Mullen Group Ltd. - Interim / Quarterly Report 2020

INTERIM FINANCIAL REPORT FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2020

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MANAGEMENT'S DISCUSSION AND ANALYSIS

This Management's Discussion and Analysis (" MD&A "), dated April 22, 2020, has been prepared by management of Mullen Group Ltd. (" Mullen Group " and/or the " Corporation ") for the three month period ended March 31, 2020, and should be read in conjunction with (i) the audited annual consolidated financial statements for the fiscal year ended December 31, 2019 (the " Annual Financial Statements "), together with the Management's Discussion and Analysis thereon (the " 2019 MD&A "), and (ii) the unaudited condensed interim consolidated financial statements for the three month period ended March 31, 2020 (the " Interim Financial Statements "). Unless otherwise specified, information in this MD&A is provided as at such date and any reference to "Mullen Group", "we", "us", "our" or the "Corporation" means Mullen Group Ltd., a corporation incorporated under the laws of the province of Alberta and includes its predecessors where context so requires. The Annual Financial Statements and other additional information are available on SEDAR at www.sedar.com and at www.mullen-group.com. These documents are also available upon request, free of charge, from the Corporate Investor Services group at [email protected]. This MD&A and the Interim Financial Statements were reviewed by Mullen Group's Audit Committee and approved by the Board of Directors (the " Board ") on April 22, 2020.

ACCOUNTING PRINCIPLES

The 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 "). The Interim Financial Statements comply with IAS 34 Interim Financial Reporting and do not include all of the information required for annual financial statements. Unless otherwise indicated, all amounts contained in this MD&A are in Canadian funds, which is the functional currency of the Corporation.

ADVISORY: Forward-looking statements - This MD&A reflects management's expectations regarding Mullen Group's future growth, financial condition, results of operations, performance, business prospects, strategies and opportunities and contains forward-looking statements and forward-looking information (collectively, " forward-looking statements ") within the meaning of applicable securities laws. Wherever possible, words such as "anticipate", "may", "will", "believe", "expect", "potential", "continue", "view", "objective", "should", "plan", "intend", "ongoing", "estimate", "project" or similar expressions have been used to identify these forward-looking statements. These statements reflect management's current beliefs and assumptions and are based on information currently available to management. Forward-looking statements involve significant inherent risks and uncertainties, numerous assumptions and the risk that the predictions and forward-looking statements will not be achieved and that the actual results or events may differ materially from those anticipated in such forward-looking statements. A number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. Although the forward-looking statements contained in this MD&A are based upon what management believes to be reasonable beliefs and assumptions, Mullen Group cannot assure readers that actual results will be consistent with these forward-looking statements. Some of the risks and uncertainties include, but are not limited to certain strategic, financial and operational risks, most important of which are reduced oil and natural gas drilling, decreased oil sands and heavy oil activity, a slowdown in the general economy, currency exchange rates, change in the return on fair value of investments, prevailing interest rates, regulatory framework governing taxes and environmental matters in the jurisdictions in which the Corporation conducts and will conduct its business, customer relationships, labour disruption and driver retention, accidents, cost of liability insurance, fuel prices, ability to access sufficient capital from internal and external sources and changes in legislation including but not limited to tax laws and environmental regulations. Given these risks and uncertainties, readers should not place undue reliance on the forwardlooking statements contained in this MD&A. Readers are cautioned that the foregoing list of factors and risks is not exhaustive. Additional information on these and other factors and risks that could affect the operations or financial results of Mullen Group may be found under the heading "Principal Risks and Uncertainties" starting on page 65 of the 2019 MD&A as well as in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website at www.sedar.com. The forward-looking statements contained in this MD&A are made as of the date hereof and Mullen Group undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities law. Mullen Group relies on litigation protection for "forward-looking" statements. Additional information regarding the forward-looking statements contained in this MD&A and the material assumptions made in preparing such statements may be found under the heading "Forward-Looking Information Statements" beginning on page 40 of this MD&A.

Non-GAAP Terms - Mullen Group reports on certain financial performance measures that are described and presented in order to provide shareholders and potential investors with additional measures to evaluate Mullen Group's ability to fund its operations and information regarding its liquidity. In addition, these measures are used by management in its evaluation of performance. These financial performance measures (" Non-GAAP Terms ") are not recognized financial terms under Canadian generally accepted accounting principles (" Canadian GAAP "). For publicly accountable enterprises, such as Mullen Group, Canadian GAAP is governed by principles based on IFRS and interpretations of IFRIC. Management believes these Non-GAAP Terms are useful supplemental measures. These Non-GAAP Terms do not have standardized meanings and may not be comparable to similar measures presented by other entities. Specifically, operating margin[1] , net income – adjusted[1] , earnings per share – adjusted[1] , net capital expenditures[1] , net debt[1] , total net debt[1] and cash flow per share[1] are not measures recognized by Canadian GAAP and do not have standardized meanings prescribed by Canadian GAAP. For the reader's reference, the definition, calculation and reconciliation of Non-GAAP Terms are provided in the "Glossary of Terms and Reconciliation of Non-GAAP Terms" section of this MD&A. The Non-GAAP Terms should not be considered in isolation or as a substitute for measures prepared in accordance with Canadian GAAP. Investors are cautioned that these indicators should not replace the forgoing Canadian GAAP terms: net income, earnings per share, purchases of property, plant and equipment, proceeds on sale of property, plant and equipment and debt.

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2020 FIRST QUARTER INTERIM REPORT

HIGHLIGHTS FOR THE QUARTER

PERFORMANCE: *(unaudited)* *($ millions, except shareprice andper share amounts)*	Three monthperiods ended March 31	Three monthperiods ended March 31	Three monthperiods ended March 31
	2020	2019	% Change
Financial Results Revenue Operating income before depreciation and amortization(1) Net foreign exchange loss (gain) Decrease (increase) in fair value of investments Net income Net income – adjusted(2) Net cash from operating activities Cash dividends declared	$ 318.2 $ 45.2 2.8 1.5 4.7 9.5 40.2 15.7	319.6 44.0 (1.1) (0.1) 11.6 10.6 24.2 15.7	(0.4) 2.7 (354.5) (1,600.0) (59.5) (10.4) 66.1 —
Financial Position Cash and cash equivalents Long-term debt (includes the current portion thereof and the debt component of Debentures) Total assets	$ 84.7 $ 644.4 1,767.9	2.5 551.9 1,676.3	3,288.0 16.8 5.5
Share Information Cash dividends declared per Common Share Earnings per share – basic Earnings per share – diluted Earnings per share – adjusted(2) Share price – March 31	$ 0.15 $ $ 0.04 $ $ 0.04 $ $ 0.09 $ $ 4.10 $	0.15 0.11 0.11 0.10 11.98	— (63.6) (63.6) (10.0) (65.8)
Other Information Net capital expenditures(2)	$ 14.9 $	14.5	2.8

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Revenue - Q1 OIBDA - Q1
($ millions ) ($ millions )
[318.2] 38.9 41.7 44.0 45.2
271.7 [284.9] [292.1 319.6] 37.9
16 17 18 19 20 16 17 18 19 20
Less-Than-Truckload Less-Than-Truckload
Logistics & Warehousing Logistics & Warehousing
Specialized & Industrial Specialized & Industrial
Consolidated Consolidated 1
112.9
99.7 109.1
89.8 104.8
96.2
79.1 77.7 99.6 101.7
104.9 108.4 88.3 109.7 111.3
10.6 12.8 13.3
15.2
12.6
16.7 9.2
13.2 14.6 16.4
21.0
19.2 12.6 16.4 17.4
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1 Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

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2020 FIRST QUARTER INTERIM REPORT

POSITION:

Well-structured balance sheet with ample liquidity:
Working capital: $238.7 million (includes $84.7 million of cash and cash equivalents)
Unused Bank Credit Facility of $150.0 million
Net debt[1] of $394.9 million, which represents a debt to OIBDA ratio of 1.95:1
Private Placement Debt of $495.0 million (operating cash flow covenant at 2.29:1) with no scheduled maturities until 2024 (average fixed rate of 3.93 percent per annum)
Net book value of property, plant and equipment of $951.9 million, which includes $573.1 million of carrying costs of owned land and buildings
Book value of Derivative Financial Instruments of $66.1 million, which swaps $229.0 million of U.S. dollar debt at an average foreign exchange rate of $1.1096

PROGRESS:

Revenue decreased slightly by 0.4 percent on a year over year basis;
Less-Than-Truckload increased by 3.5 percent to $112.9 million
Logistics & Warehousing decreased by 5.4 percent to $96.2 million
Specialized & Industrial Services increased by 1.5 percent to $111.3 million
OIBDA increased by 2.7 percent from the prior year;
Less-Than-Truckload decreased by 12.5 percent to $13.3 million
Logistics & Warehousing increased by 12.3 percent to $16.4 million
Specialized & Industrial Services increased by 6.1 percent to $17.4 million
Repurchased 1,134,376 Common Shares at an average price of $5.11 per share under our NCIB
Net cash from operating activities increased by $16.0 million or 66.1 percent to $40.2 million (highest first quarter amount since 2015)

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1 Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

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2020 FIRST QUARTER INTERIM REPORT

EXECUTIVE SUMMARY

We are in the midst of a health care crisis most of us have never experienced. Governments worldwide have already implemented a series of steps based upon the predictions and advice of the health care professionals, scientists and experts that study infectious diseases. This makes talking about financial results and expectations somewhat awkward when the risks to many in our communities take on a much bigger meaning. Nevertheless, as a large employer in Canada, it is important to also talk about another consequence of this crisis and that is the devastating impact the government mandated closures are having on so many industries, businesses and the economy. And we are not exaggerating by stating that the job losses in the private sector are staggering. The bottom line is that this health crisis is hurting a lot of people. Obviously all of us hope that the steps taken by the governments will be successful but realistically we doubt if we will know for quite some time

Until mid-March our business was performing ahead of last year and basically on target to meet our expectations. However, once the full extent of the virus started to become evident, demand deteriorated in many sectors of the economy directly impacting several of our Business Units (as hereafter defined on page 7). For example, we witnessed a sharp decline in the demand for discretionary consumer goods as well as in commodity based industries. Nevertheless, the majority of our business remained steady throughout the quarter, especially our LessThan-Truckload segment and the handling of large diameter pipe, a logistical component related to pipeline construction in western Canada. As a result, we are pleased to report revenue of $318.2 million and OIBDA of $45.2 million. More importantly we generated $40.2 million in net cash from operating activities during the first quarter, which is up 66.1 percent over last year. So all in all a good start to the year despite the challenges associated with the health crisis.

But this was last quarter. Today we are in the midst of a rapidly changing supply chain. Our focus is now on what is next? Clearly business will be negatively impacted in the short-term, the duration to be determined by a virus known as COVID-19 and by governments. We will see business decline, perhaps quite significantly in the shortterm, however, we believe we will weather this crisis and come out of it stronger. My confidence stems from knowing that we have a strong cash position and well-structured balance sheet providing ample liquidity to withstand a slowdown. Furthermore, our diversified business model and leverage to many sectors of the economy that will continue to be in demand is an important differentiator. And once the economy starts to recover we will be well positioned to take advantage of the inevitable opportunities that arise during challenging times. This is a point that we have made to many of our people that have become early victims of the rapid destruction in demand. To date we have furloughed and provided temporary layoff notices to approximately 1,000 of our business associates. This in itself is extremely stressful which is why we established a $5.0 million Family Assistance Plan. We will provide support as required to those most impacted through no fault of their own until we can get them back to work. This is one of our primary responsibilities these days. The other is ensuring the many frontline workers, those deemed essential workers by the various governments, have the appropriate protective gear and safety protocols in place to manage their health and safety as they go about their regular jobs.

Mullen Group operates a diversified business model combined with a highly adaptable and variable cost structure. The financial results for the three month period ended March 31, 2020, are as follows:

generated consolidated revenue of $318.2 million, a slight decrease of $1.4 million, or 0.4 percent, as compared to $319.6 million in 2019 due to:
an increase of $3.8 million, or 3.5 percent, to $112.9 million in the Less-Than-Truckload segment
a decrease of $5.5 million, or 5.4 percent, to $96.2 million in the Logistics & Warehousing segment
an increase of $1.6 million, or 1.5 percent, to $111.3 million in the Specialized & Industrial Services segment
earned consolidated OIBDA of $45.2 million, an increase of $1.2 million as compared to $44.0 million in 2019 due to:
a decrease of $1.9 million, or 12.5 percent, to $13.3 million in the Less-Than-Truckload segment
an increase of $1.8 million, or 12.3 percent, to $16.4 million in the Logistics & Warehousing segment
an increase of $1.0 million, or 6.1 percent, to $17.4 million in the Specialized & Industrial Services segment

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2020 FIRST QUARTER INTERIM REPORT

net cash from operating activities up by $16.0 million, or 66.1 percent, to $40.2 million (highest first quarter amount since 2015)

First Quarter Financial Results

Revenue decreased by $1.4 million, or 0.4 percent, to $318.2 million and is summarized as follows:

Less-Than-Truckload segment up $3.8 million, or 3.5 percent, to $112.9 million – revenue improved by $3.8 million due to $6.0 million of incremental revenue from acquisitions along with market share and revenue gains at Gardewine Group Limited Partnership (" Gardewine ") being somewhat offset by lower demand for services in the Alberta market place.
Logistics & Warehousing segment down $5.5 million, or 5.4 percent, to $96.2 million – revenue declined by $5.5 million due to supply chain issues and bottlenecks associated with rail blockades in many parts of Canada during the first part of the year followed by issues related to COVID-19 in the month of March. These decreases were somewhat offset by greater demand for transload services from expanding our service offerings at our Edmonton, Alberta distribution center and from higher industrial salt sales due to a prolonged winter season.
Specialized & Industrial Services segment up $1.6 million, or 1.5 percent, to $111.3 million – revenue improved by $1.6 million due to greater demand for large diameter pipeline hauling and stringing services as well as revenue increases at both Smook Contractors Ltd. (" Smook ") and Canadian Dewatering L.P. (" Canadian Dewatering ") These increases were somewhat offset by lower demand for those Business Units involved in the transportation of fluids and servicing of wells and from those directly tied to oil and natural gas drilling activity as a result of the oil price collapse that declined dramatically during March whereby drilling rig activity fell in the Western Canadian Sedimentary Basin ( "WCSB ") from 237 active rigs to 29 at the end of the month.

