Q2 2026 Mullen Group Ltd Earnings Call

July 23, 2026

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Limited 2026 second-quarter earnings conference call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded.

Operator 3: Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Ltd. 2026 Q2 earnings conference call and webcast. 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 one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Murray Mullen, Chair & Senior Executive Officer. Please go ahead, Mr. Mullen.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Ltd. 2026 Q2 earnings conference call and webcast. 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 one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Murray Mullen, Chair & Senior Executive Officer. Please go ahead, Mr. Mullen.

Speaker #1: After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press * then 1 on your telephone keypad.

Speaker #1: Should you need assistance during the conference call, you may reach an operator by pressing * then 0. I would now like to turn the conference over to Murray Mullen, Chair and Senior Executive Officer.

Speaker #1: Please go ahead, Mr. Mullen.

Speaker #2: Well, welcome, everyone, to Mullen Group's quarterly conference call. This morning, we released our second quarter internal report. There's a nice, 60-page document full of detailed numbers and analysis.

Murray Mullen: Well, welcome everyone to Mullen Group's quarterly conference call. This morning, we released our Q2 interim report. It was a nice 60-page document full of detailed numbers and analysis prepared by our team, headed up by Carson Urlacher and Nik Woodworth. This document contains updated information, is available on SEDAR+, and on our website, www.mullen-group.com. I'll remind everyone this morning that today's presentation and commentary contain forward-looking statements, and they're based upon current expectations and are subject to a number of risks and uncertainty. As such, actual results may differ materially. Further information identifying the risks, uncertainties, and assumptions can be found in the disclosure documents. With me this morning, I'm joined here in Okotoks by the majority of the senior executive team. Richard Maloney is out traveling this morning, so he's not available. I have Carson Urlacher, he's our Senior Financial Officer.

Speaker #2: Prepared by our team, headed up by Carson Urlacher and Nick Woodworth. This document contains updated information that is available on Cedar Plus.

Speaker #2: And on our website, www.mullen-group.com. So I'll remind everyone this morning that today's presentation and commentary contain forward-looking statements, and they're based upon current expectations and are subject to a number of risks and uncertainty; as such, actual results may differ materially.

Speaker #2: Further information identifying the risks, uncertainties, and assumptions can be found in the disclosure documents. With me this morning, I'm joined here in Okotoks by the majority of the senior executive team. Richard Maloney is out traveling this morning, so he's not available.

Speaker #2: But I have Carson Urlacher. He's our senior financial officer. Joanna Scott, who's our senior corporate officer, and Lee Helluer, who's our senior commercial officer.

Murray Mullen: I have Carson Urlacher, he's our Senior Financial Officer. Joanna Scott, who's our Senior Corporate Officer, and Lee Hellyer, who's our Senior Commercial Officer. For today's call, we'll follow a similar format as the last few conference calls, all in an effort to make sure that this call is as meaningful and productive for everyone as possible. All prepared remarks by Carson and myself can be found in the Q2 interim report, the financial report, and the press release documents, which were released earlier this morning. We have nothing further to add, we will head straight to the Q&A session, as I suspect that you will have some interesting questions. Now, not only was last quarter one of the very best ever for our organization, it appears that there are several major projects all- A significant logistics component to them. These are actively being contemplated at this time.

Murray Mullen: Joanna Scott, who's our Senior Corporate Officer, and Lee Hellyer, who's our Senior Commercial Officer. For today's call, we'll follow a similar format as the last few conference calls, all in an effort to make sure that this call is as meaningful and productive for everyone as possible. All prepared remarks by Carson and myself can be found in the Q2 interim report, the financial report, and the press release documents, which were released earlier this morning. We have nothing further to add, we will head straight to the Q&A session, as I suspect that you will have some interesting questions. Now, not only was last quarter one of the very best ever for our organization, it appears that there are several major projects all- A significant logistics component to them. These are actively being contemplated at this time.

Speaker #2: For today's call, we'll follow a similar format as the last few conference calls, all in an effort to make sure that this call is as meaningful as possible.

Speaker #2: All prepared remarks by Carson and myself can be found in the second quarter interim report. The financial report and the press release documents. Which were released earlier this morning.

Speaker #2: We have nothing further to add. So we will head straight to the Q&A session. As I suspect that you will have some interesting questions.

Speaker #2: Now, not only was last quarter one of the very best ever for our organization, it appears there are several major projects, all of which have a significant logistics component to them.

Speaker #2: These are actively being contemplated at this time. This bodes very well for the economy, and I think it bodes very well for the organization. So, I see some of you have already joined the queue.

Murray Mullen: This bodes very well for the economy, and I think it bodes very well for our organization. I see some of you have already joined the queue. Before I hand it back to the operator, let me just summarize and give you a few opening comments. Let's start with the discussion on the state of the Canadian economy. From what the data tells us, and what it told us, the demand for freight and related services suggests the economy is doing reasonably well. Not robust by any stretch, but there was just enough economic activity to keep the markets in balance, and just tight enough that we were able to pass through those dreaded fuel surcharges that our customers just, really, they push back, but we were able to pass them through. You saw that was a pretty big number last quarter.

Speaker #2: But before I hand it back to the operator, let me just summarize and give you a few opening comments. Let's start with the discussion on the state of the Canadian economy.

Speaker #2: From what the data tells us, and what it told us, the demand for freight and related services suggests the economy is doing reasonably well.

Speaker #2: Not robust by any stretch, but there was just enough economic activity to keep the markets in balance, and just tightened up so that we were able to pass through those dreaded fuel surcharges that our customers—well, they really pushed back, but we were able to pass them through.

Speaker #2: And you saw, that was a pretty big number last quarter. But because these surcharges were so high, it just wasn't feasible to pass through general price increases.

Murray Mullen: Because these surcharges were so high, it just wasn't feasible to pass through general price increases. Our customers can only tolerate so much at one time. There'll come another day when we can negotiate higher general rates, but that was not Q2. This will happen if, and I reiterate if, the economy can continue to expand. When it does, we will push through higher rates. Until then, and this is basically what we're doing today, is that we will focus on high-grading the freight we handle, de-marketing low-paying freights. This in itself helps drive margin improvement. Moving on to the S&I segment. Results were okay, they really weren't up Q2 over last year. This didn't bother me too much because there's a lot of momentum building in terms of major capital projects that will fuel this segment to higher revenues and margins in future years.

Speaker #2: Our customers could only tolerate so much at one time. They'll come another day when we can negotiate higher general rates. But that was not last quarter.

Speaker #2: This will happen if, and I reiterate if, the economy can continue to expand. When it does, we will push through higher rates. Until then, and this is basically what we're doing today, is that we will focus on a high grading the freight we handle.

Speaker #2: Demarketing low-paying freight. This in itself helps drive margin improvement. Moving on to the S&I segment. Results were okay, but they really weren't up last quarter over last year.

Speaker #2: But this didn't bother me too much, because there's a lot of momentum building in terms of major capital projects that will fuel this segment to higher revenues and margins in future years.

Speaker #2: So all good for now. Enough said. Operator, would you please open the lines?

Murray Mullen: All good for now. Enough said. Operator, would you please open the lines?

Speaker #1: Certainly. We will now begin the question and answer session. To join the question queue, you may press * then 1 on your telephone keypad.

Operator 3: 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 you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question is from Konark Gupta with Scotiabank. Please go ahead.

Operator: 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 you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Our first question is from Konark Gupta with Scotiabank. Please go ahead.

Speaker #1: 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 * then 2.

Speaker #1: Our first question is from Konark Gupta with Scotiabank. Please go ahead.

Speaker #3: Thanks, operator. Good morning, Murray and team. Great results, of course, and glad to hear you're calling off the fair discussion here after three years.

Konark Gupta: Thanks, operator. Good morning, Murray and team. Great results of course, glad to hear you're calling off the fear of recession here after 3 years. Maybe just first one for me, on the Q2. The Q2 was the Q1 where we saw a huge volatility in the fuel price in a long time. We are still seeing some of that volatility continue into July at this point. June was a little bit better. What have you seen from your business perspective? You have a very diversified portfolio. Some parts of the business might do well in this environment, some may not do as well. What have you noticed, how the fuel price or surcharges impacted demand or pricing discussions in different parts of your business?

Speaker #3: Maybe just the first one for me. On the second quarter— you know, I mean, the second quarter was the first quarter where we saw huge volatility in the fuel price in a long time.

Speaker #3: And we are still seeing some of that volatility continue into July. At this point, June was a little bit better. What have you seen from your business perspective?

Speaker #3: I mean, you have a very diversified portfolio. Some parts of the business might do well in this environment, some may not do as well.

Speaker #3: What have you noticed? How's the fuel price or surcharges impacted demand or pricing discussions in different parts of your business?

Speaker #2: I can't quantify exactly how it's impacted demand. I think that will play itself out over the next bit, Konark, to be honest with you.

