Mullen Group Ltd. — Interim / Quarterly Report 2020

Oct 21, 2020

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SEPTEMBER 30, 2020

INTERIM FINANCIAL REPORT

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(unaudited) (thousands) September 30 Note 2020	December 31 2019
Assets Current assets: Cash and cash equivalents $ 105,433 $ Trade and other receivables 6 201,806 Inventory 31,518 Prepaid expenses 16,118 Current tax receivable 1,629	79,023 211,209 33,015 15,461 10,623
356,504 Non-current assets: Property, plant and equipment 944,251 Right-of-use assets 32,681 Goodwill 7 270,747 Intangible assets 44,470 Investments 35,788 Deferred tax assets 9,025 Derivative financial instruments 8 51,926 Other assets 9 1,988	349,331 954,604 36,799 268,707 48,456 38,491 8,070 41,375 3,459
1,390,876	1,399,961
Total Assets $ 1,747,380 $	1,749,292
Liabilities and Equity Current liabilities: Accounts payable and accrued liabilities $ 104,836 $ Dividends payable 10 2,907 Current tax payable 2,528 Lease liabilities – currentportion 11,191	90,028 5,241 44 10,711
121,462 Non-current liabilities: Convertible debentures – debt component 110,524 Long-term debt 12 475,568 Lease liabilities 25,504 Asset retirement obligations 1,666 Deferred tax liabilities 117,194	106,024 108,764 467,392 29,975 1,647 117,569
730,456 Equity: Share capital 13 875,423 Convertible debentures – equity component 9,116 Contributed surplus 36,464 Deficit (25,541)	725,347 946,910 9,116 16,860 (54,965)
895,462	917,921
Subsequent events 20
Total Liabilities and Equity $ 1,747,380 $	1,749,292

The notes which begin on page 65 are an integral part of these condensed interim consolidated financial statements.

Approved by the Board of Directors on October 21, 2020, after review by the Audit Committee.

"Signed: Murray K. Mullen"

"Signed: Philip J. Scherman"

Murray K. Mullen, Director Philip J. Scherman, Director

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2020 THIRD QUARTER INTERIM REPORT

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CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(unaudited) (thousands, except per share amounts) Note	Three month periods ended September 30 2020 2019	Nine month periods ended September 30	Nine month periods ended September 30
		2020	2019
Revenue 16 Direct operating expenses 3 Sellingand administrative expenses 3	$ 290,901 $ 325,298 190,580 228,337 35,047 41,309	$ 866,607 591,067 110,113	$ 963,866 687,623 125,203
Operating income before depreciation and amortization Depreciation of property, plant and equipment Depreciation of right-of-use assets Amortization of intangible assets Finance costs Net foreign exchange (gain) loss 8 Other(income)expense 17	65,274 55,652 18,199 18,624 2,832 2,879 4,351 5,112 6,828 6,851 (116) (3,905) (1,913) (210)	165,427 53,584 8,601 12,761 21,203 (2,513) (1,457)	151,040 53,796 8,436 14,020 17,147 (11,834) (458)
Income before income taxes Income tax expense 11	35,093 26,301 8,863 5,808	73,248 19,364	69,933 6,081
Net income and total comprehensive income	$ 26,230 $ 20,493	$ 53,884	$ 63,852
Earnings per share: 14 Basic Diluted	$ 0.27 $ 0.20 $ 0.26 $ 0.20	$ 0.53 $ 0.53	$ 0.61 $ 0.61
Weighted average number of Common Shares outstanding: 14 Basic Diluted	98,508 104,825 107,436 104,825	101,885 101,885	104,825 104,825

The notes which begin on page 65 are an integral part of these condensed interim consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

					Convertible
					debentures
(unaudited)			Share		– equity		Contributed
(**thousands) **			capital		component		surplus		Deficit		Total
Balance at January 1, 2020		$	946,910	$	9,116	$	16,860	$	(54,965)	$	917,921
Total comprehensive income for the period			—		—		—		53,884		53,884
Common Shares repurchased	13		(71,487)		—		18,613		—		(52,874)
Stock-based compensation expense			—		—		991		—		991
Dividends declared to common shareholders	10		—		—		—		(24,460)		(24,460)
Balance at September 30, 2020		$	875,423	$	9,116	$	36,464	$	(25,541)	$	895,462

					Convertible
					debentures
(unaudited)			Share		– equity		Contributed
(**thousands) **			capital		component		surplus		Deficit		Total
Balance at January 1, 2019		$	946,910	$	—	$	15,477	$	(64,311)	$	898,076
Total comprehensive income for the period			—		—		—		63,852		63,852
Convertible debentures issued			—		12,403		—		—		12,403
Deferred tax on convertible debentures			—		(3,287)		—		—		(3,287)
Stock-based compensation expense			—		—		1,034		—		1,034
Dividends declared to common shareholders	10		—		—		—		(47,171)		(47,171)
Balance at September 30, 2019		$	946,910	$	9,116	$	16,511	$	(47,630)	$	924,907

The notes which begin on page 65 are an integral part of these condensed interim consolidated financial statements.

