Speaker 3: To begin with, both Mullen Group and CN believe that this announcement was important to emphasize.

To begin with both Mullen group N Cen believed that this announcement was important to emphasize.

Speaker 3: the strong mutually beneficial working relationships CN and apps transport have developed over many, many years. It is also worth noting that a number of other Mullen Group business units have long-standing working relationships with CN as well.

The strong mutually beneficial working relationships CN and apps transport have developed over many many years. It is also worth noting that a number of other Mullen group business unit have longstanding working relationships with CN as well in.

Speaker 3: In addition, this announcement demonstrates Mullen Group's continued focus on building out our intermodal capabilities. Murray calls this the long mile.

In addition, this announcement demonstrates Mullen group's continued focus on building out our intermodal capabilities Murray calls.

Long mile.

Speaker 3: which really started in 2006 when we acquired Claisen and was greatly enhanced with the acquisition of apps transport in 2021.

Which really started in 2006, when we acquired Clayton and was greatly enhanced with the acquisition of apps transported in 2021.

Speaker 3: In fact, concurrent with the apps signing, the apps transport signing the intermodal agreement with CN, we approved a sizable capital request to order new intermodal containers to support this planned work.

In fact concurrent with the signing the apps transport signing the intermodal agreement with CN, we approved a sizeable capital request to order new intermodal containers to support this planned work.

Speaker 3: This aligns directly with the capital expenditures we outlined in our 2002 business plan.

This aligns directly with the capital expenditures, we outlined in our 2002 business plan, specifically investments towards sustainable sustainability initiatives.

Speaker 4: Specifically, investments towards sustainability.

As many will know intermodal transportation is an efficient and effective manner to move goods long distances.

Speaker 4: As many will know, intermodal transportation is an efficient and effective manner to move goods long-

Speaker 4: something ideally suited for Canada, an importing nation, and particularly important as there are fewer and fewer long-haul trucks.

Ideally suited for Canada, and importing nation, and particularly important as there are fewer and fewer long haul truck drivers.

Speaker 4: Intermodal also greatly cuts down on fuel consumption and more importantly reduces greenhouse gases emissions, a cornerstone of Mullen Group's ESG initiatives that Stefan pointed out with our carbon intensity and our continued focus on reducing...

Intermodal so intermodal is also.

Also greatly cuts down on fuel consumption and more importantly reduces greenhouse gases emissions are cornerstone of Mullen group's ESG initiatives, that's defend pointed out with our carbon intensity and our continued focus on reducing that.

Speaker 4: So, when you combine our extensive final mile LTL network that services well over 5,000 points of service in Western Canada and Ontario, with the focused and deliberate build-out of our long-mile service offering, with a strategic partner like CN, we were able to provide a comprehensive service offering to our customers. Stay tuned, everyone.

So when you combine our extensive final mile LPL network that services well over 5000 points of service in Western Canada, and Ontario, with the focused and deliberate buildout of our long mile service offering with the with this strategic partner like CN, we were able to provide.

Our comprehensive service offering to our customers.

Stay tuned everyone Marine I'll pass it back to you now.

Speaker 2: Thanks, Rich. I really appreciate that update for our investors, shareholders alike. We've got a dual purpose here. Stephane talked about it. We want to make sure that we're doing our part on climate initiatives. I think that's an important part of ESG that we're focused on. But the second part is, we're going to have to be able to provide our shippers and our customers.

Okay. Thanks, Rich I really appreciate that update for the for our investors shareholders like us.

We've got a dual purpose here so <unk> talked about it we want to make sure that we are.

We're doing our part on climate initiatives.

I think that's an important part of ESG unit that we're focused on but the second part is you got we're going to have to be able to provide our shippers and our across our customers with a viable multiple <unk>.

Speaker 2: with multiple service offerings. They can choose which one is best for their requirements. I think we've got some great initiatives. These are the kind of things that you get that I spoke earlier about when you invest in really good quality companies. Let me tell you, I couldn't be happier with those acquisitions we did in 2021. We're ready for 2022. We've got a long list of questions. I'm going to turn it over to the operator. Let's get right to the Q&A session.

Service offerings. So then they can choose which one is best for for their requirements. So I think we've got some great initiatives. These are the kind of things that you get that I spoke earlier about when you invest in really good quality companies and let me tell you I couldnt be happier with those acquisitions we did.

In 'twenty one so we're ready for 'twenty two we've got a list of the long list of questions. So I'm going to turn it over the operator.

Let's get right to the Q&A session.

Speaker 1: Certainly, we'll now begin the question and answer session. To join the question queue, you may press star then 1 on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2.

Certainly we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request.

If youre using a speakerphone please pick up your handset before pressing any key.

Withdraw your question. Please press Star then two.

First question comes from Michael Robertson with National Bank Financial Please go ahead.

Speaker 1: The first question comes from Michael Robertson with National Bank Financial. Please go ahead..

Hey, good morning, all.

Speaker 5: Hey, good morning. All congrats on a solid quarter and thanks for taking my questions.

Congrats on a solid quarter and thanks for taking my questions.

I appreciate that it's still early days for the U S and international Logistics segment, and we should probably expect margins to bounce around a bit as you add station agents and build that out but.

Speaker 5: I appreciate that it's still early days for the US and international logistics segments, and we should probably expect margins to bounce around a bit as you add station agents and fill that out. But I'm sort of just wondering at a high level what you saw there sequentially and maybe how you expect that to transfer moving forward.

Sort of just wondering at a high level, what you saw there.

Sequentially and maybe how you expect that.

To trend moving forward.

Well I think.

Speaker 2: Well, I think it's, you know, we've got, first of all, we've got a really good platform to build on there. A little bit of the noise comes in that our costs are going up because we're still involved in the carve-out process and got some additional costs that we've got to accrue as a result.

We've got first of all we've got a really good platform to build on there a little bit of the noise comes in that our costs are going up because we are still involved in the carve out process.

<unk> got some additional costs that we've got to accrue as a result of.

Speaker 2: getting the carve out of the technology from Quad Graphics into our own platform. So it's a little bit noisy on the expense side. Revenue side, we're pretty strong. The economy in the US is pretty robust.

We're getting the carve out of the technology from Quad graphics into our own platform. So it's a little bit noisy on the on the expense side revenue side were pretty strong the economy in the U S is pretty robust.

Speaker 2: On that front, doing well. It's on the cost side that we're going to have a little bit of noise in the cost side until we get that total carve-out done. Then what we're going to do is once we get that done, we'll really go into full throttle here and challenge that group down there to take this company to the next level. We're in the right space, there's no doubt about it. We compete.

So on the on that front.

Doing well, it's on the cost side that we're going to have a little bit of noise in the cost side until we get that total carve outs on.

And then what we're going to do is once we get that done we'll just we'll really go into.

In the full throttle here and.

Challenge that group down there to take this company to the next level. So we're in the right space, There's no doubt about it we compete.

They compete head to head with every one of the little Big logistics companies down there and they do very successfully.

Speaker 2: They compete head to head with every one of the big logistics companies down there, and they do very successfully, including...

Including new start ups like convoy Uber freight to and all the others. So.