Murray Mullen: I can't quantify exactly how it's impacted demand. I think that will play itself out over the next bit, Konark, to be honest with you. What we've seen thus far is that it really doesn't help spur demand. It just reships where the demand goes to. I think basically it hurts the general consumer economy because too much of their disposable income has to go to energy related. I guess maybe that's the reason why the S&I and our oilfield services business looks so productive because obviously the world needs more energy if you're going to keep prices in line. I think that's the beauty of our diversified portfolio. I would suspect the general economy will continue to do okay, but not super good. There's just not enough impetus for a huge increase.

Speaker #2: What we've seen thus far is that, you know, it really doesn't help spur demand. It just reshifts where the demand goes to.

Speaker #2: So I think basically it hurts the general consumer economy because too much of their disposable income has to go to energy-related expenses. But I guess maybe that's the reason why the S&I and our oil field services business looks so productive, because obviously the world needs more energy.

Speaker #2: If you're going to keep prices in line, I think that's the beauty of our diversified portfolio. I would suspect the general economy will continue to do okay.

Speaker #2: But not super good. There's just not enough—there's just not enough impetus for a huge increase. So, but anything to do with capital projects and with the building of these others, I think they'll, you know, we're probably in the right space in terms of that.

Murray Mullen: Anything to do with capital projects and with the building in these others, I think we're probably in the right space in terms of that. The markets are pretty much in balance from our perspective, but not growing. I don't see it. The growth opportunity is, if it's anywhere, it's related to capital projects. As I said, they're required to address this high energy cost environment that we're put in now. Part of it's risk, there's no doubt, with the war, and part of it is driven by just increased demand for energy all over the world.

Speaker #2: So the markets are pretty much in balance from our perspective, but not growing. I don't see it. The growth opportunity, if it's anywhere, is related to capital projects, as I said, that are required to address this, you know, this high energy cost environment that we're put in.

Speaker #2: Now, part of its risk, there's no doubt, with the war, and part of it is driven by just increased demand for energy all over the world.

Speaker #3: Okay. No, understood. Thanks. And on your CapEx budget, I guess you guys are increasing it by $50 million and that happens this year. But sounds like that will support your volume or demand growth in 2027.

Konark Gupta: No, understood. Thanks. On your CapEx budget, I guess you guys are increasing it by CAD 50 million, and that happens this year. Sounds like that will support your volume or demand growth in 2027. Where is that incremental CapEx going? Is that in anticipation of some of the contracts that you were bidding on, like Alaska LNG or even a new pipeline that's being contemplated between Alberta and Ontario, or something else?

Speaker #3: Where is that CapEx, incremental CapEx, going? And is that in anticipation of some of the contracts that you were bidding on, like Alaska LNG, or even a new pipeline that's being contemplated between Alberta and Ontario, or something else?

Speaker #2: Yeah, I think, you know, the majority of it, Lee, how yours Lee's on top of this file as much as anybody. Is that the majority of it that we're allocating is for major projects.

Murray Mullen: I think the majority of it, Lee Hellyer is on top of this file as much as anybody, the majority of it that we're allocating is for major projects. The reason is, let's just assume that all the projects that are being planned, that some of them start to go. Well, the industry's short of capital equipment, particularly let's take the Alaska LNG project. There is no capacity in the system right now to be able to execute on that project. Excess capacity in the trucking. It has to be new additional assets. We said, "Look, just to make sure we can execute that contract, we got to make sure we got the equipment." I asked Lee to take a look at it and make sure we were prepared. Lo and behold, the Class 8 truck market got very tight.

Speaker #2: And the reason is, is let's just assume that all the projects that are being planned, that some of them start to go. Well, the industry's short of capital equipment, particularly let's take the Alaska LNG project.

Speaker #2: There is no capacity in the system right now to be able to execute on that project—excess capacity in the trucking industry. It has to be new, additional assets.

Speaker #2: And we said, look, just to make sure we can execute that contract, we’ve got to make sure we've got the equipment. So I asked Lee to take a look at it and make sure that we were prepared, and lo and behold, the Class A truck market got very tight.

Speaker #2: So Lee, you might just want to comment on that. Just how much it's changed and why we had to move quickly on that front.

Murray Mullen: Lee, you might just want to comment on that, just how much it's changed and why we had to move quickly on that front.

Speaker #4: Yeah, Konark, it's Lee. You know, certainly the Class A truck order board tightened very, very quickly. A lot of discussion around pre-buys for 2027, of course, with the new emissions change coming.

Lee Hellyer: Connor, it's Lee. Certainly the Class 8 truck order board tightened very quickly. A lot of discussion around pre-buys for 2027, of course, with the new emissions change coming. It is our full intention to fully deploy the 85 that we had initially budgeted for. To Murray's point, the CAD 50 million directed more towards nation-building projects, whether that's here in Canada or, as he stated, possibly the Alaska LNG project. The order board did tighten, as Murray said, we wanted to make sure that we're in a good position that when those projects hit the ground running, that we are in a position to hit the ground running with it. If you wait, we were fearful that the trucks would not be here in time, so we weren't in a good position.

Speaker #4: So it is our fully intention to fully deploy the 85 that we had initially budgeted for. And then to Murray's point, the $50 million directed more towards nation-building projects, whether that's here in Canada or, as he stated, possibly the Alaska LNG project.

Speaker #4: The order board did tighten and, you know, as Murray said, we wanted to make sure that we're in a good position that when those projects hit the ground running, that we are in a position to hit the ground running with it.

Speaker #4: So if you wait, we were fearful that the trucks would not be here in time. So we were in a good position.

Speaker #2: Konark, these projects are extremely large—lots of B's involved with them. By that, I mean billions. But they're extremely complex. There are lots of parties at the table, and lots of things.

Murray Mullen: Connor, these projects are extremely large. They've got lots of Bs involved with them. By that I mean billions. They're extremely complex. There's lots of parties at the table and lots of things. There's been nothing formally announced, but we have to make a call. Do we get prepared for them or do we sit and not be prepared? If you're not prepared and it comes your way, you can't execute. We're taking a measured approach to this, and that's on the assumption that we think they're going to go, because the world needs energy. That's our thesis, and I think the majority of our shareholders will buy into that strategy that we've employed here. We're going to make sure we're prepared so we can say to the customer, We can do it. Don't worry, we got you covered. We can execute when it goes.

Speaker #2: So there's been nothing formally announced, but we're we have to make a call. Do we get prepared for them, or do we sit and not be prepared?

Speaker #2: But if you're not prepared and it comes your way, you can't execute. So we're taking a measured approach to this. And that's on the assumption that we think they're going to go.

Speaker #2: Because the world needs energy. So that's our thesis. And I think the majority of our shareholders will buy into that strategy that we've employed here.

Speaker #2: We're going to make sure we're prepared. So we can say to the customer, we can do it. Don't worry. We got you covered. We can execute when it goes.

Speaker #4: And, Konark, I'll just add that they've been spec'd so they could be deployed across many of our business units, not just any one in particular.

Lee Hellyer: Connor, I'll just add that they've been specced so that they can be deployed across many of our business units, not just any one in particular. We've made sure that if one project does or does not go, we can redeploy assets.

Speaker #4: So we've made sure that, you know, if one project does or does not go, we can redeploy assets.

Murray Mullen: Yeah, we've hedged our bets on that to make sure that it's not all in. We've got options. Primarily, we're getting ready for the Alaska LNG project, and if that goes, we're ready. If it doesn't go, we'll redeploy in the rest of our business. That's a good hedge in my book.

Speaker #2: Yeah, we've hedged our bets on that to make sure that, you know, it's not up all in. We've got options but primarily we're getting ready for the Alaska LNG project.

Speaker #2: And then if that goes, we're ready. If it doesn't go, we'll redeploy in the rest of our business. That's a good hedge in my book.

Speaker #3: That makes sense. Thanks. That does align. And good. We're going to queue. Thank you.

Konark Gupta: That makes sense. Thanks. That does align and get back in the queue. Thank you.

Speaker #2: Thank you.

Murray Mullen: Thank you.

Speaker #1: The next question is from Benoit Poirier with Desjardins Securities. Please go ahead.

Operator 3: The next question is from Benoit Poirier with Desjardins Securities. Please go ahead.

Operator: The next question is from Benoit Poirier with Desjardins Securities. Please go ahead.

Benoit Poirier: Hey, good morning, gentlemen, and congratulations for the quarter. Just to come back on the previous question about the CAD 50 million increase in CapEx and those nation-building projects, could you maybe, Murray, give us more color about the timing and the potential revenue contribution that could be coming from this increase in CapEx that we see?

Speaker #5: Hey, good morning, gentlemen, and congratulations on the quarter. Just to come back to the previous question about the $50 million increase in CapEx and those nation-building projects, could you maybe, Murray, give us more color about the timing and the potential revenue contribution that could be coming from this increase in CapEx that we see?

Murray Mullen: The timing is we're deploying the capital. It'll be later this year, right, Lee? That the trucks come in.