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2020 THIRD QUARTER INTERIM REPORT

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited) (thousands) Note	Nine month periods ended September 30	Nine month periods ended September 30
	2020	2019
Cash provided by (used in): Cash flows from operating activities: Net income Adjustments for: Depreciation and amortization Finance costs Stock-based compensation expense Foreign exchange gain on cross-currency swaps 8 Foreign exchange loss (gain) Change in fair value of investments 17 (Gain) loss on sale of property, plant and equipment 17 Gain on fair value of equity investment 17 Earnings from equity investments 17 Accretion on asset retirement obligations 17 Income tax expense 11	$ 53,884 74,946 21,203 991 (10,551) 7,628 1,409 (179) (432) (2,274) 19 19,364	$ 63,852 76,252 17,147 1,034 (2,697) (8,865) 280 1,824 — (2,574) 12 6,081
Cash flows from operating activities before non-cash working capital items Changes in non-cash workingcapital items from operatingactivities 18	166,008 18,322	152,346 (8,717)
Cash generated from operating activities Income taxpaid	184,330 (11,990)	143,629 (27,193)
Net cash from operatingactivities	172,340	116,436
Cash flows from financing activities: Net proceeds of convertible debentures Repurchase of Common Shares 13 Cash dividends paid to common shareholders Interest paid Repayment of long-term debt and loans Repayment of bank credit facility Repayment of lease liabilities Changes in non-cash workingcapital items from financingactivities 18	— (52,874) (26,794) (14,253) — — (9,102) 556	119,797 — (47,171) (11,156) (6,486) (30,000) (8,860) 654
Net cash(used in)from financingactivities	(102,467)	16,778
Cash flows from investing activities: Acquisitions net of cash (bank indebtedness) acquired Purchase of intangible assets Purchase of property, plant and equipment Proceeds on sale of property, plant and equipment Net investment in finance leases Proceeds on sale of investments Interest received Other assets Changes in non-cash workingcapital items from investingactivities 18	(14,445) — (37,514) 5,813 947 — 1,235 (34) 125	(14,979) (360) (51,351) 3,706 936 663 1,516 289 283
Net cash used in investingactivities	(43,873)	(59,297)
Change in cash and cash equivalents Cash and cash equivalents at January 1 Effect of exchange rate fluctuations on cash held	26,000 79,023 410	73,917 3,916 (272)
Cash and cash equivalents at September 30	$ 105,433	$ 77,561

The notes which begin on page 65 are an integral part of these condensed interim consolidated financial statements.

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

Three and nine month periods ended September 30, 2020 and 2019 (unaudited)

(Tabular amounts in thousands, except share and per share amounts)

1. Reporting Entity

Mullen Group Ltd. (" Mullen Group " and/or the " Corporation ") was incorporated pursuant to the laws of the Province of Alberta and is a publicly-traded company listed on the Toronto Stock Exchange (" TSX ") under the symbol 'MTL'. The Corporation maintains its registered office in Okotoks, Alberta, Canada. The business of Mullen Group is operated through wholly-owned (either directly or indirectly) subsidiaries and limited partnerships (" Business Units "). The Corporation is recognized as one of the leading suppliers of trucking and logistics services in Canada providing a wide range of service offerings including less-than-truckload, truckload, warehousing, logistics, transload, oversized and specialized hauling transportation. In addition, Mullen Group provides a diverse set of specialized services related to the energy, mining, forestry and construction industries in western Canada, including water management, fluid hauling and environmental reclamation. These unaudited condensed interim consolidated financial statements (" Interim Financial Statements ") include the accounts of the Corporation, its subsidiaries and its limited partnerships.

2. Basis of Presentation

• (a) Statement of Compliance

These Interim Financial Statements have been prepared in accordance to and comply with International Financial Reporting Standards (" IFRS "), which include the International Accounting Standards (" IAS ") and the interpretations developed by the International Financial Reporting Interpretations Committee (" IFRIC "), as issued by the International Accounting Standards Board (" IASB "). These Interim Financial Statements comply with IAS 34 Interim Financial Reporting and do not include all of the information required for annual financial statements.

• (b) Basis of Measurement

These Interim Financial Statements have been prepared on the historical cost basis except for investments (excluding investments accounted for by the equity method), and derivative financial instruments (" Derivatives "), which are measured at fair value through profit or loss.

• (c) Functional and Presentation Currency

These Interim Financial Statements are presented in Canadian dollars, which is the functional currency of the Corporation and each of its Business Units. All financial information presented in Canadian dollars has been rounded to the nearest thousand except for per share amounts.

3. Significant Accounting Policies

The accompanying Interim Financial Statements should be read in conjunction with Note 3 to Mullen Group's audited annual consolidated financial statements for the year ended December 31, 2019, (the " Annual Financial Statements ") as the accounting policies applied by the Corporation in these Interim Financial Statements are the same as those disclosed therein.

During the six month period ended June 30, 2020, the Corporation adopted the following accounting policy as a result of qualifying for the Canada Emergency Wage Subsidy (" CEWS ") program as enacted on April 11, 2020, by the federal Government of Canada.

Government Subsidies

Policy: Government subsidies are recognized when there is reasonable assurance that the subsidy will be received and that the Corporation will comply with all relevant conditions. Government subsidies related to current expenses are recorded as a reduction of the related expenses.