OIBDA increased by $1.2 million, or 2.7 percent, to $45.2 million and is summarized as follows:

Less-Than-Truckload segment down $1.9 million, or 12.5 percent, to $13.3 million – OIBDA declined due to a weakened Alberta market resulting in lower OIBDA generated by Grimshaw Trucking L.P. (" Grimshaw ") and from Gardewine receiving a $0.9 million one-time retroactive payment in 2019 on a takeor-pay contract with no corresponding associated costs. These decreases were somewhat offset by a $0.9 million increase from the incremental OIBDA generated from the acquisitions of Argus Carriers Ltd. and Inter-Urban Delivery Service Ltd. Operating margin[1] decreased to 11.8 percent from 13.9 percent in 2019 due to lower margins achieved at Grimshaw and Gardewine.
Logistics & Warehousing segment up $1.8 million, or 12.3 percent, to $16.4 million – OIBDA improved due to lower direct operating expenses and the positive variance in foreign exchange. Operating margin[1] improved to 17.0 percent from 14.4 percent in 2019 due to the strong performance at Kleysen Group Ltd. (" Kleysen Group ") and the beneficial effect of a weaker Canadian dollar and lower diesel prices.
Specialized & Industrial Services segment up $1.0 million, or 6.1 percent, to $17.4 million – OIBDA improved due to greater demand for large diameter pipeline hauling and stringing services and from Smook. These increases were partially offset by lower OIBDA from those Business Units involved in the transportation of fluids and servicing of wells and from those directly tied to oil and natural gas drilling activity. Operating margin[1] improved to 15.6 percent from 14.9 percent in 2019 due to a greater proportion of higher margin revenue and cost control measures.

Net income decreased by $6.9 million to $4.7 million, or $0.04 per Common Share due to:

A $3.9 million negative variance in foreign exchange, a $2.3 million increase in finance costs, a $1.6 million negative variance in the fair value of investments, a $0.6 million increase in amortization of intangible assets and a $0.4 million decrease in earnings from equity investments.
The above was partially offset by a $1.2 million increase in OIBDA, a $0.6 million decrease in loss on sale of property, plant and equipment and a $0.3 million decrease in income tax expense.

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2020 FIRST QUARTER INTERIM REPORT

Financial Position

The following summarizes our financial position as at March 31, 2020, along with some of the key changes that occurred during the first quarter of 2020:

Working capital of $238.7 million including $84.7 million of cash and cash equivalents and an undrawn Bank Credit Facility (as hereafter defined on page 12) of $150.0 million.
Total net debt[1] ($472.9 million) to operating cash flow ($206.1 million) (as hereafter defined on page 34) of 2.29:1 as defined per our Private Placement Debt (as hereafter defined on page 17) agreement.
Private Placement Debt of $495.0 million with no scheduled maturities until 2024 (average fixed rate of 3.93 percent per annum). Private Placement Debt increased by $27.5 million due to the foreign exchange loss on our U.S. $229.0 million debt.
Book value of Derivative Financial Instruments up $24.7 million to $66.1 million, which swaps our $229.0 million of U.S. dollar debt at an average foreign exchange rate of $1.1096.
Net book value of property, plant and equipment of $951.9 million, which includes $573.1 million of carrying costs of owned real property.
Repurchased 1,134,376 Common Shares at an average price of $5.11 per share under our normal course issuer bid.

OUTLOOK

It will come as no surprise to anyone that the economic and financial impacts of the recent government mandated decisions, due to the outbreak of the COVID-19 virus, will be substantial, at least in the short-term. Furthermore, in the absence of any information as to when the orders to "shut down and shelter in place" will be lifted we cannot offer any meaningful guidance or outlook to our shareholders at this time. In other words economic activity and demand will be determined by the actions and policies of governments.

We entered 2020 with a sense of optimism given the information available at the time. In our February Outlook, however, dated February 12, 2020, we alerted our shareholders to the possibility that the supply chain and economic growth could be negatively impacted due to the emergence of a coronavirus. As events unfolded we took very quick action to prepare for a serious disruption in economic growth and demand destruction. These steps can be found on our website (www.mullen-group.com) under the heading of COVID-19 Information .

Obviously the next few months and perhaps quarters will be difficult. However, we believe we are positioned to manage through these challenging times given the nature of our diversified business model, multiple service offerings accompanied by the need for basic services including trucking and logistics. These services have been deemed by the various government bodies to be essential services and must be maintained to ensure communities have the goods needed during this health crisis. Furthermore, the structure of our balance sheet, strong working capital position and cash of $84.7 million, provide our company with the liquidity that will be required until economic activity can be restored. Acquisitions will continue to be evaluated, however, this is not a high priority at this time.

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2020 FIRST QUARTER INTERIM REPORT

CORPORATE OVERVIEW

Mullen Group is a publicly-traded company listed on the Toronto Stock Exchange (" TSX ") under the symbol " MTL ". We are a logistics company that owns a network of independently operated businesses. We are 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 (" LTL "), truckload, warehousing, logistics, transload, oversized and specialized hauling transportation. In addition, we provide 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.

Business

The business is operated through a network of wholly-owned companies and limited partnerships (the " Business Units "). In the first quarter of 2020, the business was 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, legal support, 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 to the Business Units by MT on commercially reasonable terms. The day to day management of the Business Units is conducted at the subsidiary level.

Less-Than-Truckload Segment

Less-Than-Truckload consisted of 8 regionally focused 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.

*Service Offerings*	*Service Offerings*	*Key*	*Drivers and Considerations*
•	Less-Than-Truckload Trucking (LTL)	•	Regional network comprised of 94 terminals
		•	Tied to consumer needs
•	Ambient Temperature Controlled Transportation	•	Tied to the movement of healthcare products

Less-Than-Truckload Segment:
Business Unit	Primary Service Region
Argus Carriers Ltd.(1)	Lower Mainland British Columbia
Courtesy Freight Systems Ltd.	Northern Ontario
Gardewine Group Limited Partnership	Manitoba and Ontario & Specialized Transportation
Grimshaw Trucking L.P.	Northern Alberta
Hi-Way 9 Express Ltd.(2) (3) (4)	Southern Alberta
Inter-Urban Delivery Service Ltd.(1)	Lower Mainland British Columbia
Jay's Transportation Group Ltd.	Saskatchewan
Number 8 Freight Ltd.	Lower Mainland British Columbia
(1) Acquired July 1, 2019.
(2) On January 1, 2019, the operations of Bernard Transport Ltd. were combined into Hi-Way 9 Express Ltd.
(3) Includes Jen Express Inc., which was acquired on May 1, 2019.
(4) On January 1, 2020, the operations of Load-Way Ltd. and Streamline Logistics Inc., were integrated into Hi-Way 9 Express Ltd.

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2020 FIRST QUARTER INTERIM REPORT

Logistics & Warehousing Segment

Logistics & Warehousing consisted of 9 Business Units that provide 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.

*Service Offerings*	*Service Offerings*	*Key*	*Drivers and Considerations*
•	Long-Haul Trucking (T/L)	•	Tied to general economy (i.e., GDP)
•	Logistics, Intermodal and Transload Services	•	Requires less maintenance capital
•	Bulk Hauling	•	Primarily contract services

Logistics & Warehousing Segment:
Business Unit	Primary Service Provided
24/7 The Storehouse (2015) Ltd.	Value-Added Warehousing and Distribution Services
Caneda Transport Ltd.	LTL & Irregular Route Truckload
Cascade Carriers L.P.	Dry Bulk Freight
DWS Logistics Inc.	Value-Added Warehousing and Distribution Services
Kleysen Group Ltd.	Irregular Route Truckload & Multi-Modal
Mullen Trucking Corp.	Irregular Route Truckload & Specialized Transportation
Payne Transportation Ltd.	Irregular Route Truckload & Specialized Transportation
RDK Transportation Co. Inc.	Irregular Route Truckload & Specialized Transportation
Tenold Transportation Ltd.	Irregular Route Truckload & Specialized Transportation

Specialized & Industrial Services Segment

Specialized & Industrial Services consisted of 17 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.

*Service Offerings*	*Service Offerings*	*Key*	*Drivers and Considerations*
•	Production Services	•	Commodity prices (i.e., oil and natural gas)
•	Specialized Services	•	Drilling trends and evolving technologies
	− oil sands, dewatering and infrastructure	•	Take-away / Pipeline Capacity
•	Drilling and Drilling Related	•	Drilling activity in western Canada

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2020 FIRST QUARTER INTERIM REPORT

Specialized & Industrial Services Segment:

Business Unit	Primary Service Provided
Canadian Dewatering L.P.	Water Management Services
Cascade Energy Services L.P.	Production services, Turnaround and Industrial Cleaning Services
Canadian Hydrovac Ltd.	Hydrovac Excavation Services
E-Can Oilfield Services L.P.	Fluid Transportation
Envolve Energy Services Corp.	Processing and Disposal of Oilfield Fluids
Formula Powell L.P.	Mud / Fluid Transportation & Warehousing
Heavy Crude Hauling L.P.	Fluid Transportation
Mullen Oilfield Services L.P.(1)	Rig Relocation Services
OK Drilling Services L.P.	Conductor Pipe Setting
Pe Ben Oilfield Services L.P.	Drill Pipe Transportation & Warehousing
Premay Equipment L.P.	Specialized Heavy Haul
Premay Pipeline Hauling L.P.	Large Diameter Pipe Transportation
R. E. Line Trucking (Coleville) Ltd.	Fluid Transportation
Recon Utility Search L.P.	Hydrovac Excavation Services
Smook Contractors Ltd.	Civil Construction
Spearing Service L.P.	Fluid Transportation
TREO DrillingServices L.P.	Core Drilling
(1)On January 1, 2020, the operations of Withers L.P. were combined into Mullen Oilfield Services L.P.

A more detailed description of the Business Units is set forth in the Annual Information Form, which is dated February 6, 2020 and is available on SEDAR at www.sedar.com, our website at www.mullen-group.com or upon request, free of charge, from the Corporate Investor Services group at [email protected].

Capital Allocations

Normal Course Issuer Bid

On March 4, 2020, we 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 March 31, 2020, we had repurchased 1,134,376 Common Shares for $5.8 million, of which 1,000,920 Common Shares were cancelled in the first quarter under this NCIB program. All purchases were made in accordance with the NCIB at prevalent market prices as permitted by the Toronto Stock Exchange. The NCIB can be cancelled at the discretion of the Corporation at any time. At March 31, 2020, the Corporation had 103,824,053 Common Shares issued and outstanding. Subsequent to March 31, 2020, until the date of this report, we repurchased 934,192 Common Shares at a total cost of $4.3 million.

As at March 4, 2020, the average daily trading volume of the Common Shares on the Exchange (" ADTV ") for the most recently completed six calendar months was 266,914. Pursuant to the Exchange policies, the maximum number of Common Shares that may be purchased in one day pursuant to the NCIB will be the greater of 1,000 and 25.0 percent of ADTV, which amounts to 66,728 Common Shares, subject to certain prescribed exceptions.

The Corporation entered into an automatic securities purchase plan (the " ASPP ") with its broker, to allow for the repurchase of Common Shares at all times during the course of the NCIB including when the Corporation ordinarily would not be active in the market due to its own internal trading blackout periods, insider trading rules or otherwise. The funding for the purchase of Common Shares under the NCIB is financed out of the working capital of the Corporation. The ASPP can be cancelled at the discretion of the Corporation at any time.

Dividends

On February 12, 2020, we announced our intention to pay annual dividends of $0.60 per Common Share ($0.05 per Common Share on a monthly basis) for 2020. For the three month period ending March 31, 2020, we declared monthly dividends totalling $0.15 per Common Share (2019 – $0.15 per Common Share). At March 31, 2020, we had 103,824,053 Common Shares outstanding and a dividend payable of $5.2 million (December 31, 2019 – $5.2 million), which was paid on April 15, 2020. We declared a dividend of $0.05 per Common Share on

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2020 FIRST QUARTER INTERIM REPORT

March 23, 2020, to the holders of record at the close of business on March 31, 2020. On March 20, 2020, Mullen Group announced that we will temporarily suspend the monthly dividend of $0.05 per Common Share for three months, effective April 1, 2020. The suspension of the dividend is our response to the government mandated closure of many businesses, steps initiated to stop the spread of COVID-19. We expect this will add approximately $15.6 million of additional short-term liquidity to our company. The Board will continue to consider the amount of and the record date for the monthly dividend.

Convertible Debentures

In June 2019, we issued $125.0 million of convertible unsecured subordinated debentures (the " Debentures "), by way of a bought deal, at a price of $1,000 per Debenture. The Debentures are publicly traded and are listed on the TSX under the symbol " MTL.DB ". The Debentures will mature on November 30, 2026 and bear interest at an annual rate of 5.75 percent payable semi-annually in arrears on May 31 and November 30 in each year beginning November 30, 2019.

Each $1,000 Debenture is convertible into 71.4286 Common Shares of Mullen Group (such is based on a conversion price of $14.00) at any time at the option of the holders of the Debentures. Thus, an aggregate of approximately 8.9 million Common Shares of Mullen Group may be issued if all the holders convert their principal amount. The proceeds of the offering will be used for general corporate purposes, which may include future acquisitions. As subordinated debt, the accounting value assigned to the Debentures including any related interest expense is excluded from our financial covenant calculations under our Private Placement Debt (as hereafter defined on page 17).

The Debentures shall not be redeemable by the Corporation prior to November 30, 2023. On or after November 30, 2023 and prior to November 30, 2025, the Debentures may be redeemed by the Corporation, in whole or in part from time to time, on not more than 60 days and not less than 40 days prior notice at a redemption price equal to their principal amount plus accrued and unpaid interest, if any, up to but excluding the date set for redemption, provided that the arithmetic average of the volume weighted average trading price of the Common Shares on the TSX for the 20 consecutive trading days ending five trading days prior to the date on which notice of redemption is provided is at least 125.0 percent of the conversion price. On or after November 30, 2025 and prior to the maturity date, the Debentures may be redeemed in whole or in part at the option of the Corporation on not more than 60 days and not less than 40 days prior notice at a redemption price equal to their principal amount plus accrued and unpaid interest if any, up to but excluding the date set for redemption.

The Debentures are comprised of both a debt and equity component, which are presented separately on our condensed consolidated statement of financial position. The debt component represents the total discounted present value of both the semi-annual interest obligations and the principal payment due at maturity, using the rate of interest that would have been applicable to a non-convertible debt instrument of comparable term and risk at the date of issue. The result is an accounting value assigned to the debt component of the Debentures, which is less than the principal amount due at maturity. The debt component presented on the condensed consolidated statement of financial position will increase over the term of the Debentures to the full face value of the outstanding Debentures at maturity. This increase will be recognized in the financial statements through a notional increase to interest expense on the Debentures and a resulting decrease to net income. In the event the Debentures are converted prior to maturity, the difference between the carrying amount of such Debentures and their face value would be charged to interest expense. The equity component of the Debentures is presented under "Equity" in the condensed consolidated statement of financial position. The equity component represents the difference between the face value of the Debentures (namely, $125.0 million) and the accounting value assigned to the debt component of the Debentures at the date of issue (namely, $112.6 million). Subject to the impact of the Debentures being converted, this equity component amount will remain constant over the term of the Debentures. Upon conversion of the Debentures into Common Shares, a proportionate amount of both the debt and equity components are transferred to shareholders' capital. Accretion and interest expense on the Debentures are reflected as finance costs in the condensed consolidated statement of comprehensive income.