Speaker #2: The timing is we're deploying the capital it'll be later this year, right, Lee, that the trucks come in.

Speaker #4: That's correct.

Lee Hellyer: That's correct.

Speaker #2: So what we had to do already, you had to get ahead to get the build slots. So we're committing the capital this year. Any of the revenue that will be generated and I think what we'll do is we'll wait to see if we get the contract.

Murray Mullen: What we had to do already, you had to get ahead to get the build slots. We're committing the capital this year. Any of the revenue that will be generated, Benoit, I think what we'll do is we'll wait to see if we get the contract. If we do, we'll press release that and we'll say, "Here's the quantum and here's what we've signed," and whatever. It's premature to talk about how much we're going to do and whatever. All I can tell you is, folks, shareholders, investors, we're planning, and that's what we're doing. As soon as we know, Benoit, we will press release that out and say, "Here's what we've signed." Either we got it or we didn't get it. If we didn't get it, we'll redeploy those assets in the rest of our business, and that'll be our 2027 CapEx.

Speaker #2: If we do, you know, we'll press release that, and we'll say, here's the quantum and here's what we've signed and whatever. So, it's premature.

Speaker #2: To talk about how much we're going to do and whatever. All I can tell you is, folks, shareholders, investors, we're planning. And, you know, that's I think we should, you know, that's what we're doing.

Speaker #2: So as soon as we know, Benoit, we will press release that out and say, here's what we've signed. Either we got it or we didn't get it.

Speaker #2: If we didn't get it, we'll redeploy those assets and the rest of our business and that'll be our 2027 CapEx.

Speaker #5: Okay. And looking at the margin performance, LTL segment was quite strong and you call out the greater land density demarketing lower margin freight, but also cost recovery efforts.

Benoit Poirier: Okay. Looking at the margin performance, LTL segment was quite strong, you call out the greater land density, demarketing, lower margin freight, also cost recovery efforts. Is it fair to believe that this is a sustainable margin going forward for LTL, or could we even see greater benefits and more upside from the LTL segment?

Speaker #5: So is it fair to believe that this is a sustainable margin going forward for LTL, or could we even see greater benefits and more upside from the LTL segment?

Speaker #2: Yeah, that's a good comment. Benoit is that, yeah, LTL, I think we hit pretty good stride last quarter. And that's a function of, as we say, really it's three things.

Murray Mullen: That's a good comment, Benoit, is that LTL, I think we hit pretty good stride last quarter.

Lee Hellyer: We did, yeah.

Murray Mullen: That's a function of, as we say, really it's the I think our business units are generally doing a great job on the cost side. We did get full cost recovery on fuel surcharge. That helped bring the margin up.

Speaker #2: I think our business units are generally doing a great job on the cost side. We did get full cost recovery on fuel surcharge. That was that helped bring the margin up.

Speaker #2: And then, you know, the third is they're just enough freight in the system, Benoit, that we don't have to take some of that other low-paying freight to fill the trucks.

Murray Mullen: The third is there's just enough freight in the system, Benoit, that we don't have to take some of that other low-paying freight to fill the trucks. We're demarketing that because it's just not adding any value. Even though revenues didn't really go that much higher, the quality of the revenue improved, and that's what helped drive our margin improvement. If you get any growth in the Canadian economy, any, as the market has tightened, that will give us the go sign to maybe raise some prices. We're already seeing that happen in the United States. We haven't quite seen that happen up here in Canada yet, but hopefully that happens, but that'll probably be a 2027 situation. I don't think that's going to happen later this year.

Speaker #2: We're demarketing that because it costs; it's just not adding any value. So even though revenues didn't really go that much higher, the quality of the revenue improved, and that's what helped drive our margin improvement.

Speaker #2: Now, if you get any growth in the Canadian economy—any—as the market has tightened, that will give us the go sign to maybe raise some prices.

Speaker #2: We're already seeing that happen in the United States. We haven't quite seen that happen up here in Canada yet. But, you know, hopefully, that happens.

Speaker #2: But that'll probably be a '27 situation. I don't think that's going to happen later this year. There's too many headwinds with trade issues and with, you know, people just not investing the capital in the general economy at this moment.

Murray Mullen: There's too many headwinds with trade issues and with people just not investing the capital in the general economy at this moment. It's in pretty good balance, so I think we can maintain that margin. That's our expectation for the balance of the year.

Speaker #2: So it's in pretty good balance, so I think we can maintain that margin. That's our expectation for the balance of the year.

Speaker #5: Okay, and maybe last one for me. In terms of M&A, you mentioned some words in the press release around the interest to look at the tuck-ins and confidence that you could close some by the end of the year.

Benoit Poirier: Okay. Maybe last one for me. In terms of M&A, you mentioned some words in the press release around the interest to look at the tuck-ins and confidence that you could close some by the end of the year. Could you maybe provide some details about the size of those tuck-ins that you're looking at these days, the business segments also that you're looking at, and whether valuation is still reasonable given the seller expectation in the more favorable trucking market? Thanks.

Speaker #5: So could you maybe provide some details about the size of those talk-ins that you're looking at these days? The business segments, also that you're looking at and whether valuation is still reasonable given the seller expectation and the more favorable trucking market.

Speaker #5: Thanks.

Speaker #2: Yeah, I think, you know, on the expectation side, it's kind of a tale of two worlds here, you know, you know, clearly every seller wants to get the best price and every buyer wants to get the lowest price.

Murray Mullen: Yeah. I think, on the expectation side, it's kind of a tale of two worlds here. Clearly, every seller wants to get the best price, and every buyer wants to get the lowest price. That's the game that is played. It's kind of a tale of two worlds here. Eastern Canada, it's a little bit better, Benoit, but it hasn't improved substantially, so expectations are still reasonable. Truthfully, there's a lot of people, of our peers, that have got their balance sheet stretched. We'll take a look whether we think that those business units fit into our network where we can find synergy. Those are really the only ones that we're really contemplating at this time. Because we don't think the economy is strong enough to justify just getting a bigger entity.

Speaker #2: I mean, that's the game that is played. It's kind of a it's kind of a tale of two worlds here. Eastern Canada's it's a little bit better.

Speaker #2: Benoit, but it's but it hasn't proved improved substantially. So expectations are still reasonable are still reasonable. And truthfully, there's a lot of people of our peers that have got their balance sheet stretched, so they're not you know, we'll take a look whether we think that those business units fit.

Speaker #2: Into our network where we can find synergy. Those are the really the only ones that we're really contemplating at this time. Because we don't think the economy is strong enough to, you know, to justify just getting a big, you know, a bigger entity.

Speaker #2: Where we might kind of stretch out is in the S&I segment, because we expect that in future years there could be a lot of activity.

Murray Mullen: Where we might stretch out is in the S&I segment because we expect that in future years that there could be a lot of activity. That's what we're telegraphing. We'll continue to look on the S&I side. You've got to invest for the next cycle, not for the next week or quarter. If we do them, you know that we're optimistic about the future for S&I. The rest of it's got to be tuck-ins so we can find synergy. Without synergy, we're really not that interested.

Speaker #2: That's what we're telegraphing. So we'll continue to look in the S&I side, and that will give us—you know, you've got to invest for the next cycle, not for the next week or quarter.

Speaker #2: So we'll be if we do them, you know that we're optimistic about the future for S&I. The rest of it, it's got to be talk-ins so that we can find synergy.

Speaker #2: Without synergy, we're really not that interested.

Speaker #5: Okay, that's great, caller. Thank you very much. Thanks very much.

Benoit Poirier: Okay. That's great, Tyler. Thank you very much.

Speaker #2: I can't give you the size and which ones we're looking at, but I can tell you we're looking at a number that, you know, you know, we do a lot of smaller ones that just are real talk-ins Joanna.

Murray Mullen: I can't give you the size and which ones we're looking at. I can tell you we're looking at a number that we do a lot of smaller ones that just are real tuck-ins. Joanna, you're working on a number of files on those. Those individually are not really that significant. When you layer them in, I expect it's going to help our margin. That is what I got to keep telling everybody. That's what we're focused on. We're not really focused on the top line. We're focused on how do we improve the margin. We've got to make some smart business decisions on that, put capital work so we can get our margin up. We're not comfortable with, even though we had a good quarter, Karse-

Speaker #2: You're working on a number of files on those. Those individually are not really that significant, but when you layer them in, I expect it's going to help our margin.

Speaker #2: And that is what I have to keep telling everybody. That's what we're focused on. We're not really focused on the top line. We're focused on how do we improve the margin, and we've got to make some smart business decisions on that.

Speaker #2: Put capital to work so we can get our margin up. We're not comfortable with that, even though we had a good quarter, of course.

Speaker #5: Yeah.

Benoit Poirier: Yeah

Speaker #2: We are still focused on how we keep getting that margin going up.

Murray Mullen: We are still focused on how do we keep getting that margin going up.

Speaker #5: Absolutely.