Supporting information:

During the three and nine month periods ended September 30, 2020, the Corporation qualified for the CEWS program and recognized $10.3 million and $21.2 million as a reduction to wage expense, respectively. During the three month period ended September 30, 2020, $8.0 million and $2.3 million was allocated to direct operating expenses and selling and administrative expenses, respectively. During the nine month period ended September 30, 2020, $16.3 million and $4.9 million were allocated to direct operating expenses and selling and administrative expenses, respectively.

4. Determination of Fair Values

The following table compares the fair value of certain financial assets and financial liabilities to its corresponding carrying amount as presented in the condensed consolidated statement of financial position.

September 30, 2020 Financial Instrument Fair Value Hierarchy Carrying Amount	Fair Value
Investments (excluding investments accounted for by using the equity method) Level 1 $ 745 Derivative Financial Instruments Level 2 $ 51,926 Private Placement Debt Level 2 $ 475,568 Convertible Debentures – debt component Level 2 $ 110,524	$ 745 $ 51,926 $ 464,014 $ 111,143

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

5. Acquisition

2020 Acquisition

Pacific Coast Express Limited – On August 1, 2018, Mullen Group acquired 40.0 percent of the issued and outstanding shares of Pacific Coast Express Limited (" PCX ") for $2.0 million. Mullen Group used the equity method to account for this investment and recognized $1.6 million of earnings from August 1, 2018 until September 1, 2020. On September 1, 2020, Mullen Group acquired all of the remaining issued and outstanding shares of PCX including two of PCX's operating facilities, one in Calgary, Alberta and one in Winnipeg, Manitoba for cash consideration of $14.4 million. Mullen Group recorded $14.4 million of cash used to acquire PCX in its condensed consolidated statement of cash flows, which consists of $14.2 million of cash consideration paid on closing and $0.2 million of bank indebtedness acquired. The fair value of PCX was $18.4 million on the date control was obtained resulting in a $0.4 million gain on this equity investment being recognized within other (income) expense on the condensed consolidated statement of comprehensive income. PCX is based out of the Lower Mainland of British Columbia and provides expedited handling of international less-thantruckload and truckload shipments to and from western Canada. Mullen Group acquired PCX as part of its strategy to invest in the transportation sector in western Canada. The financial results of PCX's operations are included in the Less-Than-Truckload segment.

This acquisition has been accounted for by the acquisition method, and results of operations have been included in these Interim Financial Statements from the date of acquisition. The goodwill acquired in this acquisition primarily relates to the assembled workforce and the synergies from the integration of the acquired business.

Due to the limited time between the closing of the acquisition of PCX and the preparation of these Interim Financial Statements, the value of the assets acquired and the liabilities assumed are based upon preliminary financial information available to management as of the date of this report and are subject to change.

6. Trade and Other Receivables

September 30 2020	December 31 2019
Trade receivables $ 168,028 $ Other receivables 31,002 Net investment in finance leases 1,734 Contract assets 1,042	182,023 26,907 788 1,491
$ 201,806 $	211,209

7. Goodwill

Goodwill is reviewed for impairment annually at December 31, or more frequently if there are indications that impairment may have occurred. One indication that an asset may be impaired occurs when the carrying amount of the net assets of an entity is more than its market capitalization. The carrying amount of Mullen Group's net assets exceeded its market capitalization as at March 31, 2020. Goodwill impairment is tested at the cash generating unit ( "CGU" ) level and is determined based upon the recoverable amount of each CGU compared to the CGUs respective carrying amount. At March 31, 2020, the Corporation performed an impairment test for goodwill within certain CGUs, including revising revenue projections downwards and increasing the discount rate, and concluded that there was no impairment of goodwill as the recoverable amount for these CGUs was higher than their respective carrying amount. Given the unprecedented economic impact due to COVID-19 and low oil prices, Mullen Group will continue to monitor events in the fourth quarter and the assumptions used for such impairment tests.

8. Derivative Financial Instruments

On July 25, 2014, Mullen Group entered into two cross-currency swap contracts with a Canadian bank to swap $117.0 million U.S. dollars and $112.0 million U.S. dollars into Canadian dollars (collectively, the " Cross-Currency Swaps ") at foreign exchange rates of $1.1047 and $1.1148 that mature on October 22, 2024 and October 22, 2026, respectively. These Cross-Currency Swaps hedge the principal amount of the Series G and Series H Notes.

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2020 THIRD QUARTER INTERIM REPORT

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

For the nine month period ended September 30, 2020, Mullen Group has recorded a net foreign exchange gain of $2.5 million (2019 – $11.8 million). This was due to the impact of the change over the period in the value of the Canadian dollar relative to the U.S. dollar on the Corporation's U.S. dollar debt and from the change in the fair value of its Cross-Currency Swaps as summarized in the table below:

Net Foreign Exchange (Gain) Loss	Nine month periods ended September 30	Nine month periods ended September 30
	CDN. $ Equivalent
	2020	2019
Foreign exchange loss (gain) on U.S. $ debt Foreign exchangegain on Cross-CurrencySwaps	$ 8,038 $ (10,551)	(9,137) (2,697)
Net foreign exchange gain	$ (2,513) $	(11,834)

For the nine month period ended September 30, 2020, Mullen Group recorded a foreign exchange loss (gain) on U.S. dollar debt of $8.0 million (2019 – $(9.1) million) as summarized in the table below:

