Operator: Thank you for standing by. This is the conference operator. Welcome to the Mullen Group Limited 2026 Q3 Earnings Conference Call and Webcast. As a reminder, all participants are in a listen-only mode, and the conference call 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 Mr. Murray Mullen, Chair and Senior Executive Officer. Please go ahead, Mr. Mullen.
Murray Mullen: Welcome everyone to Mullen Group's quarterly conference call. This morning, we released our Q3 interim report. It is a 60-page document. It is full of detail, numbers, and analysis prepared by our team, headed up by Carson Urlacher and Nik Woodworth. This document contains updated information. It is available on SEDAR Plus and on our website, www.mullen-group.com. I am going to remind everyone that today's presentation and commentary contain forward-looking statements that are based upon current expectations and are subject to a number of risks and uncertainties. As such, actual results may differ materially. Further information identifying the risks, the uncertainties, and assumptions can be found in the disclosure documents. With me this morning, I am joined in Okotoks by the senior executive team. Carson Urlacher, Senior Financial Officer. Joanna Scott, who is our Senior Corporate Officer.
Murray Mullen: Richard Maloney, our President and Senior Operating Officer, and Lee Hellyer, our Senior Commercial Officer are on the line. For today's call, we will 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 the prepared remarks by Carson and myself can be found in the Q3 interim report, the financial report, and press release documents, which were released earlier this morning. Truthfully, we have nothing further to add. We will head straight to the Q&A session, as I suspect you will have some interesting questions. Before I hand it over to the operator, I am going to offer up a few opening comments. Let's start with the obvious. Our operating performance in Q3 was very good. In fact, some of the best ever.
Murray Mullen: It is a strong validation of the strength of our diversified business model, that truthfully, we have built up over 30-some plus years as a public company. Second, the balance sheet is rock solid. It is backstopped by those 10 and 12-year long-term bonds we placed a couple of years ago. This in itself looks pretty timely given where interest rates are trending these days. Furthermore, if you look at the cash position as at 30 September 2026, you are going to see that we had CAD 214 million in cash on hand, CAD 381 million of working capital, and a boatload of untapped bank loans. This leads to my third comment. You need to consider the Willson International announcement on Monday morning in conjunction with our Q3 MD&A.
Murray Mullen: We used a portion of the CAD 214 million cash on hand to grow the business with another quality acquisition, the backbone of our long-term growth strategy. Enough said. Operator, would you please open the lines to the Q&A?
Operator: Yes, sir. 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 will hear a tone acknowledging your request. If you are on a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause momentarily as callers join. The first question will come from Kevin Chiang with CIBC. Please go ahead.
Kevin Chiang: Hey, good morning, everyone. Congrats on the good results here. Maybe two questions for me, and maybe just first one, as we think about how you look to deploy capital for growth. Is there a way to frame how you might think of the investment intensity in 2027 and beyond, just given maybe the growing optimism in the end markets you are servicing, and you have a Productivity Mega Deduction that looks like it will be helpful to your free cash flow conversion. Just in terms of if an improving free cash flow, does that get deployed towards more growth capital, or does that extra free cash flow get deployed to maybe other initiatives?
Murray Mullen: Good question, Kev. It is one that we debate here all the time, and it is not that we are not going to have to deploy more capital to capitalize on the potential new growth, which is basically, we all know, tied to these huge capital big projects. The question, I think, Kevin, is really timing. Thus far, we have heard all the anecdotal evidence that these projects are going to go, but the only area that we have really seen them going is really in some of the mining projects. Then you can see in our results how we increase CapEx tied to those projects and the corresponding results that we have when there is growth opportunities. So it is all in the timing. Is it going to happen in 2027? Maybe, maybe not.
Murray Mullen: All I can tell you is we will probably not get too far ahead on the CapEx until we know it is real. Otherwise, we are just gambling with our shareholders' money. Remember, this is Canada. It sometimes takes a long time to get these projects off the drawing board into shovels working. So we will just monitor it, Kev. Then when it is time, boom, we will go, and we will go fast. Of course, we have got the balance sheet to go fast. I think that is the way we are going to look at it. Until that happens, the economy is pretty good, and our business is pretty solid. You can see it from the results. But the outsized growth and the outsized opportunity for us is when these capital projects come to fruition.