Benoit Poirier: Absolutely. Yeah.

Murray Mullen: That's our primary focus, Benoit. Not so much the top line. How do we drive great acquisitions to improve our margin? That's our focus.

Speaker #2: And that's our primary focus, Benoit. Not so much the top line. How do we drive great acquisitions to improve our margin? That's our focus.

Murray Mullen: That's our primary focus, Benoit. Not so much the top line. How do we drive great acquisitions to improve our margin? That's our focus.

Benoit Poirier: Okay. That's great. Keep it up.

Speaker #5: Okay, that's great. Keep it up. Thank you.

Murray Mullen: Thank you.

Benoit Poirier: Thank you.

Operator 3: The next question is from Kevin Chiang with CIBC. Please go ahead.

Operator: The next question is from Kevin Chiang with CIBC. Please go ahead.

Speaker #1: The next question is from Kevin Chiang with CIBC. Please go ahead.

Speaker #2: Good morning, Kevin.

Murray Mullen: Good morning, Kevin.

Kevin Chiang: Hey. Good morning, Murray and team. Thanks for taking my questions this morning. Not to beat a dead horse, again, I'll reiterate the congrats on the good quarter here. Maybe if I, on the back of Benoit's question on LTL margins, just over 20% in Q2. If I look back, even before the pandemic, when you started disclosing this as a standalone segment, I think the only other time we saw margins this high, ex SUWS, was back in 2022 when we were kind of a year into that freight upcycle. It feels like we're in the early innings of this current freight upcycle. Looking at that trend, it seemed like you're able to expand margins, let's call it 200 to 300 basis points as we work through the innings of that ball game.

Speaker #3: Yeah, thanks. Hey, good morning, Murray and team. Thanks for taking my questions this morning. Not to beat a dead horse—and again, I'll reiterate the congrats on the good quarter here.

Speaker #3: Maybe if I on the back of Benoit's question on LTL margins, you know, just over 20% in Q2, if I look back, you know, even before the pandemic, when you started disclosing this as a standalone segment, I think the only other time we saw margins this high, you know, ex-Su's was back in 2022 when we were kind of a year into that freight upcycle.

Speaker #3: It feels like we're in the early innings of this current freight upcycle. I mean, looking at that trend, it seemed like you were able to expand margins.

Speaker #3: Let's call it 2300 basis points. You know, as we kind of work through these innings of that ballgame, is there any reason why we shouldn't be able to think of Mullen doing something similar, just at a higher base?

Kevin Chiang: Is there any reason why we shouldn't be able to think of Mullen doing something similar, just at a higher base? Could this not be, let's say, a low 20s or maybe low to even mid-20 EBITDA margin segment, just given where you're starting from here at 20.2% in Q2?

Speaker #3: Could this not be a, let's say, a low 20s or maybe low to even mid-20 EBITDA margin segment, just given where you're starting from here at, you know, 20.2% in Q2?

Speaker #2: Carson, I think I think that Kevin is he's done his homework. I've been sitting in some of our some of our executive meetings where we talk about our goals.

Murray Mullen: Carson, I think that Kevin.

Carson Urlacher: He's done the homework

Murray Mullen: been sitting in some of our executive meetings where we talk about that after our checks and our calls.

Speaker #2: So I've got the

Kevin Chiang: I've got the rooms bugged.

Speaker #3: Room's bug. I've got the room's bug.

Speaker #2: You know, I would say to you, you know, this is that is a topic that we talk about around our senior executive table is the market, you know, just getting tight enough that will help support that thesis to get back up to 20.

Murray Mullen: I would say to you, that is a topic that we talk about around our senior executive table. Is the market just getting tight enough that will help support that thesis to get back up to 20, and are we doing the right things to get us to 20? Carson, I think we're pretty close on saying we should be able to just meet those targets, right?

Speaker #2: And are we doing the right things to get us to 20? And of course, I think it's, you know, we've we're pretty close on saying we should be able to just meet those targets, right?

Speaker #5: Yeah. Yeah, for sure. You know, I would say that, you know, you've done your homework, Kevin. When you look back the last 10 years, once we start getting into that 20% margin range on LTL, it's you know, that's kind of a top end that we would have seen over our last decade.

Carson Urlacher: Yeah. For sure. I would say that you've done your homework, Kevin. When you look back the last 10 years, once we start getting into that 20% margin range on LTL, that's kind of a top end that we would've seen over our last decade. I would say that we budgeted, at the beginning of the year, to come in around 17% for fiscal 2026, and I'd say that we're ahead of that. I think the trend that we saw in Q2 is consistent into early innings, what we've seen in July so far. Nothing's really changed from that perspective. I would say that by the end of the year, we're looking at being able to beat what we originally budgeted for back in January.

Speaker #5: You know, I would say that, you know, we budgeted at the beginning of the year to come in around 17% for fiscal 2026. And I'd say that, you know, we're ahead of that.

Speaker #5: And I think, you know, kind of the trend that we saw in Q2 is kind of consistent into early innings what we've seen in July.

Speaker #5: So far, nothing's really changed. From that perspective, so I would say that, you know, by the end of the year, we're looking at being able to beat what we originally budgeted for back in January.

Speaker #2: Yeah. Once again, not so much because there's huge growth, Kevin, are we've got all the business units focused. Take the business that is higher valued freight, higher margin.

Murray Mullen: Yeah. Once again, not so much because there's huge growth, Kevin.

Murray Mullen: We've got all the business units focused. Take the business that is higher valued freight, higher margin. That's how we're going to drive margin. Less lower margin, a little bit higher margin doesn't mean that we're really increasing the revenue significantly. Once again, focus on margin and our business units. We're high-fiving them. We're saying, Folks, you. Not only did they listen, they actually executed. Once we start that trend, they don't want to go back either, Joe. They want to see high margin because we reward our business units based upon performance, and I can tell you, they're liking the performance as much as we are at corporate. I don't know why we wouldn't keep working towards that. Some of it's going to be market driven, but a lot of it's going to be because we make some good business decisions.

Speaker #2: That's how we're going to drive margin. Less lower margin, a little bit higher margin doesn't mean that we're really increasing the revenue significantly. Once again, focus on margin.

Speaker #2: And our business units you know, we're high-fiving them. We're saying, folks, you not only did they listen, they actually executed. And I would once we start that trend, they don't want to go back either.

Speaker #2: Joe, they want to see high margin because we reward our business units based upon performance. And I can tell you they're they're liking the performance as much as we are at corporate.

Speaker #2: So I don't know why we wouldn't keep working towards that. Some of it's going to be market-driven, but a lot of it's going to be because we make some good business decisions.

Speaker #3: That's very helpful color. And just my second question, again, maybe following up on some of the previous questions on your M&A pipeline and the increased capital spend here or capital that you've budgeted for.

Kevin Chiang: That's very helpful color. Just my second question, again, maybe following up on some of the previous questions on your M&A pipeline and the increased capital spend here or capital that you've budgeted for. As I think back to last year, you divested of your hydro, or maybe it was a little more than a year ago. You divested of your hydrovac business, and I think the narrative was you're just going to get scale there. Better to redeploy capital into areas that you have a competitive moat or advantage. When you think of, like you said, you're preparing for the next cycle. Is it spending capital on areas that you currently already have a strong position in? Is it looking at services you don't have a great position in and thinking that the next cycle might give you the opportunity to maybe deepen that expertise?

Speaker #3: Like, if I think back to last year, you divested of your hydrovac, or maybe a little bit more than a year ago. You divested of your hydrovac business.

Speaker #3: And I think the narrative was you just couldn't get scale there. So better to redeploy capital into areas that you have a competitive moat or advantage.

Speaker #3: When you think of, you know, like you said, you're preparing for the next cycle, is it spending capital on areas that you currently already have a strong position in?

Speaker #3: Is it looking at services you don't have a great position in, and thinking that the next cycle might give you the opportunity to maybe deepen that expertise?

Speaker #3: Just trying to get a sense of is this doing more of what you do already or is it part of a maybe a product or service expansion plan here, just given the optimism around a lot of these nation-building projects?

Kevin Chiang: Is this doing more of what you do already, or is it part of maybe a product or service expansion plan here, just given the optimism around a lot of these nation building projects?

Speaker #2: Yeah, I would have you know, I think our primary focus, Kevin, we're open to looking at everything. You know, if the margins are correct and if we can get the appropriate returns on it.

Murray Mullen: I think our primary focus, Kev, we're open to look at everything, if the margins are correct and if we can get the appropriate returns on it. The best way, and our primary focus, is building on those verticals that we're already in.

Speaker #2: But the best way and our primary focus is building on those verticals that we're already in. So if we can get stronger, bigger, gain market share, put new capital to work in those verticals that we've already got a position in, we know them.

Kevin Chiang: Okay.