Foreign Exchange Loss (Gain) on U.S. $ Debt ($ thousands, except exchange rate amounts)	Nine month periods ended September 30	Nine month periods ended September 30	Nine month periods ended September 30	Nine month periods ended September 30
	2020	CDN. $ Equivalent		2019
	U.S. $ Debt Exchange Rate		U.S. $ Debt	Exchange Rate	CDN. $ Equivalent
Ending – September 30 Beginning– January1	229,000 1.3339 229,000 1.2988	305,464 297,426	229,000 229,000	1.3243 1.3642	303,265
					312,402
Foreign exchange loss (gain) on U.S. $ debt		8,038			(9,137)

For the nine month period ended September 30, 2020, Mullen Group recorded a foreign exchange gain on its Cross-Currency Swaps of $10.6 million (2019 – $2.7 million). This was due to the change over the period in the fair value of these Cross-Currency Swaps as summarized in the table below:

Foreign Exchange (Gain) Loss on Cross-Currency Swaps		Nine month periods ended September 30	Nine month periods ended September 30	Nine month periods ended September 30	Nine month periods ended September 30
		2020 CDN. $ Change in Fair Value **of Swaps **			2019
	U.S. $ Swaps		U.S. $ Swaps		CDN. $ Change in Fair Value **of Swaps **
Cross-Currency Swap maturing October 22, 2024 Cross-CurrencySwapmaturingOctober 22, 2026	117,000 112,000	(5,171) (5,380) (10,551)	117,000 112,000		(800)
					(1,897)
Foreign exchange gain on Cross-Currency Swaps					(2,697)
Other Assets
		September 30 2020			December 31 2019
Promissory notes Net investment in finance leases Other	$	744 779 465	$		767 2,284 408
	$	1,988	$		3,459

9. Other Assets

10. Dividends Payable

For the nine month period ended September 30, 2020, Mullen Group declared dividends totalling $0.24 per Common Share (2019 – $0.45 per Common Share). On February 12, 2020, Mullen Group announced its intention to pay annual dividends of $0.60 per Common Share ($0.05 per Common Share on a monthly basis) for 2020. On March 20, 2020, Mullen Group announced the temporary suspension of the monthly dividend of $0.05 per Common Share for three months, effective April 1, 2020. On July 22, 2020, the Corporation announced that it will resume the monthly dividend by paying $0.03 per Common Share on a monthly basis. At September 30, 2020, Mullen Group had 96,910,713 Common Shares outstanding and a dividend payable of $2.9 million (December 31, 2019 – $5.2 million), which was paid on October 15, 2020. Mullen Group also declared a dividend of $0.03 per Common Share on October 20, 2020, to the holders of record at the close of business on October 31, 2020.

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2020 THIRD QUARTER INTERIM REPORT

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

11. Income Taxes

The following table provides a reconciliation of the effective tax rates based on the applicable tax rates in various provincial jurisdictions during the period.

	Three month periods ended September 30 2020 2019	Nine month periods ended September 30	Nine month periods ended September 30
		2020	2019
Income before income taxes Combined statutory tax rate Expected income tax Add (deduct): Non-deductible (taxable) portion of net foreign exchange loss (gain) Non-deductible (taxable) portion of the change in fair value of investments Stock-based compensation expense Changes in unrecognized deferred tax asset Decrease in income tax due to changes in income tax rates Other	$ 35,093 $ 26,301 26% 27% 9,124 7,101 — (517) (42) 33 82 93 — (517) — (70) (301) (315)	$ 73,248 26% 19,044 — 122 248 — — (50)	$ 69,933 27% 18,882 (1,568) 37 274 (1,568) (9,469) (507)
Income tax expense	$ 8,863 $ 5,808	$ 19,364	$ 6,081

During the second quarter of 2019, the Government of Alberta passed Bill 3, which will reduce the Alberta provincial corporate tax rate from 12.0 percent to 8.0 percent in a phased approach between July 1, 2019 and January 1, 2022. As a result of this change, the Corporation made an adjustment to current and deferred income taxes of $0.2 million and $9.4 million, respectively, which was recorded in the second quarter of 2019. As the tax rate change came into effect on July 1, 2019, the combined federal and provincial statutory income tax rate for 2019 decreased to 26.6 percent.

12. Long-Term Debt and Credit Facility

On October 24, 2018, Mullen Group entered into an agreement with its lender to amend the amount available to be borrowed on its credit facility (the " Bank Credit Facility "). The amount available to be borrowed on the Bank Credit Facility was increased by $50.0 million to $125.0 million. On June 21, 2019, the amount available to be borrowed on the Bank Credit Facility was increased by $25.0 million to $150.0 million. Interest on the Bank Credit Facility is payable monthly and is based on either the bank prime rate plus 0.50 percent or bankers' acceptance rates plus an acceptance fee of 1.50 percent. As at September 30, 2020, no amounts were drawn on this facility. All other terms under the Bank Credit Facility remain the same. This facility does not have any financial covenants, however, Mullen Group cannot be in default of its Private Placement Debt and it must be in compliance with certain reporting and general covenants. Mullen Group is in compliance with all of these reporting and general covenants.