Kevin Chiang: Right. That is great color. Maybe just my second question. When I look at your S&I margins, they are the highest, at least I have seen since maybe during the pandemic when there was a little bit of noise with CEWS in everyone's numbers, I guess. But at the same time, as you mentioned, a lot of optimism in those end markets. Maybe we have not seen a lot of the FIDs come through yet. Is there a way to frame how these margins could trend as those projects come through?
Kevin Chiang: Is this something where you could see a step function improvement in the profitability of S&I given the combination of both maybe increasing activity, which we are all hopeful for, plus it sounds like you are repricing some of the book of business today to capture some of that higher pricing as you improve the quality of the existing book.
Kevin Chiang: Just, is there a way to frame how these margins could trend as hopefully some of these nation-building projects get off the ground here?
Murray Mullen: It is tough to frame it, I think. I do not know if that is the right word, and not the way we look at it. I can tell you once the projects go, you are going to need new capital. But I am here to tell our shareholders and everybody, we are not deploying new capital unless we see that the rates are going to go up from our customers. Because new capital really implies that we should be making way north of 20% EBITDA margins, up around 25 for new capital. New capital, you are only going to get 25, Kev, when there is demand exceeds supply in any market. Demand will exceed supply when the projects go.
Murray Mullen: When they go, we will put new capital work when we are going to get 25% EBITDA margins or else we are not deploying the capital, and we are not going to take the risk on behalf of shareholders unless we can get 25 for our shareholders. So that is how we look at it here. We are poised to go. But we are not going to go too early, because honestly, you are just wasting your bullets.
Kevin Chiang: That is super helpful. Again, congrats on a good quarter then. I will pass it along. Thank you very much.
Murray Mullen: Thanks, Kev.
Operator: The next question will come from Konark Gupta with Scotiabank. Please go ahead.
Konark Gupta: Thanks, operator. Good morning, Murray and team, and congrats on good results in Q3. I wanted to follow up on Kevin's question a little bit here as well on the S&I segment. It seems like from the commentary you put on the press release, there wasn't everything that was perfectly aligned in the quarter, yet the margin was pretty good. You still had some declines or challenges in the turnaround projects, maybe, though drilling was up. I don't think we are hearing that the drilling activity is kind of catching up completely with commodity prices today because producers are now taking the view that these commodity prices are structurally sustainable. My question is, how much more upside you would think the S&I segment might have in terms of both top line and margin if this commodity price environment becomes more structural? You know what I mean?
Konark Gupta: It becomes more sustainable over the next few years.
Murray Mullen: I think the simple answer is that, yeah, I agree with you that the energy prices are up. I will be honest with you, we have not seen that turn into a whole bunch of new increased demand yet. Our customers are doing exceptionally well off the backbone of high energy costs, and we all know why. So they are doing exceptionally well, but I have not seen where they have really upped their CapEx dramatically yet. I think everybody is waiting for the infrastructure to get built and get going, and then they will free up their balance sheet to go invest. But right now, they are holding their cards pretty close to the vest, to be honest with you. So we have to be very picky about where we go. Until demand exceeds supply, as I said on the last call with Kev, is that, look, we will be prudent with our shareholder capital.
Murray Mullen: Where we have seen nice uptick is, for example, Carson is our Canadian Dewatering group, which there are some really nice projects going on in Canada tied to mining. Those projects have gone, and we have had some nice returns there and some really good growth. So, in the meantime, I will just tell you, our margin is going up because we are still rightsizing. I am getting rid of business where the margins are not high enough. It is in anticipation that I am not going to go to work for nothing. We are going to go to work where we can make a return for our shareholders and where we can create great jobs for our people. So, we are just waiting. When it does, we will go back to the margins we used to have when capital was flowing freely back a decade and a half ago. It is all about the flow of capital.