The transaction costs associated with the Debentures were $5.2 million and are being amortized over the term of the Debentures. If the holders of the Debentures convert the principal portion to Common Shares prior to maturity, the unamortized transaction costs would be expensed and would thereby decrease earnings.

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The details of the debt component of the Debentures are as follows:

*($ millions)*	March 31, 2020 December 31, 2019	March 31, 2020 December 31, 2019
Year of Maturity Interest Rate	Face Value Carrying Amount Face Value	Carrying Amount
2026 5.75% $	125.0 $ 109.3 $ 125.0 $	108.7

Capital Expenditures

On February 12, 2020, the Board approved a $50.0 million capital budget for 2020, exclusive of corporate acquisitions, real property and special projects with $45.0 million to be allocated to replace trucks, trailers and specialized equipment to support the operations of the business and $5.0 million allocated to the Corporate Office mainly to complete the Regina, Saskatchewan cross dock facility. On March 20, 2020, we announced that capital expenditures for fiscal 2020 will remain at $50.0 million, although some capital will be delayed due to plant shutdowns and disruptions to the supply chain. The Board will continue to monitor the various sectors of the economy we serve and will adjust the capital budget as required.

In the first three months of 2020, gross capital expenditures on a pre-consolidated basis were $16.0 million as compared to $18.0 million in 2019. These capital expenditures were comprised of $6.9 million in the Less-ThanTruckload segment (2019 – $4.2 million), $2.4 million in the Logistics & Warehousing segment (2019 – $4.5 million), $5.1 million in the Specialized & Industrial Services segment (2019 – $7.7 million) and $1.6 million in the Corporate Office (2019 – $1.6 million). Gross dispositions on a pre-consolidated basis were $1.1 million in 2020 as compared to $3.5 million in 2019. These gross dispositions were comprised of $0.2 million in the Less-Than-Truckload segment (2019 – $0.4 million), $0.2 million in the Logistics & Warehousing segment (2019 – $0.2 million), $0.7 million in the Specialized & Industrial Services segment (2019 – $2.9 million) and nil in the Corporate Office (2019 – nil).

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 CGU's 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, we will continue to monitor events in the second quarter and our assumptions used for such impairment tests.

Acquisitions and Intangible Assets

The acquisitions set forth below have been accounted for by the acquisition method and the financial results of operations have been included in the accompanying Interim Financial Statements from the date of acquisition.

2019

Argus Carriers Ltd. and Inter-Urban Delivery Service Ltd. – On July 1, 2019, we acquired all of the issued and outstanding shares of Argus Carriers Ltd. (" Argus ") and Inter-Urban Delivery Service Ltd. (" Inter-Urban ") for total cash consideration of $20.0 million. Both Argus and Inter-Urban provide transportation and logistics services in the Lower Mainland of British Columbia. We acquired Argus and Inter-Urban as part of our strategy to invest in transportation and logistics companies that have a strong regional LTL presence centrally located to serve consumers in large urban centres. Argus and Inter-Urban financial results were included in the Less-ThanTruckload segment.

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Argus, a well-established company founded in 1948, has approximately 95 employees and dedicated owner operators and operates a fleet of 57 trucks and 46 trailers providing general freight services including: local pick-up and delivery, warehousing, regional LTL, dedicated and linehaul trucking from four British Columbia operating terminals – Burnaby, Kelowna, Victoria, and Nanaimo. In addition, Argus provides daily LTL service to the Pacific Northwest of the United States.

Inter-Urban, also a well-established company founded in 1974, has approximately 70 employees and dedicated owner operators and operates 43 trucks and 26 trailers focusing on critical same day delivery service for the healthcare sector including: cross-border linehaul, cross-border LTL cartage, dedicated and local pick-up and delivery. Inter-Urban operates from a terminal based in Abbotsford, British Columbia.

Jen Express Inc. – On May 1, 2019, we acquired the business and assets of Jen Express Inc. (" Jen Express ") for cash consideration of $1.5 million. Included in this amount is $0.3 million of contingent consideration. Pursuant to the purchase and sale agreement, the vendor may receive cash consideration of up to $0.3 million for achieving certain financial targets over the two year period ending May 1, 2021. The funds to settle this liability have been set aside in an escrow account, which have been presented within cash and cash equivalents. We acquired Jen Express as part of our strategy to invest in the transportation sector in western Canada. Located in Stettler, Alberta, Jen Express offers LTL services and has been integrated into the operations of Hi-Way 9 Express Ltd. (" Hi-Way 9 "), whose financial results were included in the Less-Than-Truckload segment.

Intangible Assets

In the second quarter of 2019, MT purchased a customer list for Hi-Way 9 from a third-party for $0.4 million. The customer list included LTL customers in the Alberta and British Columbia regions.

Bank Credit Facility Amendments

On October 24, 2018, we entered into an agreement to amend the amount available to be borrowed on the credit facility with the Royal Bank of Canada (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. All other terms under the Bank Credit Facility remain the same. This facility does not have any financial covenants, however, we cannot be in default of our Private Placement Debt (as hereafter defined on page 17) and we must be in compliance with certain reporting and general covenants. We are in compliance with all of these reporting and general covenants.

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2020 FIRST QUARTER INTERIM REPORT

CONSOLIDATED FINANCIAL RESULTS – THREE MONTH PERIOD ENDED MARCH 31, 2020

Summary – Trailing Five Quarters

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Consolidated Revenue OIBDA Operating Margin [1]
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This is the first quarter our results are reported in three operating segments: Less-Than-Truckload; Logistics & Warehousing; and Specialized & Industrial Services. The reporting structure we have adopted more accurately reflects the business of Mullen Group today and is aligned with how information is regularly reviewed for the purposes of decision making, capital allocation and accessing performance.

Our overall financial performance for the quarter was generally in line with last year and close to expectations in spite of the challenges associated with significant declines in the demand for most service offerings by the middle of March due to the outbreak of the COVID-19 virus in North America. Government mandated closures of many businesses and restrictions on most activities led to declines in manufacturing, temporary job losses and significant declines in many sectors of the economy, but not all. For example, trucking and delivery services were declared as essential services, along with several other industry groups by government authorities, allowing our Less-ThanTruckload segment as well as Logistics & Warehousing segment Business Units to maintain a base level activity throughout the month of March, at a time when many businesses were forced to suspend service or production.

From a macroeconomic perspective it is difficult to compare the economic conditions to last year due to the unprecedented challenges associated with COVID-19. Nevertheless, we can provide shareholders with general commentary as it relates to the three new operating segments and the performance of some specific Business Units.

LESS-THAN-TRUCKLOAD was not negatively impacted in the quarter primarily due to the nature of the business – providing a service to meet the needs of consumers and communities. The demand for consumables such as groceries, health care products, pharmaceuticals, beer and liquor along with other general freight remained steady throughout the period. In addition, the acquisitions of Argus and InterUrban added incremental revenue to the segment during the quarter. Our largest Business Unit within the segment, Gardewine actually grew revenue by $1.5 million despite the loss of some regional bulk haul business reflecting the powerful brand this company has in the Manitoba and northern Ontario marketplace.
LOGISTICS & WAREHOUSING was steady until mid-March when the full extent of the slowdown became more apparent. Cross border traffic was impacted as freight demand for industrial and manufacturing products declined as facilities closed. Consumer product demand remained strong throughout the period as consumers stocked up in anticipation of supply shortages. Once again Kleysen Group, the largest

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Business Unit in the segment had an excellent quarter, growing revenue and operating profitability as the demand for transload services remained strong in addition to an increase in industrial salt sales. Fuel costs were down significantly as the price of diesel fuel declined reducing operating expenses, but this also contributed to slightly lower revenue related to fuel surcharges.

SPECIALIZED & INDUSTRIAL SERVICES was up slightly in the quarter, however, the majority of the Business Units in the segment experienced significant revenue declines in March. The major exception is related to pipeline construction activity that remained robust throughout the quarter. Premay Pipeline Hauling L.P. (" Premay Pipeline ") benefitted from the stockpiling of large diameter pipe associated with the Coastal GasLink Project and LNG Canada, a liquified natural gas facility located near Kitimat, British Columbia, as well as the stringing of pipe along the Trans Mountain Pipeline route, a pipeline owned by the Government of Canada. Overall, revenue at Premay Pipeline grew by $14.2 million during the quarter.

Several industries and businesses have seen material declines in activity since the outbreak of COVID-19. Examples include airlines, the cruise ship business, tourism, travel and now even vehicle traffic resulting in a significant decline in the demand for crude oil worldwide. The impact in crude oil pricing was devastating, which in turn had a material effect on the Canadian oil industry. Drilling programs were immediately put on hold, numerous production wells were shut-in, investment decisions delayed and even planned maintenance has been curtailed, as producers attempted to adjust their business plans to the changing market conditions. This directly impacted our Business Units servicing the oil and natural gas industry in western Canada in the month of March and was the principal reason our results for the quarter were softer than they would have otherwise been. We estimate the impact on revenue during the quarter to be approximately $15.0 million.

Revenue

Revenue is generated by the Corporation through its Business Units. These Business Units are divided into three operating segments: Less-Than-Truckload, Logistics & Warehousing and Specialized & Industrial Services. The Business Units utilize a combination of company assets that are either owned by the Business Unit or leased (" Company Equipment "), owner operators who provide trucks and/or trailers and work exclusively for the Business Unit under annual contracts and subcontractors who own their own equipment and are used during times of peak demand (collectively, " Contractors ").

Q1 Consolidated Revenue by Segment *(unaudited)* *($ millions)*	2020 2019 Change	2020 2019 Change
Less-Than-Truckload Logistics & Warehousing Specialized & Industrial Services Corporate and intersegment eliminations	$ % $ % $**	%
	112.9 35.2 109.1 34.0 3.8 96.2 30.0 101.7 31.7 (5.5) 111.3 34.8 109.7 34.3 1.6 (2.2) — (0.9) — (1.3)	3.5 (5.4) 1.5 —
Total	318.2 100.0 319.6 100.0 (1.4)	(0.4)

*as a percentage of pre-consolidated revenue

Consolidated revenue in the first quarter decreased by $1.4 million, or 0.4 percent, declining to $318.2 million as compared to $319.6 million in 2019. The government mandated closure of many parts of the Canadian economy, beginning in March, had a negative impact on the demand for most trucking and logistics services. In our LessThan-Truckload segment revenue improved by $3.8 million year over year primarily due to the acquisitions of Argus and Inter-Urban. Demand for these services was largely consistent with prior year reflecting the steady nature of the service requirements. The demand for our Logistics & Warehousing segment services was softer than 2019 due to supply chain issues and bottlenecks associated with rail blockades in many parts of Canada during the first part of the year followed by issues related to COVID-19 in the month of March. As a result, this segment experienced a revenue decline of $5.5 million. In our Specialized & Industrial Services segment revenue increased by $1.6 million due to very strong pipeline construction activity that offset weakness in other industry groups such as oil and natural gas. Excluding acquisitions, consolidated fuel surcharge revenue was $20.8 million as compared to $21.2 million in 2019.

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Q1 Consolidated Revenue *(unaudited)* *($ millions)*	2020 2019 Change	2020 2019 Change
Company Contractors Other	$ % $ % $	%
	228.4 71.8 216.0 67.6 12.4 88.7 27.9 102.3 32.0 (13.6) 1.1 0.3 1.3 0.4 (0.2)	5.7 (13.3) (15.4)
Total	318.2 100.0 319.6 100.0 (1.4)	(0.4)

Company Equipment revenue was $228.4 million in the current period, an increase of $12.4 million, or 5.7 percent, as compared with $216.0 million in 2019. Contractors revenue, however, decreased by $13.6 million to $88.7 million from $102.3 million. These changes in revenue mix are primarily due to the increased revenue at Business Units that utilize Company Equipment versus Contractors, the most notable being Premay Pipeline. In addition, the majority of revenue generated by the Less-Than-Truckload segment is allocated to Company Equipment. Revenue declines associated with the transportation of fluids, where Contractors are utilized extensively, was the primary reason for the drop in Contractors revenue in the quarter.

Direct Operating Expenses

Direct operating expenses (" DOE ") include two main categories of expenses. The first category of DOE relates to the direct costs incurred to operate and maintain Company Equipment. The major DOE associated with operating Company Equipment are wages, fuel, repairs and maintenance, purchased transportation and operating supplies. The other expenses included under DOE – Company mainly consist of short-term or low value leases, equipment rent, insurance and licensing costs. The second category of DOE are the costs incurred to hire Contractors, whether owner operators or subcontractors.

Q1 Consolidated Direct Operating Expenses *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Consolidated Direct Operating Expenses *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Consolidated Direct Operating Expenses *(unaudited)* *($ millions)* 2020 2019 Change
Company Wages and benefits Fuel Repairs and maintenance Purchased transportation Operating supplies Other Contractors	$ % $ % $**	%
	61.9 27.1 59.4 27.5 2.5 21.5 9.4 23.2 10.7 (1.7) 29.6 13.0 29.2 13.5 0.4 24.3 10.6 22.6 10.5 1.7 20.3 8.9 15.8 7.3 4.5 6.6 2.9 6.1 2.9 0.5	4.2 (7.3) 1.4 7.5 28.5 8.2
	164.2 71.9 156.3 72.4 7.9 68.3 77.0 77.0 75.3 (8.7)	5.1 (11.3)
Total	232.5 73.1 233.3 73.0 (0.8)	(0.3)

*as a percentage of respective Consolidated revenue

DOE were $232.5 million in the first quarter as compared to $233.3 million in 2019. This decrease of $0.8 million, or 0.3 percent, was in line with the $1.4 million, or 0.4 percent, decrease in consolidated revenue.

DOE associated with Company Equipment increased to $164.2 million as compared to $156.3 million in 2019. This increase of $7.9 million, or 5.1 percent, was attributable to the $12.4 million, or 5.7 percent, increase in Company revenue that occurred during the quarter. As a percentage of Company revenue these expenses decreased by 0.5 percent to 71.9 percent as compared to 72.4 percent in 2019 due to decreased fuel expenses and cost control initiatives being offset by slightly higher operating supplies expense.

Contractors expense in the first quarter decreased to $68.3 million as compared to $77.0 million in 2019. This $8.7 million, or 11.3 percent, decrease was generally in line with the $13.6 million, or 13.3 percent, decline in Contractors revenue. As a percentage of revenue, Contractors expense increased by 1.7 percent to 77.0 percent as compared to 75.3 percent in 2019 and was primarily attributable to higher costs experienced by the Specialized & Industrial Services segment due to the effect of rate discounting, primarily by those Business Units involved in the transportation of fluids and servicing of wells.

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Selling and Administrative Expenses

Selling and administrative (" S&A ") expenses include salaries, employee profit share and other administrative expenses incurred to support the operations of Mullen Group and its Business Units.