Murray Mullen: If we can get stronger, bigger, gain market share, put new capital to work on those verticals that we've already got a position in, we know them. That's probably the easiest path towards not only growth, but higher margins. That'll be our primary focus on that. In terms of the CapEx, look, it's really going to be focused on, the first is probably going to be pipeline business, because you've got to build the infrastructure before we build the business behind it. You've got to build the highway before you put the cars on it. Pipelines, that's all you're doing, is you're building the highway for the oil and gas business, and that's got to go. Our first objective and the first leg of this uptick is pipelines.

Speaker #2: That's probably the easiest path towards you know, towards not only growth, but higher margins. So that'll be our primary focus on that. In terms of the CapEx, look, you know, it's it's really going to be focused on the first is probably going to be pipeline business because you've got to build the infrastructure before we build the business behind it.

Speaker #2: So, you've got to build the highway before you go put the cars on it. Pipelines—that's all you're doing; you're building the highway for the oil and gas business.

Speaker #2: And that's got to go. So our first objective in the first leg of this uptick is pipelines. We've got to be prepared. And what we're seeing in the pipeline business around the world is they have to build new pipelines.

Murray Mullen: We've got to be prepared, what we're seeing in the pipeline business around the world is they have to build new pipelines. It doesn't matter whether it's in Alaska, whether it's in Canada, whether it's in the Middle East, in the United States. There's going to be a build-out of infrastructure over the next bit. That's the first leg of this, and we've got to have the capital for that. Then we'll redeploy that capital once the pipelines are built into filling the lines. That's the thesis. We think we're in a good long-term trend here. It's not a one and done.

Speaker #2: And it doesn't matter whether it's in Alaska, whether it's in Canada, whether it's in the Middle East, or in the United States. There's going to be a build-out of infrastructure over the next bit.

Speaker #2: That's the first leg of this. And we've got to have the capital for that. And then we'll redeploy that capital once the pipelines are built into filling the lines.

Speaker #2: And that's the thesis. So we think we're in a good long-term trend here. It's not a one-and-done. Pipelines is a one-and-done. But not the behind to fill the pipelines is not one-and-done.

Kevin Chiang: Right.

Murray Mullen: Pipelines is one and done, but not the behind to fill the pipelines is not one and done. That is where your sustainable business comes in long term.

Speaker #2: That's where your sustainable business comes in long-term.

Lee Hellyer: That's-

Lee Hellyer: That's I guess our diversity as well, too.

Speaker #3: That's our diversity

Lee Hellyer: I guess our diversity as well, too.

Speaker #5: as well, too. We don't want to participate in a large capital project just on one phase of it. We look to be able to, you know, participate in every phase of those large capital projects right from the construction of them to delivering LTL freight to the support staff that need to build it.

Lee Hellyer: Oh, yeah.

Lee Hellyer: We don't want to participate in a large capital project just on one phase of it. We look to be able to participate in every phase of those large capital projects, right from the construction of them, to delivering LTL freight to the support staff that need to build it. Like to Murray's point, after you get it built, that requires drilling activity. We can move those assets around quite nicely, and that's kind of why we diversified our business model the way we have.

Speaker #5: And then like Murray's point, after you get it built, that requires drilling activity. So we can move those assets around quite nicely in kind of the way that why we diversified our business model the way we have.

Speaker #3: That's super helpful. Thank you for taking my questions. And again, congrats on the good quarter there.

Kevin Chiang: That's super helpful. Thank you for taking my questions. Again, congrats on the good quarter there.

Speaker #2: Thank you.

Murray Mullen: Thank you.

Speaker #1: The next question is from Cameron Dirksen with National Bank. Please go ahead.

Operator 3: The next question is from Cameron Doerksen with National Bank. Please go ahead.

Operator: The next question is from Cameron Doerksen with National Bank. Please go ahead.

Speaker #6: Yeah, good morning. I guess certainly very strong Q2. It sounds like the trends you saw in June have continued into July. So pretty optimistic outlook for the back half of the year.

Cameron Doerksen: Yeah, good morning.

Murray Mullen: Hey, Cameron.

Cameron Doerksen: I guess certainly a very strong Q2. It sounds like the trends you saw in June have continued into July, pretty optimistic outlook for the H2. I guess, what's your level of confidence that the original sort of EBITDA guidance that you put out at the beginning of the year, CAD 365 million, that you're going to be able to exceed that? It sort of sounds like you're trending towards that.

Speaker #6: I guess what's your level of confidence that the original sort of EBITDA guidance that you put out at the beginning of the year, 365 million, that you're going to be able to exceed that?

Speaker #6: It sort of sounds like you're trending towards that.

Speaker #2: Well, I think if you extrapolate out second quarter, you know, you could probably buy into that thesis. But, you know, for us, the way that we manage the business and we articulate, we come out at the first of the year and say, here's what we think, you know, the year's shaping up to look like.

Murray Mullen: Well, I think if you extrapolate out Q2, you could probably buy into that thesis. For us, the way that we manage the business and we articulate it, we come out at the first of the year and say, here's what we think the year's shaping up to look like. So far, it looks like we were pretty close to our thesis, and it looks like it's maybe gaining a little momentum because we did say that our numbers that we said early in the year did not including any nation-building projects. To the extent that they start to accelerate, Cameron, yes, it's a reasonable conclusion to say that we'll do better than what we originally published. Look, so far, a lot of talk, I haven't seen all the action. The talk is getting louder, and it looks like it's getting closer.

Speaker #2: And so far, it looks like we were pretty close to our thesis. And it looks like it's maybe gaining a little momentum, because we did say that our numbers, that we said early in the year, did not include any nation-building projects.

Speaker #2: To the extent that they start to accelerate, Cameron, then yes, you know, it's a reasonable conclusion to say that we'll do better than what we originally published.

Speaker #2: But look, so far, a lot of talk, but I haven't seen all the action. But the talk is getting louder, and it looks like it's getting closer.

Speaker #2: So I suspect that the majority of the, you know, the real momentum that's building is going to carry into '27. You know what? And we'll build our budgets and talk to everybody in October and November time frame as once we get through this quarter to make sure that that trend that we started to see happen in the second quarter is maintainable.

Murray Mullen: I suspect that the majority of the real momentum that's building is going to carry into 2027. You know what? We'll build our budgets and talk to everybody in October and November timeframe as once we get through this quarter to make sure that that trend that we started to see happen in the Q2 is maintainable. Lots of moving parts as you know in this economy, but let's make sure that the trend is well entrenched before we get too ahead of ourselves.

Speaker #2: Lots of moving parts, as you know, in this economy. But let's make sure that the trend is well entrenched before we get too far ahead of ourselves.

Speaker #6: Okay, that's fair enough. Maybe, second question—just on the logistics and warehousing segment. It seems to me that maybe that's the segment that would be more positively impacted by some of the regulatory enforcement actions we're seeing across Canada.

Cameron Doerksen: Okay. That's fair enough. Maybe 2nd question, just on the logistics and warehousing segment. It seems to me that maybe that's the segment that would be more positively impacted by some of the regulatory enforcement actions that we're seeing across Canada, which presumably would help pricing. Have you seen any, I guess, evidence that pricing in some of the sort of truckload businesses are starting to improve? I guess maybe has your level of confidence increased from the last quarter that we're going to see some pricing improvement there just due to some of this enforcement action?

Speaker #6: Which presumably would help pricing. Have you seen any, I guess, evidence that pricing in some of the sort of truckload businesses are starting to improve?

Speaker #6: And I guess, maybe, has your level of confidence increased from the last quarter that we're going to see some pricing improvement there, just due to some of this enforcement action?

Speaker #2: I would say that it's so there's different markets. And I can't just lump it all together. But let's just but let's start with the US, the enforcement action in the United States, is very aggressive.

Murray Mullen: I would say that there's different markets, I can't just lump it all together, but let's start with the US. The enforcement action in the United States is very aggressive. That's tightened the US market dramatically, and you've seen all those reports, and you've seen what the public companies are articulating. You've seen a lot of the headlines come out of there. There's been some enforcement in Canada, but not to the same degree as the United States, period. The Ontario market, Quebec market, it's okay, but it hasn't tightened enough. Not much has happened on Ontario. Back west out here, where we have a very strong platform, we're seeing it tighten a little bit more because there's more capital going to work out here, and that's tightening the market a little bit quicker. We have a pretty sizable market share in Western Canada.

Speaker #2: That's tightened the U.S. market dramatically. And you've seen all those reports, and you've seen what the public companies are articulating. You've seen a lot of the headlines come out of there.

Speaker #2: There's been some enforcement in Canada, but not to the same degree as the United States, period. The Ontario market, Quebec market, it's a little it's okay.

Speaker #2: But it hasn't tightened enough, and so not much has happened in Ontario. Back west—oh, here, where we have a very strong platform—we're seeing it tighten a little bit more because there's more capital going to work out here.

Speaker #2: And that's tightening the market a little bit quicker. And we have a pretty sizable market share in Western Canada. Cross-border, when you're doing cross-border, actually US rules apply.