Mullen Group has $3.9 million of letters of credit outstanding, which were issued to guarantee certain performance and payment obligations. These letters of credit reduce the amount available under the Bank Credit Facility.

Mullen Group's long-term debt is mainly comprised of a series of unsecured debt (collectively, the " Private Placement Debt "), the details of which are set forth below:

w:
Notes	Principal amount Maturity Interest Rate(1)
Series G $ Series H $ Series I $ Series J $ Series K $ Series L $	117,000 U.S. October 22, 2024 3.84% 112,000 U.S. October 22, 2026 3.94% 30,000 CDN. October 22, 2024 3.88% 3,000 CDN. October 22, 2026 4.00% 58,000 CDN. October 22, 2024 3.95% 80,000 CDN. October 22, 2026 4.07%

(1) Interest is payable semi-annually.

Mullen Group's unamortized debt issuance costs of $0.9 million related to its Private Placement Debt have been netted against its carrying value at September 30, 2020 (December 31, 2019 – $1.0 million). Mullen Group has certain financial covenants that must be met under its unsecured Private Placement Debt, which include a total net debt to operating cash flow ratio and a total earnings available for fixed charges to total fixed charges ratio. Mullen Group's total net debt cannot exceed 3.5 times operating cash flow calculated using the trailing twelve months financial results normalized for acquisitions. The term " total net debt " means all debt including the Private Placement Debt, lease liabilities, the Bank Credit Facility and letters of credit less any unrealized gain on Cross-Currency Swaps plus any unrealized loss on Cross-Currency Swaps, as disclosed within Derivatives on the condensed consolidated statement of financial position. The term " operating cash flow " means, for any quarterly period, the trailing twelve month consolidated net income adjusted for all amounts deducted in the computation thereof on account of (i) taxes imposed on or measured by income or excess profits, (ii) depreciation and amortization taken during such period, (iii) total interest charges, including interest on the Debentures and lease

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

liabilities; and (iv) non-cash charges. Mullen Group cannot have a fixed charge coverage ratio less than 1.75:1 calculated using the trailing twelve months financial results. Mullen Group is in compliance with all the Private Placement Debt financial covenants.

Mullen Group entered into Cross-Currency Swaps to swap the Series G and Series H Notes into Canadian dollars at foreign exchange rates of $1.1047 and $1.1148 that mature on October 22, 2024 and October 22, 2026, respectively.  For more information, refer to Note 8 .

The following table summarizes the Corporation's total debt:

September 30, 2020	December 31, 2019
Current liabilities: Private Placement Debt $ — $ Lease liabilities – current portion 11,191 Bank Credit Facility —	— 10,711 —
11,191 Non-current liabilities: Private Placement Debt 475,568 Lease liabilities 25,504	10,711 467,392 29,975
501,072	497,367
$ 512,263 $	508,078

The details of total debt, as at the date hereof, are as follows:

	Interest Rate	September 30, 2020 Face Value Carrying Amount	September 30, 2020 Face Value Carrying Amount	September 30, 2020 Face Value Carrying Amount
			Face Value	Carrying Amount
Bank Credit Facility — Lease liabilities 2020-2028 Private Placement Debt 2024-2026	Variable 3.20% 3.84% - 4.07%	$ $	$	$
		— — 39,843 36,695 476,463 475,568	— 43,754 468,425	— 40,686 467,392
		516,306 512,263	512,179	508,078

13. Share Capital

The authorized share capital of Mullen Group consists of an unlimited number of no par value Common Shares and an unlimited number of Preferred Shares, issuable in series.

The number of, and the specific rights, privileges, restrictions and conditions attaching to any series of Preferred Shares shall be determined by the Board of Directors (the " Board ") of Mullen Group prior to the creation and issuance thereof. With respect to the payment of dividends and distribution of assets in the event of liquidation, dissolution or winding-up of Mullen Group, whether voluntarily or involuntarily, the Preferred Shares are entitled to preference over the Common Shares and any other shares ranking junior to the Preferred Shares from time to time and may also be given such other preferences over the Common Shares and any other shares ranking junior to the Preferred Shares as may be determined at the time of creation of such series. As at the date hereof, no series of Preferred Shares had been created.

All of the issued Common Shares of Mullen Group have been paid in full.

	# of Common Shares	# of Common Shares
	2020	2019
Issued Common Shares at January 1 Common Shares repurchased and cancelled	104,824,973 (7,914,260)	104,824,973 —
Issued Common Shares at September 30	96,910,713	104,824,973

On March 4, 2020, Mullen Group announced a normal course issuer bid (" NCIB "), commencing March 9, 2020, to purchase for cancellation up to 7,972,926 Common Shares in the open market on or before March 8, 2021. As at September 30, 2020, Mullen Group had purchased and cancelled 7,914,260 Common Shares for $52.9 million under this NCIB program.

All purchases were made in accordance with the NCIB at prevalent market prices as permitted by the Toronto Stock Exchange, with consideration allocated to share capital up to the average carrying amount of the shares and any excess allocated to contributed surplus. The NCIB can be cancelled at the discretion of the Corporation at any time.