Speaker 2: new startups like Convoy and Uber Freight and all the others.

Speaker 2: We've got a heck of a great team there and expect they'll continue to to expand their market share down there once we get finished. We think we'll be done most of the car vote by the end of June . That was our original plan and I think collaborating with our group down there, they're pretty comfortable that we'll be on that. So all good from there. The US economy still remains strong. Freight is still moving.

We've got a heck of a great team there and expect they'll continue to.

To expand our market share down there and once we get once we get finished we think will be done most of the carve out by the end of June and that was our original plan and I think.

Collaborating with our group down there they are pretty comfortable that we'll be on that so.

All good from there.

The U S economy still remains strong freight is still moving.

And.

Speaker 2: And from that perspective, what they watch very, very carefully is.

From that perspective.

The watch very very carefully is what's happening with the trucking rates in the United States because what they do is just manage the spread between what the what the contract expenses to what the charge to their customer so.

Speaker 2: what's happening with the trucking rates in the United States because what they do is just they manage the spread between what the contract expense is to what they charge to their customer. Really the margin should not change if the markets get a little competitive because then the availability of trucks becomes available and prices will go down there. We have not seen any.

Really the margin should not change.

If the markets get a little competitive because the availability of trucks becomes available and prices to go down there, but we have not seen any.

Speaker 2: Any degradation in pricing in the US market yet? Not at all. Still pretty robust. But we watch that every month.

Any.

Degradation in pricing in the U S market, yet not at all still pretty pretty robust.

And we but we watch that every every month for sure.

Speaker 2: It's a great platform. We needed to get another.

That's helpful.

Yeah, it's a great year.

Great platform, we needed to get another.

Growth opportunity outside of Canada. This is just the start.

Speaker 2: growth opportunity outside of Canada. This is just the start.

Speaker 2: And we're proving down there that you...

And it's.

We're proving down there that you.

We just followed the same platform, we got up here you invest in good companies with Great management teams and turn them loose.

Speaker 2: We just follow the same platform we got up here. You invest in good companies with great management teams. Turn them loose.

Sure.

We reward them for their successes. So we'll probably continue to grow in the U S is one of our.

Speaker 2: So we'll probably continue to grow in the US.

Speaker 2: what we'll do, but you've got to identify the right opportunity. There's no sense just growing to grow and getting into a, you know, into a heck of a problem. So, but we didn't get into a problem with this group. They're first class.

What we'll do but you got to identify the right opportunity theres, no sensors growing to grow them and getting into.

Endured into a heck of a problem, so, but we didn't get into a problem with this group.

They are first class.

Got it thanks for that.

Speaker 5: Thanks for that. You also noted in the release last night that you are focusing on a new differentiated pricing model to help support margins. I'm wondering what the bigger picture there is in terms of what you think that might look like. I think what we have done in the past is really looked at

You you also noted in the release last night that you.

You are focusing on a new differentiated pricing model to help support margins.

Wondering what the bigger picture there is in terms of what you think that might look like.

Yes, I think what we've done in the past.

This has been through here.

Speaker 2: history is you know you kind of charge the same price to everybody and when I say a differentiated pricing model we're saying to the customers if you want guaranteed service you got to pay hard.

History is.

You're going to charge the same price to everybody and when I say, a differentiated pricing model, we're saying to the customers. If you want guaranteed service you've got to pay her place. If you want if you want to give us flexibility. So that we can do it on our time in one.

Speaker 2: If you want to give us flexibility so that we can do it on our time and when we got additional capacity, it'll sit on the dock or we'll get to it when we can, then that fits in our network. We'll give you that, but it's not going to come with that guaranteed service. So if you want service and you want commitment from this group, your prices are going up pretty significantly. If you want to give us flexibility, if you have got ability on that.

When we got additional capacity it will sit on the dock or it.

We will get to it when we can then.

That fits in our network, we will give you that but it's not going to come without guaranteed service. So if you want service and you want commitment from this group.

Your prices are going up pretty significantly if you wanted to give us flexibility. If you have got the ability on that.

Speaker 2: then we probably won't move our pricing quite as aggressively on that side. That's what I mean by the differentiated pricing model. If you want service, you've got to pay for it.

Then, we probably won't move our pricing quite as aggressively.

On that side. So that's what I mean by the differentiated pricing model. If you want service you got to pay for.

Makes sense.

Speaker 5: makes sense. That's super helpful. I appreciate it. Again, congrats on a solid quarter. I'll turn it back. Thanks.

That's super helpful. I appreciate it again, congrats on a solid quarter I'll turn it back.

Thanks, Michael appreciate it.

The next question is from <unk> Gupta with Scotia capital. Please go ahead.

Speaker 1: The next question is from Konark Gupta with Scotia Capital. Please go ahead.

Thanks, and good morning, everyone.

Speaker 6: So maybe I want to ask you about the 2022 business plan that you rolled out in December and we didn't really have a chance to kind of speak on that broadly. So you mentioned last year's acquisitions are generating about, will generate about 500 million dollars in revenue and that's kind of up 119 from your Q2 disclosure.

So maybe I wanted to ask you about the 2022 business plan that you rolled out in December and we didn't really have a chance to kind of speak on that broadly.

You mentioned last years acquisitions are generating about will generate about $500 million in revenue.

And that's kind of up 119 from Q2 disclosure so if I simply take the incremental there given they were done midyear last year.

Speaker 6: So if I simply take the incremental there, given they were done mid-year last year, you're probably going to see revenue go up maybe 1.66 or so billion dollar in 2022, just by those acquisitions, and perhaps there is some organic growth across multiple...

Probably going to see revenue go up maybe $1.66 billion in 2022, just by both acquisitions and perhaps there is some organic growth across most of the segments.

Speaker 6: So how would you break up your 2022 business plan that you laid out in terms of revenue and margin? I'll see you in my next segment.

Would you break up your.

2022 business plan that we laid out in terms of revenue and margin outlook by segment for this year.

Speaker 2: Steph, I don't think we broke that out by segment.

Stuff I don't think we broke that out by segment.

I don't recall us doing that degree.

Speaker 3: No, we never did give guidance to it. The previous year we said it would be a third, a third, a third. And of course that didn't turn out to be right. But you know, it's going to roughly be

No we never give guidance to it the previous year, we said it would be a third a third a third and of course that didn't turn out to be right, but.

It's going to roughly be probably.

Speaker 3: probably, you know, again looking at the trend on the quarters you can just adjust your models, but you can see what the pace of US logistics is, you can kind of see what the pace of LTL growth has been.

Again looking at the trend on the quarters, you can just adjust your models but.

You can see what the pace of U S logistics as you can kind of see what the pace of <unk> growth has been.

Speaker 3: And again, I'll give it with one caveat. You've got $1.6 to $1.7 billion in revenue. And again, you're not adjusting for any new acquisitions that we might do during 2022 here. So again, that mixes.

Again.

Even with one caveat, you've got $1 six to $1 $7 billion in revenue and again youre not adjusting for any new acquisitions that we might do during 2022 here so again that mixes.

We can get a little bit more granular maybe after the call once you've done you've got it.