Murray Mullen: Right now, it has not really increased yet. So that is why I am optimistic that once it does, we will do better, period.
Konark Gupta: Right. That makes sense. Thanks, Mike. If I can delve into LNG opportunities, obviously we are seeing some momentum on the LNG side in Canada come back. There is also a big contract you guys were talking about on the last earnings call. Can you provide an update perhaps on what is happening on the LNG side for you guys, and how are you preparing for some of those contract opportunities?
Murray Mullen: Oh, we have heard the same thing as you and everybody else on the line because it is in the news every day. We have had lots of ceremonies and ceremonial signings and we have had lots of everybody patting themselves on the back that we are going to do it, but we have not seen the purchase orders yet. We have not seen this or that. We think maybe we are closer to that in 2027, but I cannot commit to what time that is. I do not have any better insight on that than you do.
Konark Gupta: Okay. Thanks, Murray. And then maybe last one before I turn the call over. On M&A opportunities, maybe you can perhaps explain the rationale behind Willson deal, and is that the area where you think there is going to be a lot more M&A activity? That seems to be the area where a lot of your competitors have also focused. Recently, we have seen a few transactions in that arena. Are you looking at something more on the S&I side as things evolve in the oil patch over the next couple of years?
Murray Mullen: Well, Carson, I think what we did, I will turn this to let Cars, but I think with Willson, first of all, it is a brand name company, and it is in a vertical we like. But I think the big thing with Willson is, Cars, is that we were able to use that strong balance sheet and turn making a couple percent, I think, and turned it into a decent return. So-
Carson Urlacher: Yeah, for sure. With those, Konark, you cannot really pick your time with respect to when those acquisitions become available. Entrepreneurs are on their own schedule, and they pick the time for the liquidity event, not us. So we just make sure that we have the balance sheet that we can participate in those transactions, and which we did this time. It is a 100-year-old company in a vertical that we quite like. It is going to complement our Cole acquisition that we did just over a year ago. So it is a space that we like, and the opportunity came available to us, and obviously, we transacted on it, as you know. But that does not preclude us from looking elsewhere into different verticals as well too, including S&I. So I would say that the number of opportunities on our desk right now is robust, to say the least.
Carson Urlacher: I think Joanna Scott has been working her tail off here looking at files and such. I would say that there is lots of opportunities for us on a go-forward basis.
Murray Mullen: Including in the S&I. S&I, once again, I am just going to caution everybody. It is coming, but when? So when we see the right opportunity, Conor, we pounce. We do not do it to grow. We do it because they are great quality companies, and we can see outsized returns, and they complement what we are doing in our business model. That has always been in our DNA, not changing today. Happy to do S&I, happy to do in any vertical, but it has got to be the right opportunity and a good brand.
Konark Gupta: That is a great clarity. I appreciate the time as always. Thank you.
Murray Mullen: Thanks, Conor.
Carson Urlacher: Thank you.
Operator: The next question will come from Benoit Poirier with Desjardins Capital Markets. Please go ahead.
Benoit Poirier: Hey, good morning, everyone, and congratulations for the strong quarter. Maybe, Murray, just in terms of supply-demand, obviously, no big recovery in demand yet, but I would be curious to get some of your thoughts about how did you see the supply and demand evolving over the last quarter, and whether you still see a disconnect between Canada and the US. Just curious, especially given the temporary softening in pricing we saw back in July and August.
Murray Mullen: I think basically you can see from our numbers, Benoit, is that the market appears to be in balance. If the market is not in balance, it would be really difficult for us to generate the results we do. So the market is pretty much in balance. The pockets where we saw good growth, primarily, it was where capital went to work, and I have highlighted that, and that was really in the mining sector and anything to do with that. It just so happens we have got a diversified business model, and we have got multiple ways to capitalize on that. But generally, the overall market, it is in balance. Look at our LTL side. We said there is just no growth. That is the Canadian economy. You know it.