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

14. Earnings per Share

• (a) Basic Earnings per Share

Basic earnings per share is calculated as net income attributable to common shareholders divided by the weighted average number of Common Shares outstanding for the period. Net income attributable to common shareholders for the three and nine month periods ended September 30, 2020, were $26.2 million and $53.9 million (2019 – $20.5 million and $63.8 million), respectively. The weighted average number of Common Shares outstanding for the three and nine month periods ended September 30, 2020 and 2019 was calculated as follows:

Note	Three month periods ended September 30 2020 2019	Nine month periods ended September 30	Nine month periods ended September 30
		2020	2019
Issued Common Shares at beginning of period 13 Effect of Common Shares repurchased and cancelled 13	99,620,189 104,824,973 (1,112,522) —	104,824,973 (2,940,384)	104,824,973 —
Weighted average number of Common Shares at end of period – basic	98,507,667 104,824,973	101,884,589	104,824,973

• (b) Diluted Earnings per Share

Diluted earnings per share is calculated by adjusting net income attributable to common shareholders and the basic weighted average number of Common Shares outstanding by the effects of all potentially dilutive transactions to existing common shareholders. In calculating diluted earnings per share, net income was adjusted as follows:

	Three month periods ended September 30 2020 2019	Three month periods ended September 30 2020 2019	Three month periods ended September 30 2020 2019
		2020	2019
Net income Effect on finance costs from conversion of Debentures(net of tax)	$ 26,230 $ 20,493 1,750 —	$ 53,884 —	$ 63,852 —
Net income – adjusted	$ 27,980 $ 20,493	$ 53,884	$ 63,852

The diluted weighted average number of Common Shares was calculated as follows:

	Three month periods ended September 30 2020 2019	Nine month periods ended September 30	Nine month periods ended September 30
		2020	2019
Weighted average number of Common Shares – basic Effect of "in the money" stock options Effect of the Debentures	98,507,667 104,824,973 — — 8,928,571 —	101,884,589 — —	104,824,973 — —
Weighted average number of Common Shares at end of period – diluted	107,436,238 104,824,973	101,884,589	104,824,973

For the three and nine month periods ended September 30, 2020 and 2019, stock options outstanding were excluded from the diluted weighted average number of Common Shares calculation as their effect would have been anti-dilutive. The average market value of the Corporation's Common Shares for the purposes of calculating the dilutive effect of stock options was based on quoted market prices for the periods ended September 30, 2020 and 2019. For the three month period ended September 30, 2019 and the three and nine month periods ending September 30, 2020 and 2019, the Common Shares that would be issued upon conversion of the convertible unsecured subordinated debentures (" Debentures ") were excluded from the diluted weighted average calculation as their effect would have been anti-dilutive. For the three month period ended September 30, 2020, the Common Shares that would have been issued upon conversion of the Debentures were included in the diluted weighted average calculation as their effect would have been dilutive.

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

15. Seasonality of Operations

Revenue and profitability within the Less-Than-Truckload segment and the Logistics & Warehousing segment are generally lower in the first quarter than during the remainder of the year as freight volumes are typically lower in the first quarter following the holiday season due to less consumer demand and customers reducing shipments. Operating expenses also tend to increase within these segments in the winter months due to decreased fuel efficiency and increased repairs and maintenance expense resulting from cold weather conditions.

A significant portion of the operations within the Specialized & Industrial Services segment is comprised of a wide range of unique businesses providing specialized equipment and services to the oil and natural gas, environmental, construction, pipeline, utility, telecom and civil industries. Earnings are influenced by the seasonal activity pattern of western Canada's oil and natural gas exploration industry whereby activity usually peaks in the winter months and declines during the spring when wet weather and the spring thaw may make the ground unstable. Consequently, municipalities and provincial transportation departments enforce road bans that restrict the movement of heavy equipment, thereby reducing activity levels. Additionally, certain oil and natural gas producing areas are only accessible in the winter months because the ground surrounding the drilling sites in these areas consists of swampy terrain. Seasonal factors and unexpected weather patterns may lead to declines in the activity levels of exploration and production companies and corresponding declines in the demand for the goods and services provided by Mullen Group. As a result, the demand for these services is traditionally highest in the first quarter and lowest in the second quarter.

16. Revenue

The business of Mullen Group is operated through its Business Units, which are divided into three distinct operating segments for reporting purposes – Less-Than-Truckload, Logistics & Warehousing and Specialized & Industrial Services. The segments are differentiated by the type of service provided, equipment requirements and customer needs. Mullen Group provides the capital and financial expertise, technology and systems support, shared services and strategic planning (the " Corporate Office ") for the Business Units. The Corporate Office also invests in certain public and private corporations. In addition, the Corporate Office, through its subsidiary MT Investments Inc. (" MT "), owns a network of real estate holdings and facilities that are leased primarily to the Business Units. Such properties are leased by MT to the Business Units on commercially reasonable terms. The day to day management of the Business Units is conducted at the subsidiary level.  For more information, refer to Note 19 .

At September 30, 2020, the Less-Than-Truckload segment consisted of 9 Business Units and is often referred to as the final or last mile delivery of general freight consisting of smaller shipments, packages and parcels. Through an extensive terminal network the pickup, handling and delivery of a wide range of freight including ambient, temperature controlled and consumer goods is coordinated from regional hubs located in Ontario and western Canada. We are committed to investing in the most advanced technologies available ensuring the continued improvement in all aspects of our business, shortening delivery times and providing customers with visibility, via tracking and tracing, to their shipments during transit.