Speaker 2: We can get a little bit more granular, Konrad, maybe after the call once you've done your modeling. Konrad, I think the thing is you've got new acquisitions, they're going to add about $500 million. Same store sales in 22, you had $500 million, or $21 million, sorry.

I think the thing is <unk> got new acquisitions, Theyre going to add about 500 million. So you take same store sales in 'twenty, two you had $500 million.

'twenty one story.

Annualized revenues of 500.

And then I am telling you were raising prices, so if you're raising prices by.

10%.

That's quite a bit of money on a on a 151 $6 billion company.

Speaker 2: That's quite a bit of money on a $1.5, $1.6 billion company.

Okay.

Speaker 2: Is pricing coming along with organic volume growth or it's coming at a cost of one in decline? No, it's right now. We've never seen this cost curve like what we're seeing right now. So we raise prices and then you know your next thing you know your costs are going up.

Is it pricing coming along but that organic volume growth, it's coming at a cost of one a decline no. It's right now.

We've never seen this cost curve like what we're seeing right now.

So we raised prices and then.

Next thing you know your costs are going up.

So just about as fast or even higher so it's a little bit like the fuel surcharge.

Price of fuel goes up you raise the fuel surcharge.

Speaker 2: Costs go up, you raise your prices. I would suggest to you, we're a little bit behind on that curve because our teams, we said raise your prices and they did. Then all of a sudden the costs, it's very difficult to contain costs right now. We're having to adjust rates.

Cost go up you raise your prices and.

I would suggest to you.

We're a little bit behind on that curve because our teams. We said raise your prices and they did and then all of a sudden the cost.

It's very difficult to contain costs right now so we're having to adjust rates, we do once a year before and now we're going to have to do it.

Speaker 2: We do it once a year before. Now we're going to have to do it. We're already talking about adjusting rates on a second quarter. I know for sure we're going to adjust rates to maintain margin. Like I know that for sure.

Already talking about adjusting rates kind of second quarter.

I know for sure we're going to adjust rates to maintain margin.

I know that for sure.

Speaker 2: But our teams have said, you know, we're going to have this differentiated pricing model, I expect a higher margin in 2020. So they'll have to raise above what the costs are going up.

But our teams I've said.

We're going to have this differentiated pricing model I expect a higher margin in 'twenty two.

So they'll have to raise above what the costs are going up.

For sure so let's just.

Speaker 2: for sure. But let's just ballpark it and say prices are going to go up by 10%.

Let's just ballpark it and say prices are going to go up by 10%.

Speaker 2: On one six, that's 160 mil.

On 106 of the $160 million.

Okay.

Speaker 2: Just through, you know, and then that's going to flow through. The question then becomes how much of that is going to flow through on the cost side too.

And then that's going to flow through the question then becomes when how much of that is going to flow through on the cost side too.

Okay.

Speaker 2: We tried to give you a reasonable guideline when we did our first blush at 22, which suggested that's what I think is going to happen. I gave up a bit of a small bucket. Every 1% margin improvement now is...

We tried to give you a.

A reasonable guideline when we did our first blush of 'twenty two.

Which suggested.

That's what I think is going to happen I mean, I gave a bit of a small bucket, but every every 1% margin improvement.

Is 16.

Speaker 2: $16 to $18 million of EBITDA. Business Units know the game plan.

$16 million to $18 million.

Of EBITDA so.

The business units.

The game plan.

We expect we expect prices to go up because I think the Canadian marketplace has now changed and.

The U S marketplace has already changed that's already happened, they're not going to get big big rate increases any longer in the U S, but in Canada.

We're going to we're going to get at some of the some of the things that I am seeing now we're not 10% some of the some of the stuff is.

Speaker 2: You know, you've got border closures, you've got blockage, you've got less drivers that can go to the U.S. because of new vaccine mandates. All of that reduces capacity.

<unk> got border closures, you've got block age you have got less drivers that can go to the U S because of new.

Vaccine mandates all of that reduces capacity.

And when you reduce capacity and demand stays strong price goes up.

Speaker 2: And when you reduce capacity and demand stays strong, price goes up.

Our job is to manage the price.

And I can tell you, we're 100% focused on that in 'twenty two.

Speaker 2: and I can tell you we're 100% focused on that in 2020.

Okay.

Speaker 6: Okay, that's really good color. I appreciate that. And then perhaps my last question before I turn it over. On the real estate, a lot of your shareholders kind of wonder about what your strategy is with that real estate book value you have. I think it's about $630 million.

Good color I appreciate that and then my last question before I turn it over.

On the real estate.

A lot of your shareholders.

Wonder about what your strategy is with that real estate book value you have I think it's about $630 million.

Speaker 6: Also at this point, and I'm sure with the kind of inflation we are seeing over the last decade or so, the real estate market value has probably gone up significantly for you guys.

So at this point and I'm sure that the kind of inflation, we are seeing over the last decade or so.

Fifth market value has probably gone up significantly for you guys.

Speaker 6: So a couple of kind of questions, two part question there. What kind of real estate do you own at this time? And what do you see or what kind of plans you might have for leveraging the market value?

So a couple of questions two part question there.

Kind of where do.

Do you own at this time.

What do you see what kind of plans you might have for leveraging the market.

Well we've got.

Speaker 2: Well, we've got, as you comment, I think, Carson, Steph, you can chime in on this, but I think the book value, the stated value on our books is around $620 million, 625 or something like that. Yeah, 630, right? Some market value. Yeah, 630.

Is your comment I think.

Carson stuff you can chime in on this but I think the book the book value of the stated value on our books is around $620 million 625, or something like that yes, 660 <unk>. So.

Speaker 2: You know, you've got the real estate that we hold in the crazy markets in Canada, which would be Vancouver, which would be the GTA.

You've got.

The real estate that we hold in.

Crazy markets in Canada.

Would be Vancouver, which would be the GTA.

Speaker 2: and some of those markets are, you know, it's through the roof. You know, we're talking about

And some of those markets or it's through the roof.

We're talking about multiple.

Multiples over our book value and then we've got some absolute strategic assets in Calgary and Edmonton that are tied to rail those are irreplaceable asset. So we've got lots of <unk>.

Speaker 2: multiples over our book value. Then we've got some absolute strategic assets in Calgary and Edmonton that are tied to rail. Those are irreplaceable assets. We've got lots of our market value of our real estate is higher than the book value. Okay, we'll just leave it at that. My strategy is real simple. We've got one of a really really great asset and it's called real estate.

Our book or a market value of our real estate is higher than the book value. Okay. Just I'll just leave it at that.

Strategy is real simple, we got one of a really really great asset that's called real estate.

Speaker 2: You got to own real estate in a rising inflationary environment. And I suspect that when we go to renew our debt facilities, that that's going to be a pretty darn good leverage that we'll be able to use with our debt holders to say, this is a fantastic asset and I think we'll be able to add some additional liquidity to our business so we can grow through acquisition. That's our strategy. Thank you.

You got to own real estate in a rising inflationary environment and I suspect that when when we go to renew our debt our debt.

Facilities.