Murray Mullen: Everybody knows that the Canadian economy has got a little bit of growth, a little bit of downside because of the trade issues, but on balance, it is about flat. That is what we see. If the capital goes to work, which drives economic growth, then you are going to see margins go up because, I will oversimplify it, but demand exceeds supply, and that is the only time you can raise price, period. Our job here is to predict where we think there is opportunity for demand to exceed supply. In the meantime, you will see, including on our LTL side, where we work on productivity gain, on watching costs, on using new technology tools. I hate the word AI, but I will use it because everybody talks about it. AI is just another tool to help you improve your productivity, and that is not going to change with our group.
Murray Mullen: We are going to continue to employ all the tools available to drive productivity gain. You need to do that in a flat economy. There is no growth, so we have to improve. You can see we did a very good job of that. Then when growth does happen, watch out. That is when you are going to have outsized margin improvement. Until then, we just stay in our lane and run as best business we can.
Benoit Poirier: Okay. That is great. In terms of CapEx, it seems to be well under control with about CAD 45 million spent so far this year, while the board approved close to CAD 135 million with the latest round of CAD 50 million. I was just curious about how we should be thinking about Q4, given what you have spent so far and what the board has approved.
Murray Mullen: I think that is timing, is not it, Conor? Since we have got-
Carson Urlacher: Yeah
Murray Mullen: our order books for CapEx. It is just when it arrives, but I think there is a fair amount coming in in Q4.
Carson Urlacher: That is correct. So we placed the orders back in July. So a lot of that net equipment is going through the manufacturing process right now. We are expecting a lot of it to land in November, December, and then early into the new year.
Benoit Poirier: Okay. That is great. And maybe in terms of the former question about the tax deduction benefits, I was curious if you could quantify what we could see in terms of free cash flow, given the recent discussion on those benefits.
Carson Urlacher: Yeah, Benoit. There are a lot of variables that are at play on that, i.e., the timing of when equipment comes in, the class that it sits in, and those sorts of things. Just to give you a ballpark, we did kind of the back-of-the-napkin as to our best guess as to when things are going to show up, but you are probably looking at about a CAD 10 million cash tax savings.
Murray Mullen: Immediately.
Carson Urlacher: Immediately.
Murray Mullen: Yeah.
Carson Urlacher: But you got to remember that that's a one-time saving. Going forward in year 2, 3, and 4, there's no tax deductibility now. So you're getting that benefit up front, but it doesn't help you long term.
Murray Mullen: I see.
Carson Urlacher: CAD 10 million is kind of our.
Murray Mullen: Yeah. At the end of the day, I think, truthfully, Benoit Poirier, I think it's a bit of smoke and mirrors. It helps with your cash taxes now and your cash flow, but it punishes you after year 1.
Carson Urlacher: Correct.
Murray Mullen: It is just a temporary cash flow situation.
Carson Urlacher: Yeah.
Murray Mullen: We do not have that problem here. We have got a strong balance sheet that might help some smaller business with some immediate tax deduction, but you pay the price in years 2, 3, 4, 5, 6, 7, 8.
Carson Urlacher: Yeah.
Murray Mullen: It is a one-timer. Yeah, it will save us on tax this year, and it will catch us in the back. We will never make a decision based upon we save a couple of bucks on tax right now. It has got to make economic sense. Okay, that is great, caller. Thank you very much, and congrats again.
Carson Urlacher: Thanks, caller.
Murray Mullen: Thank you, Benoit.
Operator: The next question will come from Walter Spracklin with RBC Capital Markets. Please go ahead.
Walter Spracklin: Yeah. Thanks very much, operator. Hi, everyone.
Carson Urlacher: Morning, Walter.
Walter Spracklin: Yeah, I would like to go back to the rates point you were making, Murray, that you need rates to go higher. I have been speaking to a couple of your Canadian peers, and they are really saying that the tax application now on the Driver Inc. model is indeed leading to some outflow of labor. Some of it was migrant workers, and that is not available anymore. So the driver pool is tightening up a bit, and that is allowing for the start of some nice price activity in Canada. I know it has been prevalent in the US. Are you seeing that, Murray? Are you seeing that driver availability affecting supply? Is that giving you the opportunity to raise rates to the levels that you need to?