Murray Mullen: Cross border. When you're doing cross border, actually US rules apply. That market's tight for drivers because not all Canadian drivers can go to the US. That's tightened the cross-border market, and that's helped. Some of our logistics warehousing, particularly back west, is doing better. Back east, it's okay, but it really hasn't changed a whole bunch yet, Cameron.

Speaker #2: So that market is tight for drivers because not all Canadian drivers can go to the U.S., and so that's tightened the cross-border market, and that's helped.

Speaker #2: And some of our logistics warehousing, particularly back West, is doing better. Back East, it's okay. But it really hasn't changed a whole bunch yet.

Speaker #2: Cameron.

Speaker #6: Okay, no, that's helpful. I'll pass the line. Thanks very much.

Cameron Doerksen: Okay. No, that's helpful. I'll pass the line. Thanks very much.

Speaker #2: Thank you. Appreciate it.

Murray Mullen: Thank you. Appreciate it.

Speaker #1: The next question is from Walter. Please go ahead.

Operator 3: The next question is from Walter Spracklin with RBC Capital Markets. Please go ahead.

Operator: The next question is from Walter Spracklin with RBC Capital Markets. Please go ahead.

Speaker #3: Yeah, thanks very much. Good morning, everyone. I just want to go back to large project investment. Understanding you can't give us dollar values, but maybe can you give us timing on are any of them formal RFPs that have announcement dates associated with them?

Walter Spracklin: Yeah. Thanks very much. Good morning, everyone.

Murray Mullen: Hey, Walter.

Murray Mullen: I just want to go back to large project investment. Understanding you can't give us dollar values, but maybe can you give us timing on are any of them formal RFP that have announcement dates associated with them and what they are. I know you mentioned Alaska. Meta's Alberta Data Center, is that something you're bidding on? Or is that just something that if there's services required, and it's not part of a formal bid, just curious how that's all going to be, how your outlook is on each one of those.

Speaker #3: And what are they? I know you mentioned Alaska as well as the Alberta data center. Is that something you're bidding on, or is that just something that, if there's services required, those are—it's not part of a formal bid?

Speaker #3: Just curious how that's all going to be how your outlook is on each one of those.

Speaker #2: Yeah, so there's a lot in what you just spoke about. And we were on top of it every day. Look, even in the month of July, there were already two announcements that pipeline activity is going.

Murray Mullen: Yeah. There's a lot in that you just spoke about, and we're on top of it every day. Look, even the month of July, there were two announcements already that pipeline activity are going. Those were in the billion-dollar ranges. It's starting to happen already, and we're involved in those projects. The elephant in the room is the Alaska LNG project. We're at the final table. We think we're in an excellent position. We've done everything we can. We know that we're one of the very few that can do that project, in conjunction with our partner up in Alaska, to be able to execute. That's a very complex file, and it's hung up in the Alaska legislature right now. I have no idea how that's going to play out. Typical of most political situations, just kind of kick the can down the road.

Speaker #2: And those were in the billion-dollar ranges, so it’s starting to happen already. And we're involved in those projects. The elephant in the room is the Alaska LNG project.

Speaker #2: We're at the final table. We think we're in an excellent position. We've done everything we can. We know that we're one of the very few that can do that project.

Speaker #2: In conjunction with our partner up in Alaska, to be able to execute. But that's a very complex file, and it's hung up in the Alaska legislature right now.

Speaker #2: I have no idea how that's going to play out. But, typical of most political situations, they kind of kick the can down the road.

Murray Mullen: They do those kind of things. Not going as fast as what we'd anticipated. The issue that's happening is the longer they delay that one, the more it gets closer that we in Canada are getting close to some of the major projects that are on the books in Canada. Those could be doubling up. Nothing formalized, I can tell you, we know our market position, we know the teams we've got, we're one of the very few that has the balance sheet to be able to have all the capital committed we can say to the client, "We can look after you." We're doing everything we can to make sure our business units were chosen, and we can execute to a high level. Nothing formal. As soon as anything's formalized, we will press release it.

Speaker #2: Those kind of things. So not going as fast as what we'd anticipated. The issue that's happening is the longer they delay that one, the more it gets closer that we in Canada are getting close to some of the major projects that are on the books in Canada.

Speaker #2: So those could be doubling up. Nothing formalized, but I can tell you we know our market position. We know the teams we've got. And we're one of the very few that has the balance sheet to be able to have all the capital committed so we can save the client.

Speaker #2: We can look after you. So we're doing everything we can to make sure our business units are chosen, and we can execute at a high level.

Speaker #2: So, nothing formal. As soon as anything's formalized, we will press release it.

Speaker #3: Okay. When I look at your.

Walter Spracklin: Okay.

Speaker #2: Until then, Walter, your guess is as good as our guess.

Murray Mullen: Until then, Walter, your guess is as good as our guess.

Speaker #3: Okay. When I look at your plan, when you published it originally, you had Q1 results that were in line with kind of that plan, I would say.

Walter Spracklin: Okay. When I look at your plan, when you published it originally, you had Q1 results that were in line with that plan. I would say Q2 now is coming ahead of that plan. You're giving us an outlook now saying that, "Look, things are looking better in the H2 than they did when you made your plan." I know you're keeping your guidance intact. I think expectations are that if you look forward to analyst estimates for tomorrow, they're going to be somewhat higher than what you'd originally planned. What my question is, to the extent that people don't get ahead of their skis, I think what you'd said is that your revenue guide of CAD 2.3 to 2.4 is less about growth and more about better business.

Speaker #3: Q2 now is coming ahead of that plan, and you're giving us an outlook now, saying that, look, things are looking better in the back half than they did when you made your plan.

Speaker #3: I know you're keeping your guidance intact, but I think expectations are that if you look forward to analyst estimates for tomorrow, they're going to be somewhat higher than what you'd originally planned.

Speaker #3: My question is, to the extent that people don't get ahead of their skis, I think what you said is that your revenue guide of $2.3 to $2.4 billion is less about growth and more about better business.

Speaker #3: So maybe that doesn't go much higher because you're replacing perhaps or demarketing, as you mentioned, some of the lower-quality business with some better-quality business.

Walter Spracklin: Maybe that doesn't go much higher because you're replacing perhaps or demarketing, as you mentioned, some of the lower quality business with some better quality business. If you're doing that, then your EBITDA must be going higher. Just trying to get a sense of, as you look forward on a more optimistic scenario than you did when you first wrote your plan, is this CAD 20 million higher? Again, something that we don't want to get expectations too high. Just wanted to get properly sized when we look at how you're trending for the H2 of the year.

Speaker #3: But if you're doing that, then your EBITDA must be going higher. I'm just trying to get a sense— as you look forward, on a more optimistic scenario than you did when you first wrote your plan— is this $20 million higher?

Speaker #3: Again, it's something that we don't want to—we don't want to get expectations too high. We just want them to be properly sized when we look at how you're trending for the back half of the year.

Murray Mullen: I can't give you the number because I can tell you it looks positive.

Speaker #2: I can't give you the number because it's I can tell you we're on it looks positive. But like I said, I think we're certainly we're on target.

Murray Mullen: Like I said, I think certainly we're on target. It looks like the trend is looking more positive. It really is dependent upon these projects, Walter. If the projects come, then yes, clearly we're going to be above what the plan was because we didn't include in the plans the projects. There's some-

Speaker #2: It looks like the trend is looking more positive. But it really is dependent upon these projects, Walter. If the projects come, then yes, clearly, we're going to be above what the plan was.

Speaker #2: Because we didn't include in the plans the projects. But there's something about it.

Walter Spracklin: Right. I'm talking excluding the projects. The 2.3 to-

Speaker #3: Right. But I'm talking excluding the projects. So the $2.3 (billion) to $2 (billion).

Murray Mullen: Excluding the projects, I don't think any growth, and we've kind of slowed M&A over the last bit. Last quarter we did maybe one or two insignificant little things, generally all we did is evaluate opportunities less. The growth from acquisitions is nearly over, Carson.

Speaker #2: Excluding the projects, I don't think any growth, and we've kind of slowed M&A over the last quarter. We did maybe one or two little, insignificant things.

Speaker #2: But generally, all we did is evaluate operating opportunities less. So the growth from acquisitions is nearly over. Carson.

Speaker #3: Yeah, it is.

Carson Urlacher: Yeah, it is.

Carson Urlacher: Don't count on significant revenue growth unless a big project's coming.

Speaker #2: So, don't count on significant revenue growth unless a big project comes in. If a big project comes, that's incremental. And those are very high margin.

Carson Urlacher: Don't count on significant revenue growth unless a big project's coming.

Murray Mullen: Right.

Murray Mullen: If a big project's coming, that's incremental, and those are very high margin. Acquisitions, we haven't done any for a little bit, Q3 revenue growth will slow, but our margins is we're focused 100% on margin. Reasonable to assume that we are going to continue to focus on maintaining that margin. If all goes as planned, we expect to improve the margin. It's all focused on margin. Margin is cash.