That's going to be a pretty darn good.

Leverage that we'll be able to use with our debtholders to say this is a fantastic asset and I think we'll be able to.

They had some additional liquidity to our business. So we can grow through acquisition that's our strategy.

Okay, that's pretty simple that yes. Thank you.

Yep.

Your next question is from Kevin Chiang with CIBC. Please go ahead.

Speaker 1: Our next question is from Kevin Chang with CIBC. Please go ahead.

Speaker 7: Thanks for taking my question. Just on the repricing opportunity you mentioned here Murray, just wondering like...

Thanks for taking my question.

Just on the repricing opportunity you mentioned here Murray just wondering Mike.

How much of the book of business do you think today maybe below.

Speaker 7: How much of the book of business do you think today is maybe below a pricing level you think is acceptable? And how much of that can you reprice? In other words, do you have contracts in place that maybe...

Our pricing level, you think is acceptable and how much of that can you re price in other words do you have contracts in place that maybe.

Speaker 7: push up when some of that repricing can happen just because you're under a contractual obligation to provide that service under a previous rate.

Push out with something that we price. It can have been just just because youre under a contractual obligation to provide that service under under our previous rate.

Speaker 2: Yeah, I think we've got some of that. You never... You know, I think that in 21, Kevin...

Yes, I think we've got some of that churn number.

I think it is.

'twenty one Kevin.

Nobody there was pricing in Canada was factoring in an inflationary.

Speaker 2: Nobody that was pricing in Canada was factoring in an inflationary spiral that you know, that really happened particularly in the last half of the year. It's just it's just absolutely exploded. And by the way, we're not the only ones that are talking like that. Our Bank of Canada, the governor's talking about it, you know, and everybody is now inflation is now totally embedded within the, you know, within the Canadian landscape.

Spyros.

That really happened, particularly in the last half of the year.

These steps will be exploited and by the way we are not the only ones that are talking like that bank of Canada Governor is talking about it.

And everybody is now inflation is now totally embedded within the <unk>.

Hidden.

The Canadian landscape.

Speaker 2: So I think what we were is basically behind the curve on some of that.

So I think what we were is basically behind the curve on some of that a little.

Speaker 2: you know, a little cautious on pricing improvement. And you've got to remember, this is the first time in decades where you've had an inflationary environment like this. I don't think that's the case now. I'm telling all of our business units, don't be shy, you know, and this is, we expect pricing, you know, pretty significant pricing increases to happen. And by the way, we have to have that because driver salaries are going to go up quite significantly.

A little cautious on pricing improvement and you got to remember this is the first time in decades, where you've had an inflationary environment like this I don't think Thats. The case now I'm, telling all of our business units don't be shy.

And this is.

We expect pricing.

Pretty significant pricing increases to happen and by the way we would have to have that because driver salaries are going to go up quite significantly.

Speaker 2: We already know what's happening with fuel. You can't get new equipment. New equipment is going to be up a bitch 20%.

We already know what's happened with fuel you can't get new equipment, new equipment is going to be up a bit to 20%.

Speaker 2: We're not talking about five anymore, Kevin. It's got to be significantly higher than that. Our job then is to get something higher than what the cost is. That's going to be our job as a senior team is to improve the margin in 22. It's got to come through pricing. Then hopefully we can mitigate some of our costs by being smart. But you can't mitigate driver salary.

So we're not talking about five anymore Kevin.

It's got to be significantly higher than that and then our job then is to get.

A little it is to get something higher.

Then what the cost is and that's going to be our job as a senior team is to improve the margin in 'twenty, two and it's got to come through pricing.

Hopefully, we can mitigate some of our costs by being smart, which can't mitigate driver salaries.

Speaker 2: That's a market driven thing. You got to pay what you got to pay just like for fuel.

That's that's a market driven and when you got to pay what you got to pay just like for fuel.

So right.

Speaker 2: I think where you get some of our margin degradation, Stephane talked about this, is we have moved our business away from owning the asset to being non-asset to being really asset-like.

Well, I think where where do you get some of our margin degradation Stfan talked about this is we have moved our business away from owning the asset to being non asset to being really asset light. So.

Speaker 2: So, you know, and our asset-based businesses, we expect...

And our asset based businesses.

We expect 20% margin plus.

Speaker 2: If we're buying the asset, the truck, the trailer and everything, we expect 20% plus margin.

If we're buying the asset the truck trailer and everything we expect 20% plus margin.

Speaker 2: If you're using all subcontractors, you're not going to make 20% because the contractor is going to make that. In those where we have no assets.

If youre using all sub contractors, when youre not going to make 20% because the contract was going to make it make that so we are in.

In those where we have no assets.

Speaker 2: You have a much lower margin than when you would on there. That's kind of our game plan because what we do is just manage the spread. We have a nice mixture. I expect when we invest the capital, we expect 20% margin plus business.

Aw.

A much lower margin than you would on there and thats kind of our game plan because what we do is just manage the spread so we have a nice mixture.

When we when we invest the capital, we expect 20% margin plus businesses.

Speaker 2: When we just have logistics or asset light, then the margin goes down. And we've been moving more and more towards asset light business, where we're not making the capital investment. We love to invest in real estate because it's long term. We love the intermodal business.

We just have logistics or asset light then the margin goes down and we've been moving more and more towards asset light business, where we're not making the capital investment we love to invest in real estate, because it's long term.

Yeah.

We love the intermodal business, because it's long term.

Alright.

Speaker 2: Right. That makes a ton of sense. You can still generate good ROI on investing more. Yes, it's all about do we generate cash and a return on the cash we invested. We're still Warren Buffett disciples here at...

That makes a ton of sense you can still generate good good ROI on them.

To us it is.

Mora said, yes.

It's all about do we generate cash and a return on the cash we invested.

We're still Warren Buffett disciples Europe .

Mullen group.

Makes sense.

Speaker 7: It makes sense. You know, you made a comment a few times that you think there's a structural change in the Canadian freight industry. You know, it's been underpriced for a long time now and maybe that's starting to change and maybe following what

You've made a comment a few times that you think there is a structural change in the Canadian.

<unk> industry.

It's been under price for a long time, now and maybe thats starting to change and maybe following what.

Speaker 7: always can tell through the border. Are you seeing any behavioral changes with

We've seen sell through the border or are you seeing any behavioral changes with.

With your shippers or customers.

Speaker 7: with your shippers or your customers, you know, to the extent that a crystal ball they've seen how disruptive it has been.

It makes sense to have a crystal ball they've seen how disruptive it has been.

Speaker 7: to shippers south of the border, if they did not secure capacity ahead of time, and if what you're calling for is something maybe similar to what we've seen in the US the past few years here, you know, that incentivizing shippers to maybe, you know, as you mentioned, maybe lock in some dedicated capacity, lock in rates maybe at a higher level, but knowing that there's consistency of service. Are you seeing if that behavior change, if what you're calling for is really what's happening?

Shippers are south of the border did unsecure capacity ahead of time.

What you are calling for something maybe similar to what we've seen in the U S. The past few years here.

That incentivising shippers and maybe as you mentioned maybe.