Walter Spracklin: Is it something you expect to happen? Is it happening now, or do you not see it in the cards for Canada?
Murray Mullen: Well, it is a really good headline, newsworthy story, but I have not seen it actually show up yet. I think that it is a long-term trend that is happening, which just says, I think you are going to still have more immigrants in our business. But I think you are going to have tighter standards now in terms of training, in terms of certification, and that will end up as being a much better safety result for the motoring public. The facts are over the last bit, it is not that we had the immigrants come in, it is the fact that they just were not trained properly before they went out there. So they were not certified. But I think the standard is going up. I think that there is more enforcement, which is raising the bar.
Murray Mullen: Thus far, I have not seen where it gives us enough freedom, if you will, to tighten the market substantially to raise rates. It is different than in the US. That has happened in the US, but in Canada, just a little bit slower. I think the trend is there, but it has not given us enough leeway to go and raise prices to the customers right now. I have not seen that yet.
Walter Spracklin: Okay. On the large project pipeline, I was wondering if you could rank order for us both in terms of size and expected announcements or decisions on any RFPs you have out there. I know the Alaska pipeline, you have a few in the works on that one. Have any of those been decided on yet? When do you expect those specific to the Alaska pipeline to come across your table?
Murray Mullen: Well, the easy answer is, I expect those decisions to come in the future. The more difficult part of that is when in the future. I have no idea. But when they do, and it moves from us talking with our customers about what's the potential to we got a contract, we will press release it. Until then, all we're doing is the same thing as everybody else. We're talking, we're debating. Everybody's waiting for final approval from the government authorities and truthfully, that we've got First Nations on side, and you've got to take agreement. It's coming in the future. I'm convinced of that. But the timing, I have no idea.
Walter Spracklin: When you say convinced of it coming in the future, do you mean you're. I guess I'll leave that question as to whether you're going to win it or not. Are you convinced of your positioning to win it, or is it-
Murray Mullen: Oh, we're in good position to win our fair share, guaranteed.
Walter Spracklin: Right. Okay.
Murray Mullen: Will we win it all? No, we are not going to win it all. That is being too cocky.
Walter Spracklin: Yeah.
Murray Mullen: But we will get more than our fair share, and we will do quite well when those projects start going. We have proven it. Once those mining projects went, and capital went to work, and people got employed, that very same thing will happen. For example, there is not enough activity yet for us to increase our headcount, Joel. In fact, we did well. We did more revenue. Our overall headcount is down year-over-year, 160 people. We are down 160 people despite being able to knock out the results we did. This economy, if we are going to look after Canadians and give jobs, we got to get capital going to work. That is my primary message to Canadians and the government. Get going so we can employ people. Until then, we are still on a productivity hunt.
Murray Mullen: How do we get better and smarter and using all the tools in the toolbox to make sure that we are as productive as we can be. We are poised to grow. We are poised to get new capital, and we want to desperately hire more people, but not until the projects go, period.
Walter Spracklin: Related to that, what do you think is the ramp time once a contract decision is made and when you start booking revenue and getting to work on that?
Murray Mullen: Six to 12 months. Yeah, six to 12 months, I think once you get going. They are not going to happen in 2 days. It is 6 to 12 months. There are just so many logistical issues to get going. But once you get going, then the meter starts going, okay, start positioning, start getting capital, start hiring people, and those kind of things. But we will have a 6 to 12-month lead time.
Walter Spracklin: Okay. Last question is, am I rank ordering it right? You already mentioned the mining work, so that is ongoing, that you are capitalizing on now. The pipeline, still TBD in the future, but still TBD. Are you going to be involved in the data center construction? Have you done any work on isolating of all the large projects that you see possible in your area? How many or how much of that you are ready and willing to bid on?
Murray Mullen: Carson?
Carson Urlacher: I would say with the data centers that we are well-positioned to participate in the construction of those. One of the leading products that goes into constructing those facilities is cement. As you know, we have a couple business units that are directly involved in that line of business. The data center that is projected for North Edmonton is well-situated by our transload facility that is serviced by both CP and CN. So we would be in a very good position to be able to be moving steel and various products that are required in that construction of that facility. Then on the offtake of it after, you need energy to run those facilities, which means natural gas and drilling activity.
