Despite turbulent markets this logistics company continues to grow

The Market Online

a day ago

Alberta-based logistics company, Mullen Group Ltd. (TSX:MLT) is making major moves in 2025. In this interview we unpack the Cole Group of Companies acquisition and dive into the details of Mullen's C$400 million private placement debt, which is fueling the company's expansion.
Joanna Scott, Senior Corporate Officer, and Carson Urlacher, Senior Financial Officer at Mullen Group join Stockhouse for an update.
Stockhouse: So, Joanna, I'm going to start with you here. The Mullen Group has certainly been busy over the first half of 2025. I mean, that is clear. So, my first question is, if you can tell us more about what the company has been up to?
JS: lt's been a great time for Mullen Group and in an uncertain market and we've had a lot of exciting things happening, two of which stand out to us because they really set us up for the long term and our future. And that is, as you had said, our acquisition of the Cole Group of companies, which we announced the closing of today, and also our private placement notes offering. We priced that and we announced that pricing on May 22nd, 2025.
Stockhouse: Well, let's peel that back just a little bit more, and maybe, Joanna, you can continue on here. Tell us about your acquisition of the Cole Group of companies and what Cole Group actually does.
JS: Yes, and I'll start by saying we are absolutely thrilled to add the Cole Group to our organization and to welcome its employees into our group of companies. But before I get into that, I just want to step back and explain a little bit about why we were able to do the Cole acquisition when we did, and we have to go all the way back to 2022 at a time when a lot of other companies in the industry were growing and buying companies. We actually didn't like the valuations at that time. And so, we kind of sat back and we were quiet and we were disciplined, and we kind of held our cash for another day. And lo and behold, that day came not that long ago, and we were thrilled to be able to use that money to acquire such a great company. It's a gem and it really is a generational opportunity to be able to acquire the Cole group and, put it into our group of companies.
Stockhouse: Absolutely. Now what do they do?
JS: Well, they're over a hundred years old, and they were founded in the 1920s, and they have a long proven record of success. They are an industry leading full spectrum logistics company, and they do customs brokerage as kind of their main line of business, and then they also do some freight forwarding and some customs consulting services. They also operate throughout Canada and the US from 43 locations. And those locations are strategically located at air and seaports and land borders, and they also have over 700 employees that provide industry leading customs and logistics services to a very diverse group of North American and international customers. And they do that through a suite of proprietary technology software.
Stockhouse: Wow. Now quite a partnership that you all have now. Let's flip to you, Carson. What about the financial metrics behind the acquisition? What insights can you share about that?
CU: So, Cole Group is expected to generate roughly about 300 million of annualized revenue and approximately 20 million of operating income before depreciation and amortization. So that's commonly referred to as EBITDA. So, Cole Group operates a very non-asset based business. So, EBITDA is essentially EBIT. Now, what did we pay for it? It was approximately 190 million of cash consideration, which is subject to a working capital adjustment, which is no different than a lot of transactions of this size and nature. So, the working capital we'll receive 29 million of working capital upon closing of the transaction, and included in the 190 million of consideration is also 10 million of real estate mainly associated with office space and those sorts of things that that we'll end up acquiring as part of the transaction.
Stockhouse: Wow. This is fascinating. Joanna, I'm going to go back to you on this one. Can you tell our audience a bit about the strategic rationale behind the acquisition?
JS: Sure. And, there were a number of reasons why we really liked the Cole acquisition. And you know, you've probably heard us talk about our precision-based acquisitions. It has to be the right fit, the right price, and have the right synergies. And the Cole Group fit that for a number of reasons, but I'll give you kind of five key strategic reasons why we liked it. The first is it really allows us to expand that non-asset-based logistics and our entire mile service offering. And that provides our customers with enhanced choice and flexibility. It also provides meaningful synergies through cross-selling opportunities with our US 3PL segment, and then also within other divisions of Mullen Group. It also allows us to assist our customers in managing the increasingly complex global trade market. I think we can all agree that tariffs and trade are not getting any easier these days. And then another thing you'll hear us talk about is our free cash. The acquisition of Cole Group will be immediately accretive. They generate free cash and they have minimal capital expenditures. They're really just made up of very skilled professional employees and technology and we like that business model. And lastly, it is a foundation for our long-term growth. The Cole group really does that. It establishes a robust platform for us for our future growth in the US and the international logistics segment. And it's something that we really have been focused on lately for the longer term.
Stockhouse: So you really just took your time and really did your due diligence, and that is so important to make sure that that partnership, you know, is a success. So, great job on that for sure. Now, Carson, the big question on this, how did the funding come together for the acquisition of Cole Group?
CU: Well, you know, as to Joanna's point earlier, we really didn't use a lot of our bullets when the market was peaked back in 2022 and 2023. So, we have initially funded the transaction using our 525 million of bank credit facilities. But we always, our strategy has always been to match long-term assets, including acquisitions with long-term structured debt. So, what we did on May 22nd was we entered into the private debt markets raising 400 million of 12 year money and basically structured that debt out over the long term. So over that 400 million, a portion of those proceeds are going to be used to repay that 525 million of bank line. So we'll be undrawn. We'll also be refinancing some notes that are coming due next year in October of 2026 with that funding. And it's also going to leave us with approximately 125 million of cash on the balance sheet with which we can deploy going forward. So, a liquidity position, we're going to have over 600 million of liquidity, including our cash and our undrawn bank line. So on we're in a pretty good space going forward.
Stockhouse: Great job, guys, for sure. Now, as we close out our time here today, Carson, what additional information can you let us in on with your private placement debt transaction?
CU: Well, I think the private placement can be characterized. You know, we were very well received, again with the private debt markets. We had very strong demand. In fact, we were over seven times oversubscribed on the bids compared to our initial offering. So having a structured debt like this really puts us in elite territory compared to our peers. You have to have a balance sheet that's structured with real estate and consistently generate free cash over the long term in order to play in this market. So, it really differentiates us from a lot of our peers. So the, the notes are actually getting into more specifics of them -they're combined with both Canadian and U.S. denominated currency at approximately about a 6.2 interest rate coming due in 12 years. Which is remarkably consistent with 20 years ago when we entered into the debt markets. The interest rates are almost identical as to as to what we've achieved now. So, it's expected to close in early July. So, we'll get the funding then. And I'd also say that this round of financing is essentially the same financial terms financial covenants as to the debt that we raised last summer. So really what we did was we de-risked the risk of, of not being able to finance next summer. Who knows where the debt markets and the interest rates are going to be next year. So, what we wanted to do was de-risk it, and, and we used the opportunity to refinance next year's notes along with the Cole acquisition now to really be able to put our balance sheet into a secure position on behalf of our shareholders and really protect that dividend and our balance sheet going forward.
Stockhouse: Well, let's lean into that just a little bit further then, Carson. How satisfying is it for Mullen to be able to execute on its strategy despite all of the uncertainty right now in the market?
CU: Well, that's a very good point. You know, it is in uncertain times. We're still showing both growth with the Cole acquisition. So, we're growing our business in a time where everyone else is kind of on the defensive and really, we put our balance sheet in a position where, where we can now sit back and deploy capital and not have to worry about financing over the next decade. So really, it's putting us in an enviable position.
JS: It sure is. And I think I just add to Carson to say a huge shout out to the team here at Mullen Group. We've done a fantastic job, and I couldn't be more proud of our team and just very excited about what the future holds for Mullen Group.
Stockhouse: Absolutely. And there seems to be a lot on the go, and we hope to have you back for further updates soon.
Mullen Group Ltd.'s website is mullen-group.com and you can find them on the TSX under the ticker symbol MTL.
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