Lock in some dedicated capacity lock in rates, maybe at a higher level, but knowing that.

This consistency of service are you seeing any of that behavior change.

Okay.

They're calling for is really what's happening.

To repair, but I haven't seen that yet.

Speaker 2: Truthfully, Kevin, I haven't seen that yet.

<unk>.

At least in the Canadian marketplace.

Speaker 2: at least in the Canadian marketplace. By the way, no customer that I know of yet, and I've told this to all of our group, has come to us and offered us a price.

By the way no customer that I know of yet and I told this to all of our group has come to us and offered US a price increase.

Speaker 2: We got to go ask for it. We got to go tell them. If you want servos...

You got to go out and work regarding you tell them if you want to share those.

Speaker 2: This is what you will pay. So these are awkward discussions when you haven't had these discussions for a long period of time. So you're going to win some, you're going to lose some, but net net prices are going up.

This is what you pay so these are awkward discussions when you had been at these discussions for a long period of time so.

Youre going to win some youre going to lose some but but net net prices are going up.

Speaker 2: Some customers, I think generally though, all the customers that we've had are receptive to the pricing increases. What we are still involved in, nobody just accepts a huge increase. There's lots of debate and, hey, can you mitigate? Can you do this? Can you do that? And therefore, I want to give our customers the option of

Some customers I think generally the people all the customers that we are.

Are receptive to the pricing increases.

We are still involved in nobody just accepts a huge increase there's lots of debate and hey can you mitigate can you do this can you do that and Thats, where I want to give our customers the option.

What do you want <unk>.

Speaker 2: If you can give us time and you want to move it intermodally, that's probably going to be a much more efficient, cost-efficient way for you than if you want truck and you want it delivered tomorrow. That service is going to cost you a lot of money. And so...

Give us time and you want to move at intermodal, that's probably going to be a much more efficient.

Cost efficient way for you then if you want truck and you want it delivered tomorrow.

That service is going to cost you a lot of money.

And so.

We have to manage it Kevin I know prices are going up.

Speaker 2: We have to manage it, Kevin. I know prices are going up, but the market will pay if they have to pay, not because they want to pay.

But.

The market will pay if they have to pay not because they want to pay.

No.

Speaker 7: No, that's a very fair statement. I'll leave it there, Marie. Thanks for taking my questions. I can grasp on a solid cue for there. Yeah, thanks, Kevin. I appreciate that. Cheers, man.

That's a very fair statement that I'll leave it there.

Thanks for taking my questions and congrats on a solid Q4, there yeah. Thanks, Kevin appreciate that.

The next question is Ben David Ocampo, with Cormack Securities. Please go ahead.

Speaker 1: The next question is from David Ocampo with Cormac Securities. Please go ahead.

Thanks, Good morning, everyone.

Mary you mentioned that the acquisition should continue to be a story here in 2002, but when I look at your outlook section. Your annual release, there you called out being uncomfortable with the current valuation expectations. So how should I frame those those two comments together.

Speaker 8: Murray, you mentioned that the acquisition should continue to be a story here in 22. But when I look at your outlook section, your annual release there, you called out being uncomfortable with the current valuation expectations. So how should I frame those?

Well I think that's the that's the pool that we're going to have David is that if you think about it.

Speaker 2: Well I think that's the, you know, that's the the the tuck pole that we're going to have, David, is that if you think about it...

Speaker 2: A seller is now saying, well, I'm going to get pricing increases, so I want.

A seller is now, saying well my I'm going to get pricing increases so I want.

Speaker 2: you know, I want higher valuation. And that ends up being the.

I wanted to higher valuation and that ends up being the.

I think that ends up being.

Speaker 2: I think that ends up being the difference between what we're paying for and what we expect.

The difference.

Between what we're paying for and what we expect so.

We just have to manage that you've got to find a happy medium is so everybody tells me the raising prices.

Speaker 2: We just have to manage that. You've got to find a happy medium. Everybody tells me they're raising prices.

Speaker 2: all these guys that are trying to sell their businesses. Well, I'm going to raise my prices. Well then go raise your prices and show me. Because I want to see how it works out before I invest money in your business. Where we would invest.

All of these guys that are trying to sell their businesses, while I'm going to raise my prices will then go raise your prices and xiaomi.

Because I want to see how it works out before I before I invest.

Money in your business, where we would invest.

It was when we think we get a really quality company with a great workforce. Some great leadership, just like we did last year, we'll continue to.

Speaker 2: It is when we think we get a really quality company with a great workforce and great leadership, just like we did last year. We'll continue to look favorably at acquisitions like that, but I'm not going to go... Some of these businesses, they need to be...

Look favorably at the acquisitions like that but I'm not going to go some of these businesses just now they need to be.

Speaker 2: They need to get their <expletive> together and raise some prices and get their margins up. They need to get out of the business. That's how simple it is.

The Union if you get the ship together and raised some prices and get the margins up where they need to get out of the business.

How simple it is.

Speaker 8: Right, and I guess just as a follow up, if you can't get anything across the line this year, how would you prioritize your free cash flow? Is it just paying down debt, dividends and buybacks?

Alright, and I guess, just as a follow up if you if you can't get anything and crossed the line. This year, how would you prioritize your free cash flow, but just paying down debt dividends and buybacks.

Buy back shares.

Speaker 2: We already increased the dividend for this year. We're really comfortable with that. I can tell you right now, we're really, really comfortable in buying this really cheap company. It's called MTL.

We already increased the dividend for this year.

Really comfortable with that and.

I can tell you right now, we're really really comfortable in making.

Volume is really cheap company it's.

It's called MTO.

Okay. That's it for me Mary I'll hand, the call over.

Thanks, David.

Yeah.

The next question is from Walter Bachman with RBC capital markets. Please go ahead.

Speaker 1: The next question is from Walter Sprocklin with RBC Capital Market. Please go ahead. Yeah, thanks very much.

Yes, thanks very much.

Mary how are you doing.

Good good good so just on.

Speaker 4: Good, so just on your outlook for December , just to recap what I think I've heard here is that you gave an outlook for December , you highlighted that Canada was behind the US. We've heard from one of your key competitors here that that was true but now the gap is closing, Canada is getting its act in gear, getting its act together.

Your outlook for December just to recap what I think I've heard here is that you gave an outlook for December you highlighted that Canada was behind the U S. We've heard from one of your key competitors here that that was true but now.

Now the gap is closing Canada is getting its act in gear.

Getting its act together.

Speaker 4: And now conditions have improved significantly that will allow you to drive price in Canada at a much better level than you saw in December . Is that a fair?

I know conditions are have improved significantly that will allow you to drive price in Canada at a much better level than you saw in December .

Is that a fair.

Is that fair to say I think thats the expectation.

Speaker 2: Is that fair to say in the summary? I think that's the expectation, Walter, is that...

Walter is that.

Is the gap is going to narrow between the two markets, Canada and U S. I think that's exactly what's going to happen.

Speaker 2: is the gap is going to narrow between the two markets, Canada and US. I think that's exactly what's going to happen.