Carson Urlacher: We like to participate in major projects right from cradle to grave, where we are involved in the construction piece and then that ongoing annuity at the end where we are involved in helping generate or provide the power source to those facilities.
Walter Spracklin: Okay. Are you still expected to give your typical update in, are you targeting December, Murray, for the following year? Can I ask if you will be putting anything out on project potential, or is it really on base business that you will be giving your business plan?
Murray Mullen: Carson, I think that we are going to be presenting to the board early December. December 2nd, yeah. We will present our base case to the board, then we will come up with our business plan that we will articulate to all investors of what we think will happen in 2027. Will we have any more clarity in the next 6 weeks on nation-building projects and whatever? I would not hold my breath on that. We will not factor into our business plan that the projects are going to go. So we will factor in what we think is our base case. This year, our base case thus far looks to be, we are trending above what we said our base case was going to be for this year.
Murray Mullen: Walter, I do not remember when we did our outlining of our base case that there was going to be a war in Iran and fuel prices were going to go up to where they went. So anything to do with increase in fuel surcharges, we did not put that into our base case.
Walter Spracklin: Yeah.
Murray Mullen: What we did is, I give all the credit to our business units, we had these uncomfortable discussions to say to our customer, "You got to pay because we are not paying." Those are called fuel surcharges. That is where we are really off, Walter, in terms of revenue is on that side. Generally, our base case was pretty close, Carson.
Carson Urlacher: Pretty spot on.
Murray Mullen: Pretty spot on. X of the fact I just didn't count. I don't know what I missed on that. I didn't see that in December. So there'll be something that comes up next year that I have no freaking idea what's going to happen. I can tell you, our business model and our structure allows us to move very quickly, whatever happens.
Walter Spracklin: Awesome. Appreciate the time and color as always, Murray. Thank you.
Murray Mullen: Always. Thanks, Walt. Appreciate it.
Operator: The next question will come from Tim James with TD Cowen. Please go ahead.
Tim James: Thank you. Thanks very much. Good morning. Great quarter. My first question, I just wonder if you could elaborate a little bit on the de-marketing of lower margin contracts. I guess I am thinking of the S&I segment in particular. Your sort of runway with respect to de-marketing, is it dependent on new opportunities coming in one side of the door, or do you kind of have your sights set on sort of a particular number of contracts or revenue where you want those to roll off and it is irrespective of the new opportunities, or do sort of more opportunities mean more de-marketing?
Murray Mullen: Well, first of all, that is a really good question. Here is our thesis on that. Right now, on some of this production services, the customers, for all intents and purposes, are trying to trick you into signing a long-term contract and fix the price right now. We will not get sucked into that because we think it is going to get busier. The biggest delta you are going to have in the future when it gets busier is going to be labor. We will not fix a contract right now. When we did not see opportunity, we accepted lower margin and a lower return, just to keep our people employed. In the future, we think we are going to have to redeploy our capital into higher margin business, and we will need to move the people to where we can pay them more.
Murray Mullen: We are just not going to get tricked by any big oil company. Not happening. If our little competitors want to sign on to that, fill your boots, but we are not doing it.
Tim James: Okay. Thank you. My second question, just getting into a little bit of detail here, I noticed within the L&W segment, you called out in the MD&A greater demand for cross-border shipments. Just wondering if you could elaborate on that. Maybe surprising might be a strong word, but just caught my attention given the kind of trade environment we are in. What was the driver of kind of the stronger cross-border shipments for that business?
Murray Mullen: Just the supply constraint. The US has tightened labor standards, entrance standards, and we just have fewer competitors that can cross the border, because when you cross that border, you have to comply with US rules. A number of the ones that are doing it, they cannot comply. That is why, even though the demand has not increased, the supply has shrunk, and that is why we have done well, because we comply.