Q1 Consolidated Selling and Administrative Expenses *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Consolidated Selling and Administrative Expenses *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Consolidated Selling and Administrative Expenses *(unaudited)* *($ millions)* 2020 2019 Change
Wages and benefits Communications, utilities and general supplies Profit share Foreign exchange Stock-based compensation Rent and other	$ % $ % $**	%
	25.4 8.0 25.4 7.9 — 12.0 3.8 12.2 3.8 (0.2) 3.1 1.0 2.6 0.8 0.5 (2.2) (0.7) 0.2 0.1 (2.4) 0.3 0.1 0.4 0.1 (0.1) 1.9 0.5 1.5 0.5 0.4	— (1.6) 19.2 (1,200.0) (25.0) 26.7
Total	40.5 12.7 42.3 13.2 (1.8)	(4.3)

as a percentage of total Consolidated revenue

S&A expenses for the period declined by $1.8 million to $40.5 million as compared to $42.3 million in 2019. This was largely due to the $2.4 million positive variance in foreign exchange expense that related to the year over year change in the Canadian dollar relative to the U.S. dollar being partially offset by the $0.7 million of incremental S&A expenses associated with acquisitions.

Operating Income Before Depreciation and Amortization

Operating income before depreciation and amortization (" OIBDA ") is net income before, depreciation of property, plant and equipment, depreciation of right-of-use assets, amortization of intangible assets, finance costs, net foreign exchange gains and losses, other (income) expense and income taxes.

Q1 Consolidated Operating Income Before Depreciation and Amortization *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Consolidated Operating Income Before Depreciation and Amortization *(unaudited)* *($ millions)* 2020 2019 Change
$ % $ % $	%
Less-Than-Truckload 13.3 29.4 15.2 34.5 (1.9) Logistics & Warehousing 16.4 36.3 14.6 33.2 1.8 Specialized & Industrial Services 17.4 38.5 16.4 37.3 1.0 Corporate (1.9) (4.2) (2.2) (5.0) 0.3	(12.5) 12.3 6.1 (13.6)
Total 45.2 100.0 44.0 100.0 1.2	2.7

OIBDA for the period was $45.2 million, or 14.2 percent of revenue, as compared to $44.0 million, or 13.8 percent, in 2019. The $1.2 million increase represents a year over year increase of 2.7 percent and was due to a $1.8 million increase in OIBDA in the Logistics & Warehousing segment, the $1.0 million increase in the Specialized & Industrial Services segment and the $0.3 million reduction in Corporate costs being partially offset by the $1.9 million decline in the Less-Than-Truckload segment.

Depreciation of Property, Plant and Equipment

Depreciation of property, plant and equipment was $17.5 million in the first quarter as compared to $17.4 million in 2019. This increase of $0.1 million was mainly attributable to a greater amount of depreciation being recorded in the Less-Than-Truckload segment, which was somewhat offset by a lower amount of depreciation being recognized in the Specialized & Industrial Services segment. Depreciation in the Logistics & Warehousing segment and the Corporate Office remained consistent on a year over year basis. Depreciation in the Less-Than-Truckload segment increased by $0.5 million due to a greater amount of capital expenditures being made within this segment and from the acquisition of Argus and Inter-Urban. Depreciation in the Specialized & Industrial Services segment decreased by $0.4 million and was mainly due to the lower amount of capital expenditures made within this segment, the sale of older assets by certain Business Units and from the Corporation's declining balance method of depreciation.

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Depreciation of Right-of-Use Assets

Depreciation of right-of-use assets was $2.9 million in the first quarter as compared to $2.8 million in 2019. The majority of our right-of-use assets consist of real property leases within the Less-Than-Truckload segment and the Logistics & Warehousing segment. This increase of $0.1 million was mainly attributable to a greater amount of depreciation of right-of-use assets being recorded in the Less-Than-Truckload segment, which was somewhat offset by a lower amount of depreciation being recognized in both the Specialized & Industrial Services segment and the Logistics & Warehousing segment. Depreciation in the Less-Than-Truckload segment increased by $0.4 million, which was mainly due to the incremental real property leases acquired in the acquisition of Argus and Inter-Urban. Depreciation in the Specialized & Industrial Services segment and the Logistics & Warehousing segment decreased by $0.3 million and was mainly due to some real property leases that have come to the end of their term and were not renewed.

Amortization of Intangible Assets

Intangible assets are normally acquired on acquisitions and are mainly comprised of customer relationship values and non-competition agreements that are amortized over their estimated life from the date of acquisition. Amortization of intangible assets was $5.0 million in the first quarter as compared to $4.4 million in 2019. This increase mainly resulted from the additional amortization recorded on the intangible assets associated with the acquisition of Argus and Inter-Urban. These increases were somewhat offset by certain intangible assets becoming fully amortized.

Finance Costs

Finance costs consist of:

Interest expense on financial liabilities, including:
U.S. $117.0 million of Series G Notes, U.S. $112.0 million of Series H Notes, $30.0 million of Series I Notes, $3.0 million of Series J Notes, $58.0 million of Series K Notes and $80.0 million of Series L Notes (collectively, the " Private Placement Debt ");
the Debentures that were issued in June 2019;
lease liabilities; and
borrowings on the Bank Credit Facility.
Less any interest income generated from the debentures issued to Pacific Coast Express Limited and Thrive Management Group Ltd. and from cash and cash equivalents.

Finance costs were $7.2 million in the first quarter as compared to $4.9 million in 2019. The increase of $2.3 million was mainly attributable to the $2.4 million of interest expense being recorded on the Debentures and from a greater amount of interest expense being recorded on our U.S. dollar debt as a result of the change in the value of the Canadian dollar relative to the U.S. dollar. These increases were somewhat offset by the reduction in interest expense from borrowings on the Bank Credit Facility and from a greater amount of interest income being earned on cash held in the first quarter of 2020.

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Net Foreign Exchange Loss (Gain)

We recognize foreign exchange gains or losses at the end of each reporting period related to our U.S. dollar debt and from our two cross-currency swap contracts. In 2014 we entered into two cross-currency swap contracts to swap the principal portion of the Series G (U.S. $117.0 million) and Series H (U.S. $112.0 million) Notes (collectively, the " Cross-Currency Swaps ") into Canadian dollars at foreign exchange rates of $1.1047 and $1.1148 that mature on October 22, 2024 and October 22, 2026, respectively. These swap contracts were entered into as a method of hedging the U.S. debt notes against any declines in the Canadian dollar vis-à-vis the U.S. dollar.

The net foreign exchange loss was $2.8 million in the first quarter of 2020 as compared to a net foreign exchange gain of $1.1 million in 2019. The net foreign exchange loss of $2.8 million in 2020 resulted even though the principal portion of all our U.S. $229.0 million debt is hedged by our Cross-Currency Swaps. This loss is due to how our U.S. dollar debt and our Cross-Currency Swaps are valued for accounting purposes. Our U.S. dollar debt is valued at the end of each quarter using the closing exchange rate between the Canadian dollar vis-à-vis the U.S. dollar (the " Spot Rate "). In addition to the Spot Rate, our Cross-Currency Swaps are valued using a discounted value from maturity of the forward rate, which is influenced by changes in interest rate differentials between Canada and the United States. As the Cross-Currency Swaps get closer to maturity, their accounting value should more closely correlate to the value of our U.S. dollar debt. The variance of $3.9 million was mainly attributable to the change in the value of the Canadian dollar relative to the U.S. dollar. The details of the net foreign exchange loss (gain) are as follows:

Net Foreign Exchange Loss (Gain) *(unaudited)* *($ millions)*	Three month periods ended March 31	Three month periods ended March 31
	CDN. $ Equivalent
	2020	2019
Foreign exchange loss (gain) on U.S. $ debt Foreign exchange(gain)loss on Cross-CurrencySwaps	27.5 (24.7) 2.8	(6.4)
		5.3
Net foreign exchange loss (gain)		(1.1)

Foreign Exchange Loss (Gain) on U.S. $ Debt

We recorded a foreign exchange loss of $27.5 million related to our U.S. dollar debt due to the $0.1199 weakening of the Canadian dollar relative to the U.S. dollar during the first quarter of 2020. For the same period in 2019, we recorded a foreign exchange gain of $6.4 million due to the strengthening of the Canadian dollar relative to the U.S. dollar. The details of the foreign exchange loss (gain) on the U.S. dollar debt are summarized in the following table:

Foreign Exchange Loss (Gain) on U.S. $ Debt *(unaudited)* *($ millions, except exchange rate amounts)*	Three month periods ended March 31	Three month periods ended March 31	Three month periods ended March 31
	2020	CDN. $ Equivalent	2019
	U.S. $ Debt Exchange Rate		U.S. $ Debt Exchange Rate	CDN. $ Equivalent
Ending – March 31 Beginning– January1	229.0 1.4187 229.0 1.2988	325.0 297.5	229.0 1.3363 229.0 1.3642	306.0
				312.4
Foreign exchange loss (gain) on U.S. $ debt		27.5		(6.4)

Foreign Exchange (Gain) Loss on Cross-Currency Swaps

On July 25, 2014, we entered into two Cross-Currency Swaps with a Canadian bank to swap U.S. $117.0 million and U.S. $112.0 million into Canadian currency at foreign exchange rates of $1.1047 and $1.1148 that mature on October 22, 2024 and October 22, 2026, respectively. The Cross-Currency Swaps convert the repayment of the principal portion of the Series G and Series H Notes into a Canadian currency equivalent of $129.2 million and $124.9 million, respectively. We record the foreign exchange gain or loss relating to these Cross-Currency Swaps within net foreign exchange loss (gain) on the condensed consolidated statement of comprehensive income, which is consistent with its underlying nature and purpose. The carrying value of these Cross-Currency Swaps are

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2020 FIRST QUARTER INTERIM REPORT

recorded within derivative financial instruments (" Derivatives ") in the condensed consolidated statement of financial position.

We recorded a foreign exchange gain on Cross-Currency Swaps of $24.7 million in the first quarter of 2020 as compared to a $5.3 million loss in 2019. This was due to the change over the period in the fair value of these CrossCurrency Swaps as summarized in the table below:

Foreign Exchange (Gain) Loss on Cross-Currency Swaps *(unaudited)* *($ millions)*		Three month periods ended March 31	Three month periods ended March 31	Three month periods ended March 31
		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	117.0 112.0	(12.9) (11.8) (24.7)	117.0 112.0	2.7
				2.6
Foreign exchange (gain) loss on Cross-Currency Swaps				5.3

Other (Income) Expense

Other (income) expense consists of the change in fair value of investments, the gain or loss on sale of the Corporation's assets including property, plant and equipment and earnings from equity investments. Other expense in the first quarter was $1.3 million, a $1.4 million negative variance as compared to the $0.1 million of other income recorded in 2019. The $1.4 million negative variance was due to the factors set forth below:

Change in Fair Value of Investments (negative variance of $1.6 million). We periodically invest in certain public corporations. We recorded a decrease in the fair value of investments of $1.5 million in the first quarter as compared to a $0.1 million increase in 2019. There were no investments purchased or sold in either the first quarter of 2020 or 2019.

Loss on Sale of Property, Plant and Equipment (positive variance of $0.6 million). We recognized a nominal loss on sale of property, plant and equipment on total consolidated proceeds on sale of $1.0 million in the first quarter as compared to a $0.6 million loss on sale of property, plant and equipment on total consolidated proceeds on sale of $1.4 million in 2019. The nominal loss on sale of property, plant and equipment in 2020 mainly resulted from the sale of older equipment in the Less-Than-Truckload segment and the Logistics & Warehousing segment, which was somewhat offset by a $0.2 million gain on sale being recognized within the Specialized & Industrial Services segment. The $0.6 million loss on sale of property, plant and equipment in 2019 related to slight losses on sale of older equipment in all our operating segments.

Earnings from Equity Investments (negative variance of $0.4 million). We recognized $0.2 million of earnings from equity investments in the first quarter as compared to earnings of $0.6 million in 2019. The $0.4 million negative variance was mainly due to declines in demand for their services, which resulted from lower economic activity. We use the equity method to account for investments in which we obtain significant influence or joint control over the investee and we recognize earnings from these equity investments from the date thereof. The following table details our equity investments and the date from which we commenced recording earnings from them.

	Date of Significant Influence
Equity Investment	or Joint Control Obtained
Canol Oilfield Services Inc.	January 1, 2013
Kriska Transportation Group Limited	December 1, 2014
Cordova Oilfield Services Ltd.	April 17, 2015
Butler Ridge Energy Services (2011) Ltd.	July 1, 2015
Thrive Management Group Ltd.	September 27, 2018
Pacific Coast Express Limited	August 1, 2018

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Income Taxes

*(unaudited)* *($ millions)*	Three month periods ended March 31	Three month periods ended March 31
	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 Other	$ 8.5 26% 2.2 0.3 0.2 0.1 — 1.0	$ 15.7 27% 4.2 (0.2) — 0.1 (0.2) 0.2
Income tax expense	$ 3.8	$ 4.1

Income tax expense was $3.8 million in the first quarter of 2020 as compared to $4.1 million in 2019. The decrease of $0.3 million was mainly attributable to the lower amount of earnings generated in 2020 as compared to the prior year.

Net Income

*(unaudited)* *($ millions, except share and per share amounts)*	Three month periods ended March 31	Three month periods ended March 31
	2020 2019	% Change
Net income Weighted average number of Common Shares outstanding	$ 4.7 $ 11.6 104,670,985 104,824,973	(59.5) (0.1)
Earnings per share – basic	$ 0.04 $ 0.11	(63.6)

Net income decreased to $4.7 million in the first quarter as compared to $11.6 million in 2019. The factors contributing to the decrease in net income include:

a $3.9 million negative variance in net foreign exchange;
a $2.3 million increase in finance costs;
a $1.6 million negative variance in the fair value of investments;
a $0.6 million increase in amortization of intangible assets;
a $0.4 million decrease in earnings from equity investments;
a $0.1 million increase in depreciation of right-of-use assets; and
a $0.1 million increase in depreciation of property, plant and equipment.

These factors were somewhat offset by the following factors that increased net income:

a $1.2 million increase in OIBDA;

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a $0.6 million decrease in the loss on sale of property, plant and equipment; and
a $0.3 million decrease in income tax expense.

Basic earnings per share decreased to $0.04 in 2020 as compared to $0.11 in 2019. This decrease resulted from the effect of the $6.9 million decrease in net income. The weighted average number of Common Shares outstanding decreased from 104,824,973 to 104,670,985, which was due to the repurchase and cancellation of 1,000,920 Common Shares under the NCIB in the first quarter of 2020.

Net Income – Adjusted and Earnings per Share – Adjusted

The following table illustrates net income and basic earnings per share before considering the impact of the net foreign exchange gains or losses and the change in fair value of investments. Net income and basic earnings per share have been adjusted to reflect earnings from a strictly operating perspective.