Speaker 2: And I have not spoken with Mr. Baddar, but I can tell you it's the market. So he sees it from his perspective. I see it from ours. So that tells me it's a market force. Is that prices are going up because they have to. And that gap is going to narrow. When that narrows.

And I have not spoken with Mr. <unk>, but I can tell you. It's the market. So he sees it from his perspective I see it from ours. So.

That tells me it's a market for us is that prices are going up because they have to.

That gap is going to narrow when that narrows.

Speaker 2: then I think that what you're going to see is margin improvement. So when people, what's going to change in our business, there's not going to be substantially more revenue of economic growth.

Then.

I think that what youre going to see is margin improvement. So when people what's going to change in our business. There is not going to be substantially more revenue.

Economic growth.

Speaker 2: The economy is kind of growing about what it can right now. You've got a tight labor market, you've got supply chain issues. We just can't grow much more. Where we do see the step change.

The economy is kind of growing at about what it Ken right now it's you got a tight labor market you've got.

Supply chain issues, we just can't grow much more where it is going to where we do see the step change is.

Speaker 2: is in the cost side and appropriate.

As in the cost side.

And.

Appropriate pricing levels. So how much I've just said I gave my best guess that we're going to improve margin, we're going to strive to maybe improve margin by 1% or something like that that's $18 million.

Speaker 2: How much? I gave my best guess that we're going to strive to maybe improve margin by 1% or something like that. That's $18 million.

No.

That was just my best guess in December .

Speaker 2: That was just my best guess in December . And this is a very fluid market right now. Some of the stuff I'm seeing, this is

And this is a very fluid market right now like some of the stockpile seen this.

This is not.

Speaker 2: not like 1% margin is quite significant.

Not like 1% margins quite significant.

Speaker 2: We'll have to see how it plays out. I'm just telling everybody prices are going up. I think there's a step change that's happening in the logistics and Canadian trucking business. Our job is to manage that and drive margin and it's going to come from pricing leverage.

So we'll have to see how it plays out I'm, just telling everybody prices are going up I think theres a step change that's happening in the logistics and Canadian trucking business and our job is to manage that and drive margin.

It's going to come from pricing leverage.

Speaker 2: period. It's just so simple. I think there's going to be a step change. You'll be able to monitor us every quarter. How are we doing on that? You start the year, we've got pricing improvement, and then you're sitting at the borders waiting because there's backlogs, there's protests. Whenever there's a protest, it didn't matter if it was...

Period, it's a subset of those so I think theres going to be a step change and then youll.

Youll be able to monitor as every quarter. How are we doing on that now you start the year, we got pricing improvement then youre sitting at the borders waiting because there's there's backlog. So there's protest whenever there is a protest it didn't matter if it was protesting the pipelines it didn't matter. If it's this protest that protest when theres protests.

Speaker 2: protesting the pipelines, it didn't matter if it's this protest, that protest. When there's protests, which are really labor disruption moves, then those are awkward times when they kind of, you know, they...

Which are really labor disruption moves than those.

Those are awkward times in the economy.

Speaker 2: You know, you don't have good productivity and those kind of things during that period of time. But protests don't last forever. They'll go away. What I'm talking about is the trend.

You don't have good productivity and those kinds of things during that period of time, but protests don't last forever. They will go away when.

I'm talking about is the trend and I think the trend.

Speaker 2: is higher prices and I think that will be the friend for those people that know how to take advantage of that.

As higher prices and I think that will be the trend for those people that know how to take advantage of that.

Okay.

Hugh.

Speaker 3: You highlighted your intermodal deal with CN. As you know, and I know I've asked you this in the past, CN is currently examining how they're going to operate.

You highlighted your intermodal deal with CN.

As you know and I know if I ask you. This in the past <unk> is currently.

Jamming, how theyre going to.

Operate their intermodal.

Segment.

Speaker 2: from that trucking side, particularly with their transacts and H&R and so on. You appear to be getting a deeper and deeper relationship with CN on the intermodal side. Does it stand to reason that there could be further...

From from that trucking side, particularly with with their transaction H&R and so on.

You appear to be getting a deeper and deeper relationship with CN on the intermodal side.

It does it stand to reason that there could be further further.

Our partnership here.

Speaker 3: partnership here if they do indeed go ahead with that kind of JV model that they've talked about or on the flip side if they didn't go

If they do indeed go ahead with that kind of JV model that they've talked about.

Or on the flip side, if they didn't go with <unk>.

Speaker 2: Mullen on the JV model and went with another player. Do you see that intermodal business that you've announced with CN at risk in the future, depending on who they go with?

On the JV model and with another player do you see that intermodal business that you've announced with CN at risk in the future depending on who they go with if they do JV with someone else.

Speaker 2: Well, I can't speak for CN. I'll let you can talk with them. They've got their strategic plans and their initiatives, and I'm not privy to them and whatever. I'll just say, I'll look at any deal that comes up across our desk.

Well I can't speak for CN I'll, let you can talk with them they've got.

Their strategic plans and their initiatives and I'm, not privy to them and whatever suffice to say all look at any deal that comes up.

Across our desk. So I can speak of what we would look at and by the way I looked at the H&R assets before and I looked at the transact assets before they bought them.

Speaker 2: So I can speak of what we would look at. And by the way, I looked at the H&R assets before and I looked at the Transax assets before they bought them. So it's not as if this is new to us. But if it comes our way, we'll re-engage and we'll look at it and we'll see does it make sense for Mullen shareholders and for our business and for our customers. Absolutely we'll do that.

So it's not as if this is new to us.

But if it comes our way, we'll reengage and we'll look at it and we'll see does it make sense for Mylan shareholders and for our business and for our customers absolutely we'll do that.

Am I worried about when we don't get it no because we don't have it now.

Speaker 2: Am I worried about we don't get it? No, because we don't have it now.

Speaker 2: So all we're talking about, if it makes sense, then we will certainly put our best foot forward and whatever. But the steps that we're taking, and Richard talked about it, we continue to get, we're going to move more and more towards providing a full intermodal long mile service offering for our customers. Intermodal is the way of the future for the long haul, for the long mile. It'll.

So all we're talking about if it makes sense then.

We will certainly.

Put our best foot forward.

And whatever but the steps that we're taking and Richard talked about it.

We continue to get.

We're going to move more and more towards providing a full intermodal long mile.

Service offerings for our customers intermodal is the way of the future for the long haul for the long mile LT.

<unk> you.

Speaker 2: your regional network, that's delivering to the customer.

Your regional network, that's delivering to the customer. So we've built out an excellent platform in <unk> now we're building out the long mile and intermodal will be a very very critical part of it.

Speaker 2: So we've built out an excellent platform in LTL. Now we're building out the long mile, and intermodal will be a very, very critical part of it.

Speaker 2: You know, we engage with our friends at CN because you can just say, look, they know that we're going to be a player.

We engage with our friends at CN because you can just you can just see look great. They know that we're going to be.

We're going to be a player.

They will want.

They'll want to engage with us because we move a lot of freight with them, they're a big subcontractor.

Speaker 2: They'll want to engage with us because we move a lot of freight with them. They're a big subcontractor to our group.

Our group.