Tim James: Okay. I got it. Okay. That is helpful. Thanks, Murray.
Carson Urlacher: Cross-border is not a significant piece of our business within L&W, but I would say that to Murray's point, the trend is showing that supply is constricting, and the business units that we have in that vertical are benefiting from a reduction in supply.
Tim James: Great. Thank you.
Operator: The next question will come from Cameron Doerksen with National Bank. Please go ahead.
Cameron Doerksen: Yeah, thanks very much. Good morning. Apologize if I missed this, but just hoping for a couple more details on the Willson International acquisition. I know that the revenue is going to be split, I guess, between L&W and the US & International Logistics. Are you able to provide, I guess, a split of the revenue for Willson between those two segments?
Carson Urlacher: Yeah. Cameron, it's Carson here. I would say, in the US 3PL, in terms of revenue, you're probably looking at about CAD 25 to CAD 30 million going into the US 3PL segment. And in terms of the L&W segment, that'd be the remainder, call it CAD 55 million in revenue going into that segment.
Cameron Doerksen: Okay. That is helpful. Maybe we will get more details when the acquisition closes, but just on acquisition price, any color you can provide there?
Murray Mullen: Oh, we paid way too much. I told that to the seller. I said, "God, we are paying way too much." But it is a great quality company. It generates free cash. It is in a vertical we like. It is complementary to our Cole business unit. We were comfortable with the price. That is the art of the deal. But it is a great quality company. We just happen to have a great balance sheet and cash, so we just turned the 2% money into 10 plus.
Carson Urlacher: Yeah.
Murray Mullen: We will work with that team and with our Cole team to make it 10 plus, plus. We have not closed yet, so we are a little sensitive right now to disclosing all the details. But that will come. But that will all be disclosed at year-end.
Carson Urlacher: It will be.
Murray Mullen: of what it all is. Until then. I told the seller, "I'm paying you way too much money, but you've got a great company.
Cameron Doerksen: Fair enough. I'll stay tuned on that. Maybe just secondly, in the MD&A, there's, I guess, a mention of a leasing of a facility in Vancouver, related to, I guess, some logistics opportunities. Fairly sizable building. I'm just wondering if there's any specific opportunity that you're eyeing there, or what can we read into that?
Murray Mullen: Well, I'll tell you about that facility. Everybody on the line might have heard of this great Canadian company called Hudson's Bay. Hudson's Bay could not make it in this ultra-competitive world, and they vacated this wonderful facility. It's sat empty for a couple of years, and we think we're going to be able to, for our vast network, is we're going to use that as our logistics hub out in Vancouver area. Because we think as Canada grows and as Canada pivots to new markets and Asian markets and offshore, you got to bring it in through Vancouver. We just happen to say, we used our balance sheet to get that long-term lease on that facility, and that sets us up wonderfully to be able to service our clients. Away it goes. It's a great facility in a great area, and we got it.
Murray Mullen: That's what we're calling it, the MTL Logistics Park. We're going to put all of our businesses that we got out in Vancouver under one roof and become more efficient.
Cameron Doerksen: Okay. That makes a lot of sense. I appreciate the color. Thanks very much.
Murray Mullen: Thank you.
Operator: Again, if you have a question, please press star then one. Our next question will come from Trevor Reynolds with Acumen Capital. Please go ahead.
Trevor Reynolds: Just in terms of
Trevor Reynolds: Yeah. Hey, guys. I think most of my questions have been asked, but just in terms of the Alaska project, I was just curious where that will fall, assuming it goes ahead in terms of US 3PL and S&I.
Murray Mullen: That one's coming in the future. What day? I do not know. Probably nothing you are going to hear anything until US elections are over, Trev, and then we will see what happens after that. It is such a political hot potato, I cannot answer that. But I will be meeting with our business partners next week and positioning and make sure that when it is finally announced, that we are ready to pounce and go. If, now I am qualifying this, if the customer will pay us appropriately. We are not doing it for practice, and I am not doing it for free. We are going to put capital to work, we are going to employ people, and we expect to make a profit for our shareholders. So we will be positioned. But if they want it done for free, do not call us.