*(unaudited)* *($ millions, except share and per share amounts)*	Three month periods ended March 31	Three month periods ended March 31
	2020	2019
Income before income taxes Add (deduct): Net foreign exchange loss (gain) Change in fair value of investments	$ 8.5 $ 2.8 1.5	15.7 (1.1) (0.1)
Income before income taxes – adjusted Income tax rate Computed expected income tax expense	12.8 26% (3.3)	14.5 27% (3.9)
Net income – adjusted(1) Weighted average number of Common Shares outstanding– basic	9.5 104,670,985	10.6 104,824,973
Earnings per share – adjusted(1)	$ 0.09 $	0.10

(1) Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

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SEGMENTED INFORMATION – THREE MONTH PERIOD ENDED MARCH 31, 2020

Three month period ended March 31, 2020 *(unaudited)* *($ millions)*	Specialized &	Corporate and
	Less-Than Logistics & Industrial	intersegment
	-Truckload Warehousing Services	eliminations	Total
Revenue Direct operating expenses Sellingand administrative expenses	$ $ $	$	$
	112.9 96.2 111.3 83.8 69.6 82.0 15.8 10.2 11.9	(2.2) (2.9) 2.6(1)	318.2 232.5 40.5
Operating income before depreciation and amortization	13.3 16.4 17.4	(1.9)	45.2
Net capital expenditures(2)	6.7 2.2 4.4	1.6	14.9

Three month period ended March 31, 2019 *(unaudited)* *($ millions)*	Specialized & Corporate and
	Less-Than- Logistics & Industrial intersegment
	Truckload Warehousing Services eliminations	Total
Revenue Direct operating expenses Sellingand administrative expenses	$ $ $ $	$
	109.1 101.7 109.7 (0.9) 79.5 75.4 80.5 (2.1) 14.4 11.7 12.8 3.4(3)	319.6 233.3 42.3
Operating income before depreciation and amortization	15.2 14.6 16.4 (2.2)	44.0
Net capital expenditures(2)	3.8 4.3 4.8 1.6	14.5

(1) Includes a $1.0 million foreign exchange gain.

(2) Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

(3) Includes a $0.1 million foreign exchange loss.

LESS-THAN-TRUCKLOAD SEGMENT

Summary – Trailing Five Quarters

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Revenue OIBDA Operating Margin [1]
($ millions)
115.9
114.2
112.9
112.4
109.1
Q1 Q2 Q3 Q4
2019 2020
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1 Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

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Revenue

Q1 Revenue – Less-Than-Truckload *(unaudited)* *($ millions)* Company Contractors Other Total	2020 2019 Change	2020 2019 Change
	$ % $ % $	%
	107.2 95.0 101.0 92.6 6.2 5.6 5.0 8.0 7.3 (2.4) 0.1 — 0.1 0.1 —	6.1 (30.0) —
	112.9 100.0 109.1 100.0 3.8	3.5

Segment revenue increased by $3.8 million, or 3.5 percent, to $112.9 million as compared to $109.1 million in 2019 and represented 35.2 percent of pre-consolidated revenue as compared to 34.0 percent in 2019. This increase in revenue was mainly attributable to the acquisitions of Argus and Inter-Urban. Specific factors affecting segment revenue were:

a $6.0 million increase in revenue generated from the acquisitions of Argus and Inter-Urban;
a $1.5 million increase in revenue generated by Gardewine due to market share gains in Manitoba and northern Ontario, which was partially offset by a one-time $0.9 million payment in 2019 on a take-or-pay contract with volume commitments and by declines in certain regional bulk haul contracts in northern Ontario;
a decrease of $0.4 million in fuel surcharge revenue to $13.5 million, from the $13.9 million generated in 2019 resulting from the decline in diesel fuel prices; and
declines in demand in the Alberta market.

Generally speaking, the demand for LTL services remained resilient during the quarter, meeting our expectations, despite the slowdown in many parts of the Canadian economy. This reflects both the strong regional brands we operate along with the service nature of the LTL business, which is required to meet consumer needs.

Direct Operating Expenses

Q1 Direct Operating Expenses – Less-Than-Truckload *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Direct Operating Expenses – Less-Than-Truckload *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Direct Operating Expenses – Less-Than-Truckload *(unaudited)* *($ millions)* 2020 2019 Change
Company Wages and benefits Fuel Repairs and maintenance Purchased transportation Operating supplies Other Contractors	$ % $ % $**	%
	29.7 27.7 27.3 27.0 2.4 11.6 10.8 12.1 12.0 (0.5) 11.6 10.8 10.3 10.2 1.3 22.8 21.3 21.1 20.9 1.7 1.7 1.6 1.6 1.6 0.1 3.4 3.2 2.7 2.7 0.7	8.8 (4.1) 12.6 8.1 6.2 25.9
	80.8 75.4 75.1 74.4 5.7 3.0 53.6 4.4 55.0 (1.4)	7.6 (31.8)
	83.8 74.2 79.5 72.9 4.3

*as a percentage of respective Less-Than-Truckload revenue

These expenses increased by $4.3 million, or 5.4 percent, to $83.8 million as compared to $79.5 million in 2019. The majority of the increase is directly related to the $3.8 million, or 3.5 percent, increase in segment revenue and higher costs at Grimshaw Trucking due to one-time labour costs and higher costs associated with its winter ice road project. As a percentage of revenue these expenses increased by 1.3 percent to 74.2 percent as compared to 72.9 percent in 2019. Generally speaking, our Business Units were successful at mitigating higher wages and cost pressures by focusing on controlling other variable costs.

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DOE associated with Company Equipment increased by $5.7 million, or 7.6 percent, to $80.8 million as compared to $75.1 million in 2019. This increase was directly related to the $6.2 million, or 6.1 percent, increase in Company revenue. As a percentage of Company revenue these expenses increased by 1.0 percent to 75.4 percent as compared to 74.4 percent in 2019, primarily due to higher wages, repairs and maintenance and purchased transportation expenses being somewhat offset by lower fuel costs.

Contractors expense decreased by $1.4 million to $3.0 million as compared to $4.4 million in 2019. This decrease was directly related to the $2.4 million decrease in Contractors revenue. As a percentage of Contractors revenue, Contractors expense decreased to 53.6 percent as compared to 55.0 percent due to the availability of subcontractors.

Selling and Administrative Expenses

Q1 Selling and Administrative Expenses – Less-Than-Truckload *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Selling and Administrative Expenses – Less-Than-Truckload *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Selling and Administrative Expenses – Less-Than-Truckload *(unaudited)* *($ millions)* 2020 2019 Change
Wages and benefits Communications, utilities and general supplies Profit share Foreign exchange Rent and other	$ % $ % $**	%
	9.8 8.7 8.9 8.2 0.9 4.8 4.3 4.6 4.2 0.2 0.7 0.6 0.7 0.6 — (0.1) (0.1) — — (0.1) 0.6 0.5 0.2 0.2 0.4	10.1 4.3 — — 200.0
Total	15.8 14.0 14.4 13.2 1.4	9.7

*as a percentage of total Less-Than-Truckload revenue

S&A expenses increased by $1.4 million to $15.8 million as compared to $14.4 million in 2019 primarily due to the $0.7 million of incremental S&A expenses associated with the acquisitions of Argus and Inter-Urban. S&A expenses as a percentage of segment revenue increased by 0.8 percent to 14.0 percent as compared to 13.2 percent in 2019.

Operating Income Before Depreciation and Amortization

OIBDA decreased by $1.9 million, or 12.5 percent, to $13.3 million as compared to $15.2 million in 2019. The decrease in OIBDA was due to lower OIBDA generated by Grimshaw Trucking due to a weakened Alberta market and from lower margins recognized on the winter ice road project in Canada's far north. These decreases were somewhat offset by a $0.9 million increase from the incremental OIBDA generated from the acquisitions of Argus and Inter-Urban. Operating margin[1] decreased to 11.8 percent as compared to 13.9 percent in 2019. This margin decline was due to the lower margins achieved at Grimshaw Trucking and from the one-time retroactive payment received by Gardewine in 2019 that increased margin in the comparative period. In the absence of these nonrecurring factors, we estimate the operating margin[1 ] was 12.5 percent as compared to 13.1 percent in 2019.

Capital Expenditures

Net capital expenditures[1] were $6.7 million in the first quarter, an increase of $2.9 million as compared to $3.8 million in 2019. The Less-Than-Truckload segment had gross capital expenditures of $6.9 million and dispositions of $0.2 million for net capital expenditures[1] of $6.7 million in 2020. The majority of the capital invested was to purchase trucks and trailers to support growth opportunities as well as replace some older less efficient equipment. In 2019 gross capital expenditures were $4.2 million and dispositions were $0.4 million for net capital expenditures[1] of $3.8 million.

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LOGISTICS & WAREHOUSING SEGMENT

Summary – Trailing Five Quarters

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Revenue OIBDA Operating Margin [1]
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Revenue

Q1 Revenue – Logistics & Warehousing *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Revenue – Logistics & Warehousing *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Revenue – Logistics & Warehousing *(unaudited)* *($ millions)* 2020 2019 Change
Company Contractors Other	$ % $ % $	%
	38.1 39.6 34.8 34.2 3.3 57.9 60.2 66.6 65.5 (8.7) 0.2 0.2 0.3 0.3 (0.1)	9.5 (13.1) (33.3)
Total	96.2 100.0 101.7 100.0 (5.5)	(5.4)

Segment revenue fell by $5.5 million, or 5.4 percent, to $96.2 million as compared to $101.7 million in 2019 and represented 30.0 percent of pre-consolidated revenue as compared to 31.7 percent in 2019. The revenue declines can be attributed to the reduced demand for logistics and trucking services related to government mandated closures during the month of March as well as supply chain disruptions related to rail blockades in January. These events negatively impacted both freight volumes as well as pricing, especially on the spot market. Fuel surcharge revenue was down by only $0.1 million to $6.6 million. Offsetting these negative factors was the continued strong performance by Kleysen Group, which continued to generate solid results from transload operations and a seasonal increase in industrial salt sales.

Revenue related to Company Equipment increased by $3.3 million, or 9.5 percent, to $38.1 million as compared to $34.8 million in 2019 and represented 39.6 percent of segment revenue in the current period as compared to 34.2 percent in 2019. Revenue related to Contractors decreased by $8.7 million, or 13.1 percent, to $57.9 million as compared to $66.6 million in 2019 and represented 60.2 percent of segment revenue in the current period as compared to 65.5 percent in 2019.

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Direct Operating Expenses

Q1 Direct Operating Expenses – Logistics & Warehousing *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Direct Operating Expenses – Logistics & Warehousing *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Direct Operating Expenses – Logistics & Warehousing *(unaudited)* *($ millions)* 2020 2019 Change
Company Wages and benefits Fuel Repairs and maintenance Purchased transportation Operating supplies Other Contractors	$ % $ % $**	%
	8.4 22.0 8.8 25.3 (0.4) 2.9 7.6 3.3 9.5 (0.4) 4.7 12.3 4.7 13.5 — 1.0 2.6 1.1 3.2 (0.1) 7.7 20.2 5.8 16.7 1.9 1.1 3.0 1.3 3.6 (0.2)	(4.5) (12.1) — (9.1) 32.8 (15.4)
	25.8 67.7 25.0 71.8 0.8 43.8 75.6 50.4 75.7 (6.6)	3.2 (13.1)
Total	69.6 72.3 75.4 74.1 (5.8)	(7.7)

*as a percentage of respective Logistics & Warehousing revenue

DOE expressed as a percentage of revenue decreased by 1.8 percent to 72.3 percent as compared to 74.1 percent in 2019 due to lower fuel costs and operational efficiencies. Total DOE were $69.6 million as compared to $75.4 million in 2019. The decrease of $5.8 million, or 7.7 percent, was generally in line with the $5.5 million, or 5.4 percent, decrease in segment revenue.

DOE related to Company Equipment increased by $0.8 million, or 3.2 percent, to $25.8 million as compared to $25.0 million in 2019. This increase was generally in proportion to the $3.3 million increase in Company revenue. In terms of a percentage of revenue, Company expenses decreased by 4.1 percent to 67.7 percent as compared to 71.8 percent in 2019. This decrease was primarily due to lower wages and benefits expense as well as decreased fuel costs associated with the year over year decline in diesel prices.

Contractors expense decreased by $6.6 million to $43.8 million as compared to $50.4 million in 2019. This decrease was generally in line with the $8.7 million decrease in Contractors revenue. As a percentage of Contractors revenue, Contractors expense decreased by 0.1 percent to 75.6 percent as compared to 75.7 percent in 2019.

Selling and Administrative Expenses

Q1 Selling and Administrative Expenses – Logistics & Warehousing *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Selling and Administrative Expenses – Logistics & Warehousing *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Selling and Administrative Expenses – Logistics & Warehousing *(unaudited)* *($ millions)* 2020 2019 Change
Wages and benefits Communications, utilities and general supplies Profit share Foreign Exchange Rent and other	$ % $ % $**	%
	7.0 7.3 7.3 7.2 (0.3) 2.9 3.0 3.0 2.9 (0.1) 1.1 1.1 0.9 0.9 0.2 (1.2) (1.2) 0.1 0.1 (1.3) 0.4 0.4 0.4 0.4 —	(4.1) (3.3) 22.2 (1,300.0) —
Total	10.2 10.6 11.7 11.5 (1.5)	(12.8)

as a percentage of total Logistics & Warehousing revenue

S&A expenses were $10.2 million as compared to $11.7 million in 2019. The decrease of $1.5 million was primarily due to the $1.3 million positive variance in foreign exchange. S&A expenses as a percentage of segment revenue declined by 0.9 percent to 10.6 percent as compared to 11.5 percent in 2019. Excluding the effects of foreign exchange, S&A expenses as a percentage of segment revenue increased to 11.8 percent as compared to 11.4 percent in 2019.

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Operating Income Before Depreciation and Amortization

OIBDA increased by $1.8 million, or 12.3 percent, to $16.4 million as compared to $14.6 million generated in 2019. The majority of this rise in OIBDA was due to lower DOE related to Company Equipment and the positive variance in foreign exchange. Operating margin[1] increased by 2.6 percent to 17.0 percent as compared to 14.4 percent in 2019, primarily due to the strong performance by Kleysen Group and the beneficial effect of a weaker Canadian dollar and lower diesel prices.

Capital Expenditures

Net capital expenditures[1 ] were $2.2 million in the first quarter of 2020, a decrease of $2.1 million as compared to $4.3 million in 2019. The Logistics & Warehousing segment had gross capital expenditures of $2.4 million and dispositions of $0.2 million for net capital expenditures[1] of $2.2 million in 2020. The majority of the capital invested consisted of growth capital to expand our service offerings and rail capacity at our Edmonton, Alberta distribution center as well as purchase various pieces of operating equipment. In 2019 gross capital expenditures were $4.5 million and dispositions were $0.2 million for net capital expenditures[1] of $4.3 million.