Speaker 2: So we're going to continue and then you saw, we've already put some nice little capital addition, a lot more capital into intermodal trailers than into trucks.

So we.

We're going to continue and then you saw we've already put some.

So nicely capital addition, a lot more capital into intermodal trailers than into trucks.

Trucks use fuel trucks have drivers trucks have repairs and maintenance all the three big cost some trucking theyre going through the roof and intermodal.

Speaker 2: Trucks use fuel, trucks have drivers, trucks have repairs and maintenance. All the three big costs in trucking, they're going through the roof. In an intermodal, we signed a long-term deal with CN, which gives us price stability.

We signed a long term deal with CN.

Which gives us price stability.

And finally, just on technology here and the continue.

Speaker 2: And finally, just on technology here and the continued integration.

Continued integration a little bit on the edges at least.

Speaker 2: on intermodal with trucking and so on. I notice that Union Pacific through its logistics has done some interesting things.

On intermodal with trucking and so on.

Noticed that union Pacific through its.

Logistics has done some interesting moves here acquiring trans load facilities, but recently.

Speaker 2: moves here acquiring transload facilities, but recently partnered with Too Simple to

Partnered with two simple too.

To go down the path of autonomous driving.

Speaker 2: to go down the path of autonomous driving and really taking what we all viewed as a conceptual, down the road kind of idea and really now starting to invest dollars in it and test out equipment and so on. What's your view on...

And really taking what we all viewed as a conceptual down the road kind of idea and really now.

Turning to invest dollars in it and test out equipment and so on.

What's your view on.

On that whole path are you going to be a wait and see and Seo develops or.

Speaker 2: on that whole path? Are you going to be a wait and see and see how it develops or?

Is it possible that you start start looking at some ways to integrate more with rail by investing in autonomous driving.

Speaker 2: possible that you start looking at some ways to integrate more with rail by investing in autonomous driving.

Speaker 2: Well, I think there's a way for autonomous vehicles but...

Well.

I think theres, a theres a way for autonomous vehicles.

Probably in my career the rest of my career the autonomous vehicles will be.

Speaker 2: Probably in my career, the rest of my career, the autonomous vehicles will be on

On.

Use when they when they are on a specific site like intermodal yard where you can bring fence.

Speaker 2: use when they're on a specific site, like in an intermodal yard where you can ring fence all the parameters in there. We already know that they're using autonomous trucks in a lot of the mining, even in the oil and gas business up in the oil sands, and might be using autonomous vehicles on platforms where you just program it in and say here here's what you do.

All the parameters in there.

We already know that they are using.

Autonomy trucks, and a lot of the mining even in the oil and gas business up in the Oilsands somewhat of a using autonomous vehicles on platforms, where you're just.

Program it in and say here's your switch to.

Speaker 2: Going over the road, that's not going to happen in my lifetime. I don't see that. Our autonomous truck is going to be that intermodal platform. That's where we're going.

Going over over the road.

That's not going to happen in my lifetime, I don't see that.

Our autonomous truck is going to be that intermodal platform, that's where we're going.

Speaker 2: Will you have autonomous trucks in your yards to move freight and equipment? Yeah, I can see that happening, but it's so early stage. Right now, I'll tell you what we're really focused on.

Will you have autonomous trucks in our yards to move freight and equipment you have that I can see that happening but.

It's so early stage right now where I'll tell you what we're really focused on.

Speaker 2: I'm really focused on making sure we have the right strategic assets and facilities. We're going to continue to invest in facilities. If you don't have facilities, you're not going to be a player in this game. Am I happy with our real estate portfolio? Take it to the bank shareholders. It's fantastic.

I'm really focused on making sure we have the right strategic assets and facilities.

We're going to continued investment.

You don't have if you don't have facilities youre not going to be a player in this game.

So am I happy with our real estate portfolio take.

Take it to the bank shareholders.

It's fantastic.

Speaker 2: Do I want more intermodal? Yeah, but boy they're expensive. We've got some good platforms now and we'll continue to add where we were.

Where do I want more intermodal, yeah, but boy they're expensive.

We've got some good platforms now and we will continue to add where we where we can so.

But on.

Speaker 2: But on the technology side, technology is going to continue to evolve. We all know that. Whether it's going to be one big blockchain where everybody in the world goes through one technology, I doubt it. I think there's going to be just a continued evolution of technology and integration of service providers into one platform. If you want to call that blockchain 2, go ahead. But we'll be more integrated in with your service providers, no doubt about it.

On the technology side technologies, that's going to continue to evolve, we all know that and.

Whether it's going to be one big block chain, where everybody in the world goes through one technology I doubt it I think theres going to be.

Just a continued evolution of technology and integration of service providers into one platform. If you want to call that blockchain do go ahead.

But we'll be we'll be more integrated in with your service providers no doubt about it.

Okay I appreciate the time as always Mary thanks. Thank.

Speaker 3: Okay, appreciate the time as always, Murray. Thanks. Thank you, Walter. Good chatting. Cheers, now.

Thank you Walter.

No.

Speaker 1: Once again, if you have a question, please press star then 1.

Once again, if you have a question please press <unk>.

Other than one.

Our next question from Matthew Weekes with IAA capital market. Please go ahead.

Speaker 1: Our next question is from Matthew Week with IA Capital Market. Please go ahead.

Good morning, Thanks for taking my question I just wanted to touch first of all you briefly mentioned.

Speaker 3: Morning, thanks for taking my question. I just wanted to first of all, you briefly mentioned disruptions from blockades and protests and that sort of thing in the business. I'm just wondering if this is anything that's been material so far in the quarter or if you've for the most part been able to work around any blockades or disruptions of that sort.

Disruptions from.

Lockheed and protests in that sort of thing in the business I'm. Just wondering if this is anything thats been material so far.

In the quarter or if you're for the most part been able to work around any any blockades or disruptions of that sort.

Speaker 2: Well, it's been a pain, there's no doubt about it.

Well, it's been a pain there is no doubt about it.

<unk>.

Speaker 2: As I said, we've endured many, many blockades over the last bit. In the fourth quarter, we endeared the floods blockades. You couldn't get through the roads. This one, the other one was mother nature. This one appears to be man-made, so it's a disruption. You have to work around it and costs are going up. You avoid those areas, but you have to tell the customers, we'll avoid it. If you're stuck in the middle of it.

But as I said, we've endured many many blockades over the last bit in the fourth quarter, we endured the floods blockades you couldnt get through the road so.

This one.

The other one was mother nature of this one appears to be it is manmade, but it's so it's a disruption but you have to work around it and costs are going up so you avoid those areas.

But you have to tell the customers will avoid it if you're stuck in the middle of it.

Speaker 2: Yeah, we've had some some disruption there, but our business is totally diversified across.

We've had some some disruption there, but our business is totally diversified across.

Speaker 2: so many different platforms. We've had some disruption and then we've had some gain. So net net, I don't think you're going to hear me say, oh my God, these things destroyed our quarter. I don't think you're going to hear that.

So many different platforms on.

We've had some disruption and then we've had some gain.

So net net I don't.

I don't think Youre going to hear me say Oh My God.