Trevor Reynolds: Got it. And then just in terms of, does that fall under the US 3PL division or under S&I?
Carson Urlacher: Yeah, I think, Trevor, our plan is to include those results within the US segment. We are differentiating our US-based business goes into the US 3PL segment, which is kind of dedicated for that.
Trevor Reynolds: Perfect. Then just in terms of the truck build-out, do you guys think you ordered enough trucks there? Maybe just some insight as you kind of mentioned that you wouldn't be investing ahead of approvals, yet you did invest in these 100 trucks. So just some insight there.
Carson Urlacher: Yeah, I don't think. We ordered 100. We're optimistic that there's going to be projects going on a go-forward basis, whether that's in Alaska or Canada. The timing of which is obviously uncertain. If they don't go, well, we ordered it.
Murray Mullen: We ordered that just next year CapEx. We don't have to make CapEx. Yeah. So we hedged our bets on that, Trev.
Carson Urlacher: Yeah.
Murray Mullen: We positioned. It's a perfect hedge because if it goes, we're ready. If it doesn't go, well, we just cut our CapEx for next year because we got the trucks ordered for our existing network. So, really no risk to our shareholders.
Carson Urlacher: And we really wanted to get ahead of the order book.
Murray Mullen: Yeah
Carson Urlacher: -to be able to get access to that equipment.
Trevor Reynolds: Perfect. Thanks for providing clarity there.
Carson Urlacher: Yeah.
Operator: The next question is a follow-up from Tim James with TD Cowen. Please go ahead.
Tim James: Thank you. Just a quick follow-up question here that was kind of triggered by that last discussion. Murray, do you think there is any way that the supply and availability of trucks over the next couple of years could be an actual bottleneck in terms of some of these major projects if a lot of them go forward at once? Therefore, you obviously have moved ahead on 100, do you try and kind of stay ahead of the game so that you are not impacted by that? Or as you look out at the long-term truck supply, do you think that is not going to be an issue given what is on the drawing board?
Murray Mullen: Yeah, it is a little bit of an art or a science. I am not sure which one it is, to be honest with you, Tim. But, in this case, we saw a couple of things happening. One is we needed to get prepared because the US, it really was all about how much capital is going to be employed in the US. The US truckers are making more money now, and they are upgrading their fleets quickly. So nobody is adding any more capacity, but the trucking industry down in the US is making more money and they are upgrading their fleets, and that hogs the order book and leaves very little for the Canadian market. We do not manufacture anything in Canada. We have to import it. So we get allocated, if you will. So we just took a prudent move.
Murray Mullen: But with our scale and size, we have more pull than a little guy, let us just put it that way.
Tim James: Okay. That is helpful insights. Thank you.
Richard Maloney: Thanks, Tim. It's also important to point, as Richard talking, at the end of the day, you can have all the equipment in the world if you don't have drivers. Our focus will be to continue to get operators. At the end of the day, there's only so many drivers and we charge accordingly. This gets a fundamental principle of we've got to get the right return for what we're doing. The last 10 years have been lost because of the lack of investment in the energy space. We've got to rebuild that space. We're going to do it, we'll do it safely, properly, retrain our people, and then be able to have the right equipment at the right time. That is just part of the overall way in which we run a good business. Important to point that out.
Murray Mullen: Good color, Rich.
Operator: This will conclude our question and answer session. I would like to turn the conference back over to Mr. Mullen for any closing remarks. Please go ahead.
Murray Mullen: Hey, thanks for joining us, folks. I sit here and I'm pinching myself that our team did such a great job over the last quarter, that things are doing as well as they are. We're not going to get too ahead of our skis. We're just going to go back to work and make sure we're positioned to take advantage of whatever the market is and what will give us. Thanks for joining us, and we'll be talking not that, I guess, pretty soon.
Richard Maloney: Yeah, we will be.
Murray Mullen: Thanks so much. Have a great day. Cheers.
Operator: This concludes today's conference call. You may disconnect your lines. Thank you for your participation, and have a pleasant day.