SPECIALIZED & INDUSTRIAL SERVICES SEGMENT

Summary – Trailing Five Quarters

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Revenue OIBDA Operating Margin [1]
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Revenue

Q1 Revenue – Specialized & Industrial Services *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Revenue – Specialized & Industrial Services *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Revenue – Specialized & Industrial Services *(unaudited)* *($ millions)* 2020 2019 Change
Company Contractors Other	$ % $ % $	%
	83.0 74.6 80.2 73.1 2.8 28.1 25.2 29.2 26.6 (1.1) 0.2 0.2 0.3 0.3 (0.1)	3.5 (3.8) (33.3)
Total	111.3 100.0 109.7 100.0 1.6	1.5

Segment revenue increased by $1.6 million, or 1.5 percent, to $111.3 million as compared to $109.7 million in 2019 and represented 34.8 percent of pre-consolidated revenue as compared to 34.3 percent of pre-consolidated

1 Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

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2020 FIRST QUARTER INTERIM REPORT

revenue in 2019. This increase in revenue was mainly attributable to the rise in demand for large diameter pipeline hauling and stringing services. Specific factors affecting the segment revenue were:

A $15.9 million increase in revenue generated by those Business Units providing specialized services to the oil sands, environmental, construction, pipeline, utility, telecom and water management industries including a $14.2 million increase in pipeline hauling and stringing services revenue as well as an increase in demand for civil construction services at Smook and pumps and water management services at Canadian Dewatering. These increases were partially offset by lower demand for heavy haul transportation and hydrovac services.
A $10.2 million decrease in revenue generated by those Business Units involved in the transportation of fluids and servicing of wells due to the sharp decline in demand as a result of the oil price collapse that fell dramatically during March.
A $4.1 million decrease in revenue generated by those Business Units most directly tied to oil and natural gas drilling activity as the demand for most services was severely impacted around mid-March as drilling activity in the WCSB fell from 237 active rigs to 29 at the end of the month.

Direct Operating Expenses

Q1 Direct Operating Expenses – Specialized & Industrial Services *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Direct Operating Expenses – Specialized & Industrial Services *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Direct Operating Expenses – Specialized & Industrial Services *(unaudited)* *($ millions)* 2020 2019 Change
Company Wages and benefits Fuel Repairs and maintenance Purchased transportation Operating supplies Other Contractors	$ % $ % $**	%
	23.8 28.7 23.3 29.1 0.5 7.0 8.4 7.8 9.7 (0.8) 13.4 16.1 14.2 17.7 (0.8) 0.5 0.6 0.5 0.6 — 10.8 13.0 8.4 10.5 2.4 2.3 2.8 2.5 3.1 (0.2)	2.1 (10.3) (5.6) — 28.6 (8.0)
	57.8 69.6 56.7 70.7 1.1 24.2 86.1 23.8 81.5 0.4	1.9 1.7
Total	82.0 73.7 80.5 73.4 1.5	1.9

*as a percentage of respective Specialized & Industrial Services revenue

DOE were $82.0 million as compared to $80.5 million in 2019. The increase of $1.5 million, or 1.9 percent, was directly related to the $1.6 million, or 1.5 percent, increase in segment revenue. As a percentage of revenue these expenses increased by 0.3 percent to 73.7 percent compared to 73.4 percent in 2019, largely as a result of the change in revenue mix and inflationary cost pressures.

DOE associated with Company Equipment increased by $1.1 million, or 1.9 percent, to $57.8 million as compared to $56.7 million in 2019. This increase was directly related to the $2.8 million, or 3.5 percent, increase in Company revenue. As a percentage of Company revenue these expenses decreased by 1.1 percent to 69.6 percent as compared to 70.7 percent in 2019, primarily due to cost controls, lower fuel costs as well as lower repairs and maintenance expense being partially offset a $2.4 million increase in operating supplies expense mainly due to the increase in Canadian Dewatering's product sales as well as costs related to Premay Pipeline's operations.

Contractors expense increased by $0.4 million to $24.2 million as compared to $23.8 million in 2019. As a percentage of Contractors revenue, Contractors expense increased to 86.1 percent as compared to 81.5 percent due to the effect of rate discounting, primarily by those Business Units involved in the transportation of fluids and servicing of wells as well as the use of sub-contracted rail services in Premay Pipeline's operations.

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Selling and Administrative Expenses

Q1 Selling and Administrative Expenses – Specialized & Industrial Services *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Selling and Administrative Expenses – Specialized & Industrial Services *(unaudited)* *($ millions)* 2020 2019 Change	Q1 Selling and Administrative Expenses – Specialized & Industrial Services *(unaudited)* *($ millions)* 2020 2019 Change
Wages and benefits Communications, utilities and general supplies Profit share Foreign exchange Rent and other	$ % $ % $**	%
	6.5 5.8 7.5 6.8 (1.0) 3.5 3.1 3.9 3.6 (0.4) 1.3 1.2 1.0 0.9 0.3 — — — — — 0.6 0.6 0.4 0.4 0.2	(13.3) (10.3) 30.0 — 50.0
Total	11.9 10.7 12.8 11.7 (0.9)	(7.0)

*as a percentage of total Specialized & Industrial Services revenue

S&A expenses decreased by $0.9 million to $11.9 million as compared to $12.8 million in 2019 primarily due to the reduction in wages and benefits expense and other cost control initiatives. As a result of this focus on cost controls, S&A expenses as a percentage of segment revenue declined by 1.0 percent to 10.7 percent as compared to 11.7 percent in 2019.

Operating Income Before Depreciation and Amortization

OIBDA increased by $1.0 million, or 6.1 percent, to $17.4 million as compared to $16.4 million in 2019. Operating margin[1] increased to 15.6 percent as compared to 14.9 percent in 2019. The margin gain was due to the change in revenue mix associated with certain large diameter pipeline projects that had a beneficial effect on margin being largely offset by the significant decline in margin generated by those Business Units most tied to drilling related activity. Specifically, the $1.0 million year over year increase in OIBDA can be attributed to the following:

a $3.8 million increase relating to those Business Units providing specialized services including pipeline stockpiling and stringing services;
a $2.1 million decrease in those Business Units involved in the transportation of fluids and servicing of wells; and
a $0.7 million decrease from those Business Units tied to drilling and drilling related activity.

Capital Expenditures

Net capital expenditures[1] were $4.4 million in the first quarter, a decrease of $0.4 million as compared to $4.8 million in 2019. The Specialized & Industrial Services segment had gross capital expenditures of $5.1 million and dispositions of $0.7 million for net capital expenditures[1] of $4.4 million in 2020. The majority of the capital invested consisted of various pieces of operating equipment to support strong demand at Premay Pipeline and to replace older less efficient equipment at Smook and Cascade Energy Services L.P. In 2019 gross capital expenditures were $7.7 million and dispositions were $2.9 million for net capital expenditures[1] of $4.8 million.

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CORPORATE

The Corporate Office provides support to the Business Units including coordinating business strategies, monitoring financial and business performance and providing shared services such as payroll services, human resource support, information technology support, legal support and accounting services. The Corporate Office also owns a network of real estate holdings and facilities, through its subsidiary MT, which are leased primarily to the Business Units. Such properties are leased on commercially reasonable terms. In addition, the Corporate Office is responsible for capital allocation to the Business Units as well as all regulatory and public reporting.

The Corporate Office recorded a loss of $1.9 million in the first quarter of 2020 as compared to a loss of $2.2 million in 2019. The $0.3 million decrease in loss was mainly attributable to a $1.1 million positive variance in foreign exchange. In the first quarter of 2020, the Corporate Office recorded a foreign exchange gain of $1.0 million as compared to a foreign exchange loss of $0.1 million in 2019. Excluding the impact of foreign exchange, Corporate Office costs increased by $0.8 million which was mainly attributable to higher salaries from adding some employees and from a lower amount of costs recovered from our Business Units.

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CAPITAL RESOURCES AND LIQUIDITY

Consolidated Cash Flow Summary

*(unaudited)* *($ millions)*	Three month periods ended March 31	Three month periods ended March 31
	2020	2019
Net cash from operating activities Net cash used in financing activities Net cash used in investingactivities	$ 40.2 $ (22.9) (13.3)	24.2 (13.2) (12.2)
Change in cash and cash equivalents Effect of exchange rate fluctuations on cash held Cash and cash equivalents, beginningofperiod	4.0 1.7 79.0	(1.2) (0.2) 3.9
Cash and cash equivalents, end of period	$ 84.7 $	2.5

Sources and Uses of Cash

Mullen Group continues to generate cash in excess of its operating needs by generating $40.2 million of cash from operating activities in the first three months of 2020 as compared to $24.2 million in 2019. Net cash used in financing activities in 2020 was $22.9 million as compared to $13.2 million in 2019. The $9.7 million increase in cash used was mainly due to using $5.2 million to repurchase and cancel 1,000,920 Common Shares under the NCIB. Net cash used in investing activities increased by $1.1 million due to a greater amount of cash used in net capital expenditures[1] in 2020. Specific changes in cash flow are set forth below.

Cash From Operating Activities

Net cash from operating activities increased to $40.2 million in the first three months of 2020 as compared to $24.2 million in 2019. The increase of $16.0 million, was mainly due to a $6.4 million decrease in cash used in noncash working capital items and from a $10.3 million decrease in cash taxes paid. The change in non-cash working capital items from operating activities is detailed in the table below.

Changes in Non-Cash Working Capital Items from Operating Activities *(unaudited)* *($ millions)*	Three month periods ended March 31	Three month periods ended March 31
	2020 2019	Variance
	$ $	$
Sources (uses) of cash Trade and other receivables Inventory Prepaid expenses Accountspayable and accrued liabilities	(1.0) 1.3 1.5 — 0.1 (3.5) (0.3) (3.9)	(2.3) 1.5 3.6 3.6
Total sources (uses) of cash from non-cash working capital items	0.3 (6.1)	6.4

In the first three months of 2020 we generated $0.3 million of cash from changes in non-cash working capital items from operating activities as compared to using $6.1 million of cash in 2019. This $6.4 million variance was mainly due to the following factors.

An additional $1.5 million of cash was generated from inventory that resulted from the combined effect of a $1.5 million source of cash in 2020 as compared to a nil amount in 2019.
An additional $3.6 million of cash was generated from prepaid expenses that resulted from the combined effect of a $0.1 million source of cash in 2020 as compared to a $3.5 million use of cash in 2019.

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An additional $3.6 million of cash was generated from accounts payable and accrued liabilities that resulted from the combined effect of a $0.3 million use of cash in 2020 as compared to a $3.9 million use of cash in 2019.

Somewhat offsetting these items was the following:

An additional $2.3 million of cash was used from trade and other receivables that resulted from the combined effect of a $1.0 million use of cash in 2020 as compared to a $1.3 million source of cash in 2019.

Cash Used In Financing Activities

Net cash used in financing activities was $22.9 million in 2020 as compared to using $13.2 million in 2019. This $9.7 million variance was mainly due to the factors set forth below.

A $5.2 million increase in cash used in 2020 by repurchasing and cancelling 1,000,920 Common Shares under the NCIB.
A $5.3 million increase in cash used resulting from borrowings on the Bank Credit Facility in 2019.

Somewhat offsetting these items were the following:

A $0.1 million decrease in the repayment of lease liabilities in 2020.
A $0.3 million decrease in interest paid in 2020.

Cash Used In Investing Activities

Net cash used in investing activities increased to $13.3 million in 2020 as compared to $12.2 million in 2019. This $1.1 million increase was mainly due to the factors set forth below.

A $1.1 million variance in changes in non-cash working capital items from investing activities.
A $0.4 million increase in net capital expenditures[1] . In 2020 net capital expenditures[1] were $14.9 million as compared to $14.5 million in 2019.

Somewhat offsetting these items were the following:

A $0.2 million change in net investment in finance leases.
A $0.2 million increase in interest received from cash and cash equivalents.

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The following charts present the sources and uses of cash for comparative purposes.

Three month period ended March 31, 2020

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----- Start of picture text -----

(unaudited)
($ millions)
150.0
4.4 14.9
125.0
2.8 15.7
100.0 40.2 0.3 5.2
75.0
50.0
79.0 84.7
25.0
-
----- End of picture text -----

Three month period ended March 31, 2019

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----- Start of picture text -----

(unaudited)
($ millions)
40.0
14.5
35.0
8.3
30.0
25.0 2.9
20.0 15.7
24.2
15.0
10.0
0.6
5.0 0.2 2.5
3.9
-
----- End of picture text -----

In addition to the $40.2 million (2019 – $24.2 million) of net cash from operating activities, we also received $4.4 million (2019 – $8.3 million) from other sources, which mainly consisted of changes in non-cash working capital items from financing and investing activities, cash received from net investment in finance leases and from interest income generated on cash and cash equivalents. Cash was used to repurchase and cancel 1,000,920 Common Shares for $5.2 million, repay lease liabilities of $2.8 million (2019 – $2.9 million), pay dividends totalling $15.7 million (2019 – $15.7 million), incur net capital expenditures[1] of $14.9 million (2019 – $14.5 million) and pay interest obligations of $0.3 million (2019 – $0.6 million).

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Working Capital

At March 31, 2020, we had $238.7 million (December 31, 2019 – $243.3 million) of working capital, which included $84.7 million of cash and cash equivalents, of which $15.8 million was denominated in U.S. currency. On June 21, 2019, our Bank Credit Facility was increased by $25.0 million to $150.0 million. This working capital also includes a current liability of $10.8 million (December 31, 2019 – $10.7 million) related to the current portion of lease liabilities. This working capital, the Bank Credit Facility and the anticipated cash flow from operating activities in 2020 are available to finance our ongoing working capital requirements, our 2020 capital budget, our NCIB, as well as various special projects and acquisition opportunities.

Debt

As at March 31, 2020, we had net debt[1] outstanding of $394.9 million, (December 31, 2019 – $362.8 million), which consisted of total debt of $644.4 million (December 31, 2019 – $616.8 million) less working capital (excluding the current portion of lease liabilities) of $249.5 million (December 31, 2019 – $254.0 million). The primary reason for the increase in the carrying value of the long-term debt was due to the impact of the weakening of the Canadian dollar relative to the U.S. dollar on our U.S. dollar denominated debt. Total debt is comprised of the Private Placement Debt , the Debentures, lease liabilities and the Bank Credit Facility. The following table summarizes our total debt and net debt[1] as at March 31, 2020, and December 31, 2019:

			March	March	31, 2020 December 31, 2019
					CDN. CDN.		Change in
	Interest		U.S.		Dollar U.S. Dollar		CDN. Dollar
*($ millions)*	Rate		Dollar		Equivalent Dollar Equivalent		Equivalent
Private Placement Debt: Series G - matures October 22, 2024 Series H - matures October 22, 2026 Series I - matures October 22, 2024 Series J - matures October 22, 2026 Series K - matures October 22, 2024 Series L - matures October 22, 2026 Bank Credit Facility Less: Unamortized debt issuance costs	3.84% 3.94% 3.88% 4.00% 3.95% 4.07% variable(1)				166.0 $ 117.0 $ 151.9 159.0 112.0 145.5 30.0 — 30.0 3.0 — 3.0 58.0 — 58.0 80.0 — 80.0 — — — (1.0) — (1.0)
		$	117.0	$		$	14.1
			112.0				13.5
			—				—
			—				—
			—				—
			—				—
			—				—

			—				—
Long-term debt (including the current			229.0		495.0 229.0 467.4		27.6
portion) Debentures – debt component Lease liabilities (including the current portion)	5.75% 3.20%				109.3 — 108.7 40.1 — 40.7
			—		109.3		0.6
			—		40.1		(0.6)

Total debt Less: Working capital (excluding the Bank		$	229.0	$	644.4 $ 229.0 $ 616.8	$	27.6


Credit Facility and the current portion of
leases)					249.5 254.0		(4.5)
Net debt(2)				$	394.9 $ 362.8	$	32.1

(1) Bank prime rate plus 0.5 percent or bankers' acceptance rates plus 1.5 percent.

