Mullen Group holds capital for Canadian project boom

Mullen Group plans to hold off on major capital spending until proposed energy, infrastructure and industrial projects in Canada move closer to construction. The Okotoks, Alberta-based company has positioned its specialized transport networks for massive energy, infrastructure and industrial developments that are awaiting regulatory approvals or business decisions. Company leaders expect these projects to generate substantial work and are ensuring capital is available when that happens. “It’s all in the timing,” Mullen Group Chairman Murray Mullen said on an investor call. “All I can tell you is we will probably not get too far ahead on the capex until we know it’s real. Otherwise, we’re 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.” Mullen didn’t have a clear view of when these projects would come online. But he has heard anecdotal suggestions that they’re starting to go ahead. So far, he has seen growth only in mining projects, and as expected, his team has already increased capital expenditures for those operations. “I can tell you once the projects go, you’re going to need new capital,” Mullen said. “But I’m here to tell our shareholders and everybody, we’re not deploying new capital unless we see that the rates are going to go up from our customers.” Mullen said the expenditures would be worth the risk at an earnings before interest, taxes, depreciation and amortization margin of 25%. He expects increased activity from national projects could push demand beyond available capacity, supporting higher rates…

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