At September 30, 2020, the Logistics & Warehousing segment consisted of 9 Business Units and provides shippers throughout North America with a wide range of trucking and logistics service offerings including full truckload, specialized transportation, warehousing, fulfillment centres that handle e- commerce transactions, and transload facilities designed for intermodal and bulk shipments. Operations and customer service are supported by a robust suite of leading edge technology solutions including a fully integrated transportation management system, customized inventory management and warehouse systems along with our proprietary Moveitonline[®] and Haulistic[TM] technology platforms, applications that are positioning our organization for an evolving and changing supply chain.

At September 30, 2020, the Specialized & Industrial Services segment consisted of 15 Business Units and is comprised of a wide range of unique businesses providing specialized equipment and services to the oil and natural gas, environmental, construction, pipeline, utility, telecom and civil industries. Strategically located throughout western Canada, these specialty Business Units are focused on providing advanced technology solutions and leading edge service capabilities.

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

Disaggregation of revenue:

The following table details Mullen Group's revenue by type of service and timing of the transfer of goods or services by segment and has been restated on a retrospective basis for comparative purposes:

Nine month period ended September 30, 2020 Less-than- Truckload	Logistics & Warehousing Specialized & Industrial Services Corporate Intersegment eliminations	Total
$	$ $ $ $	$
Revenue by service line Transportation 315,857 Logistics 13,110 Other(1) 3,993 Eliminations (5,471)	152,657 146,374 — — 59,707 4,013 — — 56,167 129,566 2,358 — (3,353) (2,716) — (5,655)	614,888 76,830 192,084 (17,195)
327,489	265,178 277,237 2,358 (5,655)	866,607
Timing of revenue recognition Over time 316,032 Point in time 16,928 Eliminations (5,471)	156,165 204,829 1,843 — 112,366 75,124 515 — (3,353) (2,716) — (5,655)	678,869 204,933 (17,195)
327,489	265,178 277,237 2,358 (5,655)	866,607

(1) Included within other revenue is $26.9 million of rental revenue comprised of $0.2 million, $3.5 million, $21.4 million and $1.8 million recorded in the Less-ThanTruckload segment, the Logistics & Warehousing segment, the Specialized & Industrial Services segment and Corporate, respectively.

	Logistics & Warehousing Specialized & Industrial Services Corporate Intersegment eliminations	Logistics & Warehousing Specialized & Industrial Services Corporate Intersegment eliminations
$	$ $ $ $	$
Revenue by service line Transportation 322,555 Logistics 14,040 Other(1) 4,658 Eliminations (3,810)	180,974 166,546 — — 76,631 3,497 — — 49,279 158,758 3,181 — (4,272) (2,496) — (5,675)	670,075 94,168 215,876 (16,253)
337,443	302,612 326,305 3,181 (5,675)	963,866
Timing of revenue recognition Over time 322,669 Point in time 18,584 Eliminations (3,810)	184,151 226,610 1,917 — 122,733 102,191 1,264 — (4,272) (2,496) — (5,675)	735,347 244,772 (16,253)
337,443	302,612 326,305 3,181 (5,675)	963,866

(1) Included within other revenue is $30.8 million of rental revenue comprised of $0.1 million, $3.2 million, $25.6 million and $1.9 million recorded in the Less-ThanTruckload segment, the Logistics & Warehousing segment, the Specialized & Industrial Services segment and Corporate, respectively.

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

17. Other (Income) Expense

	Three month periods ended September 30 2020 2019	Three month periods ended September 30 2020 2019	Three month periods ended September 30 2020 2019
		2020	2019
Change in fair value of investments (Gain) loss on sale of property, plant and equipment Gain on fair value of equity investment Earnings from equity investments Accretion on asset retirement obligations	$ 94 $ 252 (907) 405 (432) — (674) (871) 6 4	$ 1,409 (179) (432) (2,274) 19	$ 280 1,824 — (2,574) 12
Other (income) expense	$ (1,913) $ (210)	$ (1,457)	$ (458)

18. Changes in non-cash working capital

Changes in non-cash working capital
	Nine month periods ended September 30
	2020	2019
Trade and other receivables Inventory Prepaid expenses Accountspayable and accrued liabilities	$ 14,555 $ 1,497 (431) 3,382	(6,686) (8) (5,355) 4,269
	$ 19,003 $	(7,780)
	Nine month periods ended September 30
	2020	2019
Changes in non-cash working capital items from: Operating activities Financing activities Investingactivities	$ 18,322 $ 556 125	(8,717) 654 283
	$ 19,003 $	(7,780)

19. Operating Segments

As disclosed in the first quarter, Mullen Group has commenced reporting financial results in three new operating segments. These three operating segments have been differentiated by the sector of the economy in which the businesses operate, the type of services provided, the equipment requirements and the customer needs. The Less-Than-Truckload segment provides final or last mile delivery of general freight consisting of smaller shipments, packages and parcels. Through an extensive terminal network the pickup, handling and delivery of a wide range of freight including ambient, temperature controlled and consumer goods is coordinated from regional hubs located in Ontario and western Canada. The Logistics & Warehousing segment provides shippers throughout North America with a wide range of trucking and logistics service offerings including full truckload, specialized transportation, warehousing, fulfillment centres that handle e-commerce transactions, and transload facilities designed for intermodal and bulk shipments. The Specialized & Industrial Services segment provides specialized equipment and services to the oil and natural gas, environmental, construction, pipeline, utility, telecom and civil industries.  For more information, refer to Notes 16 .