(2) Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

Total Net Debt[1] to Operating Cash Flow. Mullen Group's total net debt[1] cannot exceed 3.5 times operating cash flow calculated using the trailing twelve months' financial results normalized for acquisitions. The term total net debt[1] means all debt including the Private Placement Debt, lease liabilities, the Bank Credit Facility and letters of credit, excluding the Debentures 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 ", as defined within the 2014 Note Purchase Agreement, means, for any quarterly period, the trailing twelve months' 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

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and amortization taken during such period; (iii) total interest charges, including interest on the Debentures; and (iv) non-cash charges. Total net debt[1] to operating cash flow financial covenant under our Private Placement Debt enables us to include the trailing twelve months operating cash flows from acquisitions. Although permitted, we have not included any operating cash flows generated prior to the date of the acquisition from our recent acquisitions in this financial covenant calculation.

Total net debt[1] to operating cash flow was calculated as follows:

Total net debt(1) to operating cash flow		March 31 2020	December 31 2019
Total net debt(1) Operating cash flow	$	472.9 $ 206.1 $	470.6 204.7
	$
Total net debt(1)to operating cash flow		2.29:1	2.30:1

(1) Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

Total Earnings Available for Fixed Charges to Total Fixed Charges. The fixed charge coverage ratio cannot be less than 1.75:1 calculated using the trailing twelve months financial results.

The term " total earnings available for fixed charges " means, for any period, consolidated net income plus all amounts deducted in the computation thereof on account of (i) taxes imposed on or measured by income or excess profits, (ii) the depreciation and amortization taken during such period, (iii) consolidated fixed charges, (iv) interest charges with respect to convertible debentures, and (v) non-cash charges, and less any non-cash gains included in the computation of consolidated net income. The term " total fixed charges" means, for any period, the sum of total interest charges and rental charges for such period.

Total Earnings Available for Fixed Charges to Total Fixed Charges		March 31 2020	December 31 2019
Total earnings available for fixed charges Total fixed charges	$	208.8 $ 23.5 $	207.2 23.2
	$
Total earnings available for fixed charges to total fixed charges		8.89:1	8.94:1

Mullen Group, as evidenced by the table below, is in compliance with both of the aforementioned covenants.

Financial Covenants Financial Covenant Threshold	March 31 2020	December 31 2019
Private Placement Debt Covenants (a) Total net debt(1)to operating cash flow cannot exceed 3.50:1 (b) Total earnings available for fixed charges to total fixed charges cannot be less than 1.75:1		2.30:1 8.94:1
	2.29:1
	8.89:1

(1) Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

Total net debt[1] to operating cash flow was 2.29:1 at March 31, 2020. Assuming the $472.9 million of total net debt[1] remains constant, we would need to generate approximately $135.1 million of operating cash flow on a trailing twelve month basis to remain in compliance with this financial covenant. When a business is acquired, the trailing twelve months of operating cash flows generated by the newly acquired business may be added to our trailing twelve months' operating cash flows from the date of acquisition for financial covenant calculation purposes.

Mullen Group is also subject to a priority debt covenant. The term " priority debt " means all indebtedness secured by permitted liens excluding certain qualified subsidiary debt. Priority debt cannot exceed 15.0 percent of total assets. At March 31, 2020, the priority debt was $0.7 million or an insignificant percentage of total assets.

Our debt-to-equity ratio was 0.71:1 at March 31, 2020, as compared to 0.67:1 at December 31, 2019. This increase in the debt-to-equity ratio was due to the net effect of a $27.5 million increase in total debt (including the current

1 Refer to the section entitled "Glossary of Terms and Reconciliation of Non-GAAP Terms".

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portion) and a $15.9 million decrease in equity as compared to December 31, 2019. The $27.5 million increase in total debt was due to the $27.5 million foreign exchange loss on the Corporation's U.S. dollar debt. The $15.9 million decrease in equity mainly resulted from the $15.7 million of dividends declared to shareholders in the first quarter and the 1,000,920 Common Shares repurchased and cancelled for $5.2 million in March 2020. These items were somewhat offset by the $4.7 million of net income being recognized in the first quarter of 2020.

Contractual Obligations

An overview of Mullen Group's contractual obligations can be found on page 45 of the 2019 MD&A. As at March 31, 2020, Mullen Group's contractual obligations have not changed significantly from this overview.

Share Capital

The authorized share capital of the Corporation consists of an unlimited number of 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 prior to the creation and issuance thereof. As at the date hereof, no series of Preferred Shares has been created.

Common Shares

Common Shares Authorized: Unlimited Number # of Common Shares	Amount *($ millions)*
Balance at December 31, 2019 104,824,973 Common Shares repurchased and cancelled (1,000,920)	$ 946.9 (9.7)
Balance at March 31, 2020 103,824,053	$ 937.2

At March 31, 2020, there were 103,824,053 Common Shares outstanding representing $937.2 million in share capital. In the first quarter of 2020, we repurchased and cancelled 1,000,920 Common Shares under the NCIB program.

Stock Option Plan

		Weighted	average
	Options	exercise price
Outstanding – December 31, 2019	3,280,000	$	19.22
Forfeited	(127,500)		(16.33)
Outstanding – March 31, 2020	3,152,500		19.33
Exercisable – March 31, 2020	2,667,481		19.82

In the first three months of 2020, there were no stock options granted, no stock options exercised and 127,500 stock options forfeited. As at March 31, 2020, Mullen Group had 3,152,500 stock options outstanding under the stock option plan.

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SUMMARY OF QUARTERLY RESULTS

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 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. The Less-Than-Truckload segment and the Logistics & Warehousing segment represents approximately 75.0 percent of our pre-consolidated revenue on an annualized basis. Generally speaking, our third and fourth quarters tend to be the strongest in terms of demand for the services in these segments. As a result, our consolidated revenue is generally higher in these quarters compared to the first and second quarters of the year.

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 gas, environmental, construction, pipeline, utility, telecom and civil industries, predominantly in western Canada. Activity levels, revenue and earnings are influenced by the seasonal activity pattern of western Canada's oil and natural gas exploration industry whereby activity peaks in the winter months and declines during the spring when wet weather and the spring thaw 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 unpredictable weather patterns may lead to declines in the activity levels and demand for certain services. As a result, the demand for these services is traditionally highest in the first quarter and lowest in the second quarter.

Financial Results

*(unaudited)* *($ millions, except per* *share amounts)*	TTM(1)	2020 Q1 $	2019	Q1 $		2018
	$		Q4 Q3 Q2 $ $ $		Q4 $	Q3 Q2 $ $
Revenue Operating income before depreciation and amortization Net income (loss) Earnings (loss) per share Basic Diluted	1,277.1 202.1 65.3 0.62 0.62	318.2 45.2 4.7 0.04 0.04	314.6 325.3 319.0 49.9 55.6 51.4 8.4 20.5 31.7 0.08 0.20 0.30 0.08 0.20 0.30	319.6 44.0 11.6 0.11 0.11	333.3 51.7 (81.1) (0.77) (0.77)	339.7 295.7 55.1 44.3 21.9 13.9 0.21 0.13 0.21 0.13
Other Information Net foreign exchange (gain) loss Decrease (increase) in fair value of investments	(10.2) 1.6	2.8 1.5	(2.3) (3.9) (6.8) (0.3) 0.3 0.1	(1.1) (0.1)	2.2 1.7	(1.8) 1.9 0.3 (0.4)

(1) TTM represents the "trailing twelve months" and consists of a summary of the Corporation's financial results for the most recently completed four quarters.

Consolidated revenue in the first quarter of 2020 decreased by $1.4 million to $318.2 million as compared to $319.6 million in 2019. Revenue generated by the Logistics & Warehousing segment decreased by $5.5 million, which was mainly attributable to reduced demand for logistics and trucking services related to government mandated closures during the month of March as well as supply chain disruptions related to rail blockades in January. These decreases were somewhat offset by greater revenue generated by Kleysen Group, which continued to generate solid results from transload operations and a seasonal increase in industrial salt sales. Revenue generated by the Specialized & Industrial Services segment increased by $1.6 million, which was mainly attributable to greater demand for large diameter pipeline hauling and stringing services as well as revenue increases at Canadian Dewatering and Smook. These increases were somewhat offset by lower revenue generated by those Business Units involved in the transportation of fluids and servicing of wells and from those Business Units providing drilling and drilling related services. Revenue generated by the Less-Than-Truckload segment increased by $3.8 million due to revenue gains at Gardewine and the acquisitions of Argus and Inter-

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Urban. Net income in the first quarter was $4.7 million, a decrease of $6.9 million from the $11.6 million of net income generated in 2019. The $6.9 million decrease in net income was mainly attributable to a $3.9 million negative variance in net foreign exchange, a $2.3 million increase in finance costs, a $1.6 million negative variance in the fair value of investments and a $0.6 million increase in amortization of intangible assets. These decreases were partially offset by a $1.2 million increase in OIBDA, a $0.6 million decrease in the loss on sale of property, plant and equipment and a $0.3 million decrease in income tax expense. As a result, basic earnings per share in the first quarter of 2020 was $0.04, a decrease of $0.07, from the $0.11 of earnings per share generated in 2019.

Consolidated revenue in the fourth quarter of 2019 decreased by $18.7 million to $314.6 million as compared to $333.3 million in 2018. Revenue generated by the Specialized & Industrial Services segment decreased by $18.3 million and is mainly attributable to lower revenue generated by those Business Units involved in the transportation of fluids and servicing of wells and from those Business Units providing drilling and drilling related services due to intense competition, pricing pressure and from a decline in drilling activity in the WCSB. Revenue generated by the Logistics & Warehousing segment decreased by $6.6 million and is mainly attributable to lower GDP growth and a lack of project work associated with capital investments. These decreases were somewhat offset by a $7.2 million increase in revenue generated by the Less-Than-Truckload segment due to revenue gains at Gardewine and the acquisitions of Argus and Inter-Urban. Net income (loss) in the fourth quarter of 2019 was $8.4 million, an increase of $89.5 million from the net loss of $(81.1) million generated in 2018. The $89.5 million increase in net income (loss) was mainly attributable to the $100.0 million impairment of goodwill recognized in 2018, a $4.5 million positive variance in net foreign exchange and a $2.0 million positive variance in the fair value of investments. These increases to net income were partially offset by a $6.7 million increase in depreciation of property, plant and equipment, a $1.4 million increase in income tax expense, a $3.3 million increase in depreciation of right-of-use assets, a $1.8 million increase in finance costs, a $1.0 million increase in amortization of intangible assets and a $1.8 million decrease in OIBDA. As a result, basic earnings (loss) per share in the fourth quarter of 2019 was $0.08, an increase of $0.85, from the $(0.77) loss per share generated in 2018.

Consolidated revenue in the third quarter of 2019 decreased by $14.4 million to $325.3 million as compared to $339.7 million in 2018. Revenue generated by the Logistics & Warehousing segment decreased by $12.2 million and is mainly attributable to a decrease in demand for services resulting from lower GDP growth, a lack of project work associated with capital investments and a reduction in fuel surcharge revenue. Revenue generated by the Specialized & Industrial Services segment decreased by $10.7 million and is mainly attributable to lower revenue generated by those Business Units involved in the transportation of fluids and servicing of wells due to intense competition and pricing pressure and from the Alberta Government's mandated crude oil curtailments. The significant decline in drilling activity in the WCSB also had a negative impact on those Business Units most directly tied to oil and natural gas drilling activity. These decreases were somewhat offset by a $7.6 million increase in revenue generated by the Less-Than-Truckload segment due to revenue gains at Gardewine and the acquisitions of Argus and Inter-Urban. Net income in the third quarter of 2019 was $20.5 million, a decrease of $1.4 million from the $21.9 million of net income generated in 2018. The $1.4 million decrease in net income was mainly attributable to a $2.8 million increase in depreciation of right-of-use assets, a $2.2 million increase in finance costs, and a $1.2 million increase in amortization of intangible assets. These decreases were partially offset by a $2.1 million positive variance in net foreign exchange, a $1.9 million decrease in income tax expense and a $0.5 million increase in OIBDA. As a result, basic earnings per share in the third quarter of 2019 was $0.20, a decrease of $0.01, from the $0.21 of earnings per share generated in 2018.

Consolidated revenue in the second quarter of 2019 increased by $23.3 million to $319.0 million as compared to $295.7 million in 2018 with acquisitions accounting for $28.4 million of incremental revenue. Revenue generated by the Specialized & Industrial Services segment increased by $23.4 million and is mainly attributable to $25.8 million of incremental revenue related to the acquisitions of Canadian Hydrovac Ltd. and the assets of AECOM's Canadian Industrial Services Division and improved revenue generated by Premay Pipeline. These increases were partially offset by a decline in drilling activity in the WCSB. Revenue generated by the Less-ThanTruckload segment increased by $3.2 million and is mainly attributable to $2.6 million of incremental revenue from acquisitions. These increases were somewhat offset by a $3.3 million decrease in revenue generated by the Logistics & Warehousing segment due to a decrease in freight volumes. Net income in the second quarter of 2019 was $31.7 million, an increase of $17.8 million from the $13.9 million of net income generated in 2018. The $17.8 million increase in net income was mainly attributable to a $9.4 million decrease in income tax expense, an $8.7 million positive variance in net foreign exchange and a $7.1 million increase in OIBDA. These increases were partially offset by a $2.8 million increase in depreciation of right-of-use assets, a $1.9 million increase in loss on disposal of property, plant and equipment, a $0.8 million increase in depreciation of property, plant and equipment and a $0.8 million increase in amortization of intangible assets. As a result, basic earnings per share in the second quarter of 2019 was $0.30, an increase of $0.17, from the $0.13 of earnings per share generated in 2018.

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TRANSACTIONS WITH RELATED PARTIES

A description of transactions with related parties can be found on page 64 of the 2019 MD&A. As at March 31, 2020, the transactions with related parties have not changed significantly from these descriptions.