These things destroyed our quarter I don't I don't think youre going to hear that.

<unk>.

Are they obtained yes.

Speaker 2: But as I said, most disruptions are a pain, so we just have to work around that.

Most disruptions European so we just have to work around them.

Speaker 2: I know one thing that happens. If we're taking that freight and you're going to and from the United States as an example, I can tell you the rates are up pretty significantly.

Okay.

I know one I know one thing that happened that happens if we're taking that freight and youre going to and from the United States. As an example, I can tell you the rates are up pretty significantly right now.

Okay, Thanks, and speaking of great and pricing, there's been a lot of talk on that today.

Speaker 4: Okay, thanks. And speaking of rates and pricing, there's been a lot of talk on that today. So if I could just try and summarize it a little bit, would you say that overall demand remains strong in the business, but on the volume side, capacity is tight. So Mullen will be able to leverage pricing to meet the higher costs and potentially even leverage pricing increases over and above to capture incremental margin. Is that correct?

So if I could just try and summarize it a little bit would you say that overall demand remains strong in the business, but on the volume side capacity is tight so marlin will be able to leverage pricing to me.

The higher costs and potentially even leverage pricing increases over and above to capture incremental margin is that correct. Yes.

Speaker 2: Yeah, you've summarized it better than maybe I did, Mark, which is demand remains pretty strong. It's not growing. I want to make sure that I'm clear with everybody on that. I think it's not bad, but it's not growing. Capacity is the thing that has tightened for the reasons we talked about.

<unk> summarized at better than maybe I did mark which is demand remains pretty strong it's not growing I want to make sure that that.

I'm clear with everybody on that I think it's kind of it's not bad but it's not growing capacity is the thing that has tightened for the reasons we've talked about.

Speaker 2: And so that tells me that price is going to go up. Our job is to move the pricing over and above.

So that tells me that pricing is going to go up our job is to.

As to move the pricing over and above.

Speaker 2: our cost push. And myself and Richard particularly and even Safan and Carson, we're on top of our business units all the time. You better make dang sure.

Our cost push.

And.

Myself, and Richard, particularly and even Japan of course, and we're on we're on.

On top of our business units all the time.

Sure.

Speaker 2: that you moved your pricing. Don't come in with your monthly numbers to me that says, you know, we were busy but we didn't do well. You wouldn't want to have that call with Marie and Richard these days.

If you move your pricing don't come in with your with your monthly numbers, let's say.

Busy, but we we didn't do well.

You wouldn't want to have that call with marine which of these days.

Okay. Thank you I appreciate that and my last question is more macro I think if you look at the recent supply chain bottlenecks and inflation going on globally. It has highlighted some weakness in global supply chains and logistics networks would you say that this is positive for the business overall in the long.

Speaker 4: Okay, thank you. I appreciate that. And my last question is more macro. I think if you look at the recent supply chain bottlenecks and inflation going on globally, it's highlighted some weakness in global supply chains and logistics networks. Would you say that this is positive for the business overall in the long term when you consider the investment needed to bolster these networks, investments needed in technology, and on the 3PL side of the business and that opportunity as well?

When you consider the investment needed to to bolster these networks investments needed in technology and on the three PL side of the business and that opportunity as well.

Yes, I think that's a really good point, Mark I think where youre finding.

Speaker 2: Yeah, I think that's a really good point, Mark. I think where you're finding...

Where there is huge.

Speaker 2: where there's huge pricing leverage.

<unk> leverage.

Speaker 2: is really not because of a lack of technology. What technology allows us to do is be more productive.

There's really not because of a lack of technology. What technology is I think a allows us to do is be more productive.

Speaker 2: where you're having the bottleneck is, and let's look at ocean ships.

Where you're having the bottleneck is so let's look at at Ocean shipping.

Speaker 2: Demand went up, but you couldn't add any supply. You don't go build a ship in a day. You don't build a new port.

Demand went up but you couldn't add any supply.

You don't go build a ship in a day you don't build a new port.

Speaker 2: Then things got bottlenecked. So those container ships were coming from Asia over to North America instead of being on the water and in port on total rounder being 45 days.

And then things got bottleneck so.

Those container ships were coming from Asia over to North America, instead of being on the water and in port on total round or being 45 days, while they are sitting in port waiting to get offloaded, because its bottleneck because theres not enough capacity to move it out of their efficiently.

Speaker 2: Well, they're sitting in port waiting to get offloaded because it's bottlenecked because there's not enough capacity to move it out of there efficiently. So they're sitting out on open water for 15 days on both ends. Well, that adds 30 days. That takes away how many rounders you can do. So there was actually a capacity reduction.

They're sitting out on open water for 15 days on both ends will that adds 30 days that takes away how many round or as you can you can do so there was actually a capacity reduction.

Speaker 2: of available ships because they weren't productive. That is kind of happening in trucking now.

Of available ships, because they weren't productive.

That is kind of happening in trucking now.

Speaker 2: We're not as productive as we once were because there's all these new safety protocols.

We're not as productive as we once were because there's all these new safety protocols. There is a vaccine mandates. There is this mandate, it's just another form of regulation.

Speaker 2: There's vaccine mandates. There's this mandate. It's just another form of regulation. And you cannot add capacity today in anything. Nobody, nobody's building a new facility and trucking. It's too expensive.

You cannot add capacity today in anything nobody there.

Nobody's building, a new facility in trucking it's to expense.

So I think it's.

Speaker 2: So I think it's the capacity, we can't add supply.

The capacity, we can add supply.

Speaker 2: which means that if demand stays strong, price must go up.

Which means that if demand stays strong price must go up.

Speaker 2: Okay, thank you. That's helpful. I think this is, that's why I think it's a step change. And you know, it's, it could, you know, this could be, it could be a trend this year for quite a while.

Okay. Thank you that's helpful. I think this is that's why I think it's a step change and.

It could this could be.

It could be a trend that's here for quite a while.

Okay. Thanks, absolutely that's helpful.

Speaker 4: Okay, thanks. Absolutely. That's helpful. That's all my questions. I'll turn it back. Thanks, Mark.

All my questions I'll turn it back thanks.

Thanks, a lot good shedding but.

Speaker 1: This concludes the question and answer session. I'd like to turn the conference back over to Mr. Mullen for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to Mr. Mullen for any closing remark.

Thanks folks we've taken up enough of your day to day.

Speaker 2: Thanks folks, we've taken up enough of your day today. Wish everybody well and we've got a lot of work to do in 2022. I can tell you our team is totally focused and you've heard what we're going to be focused on. So thanks so much, we'll talk to you after Q1. Cheers now, bye.

Wish everybody well and we've got a lot of work to do in 'twenty two.

I can tell you our team is totally focused and you've heard the what we're going to be focused on so thanks. So much we'll talk to you after Q1 cheers bye.

Speaker 1: This concludes today's conference call. You may disconnect at your lines.

This concludes today's conference call you may disconnect your lines.

Thank you for participating and have a pleasant day.

Speaker 9: you

Yes.

Yes.

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Okay.

[music].

Speaker 9: And that.

Yeah.

Okay.

Yeah.