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

The following tables provide financial information that conforms to the Corporation's new segment presentation on a retrospective basis for comparative purposes:

	Less-than- Truckload	Logistics & Warehousing Specialized & Industrial Services Corporate	Intersegment eliminations	Intersegment eliminations
			Less-than- Truckload Logistics & Warehousing Specialized & Industrial Services
Revenue Income (loss) before income taxes Depreciation of property, plant and equipment Amortization of intangible assets Capital expenditures(1) Total assets at September 30, 2020	$	$ $ $	$ $ $	$
	112,725 11,819 3,851 1,963 6,088 372,339	86,194 92,398 661 10,592 12,967 (285) 2,813 9,994 1,541 1,523 865 — 2,207 2,188 122 244,645 435,446 694,950	(208) (340) (529) — — — — — — — — — — (253) (113) — — —	290,901 35,093 18,199 4,351 10,239 1,747,380

(1) Excludes business acquisitions

Three month period ended September 30, 2019	Less-than- Truckload	Logistics & Warehousing Specialized & Industrial Services Corporate	Intersegment eliminations	Total
			Less-than- Truckload Logistics & Warehousing Specialized & Industrial Services
Revenue Income before income taxes Depreciation of property, plant and equipment Amortization of intangible assets Capital expenditures(1) Total assets at December 31, 2019	$	$ $ $	$ $ $	$
	115,906 8,810 3,433 2,564 7,673 355,764	98,822 111,544 662 8,013 7,377 2,101 2,793 10,857 1,541 1,523 1,025 — 2,779 4,506 3,187 263,161 475,028 655,339	(135) (977) (524) — — — — — — — — — (3) (120) (10) — — —	325,298 26,301 18,624 5,112 18,012 1,749,292

(1) Excludes business acquisitions

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NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Three and nine month periods ended September 30, 2020 and 2019 (unaudited) (Tabular amounts in thousands, except share and per share amounts)

Nine month period ended September 30, 2020	Less-than- Truckload	Logistics & Warehousing Specialized & Industrial Services Corporate	Intersegment eliminations	Total
			Less-than- Truckload Logistics & Warehousing Specialized & Industrial Services
Revenue Income (loss) before income taxes Depreciation of property, plant and equipment Amortization of intangible assets Capital expenditures(1) Total assets at September 30, 2020	$	$ $ $	$ $ $	$
	327,489 25,332 10,892 5,595 14,741 372,339	265,178 277,237 2,358 29,676 20,227 (1,987) 8,354 29,828 4,510 4,570 2,596 — 7,151 10,068 7,543 244,645 435,446 694,950	(530) (3,484) (1,641) — — — — — — — — — — (411) (1,578) — — —	866,607 73,248 53,584 12,761 37,514 1,747,380

(1) Excludes business acquisitions

Nine month period ended September 30, 2019	Less-than- Truckload	Logistics & Warehousing Specialized & Industrial Services Corporate	Intersegment eliminations	Total
			Less-than- Truckload Logistics & Warehousing Specialized & Industrial Services
Revenue Income before income taxes Depreciation of property, plant and equipment Amortization of intangible assets Capital expenditures(1) Total assets at December 31, 2019	$	$ $ $	$ $ $	$
	337,443 25,375 9,471 6,375 18,364 355,764	302,612 326,305 3,181 23,197 10,243 11,118 8,261 31,469 4,595 4,570 3,075 — 13,511 17,312 6,332 263,161 475,028 655,339	(359) (3,918) (1,398) — — — — — — — — — (7) (421) (3,740) — — —	963,866 69,933 53,796 14,020 51,351 1,749,292

(1) Excludes business acquisitions

Performance is measured based on segment income before income tax, as included in the internal management reports that are reviewed by Mullen Group's CEO and President. Segment income is used to measure performance as management believes that such information is the most relevant in evaluating the results of segments relative to other entities that operate within these industries.

20. Subsequent Event

Subsequent to September 30, 2020, the Corporation purchased real estate in Calgary, Alberta for $7.5 million.

International Warehousing & Distribution Inc. – In October 2020, Mullen Group announced an agreement to acquire all of the issued and outstanding shares of International Warehousing & Distribution Inc. (" IWD ") for $5.0 million. IWD is based out of Mississauga, Ontario and provides sufferance warehousing and distribution services in Ontario. Mullen Group is acquiring IWD as part of its strategy to invest in the warehousing and transportation sector in Canada. Due to the limited time between announcing the acquisition of IWD and the preparation of these Interim Financial Statements, the value of the assets acquired and the liabilities assumed on the acquisition were not available to management as of the date of this report.

Subsequent to September 30, 2020, until the date of this report, the Corporation repurchased 58,666 Common Shares at a total cost of $0.5 million. This completes the NCIB as the Corporation has now repurchased the maximum allowable number of Common Shares under the program.

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