All of the transactions with related parties occurred in the normal course of operations with terms consistent with those offered to arms-length parties and are measured at the exchange amount. Mullen Group has no long-term contracts with any related party other than the $5.0 million of the Debentures subscribed to certain officers and directors of the Corporation.

PRINCIPAL RISKS AND UNCERTAINTIES

A description of principal risks and uncertainties can be found beginning on page 65 of the 2019 MD&A. As at March 31, 2020, these risks and uncertainties have not changed significantly from those descriptions, however, due to economic implications associated with the COVID-19 health care crisis, some of these risks have been elevated in 2020. Our risks are summarized as follows:

STRATEGIC RISKS:	STRATEGIC RISKS:	FINANCIAL RISKS:	FINANCIAL RISKS:	OPERATIONAL RISKS:	OPERATIONAL RISKS:
•	geopolitical risks	•	foreign exchange rates	•	employees & labour relations
	• general economy	•	investments	•	cost escalation & fuel costs
	• natural gas and oil	•	access to financing	•	potential operating risks & insurance
•	drilling and oil sands development • changes in the legal framework e-commerce and supply chain evolution	• • • •	reliance on major customers impairment of goodwill or intangible assets credit risk interest rates	• • • •	digital infrastructure & cyber security business continuity, disaster recovery & crisis management environmental liability risks weather & seasonality
• •	acquisitions competition			•	access to parts, development of new technology & relationships with key suppliers
				•	regulation
				•	litigation

CRITICAL ACCOUNTING ESTIMATES

This MD&A summarizes Mullen Group's financial condition and results of operations and is based upon our Interim Financial Statements, which have been prepared in accordance with IFRS and comply with IAS 34 Interim Financial Reporting. The Interim Financial Statements require management to select significant accounting policies and make certain critical accounting estimates that affect the reported assets, liabilities, revenue and expenses. A description of critical accounting estimates can be found beginning on page 80 of the 2019 MD&A. As at March 31, 2020, our critical accounting estimates have not changed significantly from such description.

SIGNIFICANT ACCOUNTING POLICIES

New Standards and Interpretations Not Yet Adopted

A description of new standards and interpretations not yet adopted can be found on page 83 of the 2019 MD&A. There have been no new standards or interpretations issued during 2020 that significantly impact Mullen Group.

Changes in Accounting Policies

There have been no changes to our accounting policies in 2020 as compared to those disclosed in our 2019 MD&A.

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DISCLOSURE AND INTERNAL CONTROLS

Disclosure Controls and Internal Controls over Financial Reporting

As at March 31, 2020, an evaluation of the effectiveness of our disclosure controls and procedures as defined under the rules adopted by the Canadian securities regulatory authorities was carried out under the supervision and with the participation of management, including the Chief Executive Officer (" CEO ") and the Chief Financial Officer (" CFO "). Based on this evaluation, the CEO and the CFO concluded that, as at March 31, 2020, the design and operation of our disclosure controls and procedures was effective.

Internal control over financial reporting is a process designed by or under the supervision of management and effected by the Board, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and preparation of consolidated financial statements for external purposes in accordance with IFRS. Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, no matter how well designed, has inherent limitations and can provide only reasonable assurance with respect to the preparation and fair presentation of published financial statements. Under the supervision and with the participation of the CEO and CFO, management conducted an evaluation of the effectiveness of its internal control over financial reporting as at March 31, 2020.

Based on this evaluation, the CEO and CFO concluded that as at March 31, 2020, our internal control over financial reporting was effective. We utilize the Internal Control – Integrated Framework (2013) as issued by the Committee of Sponsoring Organizations of the Treadway Commission. As at March 31, 2020 there was no change in our internal control over financial reporting that materially affected or is reasonably likely to materially affect our internal control over financial reporting.

FORWARD-LOOKING INFORMATION STATEMENTS

This MD&A contains forward-looking statements within the meaning of applicable Canadian Securities laws. Readers are cautioned that expectations, estimates, projections and assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The following is a list of forward-looking statements contained within this MD&A, along with the respective assumptions:

Mullen Group's comments that business will be negatively impacted in the short-term, the duration to be determined by a virus known as COVID-19 and by governments. We will see business decline, perhaps quite significantly in the short-term, however, we believe we will weather this crisis and come out of it stronger, as referred to in the Executive Summary section beginning on page 4. These forward-looking statements are based on the assumption that we have a strong cash position and well-structured balance sheet providing ample liquidity to withstand a slowdown. Furthermore, our diversified business model and leverage to many sectors of the economy that will continue to be in demand is an important differentiator, and once the economy starts to recover we will be well positioned to take advantage of the inevitable opportunities that arise during challenging times.
Mullen Group's comments that the next few months and perhaps quarters will be difficult and that it will come as no surprise to anyone that the economic and financial impact of the recent government mandated decision, due to the outbreak of the COVID-19 virus, will be substantial, at least in the short-term, as referred to in the Outlook section beginning on page 4. These forward-looking statements are based on the assumption that in the absence of any information as to when the orders to "shut down and shelter in place" will be lifted we cannot offer any meaningful guidance or outlook to our shareholders at this time. In other words, economic activity and demand will be determined by the actions and policies of governments.
Mullen Group's comment that we believe we are positioned to manage through these challenging times, as referred to in the Outlook section beginning on page 4. This forward-looking statement is based on the assumption that the nature of our diversified business model, multiple service offerings accompanied by the need for basic services including trucking and logistics, services deemed by various government bodies to be essential services must be maintained to ensure communities have the goods needed during this health crisis. Furthermore, the structure of our balance sheet, strong working capital position and cash of $84.7 million, provide our company with the liquidity that will be required until economic activity can be restored.

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2020 FIRST QUARTER INTERIM REPORT

Mullen Group's announcement of a 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 referred to in the Corporate Overview section beginning on page 7. This forward-looking statement is based on the assumption that we will generate sufficient cash in excess of our financial obligations to support any purchases of Common Shares under the NCIB.
Mullen Group's intention to pay annual dividends of $0.60 per Common Share ($0.05 per Common Share on a monthly basis) for 2020, which will be temporarily suspended for three months, effective April 1, 2020, as referred to in the Corporate Overview section beginning on page 7. This forward-looking statement is based on the assumption that we will generate sufficient cash in excess of our financial obligations to support the dividend.
Mullen Group's intention to invest $50.0 million in capital expenditures, exclusive of corporate acquisitions, real property and special projects with $45.0 million to be allocated to replace trucks, trailers and specialized equipment to support the operations of the business and $5.0 million allocated to the Corporate Office mainly to complete the Regina, Saskatchewan cross dock facility, as referred to in the Corporate Overview section beginning on page 7. This forward-looking statement is based on the assumption that our Business Units will require capital to support their ongoing operations and growth opportunities and that we will generate sufficient cash in excess of our financial obligations to support the capital expenditures.
Mullen Group's intention to use working capital, the Bank Credit Facility and the anticipated cash flow from operating activities in 2020 to finance our ongoing working capital requirements, our 2020 capital budget, our NCIB, as well as various special projects and acquisition opportunities, as referred to in the Capital Resources and Liquidity section beginning on page 31. This forward-looking statement is based on our belief that our access to cash will exceed our expected requirements.

Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct.

Forward-looking statements address future events and conditions and, therefore, involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the risks associated with the service and energy industry in general; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory, securityholder and other approvals as may be required from time to time; and changes in legislation, including but not limited to tax laws and environmental regulations. Accordingly, readers should not place undue reliance on the forward-looking statements contained in this MD&A.

Readers are cautioned that the foregoing list of factors and risks is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Mullen Group along with the forward-looking statements in this MD&A, may be found in the Advisory on page 1 as well as in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website at www.sedar.com. The forward-looking statements contained in this MD&A are made as of the date hereof and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by applicable securities law. We rely on litigation protection for "forward-looking" statements.

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2020 FIRST QUARTER INTERIM REPORT

GLOSSARY OF TERMS AND RECONCILIATION OF NON-GAAP TERMS

The Interim Financial Statements attached and referred to in this MD&A were prepared according to Canadian GAAP. References to operating margin, net income – adjusted, earnings per share – adjusted, net capital expenditures, net debt, total net debt and cash flow per share are not measures recognized by Canadian GAAP and do not have standardized meanings prescribed by Canadian GAAP. This MD&A reports on certain financial performance measures that are described and presented in order to provide shareholders and potential investors with additional measures to evaluate our ability to fund our operations and information regarding our liquidity. In addition, these measures are used by management in its evaluation of performance. These Non-GAAP Terms may not be comparable to similar measures presented by other issuers and should not be considered in isolation or as a substitute for measures prepared in accordance with Canadian GAAP. Investors are cautioned that these indicators should not replace the foregoing Canadian GAAP terms: net income, earnings per share, purchases of property, plant and equipment, proceeds on sale of property, plant and equipment and debt.

Operating Margin

Operating margin is a Non-GAAP term and is defined as OIBDA divided by revenue. Management relies on operating margin as a measurement since it provides an indication of our ability to generate an appropriate return as compared to the associated risk and the amount of assets employed within our principal business activities.

*(unaudited)* *($ millions)*	Three month periods ended March 31	Three month periods ended March 31
	2020	2019
Operating income before depreciation and amortization Revenue	$ 45.2 $ 318.2	$ 44.0 $ 319.6
Operating margin	14.2%	13.8%

Net Income – Adjusted and Earnings per Share – Adjusted

Net income – adjusted and earnings per share – adjusted are calculated by adjusting net income and basic earnings per share by the impact of any net foreign exchange gains and losses and from the change in fair value of investments. Management adjusts net income and earnings per share by excluding these specific factors to more clearly reflect earnings from an operating perspective. See page 21 for detailed calculations of net income – adjusted and earnings per share – adjusted.

Net Capital Expenditures

Net capital expenditures are calculated by subtracting the amount of cash received from the sale of property, plant and equipment from the amount of cash used to purchase property, plant and equipment. Management calculates net capital expenditures to evaluate and manage its capital expenditure budget and to assist in allocating capital amongst its Business Units.

*(unaudited)* *($ millions)*	Three month periods ended March 31	Three month periods ended March 31
	2020	2019
Purchase of property, plant and equipment Proceeds on sale ofproperty,plant and equipment	$ 15.9 (1.0)	$ 15.9 (1.4)
Net capital expenditures	$ 14.9	$ 14.5

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2020 FIRST QUARTER INTERIM REPORT

Net Debt

Net debt is calculated by subtracting total working capital (current assets less current liabilities) from total debt (longterm debt plus the debt component of lease liabilities and Debentures). Management calculates net debt to monitor its capital structure and makes adjustments to it in light of changes in economic conditions.

*(unaudited)* *($ millions)* March 31, 2020	December 31, 2019
Long-term debt $ 495.0 $ Convertible debentures - debt component 109.3 Lease liabilities(non-currentportion) 29.3	467.4 108.7 30.0
Total debt 633.6 Less working capital: Current assets 353.2 Current liabilities (114.5)	606.1 349.3 (106.0)
Total workingcapital 238.7	243.3
Net debt $ 394.9 $	362.8

Total Net Debt

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 CrossCurrency Swaps, as disclosed within Derivatives on the condensed consolidated statement of financial position. Management calculates total net debt to monitor its capital structure and makes adjustments to it in light of changes in economic conditions.

*(unaudited)* *($ millions)*	March 31, 2020
Private Placement Debt $ Lease liabilities (including the current portion) Letters of credit	495.0 40.1 3.9
Total debt Less: unrealized gain on Cross-Currency Swaps Add: unrealized loss on Cross-CurrencySwaps	539.0 (66.1) —
Total net debt $	472.9

Cash Flow per Share

Cash flow per share is calculated by dividing net cash from operating activities by the weighted average number of Common Shares outstanding. Management measures cash flow per share to provide investors with an indication of the amount of cash being generated on a per share basis, after consideration of working capital and income taxes paid.

*(unaudited)* *($ millions, except share and per share amounts)*	Three month periods ended March 31	Three month periods ended March 31
	2020	2019
Net cash from operating activities Weighted average number of Common Shares outstanding	$ 40.2 $ 104,670,985	24.2 104,824,973
Cash flow per share	$ 0.38 $	0.23

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2020 FIRST QUARTER INTERIM REPORT

AI assistant

Mullen Group Ltd. — Interim / Quarterly Report 2020

46434_rns_2020-04-22_294f283c-c3f9-456f-a26f-f5d6da5df1fe.pdf

MANAGEMENT'S DISCUSSION AND ANALYSIS

ACCOUNTING PRINCIPLES

HIGHLIGHTS FOR THE QUARTER

POSITION:

PROGRESS:

EXECUTIVE SUMMARY

First Quarter Financial Results

Revenue decreased by $1.4 million, or 0.4 percent, to $318.2 million and is summarized as follows:

OIBDA increased by $1.2 million, or 2.7 percent, to $45.2 million and is summarized as follows:

Net income decreased by $6.9 million to $4.7 million, or $0.04 per Common Share due to:

Financial Position

OUTLOOK

CORPORATE OVERVIEW

Business

Less-Than-Truckload Segment

Logistics & Warehousing Segment

Specialized & Industrial Services Segment

Capital Allocations

Normal Course Issuer Bid

Dividends

Convertible Debentures

Capital Expenditures

Goodwill

Acquisitions and Intangible Assets

2019

Intangible Assets

Bank Credit Facility Amendments

CONSOLIDATED FINANCIAL RESULTS – THREE MONTH PERIOD ENDED MARCH 31, 2020

Revenue

Direct Operating Expenses

Selling and Administrative Expenses

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 Loss (Gain)

Foreign Exchange Loss (Gain) on U.S. $ Debt

Foreign Exchange (Gain) Loss on Cross-Currency Swaps

Other (Income) Expense

Income Taxes

Net Income

Net Income – Adjusted and Earnings per Share – Adjusted

SEGMENTED INFORMATION – THREE MONTH PERIOD ENDED MARCH 31, 2020

LESS-THAN-TRUCKLOAD SEGMENT

Revenue

Direct Operating Expenses

Selling and Administrative Expenses

Operating Income Before Depreciation and Amortization

Capital Expenditures

LOGISTICS & WAREHOUSING SEGMENT

Revenue

Direct Operating Expenses

Selling and Administrative Expenses

Operating Income Before Depreciation and Amortization

Capital Expenditures

SPECIALIZED & INDUSTRIAL SERVICES SEGMENT

Revenue

Direct Operating Expenses

Selling and Administrative Expenses

Operating Income Before Depreciation and Amortization

Capital Expenditures

CORPORATE

CAPITAL RESOURCES AND LIQUIDITY

Consolidated Cash Flow Summary

Sources and Uses of Cash

Cash From Operating Activities

Cash Used In Financing Activities

Cash Used In Investing Activities

Three month period ended March 31, 2020

Three month period ended March 31, 2019

Working Capital

Debt

Contractual Obligations

Share Capital

Common Shares

Stock Option Plan

Mullen Group Ltd. Interim / Quarterly Report 2020