Speaker #2: And acquisitions, we don't we haven't done any for a little bit. So Q3 revenue growth will slow. But our margins is we're focused 100% on margins.

Speaker #2: So, reasonable to assume that we are going to continue to focus on maintaining that margin. And if all goes as planned, we expect to improve the margin.

Speaker #2: So, but it's all focused on margin. Margin is cash. That's what—and then I think what we're telegraphing to our investors is that, look, there's opportunity for us to put cash to work, both in internal growth, which will be high margin, and acquisitions, as we find the right fits.

Murray Mullen: I think what we're telegraphing to our investors is that Look, there's opportunity for us to put cash to work, both internal growth, which will be high margin, and acquisitions as we find the right fits. Nothing's really changed with us, Walter. We continue to stick with our game plan and away it goes. I can tell you the opportunities in Western Canada with some of these big, where the capital's going, we're probably as well-positioned as anybody.

Speaker #2: Nothing's really changed with us, Walter. We continue to stick with our game plan and a way it goes. But I can tell you the opportunities in Western Canada with some of these big where the capital's going, we're probably as well positioned as anybody.

Speaker #3: Makes sense. Okay. Congrats on the great quarter. Thanks, guys.

Walter Spracklin: Makes sense. Okay. Congrats on a great quarter. Thanks, guys.

Speaker #2: You too. Thank you very much. Appreciate it.

Murray Mullen: Thank you very much. Appreciate it.

Speaker #1: The next question is from Trevor Reynolds with Acumen Capital. Please go ahead.

Operator 3: The next question is from Trevor Reynolds with Acumen Capital. Please go ahead.

Operator: The next question is from Trevor Reynolds with Acumen Capital. Please go ahead.

Speaker #2: Hey, Trevor.

Murray Mullen: Hey, Trev.

Speaker #4: Hey, guys. Good morning. Most of my stuff's been answered. But just on the F&I side of things, can you guys touch on kind of where your position to get to in F&I relative to kind of where you've been at peak historically?

Trevor Reynolds: Hey, guys. Good morning. Most of my stuff's been answered. Just on the S&I side of things, can you guys touch on where you're positioned to get to in S&I relative to where you've been at peak historically, just with the demarketing and everything you've done over the past number of years?

Speaker #4: Just with kind of the de-marketing and everything you've done over the past number of years.

Murray Mullen: Carson?

Speaker #2: Well, that's a tough question. Oh, yeah. I give all the tough questions. Oh, terrible.

Carson Urlacher: That's a tough question.

Murray Mullen: No, yeah. I give all the tough questions to him.

Carson Urlacher: There you go.

Murray Mullen: Oh, true.

Speaker #4: So yeah, back in our peak, we would be up in around that $900 million revenue mark—for the estimate.

Carson Urlacher: Yeah, back in our peak, we'd be up and around that CAD 900 million revenue mark for the S&I.

Speaker #2: Anyways.

Murray Mullen: Annually.

Speaker #4: Annually for the S&I segment. We're budgeting 450 for 2026, which is a nice little increase that we've seen over the past five years. The trend is definitely more positive than it has been over the last decade.

Carson Urlacher: Annually for the S&I segment. We're budgeting CAD 450 million for 2026, which is a nice little increase that we've seen over the past 5 years. The trend is definitely more positive than it has been over the last decade. We don't see it as a headwind as we would've 5 years ago. I would say it's more of a tailwind now. I'd be apprehensive to say that we would get back to CAD 900 million anytime soon. You're going to need a lot of these nation-building projects to take off.

Speaker #4: We don't see it as a headwind as we would have five years ago. I would say it's more of a tailwind now. But I'd be apprehensive to say that we would get back to 900 anytime soon.

Speaker #4: You're going to need a lot of these nation-building projects to take off.

Speaker #2: And further M&A.

Murray Mullen: Further M&A.

Carson Urlacher: Further M&A to get back to those levels, for sure. The trend is definitely more of a tailwind now than a headwind, for sure.

Speaker #4: And further M&A to get back to those levels, for sure. But the trend is definitely more of a tailwind now than a headwind, for sure.

Carson Urlacher: Further M&A to get back to those levels, for sure. The trend is definitely more of a tailwind now than a headwind, for sure.

Speaker #2: What I can say, Trevor, and I'll add to that, is that's what we used to do. And it looks like the opportunities are building back toward the way we used to be.

Murray Mullen: What I can say, Trev, I'll add to that is, that's what we used to do. It looks like the opportunities are building back towards the way we used to be, not because of pie in the sky. It looks like the capital is coming back into these projects, capital implies growth. Growth means we've got to be prepared. That'll be both on internal CapEx that we've already started, and we can get back to where we were, but we probably have to do some M&A to get back up to that CAD 900 million on an annual basis.

Speaker #2: And not because of pie in the sky. It looks like the capital is coming back into these projects. And capital implies growth. Growth means we’ve got to be prepared.

Speaker #2: That'll be both on internal CapEx that we've already started, and we can get back to where we were. But we probably have to do some M&A to get back up to that $900 million on an annual basis.

Carson Urlacher: Yeah.

Speaker #2: But it's on our radar. I would say, when we sit around with our senior team and we talk to the board, that's our objective. That's a goal.

Murray Mullen: It's on our radar. That I would say when we sit around our senior team and we talk to the board, that's our objective. That's a goal. We got a lot of stuff to do

Murray Mullen: It's on our radar. That I would say when we sit around our senior team and we talk to the board, that's our objective. That's a goal. We got a lot of stuff to do to get back to that. It's a good goal to set. Why not?

Speaker #2: But we've got a lot of—we've got a lot of stuff to do to get back to that. But it's a good goal to set.

Carson Urlacher: Yeah

Murray Mullen: to get back to that. It's a good goal to set. Why not?

Speaker #2: Why not? We've done it before. Just give us the opportunity. I tell you, we'll be in as good a position as anybody to get back.

Carson Urlacher: Yeah.

Murray Mullen: We've done it before.

Carson Urlacher: Yeah.

Murray Mullen: Just give us the opportunity. I tell you, we'll be in as good a position as anybody to get back.

Speaker #4: Great. And then just on Alaska, and kind of your investment in 100 trucks there, does that basically satisfy what you think your requirement is to participate in that?

Trevor Reynolds: Great. Just on Alaska and your investment in 100 trucks there, does that satisfy basically what you think your requirement is to participate in that, or will there be further investments if you guys get the deal?

Speaker #4: Or will there be further investments if you guys get the deal?

Speaker #2: It depends on the size of the award, and we think that we've taken the first initial step to make sure we could meet the minimum threshold.

Murray Mullen: It depends on the size of the award. We've taken the first initial step to make sure we could meet the minimum threshold, but it depends on the actual size of the award when the formal bid comes out. It could be significantly higher. Depends on the size of the bid. We've kind of just pegged it at middle of the ground so we can execute. We will not sign a contract. I've told the team, we'll not sign a contract unless I know and comfortable that we can execute to a high level. Otherwise, it's not worth it. We've kind of picked the middle of the road on this. We'll leave it up to the customer to tell us how much they want to give us. That's up to them.

Speaker #2: But it depends on the actual size of the award when the formal bid comes out. But it could be significantly higher. Depends on the size of the bid.

Speaker #2: We've kind of just pegged it at middle of the ground so we can execute. But we will not sign a contract. I've told the team we will not sign a contract unless I know and am comfortable that we can execute to a high level.

Speaker #2: Otherwise, it's not worth it. So we've kind of picked the middle of the road on this, and we'll leave it up to the customer to tell us how much they want to give us.

Speaker #2: That's up to them.

Speaker #4: Got it. And then, in terms of the overall dollar value of the Alaska project, what does the staging and transport of the pipe represent in your view of that overall dollar value?

Trevor Reynolds: Got it. In terms of the overall dollar value of the Alaska project, what does the staging and the transport of the pipe represent from your view of that overall dollar value?

Speaker #2: The size of that project is somewhere between oh, boy. It's between 250 and 500 million. And that's total. And remember, we've got a partner.

Murray Mullen: The size of that project is somewhere between, it's between $250 to 500 million, and that's total. Remember, we've got a partner, so a partnership means 50/50. It's somewhere between, over a 2-year period, somewhere between $250 to 500 million. That's a pretty big range, all you can do is position yourself to be chosen by the customer. It's up to the customer how they're going to allocate it. The minimum we will do if that project goes around $250. That's the minimum.

Speaker #2: So, a partnership means 50/50. So it's somewhere, over a two-year period, between $250 million and $500 million US. That's a pretty big range.

Speaker #2: But all you can do is position yourself to be chosen by the customer. But it's up to the customer how they want to how they're going to allocate it.

Speaker #2: But the minimum we will do, if that project's goal is around $250, that's the minimum.

Speaker #4: Great. And then just on Alaska being included with US 3PL, is that just for simplification of accounting, I'm guessing?

Trevor Reynolds: Great. Just on Alaska being included with US 3PL, is that just for simplification of accounting, I'm guessing?

Speaker #2: No, I think the rationale behind that, Trevor, is that we want to keep US-based business in the US 3PL segment. So whether we kind of rebrand that a little bit, because right now we call it 'asset light,' obviously, the Alaska LNG project would not be asset light.

Carson Urlacher: No, I think the rationale behind that, Trevor, is that we want to keep US-based business in the US 3PL segment. Whether we rebrand that a little bit, because right now we call it asset-light. Obviously, the Alaska LNG project would not be asset-light. I think our main focus and our original thought is US-based business stays in the US 3PL segment.

Speaker #2: But I think our main focus, and our original thought, is U.S.-based business stays in the U.S. 3PL segment.

Speaker #4: Perfect. That answers my questions. Thanks, guys.

Trevor Reynolds: Perfect. That answers my questions. Thanks, guys.

Speaker #2: Thank you.

Murray Mullen: Thank you.

Speaker #4: Thank you.

Carson Urlacher: Thank you.

Speaker #1: Once again, if you have a question, please press star then one. The next question is from Tim James with TD Cowen. Please go ahead.

Operator 3: Once again, if you have a question, please press star then one. The next question is from Tim James with TD Cowen. Please go ahead.

Operator: Once again, if you have a question, please press star then one. The next question is from Tim James with TD Cowen. Please go ahead.

Speaker #4: And thanks very much. Good morning, everyone.

Tim James: Thanks very much. Good morning, everyone.

Speaker #2: Thank you.

Murray Mullen: Thank you.

Speaker #4: First question is returning to LTL, and I think you, as much as said, that that business is running ahead of budget for the year.

Tim James: First question is to return to LTL. I think you as much as said, that business is running ahead of budget for the year. Then we were talking about the margin potential. Looking beyond 2026, wherever you end up for 2026 in terms of EBITDA margin, would it be unreasonable to assume that there is more upside then to that number as the economy improves, major projects pick up that I assume could incrementally help LTL? We don't want to take 2026, and if this replicates your historically high margin for LTL, say, Okay, that's it. Is it reasonable to assume there's more upside beyond that, or are there some headwinds maybe that'll prevent that from happening?

Speaker #4: And then we were talking about kind of the margin potential. Looking beyond 2026, wherever you end up for '26 in terms of EBITDA margin, would it be unreasonable to assume that there is more upside to that number as the economy improves and major projects pick up? I assume that could kind of incrementally help LTL?

Speaker #4: So, we don't want to sort of take 2026, and if this replicates your historically high margin for LTL, say, "Okay, that's it." Is it reasonable to assume there's more upside beyond that?

Speaker #4: Or are there some headwinds, maybe, that'll prevent that from happening?

Speaker #2: I 100% agree with that thesis. Is to the extent that the Canadian economy grows from its current level, we'll continue to have the opportunity to grow expansion both through execution and through pricing leverage.

Murray Mullen: I 100% agree with that thesis, is to the extent that the Canadian economy grows from its current level, we'll continue to have the opportunity to grow expansion both through execution and through pricing leverage. You get any pricing leverage whatsoever, Tim, I tell you, the margin goes up. It would go up nicely. We've got excellent companies. We continue to build out and help them with their capacity on facilities, Leigh, to make sure that they can handle increased business as smaller competitors have a difficult time keeping up with us because we have such a coverage. Honestly, our business units are just really working hard on the technology front. Those are tough to replicate. Yes, others can drive a truck, but boy, it's technology, process improvement, making sure you've got the right facilities. That gives you a really good opportunity.

Speaker #2: So you get any pricing leverage whatsoever I tell you the margin goes up. And it would go up nicely. So we got excellent, excellent companies.

Speaker #2: We continue to build out and help them with their capacity on the facilities lead, to make sure that they can handle increased business, as smaller competitors have a difficult time keeping up with us because we have such coverage, and honestly, our business units are just really working hard on the technology front.

Speaker #2: Those are tough to replicate. Yes, others can drive a truck, but boy, it's technology, process improvement, making sure you're the right facilities, that gives you a really good opportunity.

Speaker #2: And then, if you get pricing leverage on top, it's easy to see how margin can go up.

Murray Mullen: If you get pricing leverage on top, easy to see how margin can go up.

Speaker #4: Okay. That's helpful. My second question, Murray, I'm just interested you've shown here incremental confidence that nation-building projects are going to move forward. Is that additional confidence a function of something that is surprising you?

Tim James: Okay. That's helpful. My second question, Murray, I'm just interested, you've shown here incremental confidence that nation-building projects are going to move forward. Is that additional confidence a function of something that is surprising you, or is it really just the fact that the government is taking the necessary steps, the steps they said they would, time is passing, and they're doing what they said, or is it because you've been surprised by something?

Speaker #4: Or is it really just the fact that the government is taking the necessary steps—the steps they said they would? Time is passing, and they're doing what they said?

Speaker #4: Or is it because you've been surprised by something?

Murray Mullen: Well, I think I'm pleasantly surprised from what we're seeing from our elected officials and their approach to some very complex issues to get major projects done. We have a higher level of confidence today than we did at the start of the year. They're still complex files, and they have not been all acted upon yet, but it sure feels like the powers to be, the elected officials understand that to access the world markets for what Canada has a competitive advantage in, which is energy, raw materials, minerals, metals, critical minerals, you have to have the infrastructure to be able to get to the world market. Whether that's bigger ports or whether that's pipelines, LNG facilities, new oil sands plants, that all has to be built to access the world markets. The market's there, Tim. You know it as well as I do.

Speaker #2: Well, I think I'm pleasantly surprised from what we're seeing from our elected officials and their approach to some very complex issues to get major projects done.

Speaker #2: So, we're taking—we have a higher level of confidence today than we did at the start of the year. There are still complex files, and they have not all been acted upon yet.

Speaker #2: But it sure feels like the that the powers to be, the elected officials, understand that to access the world markets or what Canada has a competitive advantage in, which is energy, raw materials, minerals, metals, critical minerals, you have to have the infrastructure to be able to get to the world market.

Speaker #2: And whether that's bigger ports or whether that's pipelines, LNG facilities, new oil sands plants, that all has to be built to access the world markets.

Speaker #2: The market's there, Tim. You know it as well as I do. Everybody knows the market is begging for Canadian—what we have. Get it done, get it to market, and Canadians will benefit from that demand.

Murray Mullen: Everybody knows the market is begging for Canadian, what we have. Get it done, get it to market, and Canadians will benefit from that demand. I think the thesis is correct, but this is Canada. It takes a while to get things approved. You got a lot of people at the table that all want a piece of the action. That may be the biggest thing that's holding up the projects right now. Who gets what of the project?

Speaker #2: So I think the thesis is correct. But this is Canada. It takes a while to get things approved. You got a lot of you got a lot of people at the table that all want a piece of the action.

Speaker #2: That may be the biggest thing that's holding up the projects right now. Who gets what of the project?

Speaker #4: Okay, that's very helpful. Thank you.

Tim James: Okay. That's very helpful. Thank you.

Murray Mullen: We're not on those files. It looks more positive than at the first of the year.

Speaker #2: We're not on those files. I can just say it looks more positive than in the first year.

Speaker #4: Great. Thank you.

Tim James: Great. Thank you.

Speaker #2: Operator, I think that's it.

Murray Mullen: Operator, I think that's it.

Speaker #1: Certainly. I'd like to hand the call back over to you, Mr. Mullen, for any closing remarks.

Operator 3: Certainly. I'd like to hand the call back over to you, Mr. Mullen, for any closing remarks.

Operator: Certainly. I'd like to hand the call back over to you, Mr. Mullen, for any closing remarks.

Speaker #2: Hey, thanks, folks, for joining us. I hope we addressed a number of the issues there and questions that you had. Really good, interactive discussion.

Murray Mullen: Hey, thanks, folks, for joining us. Hopefully, we addressed a number of the issues there, and questions that you had. A really good interactive discussion. Hopefully, that gave everybody a good playbook to go from for the back half of the year. We're 100% focused here as a senior team. Our business units are well-positioned, we're giving them a little bit more capital, and we're telling them, Stay on your game plan. Margin first, growth second. Take care. Thank you very much. Enjoy your summer.

Speaker #2: And hopefully, that gave everybody a good playbook to go from for the back half of the year. We're 100% focused here as a senior team.

Speaker #2: Our business units are well positioned. And we're giving them a little bit more capital and we're telling them, "Stay on your game plan. Margin first, growth second.

Speaker #2: Take care. Thank you very much. Enjoy your summer.

Operator 3: This concludes today's conference call. You may disconnect your line. Thank you for participating, and have a pleasant day.

Operator: This concludes today's conference call. You may disconnect your line. Thank you for participating, and have a pleasant day.

Q2 2026 Mullen Group Ltd Earnings Call

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