Murray Mullen - Chairman, President and Chief Executive Officer Stephen Clark - Chief Financial Officer Richard Maloney - Senior Vice President Joanna Scott - Corporate Secretary and VP of Corporate Services

Walter Spracklin - RBC Capital Markets Turan Quettawala - Scotiabank Jon Morrison - CIBC Capital Markets David Tyerman - Cormark Securities

Good morning and welcome, everyone to Mullen Group's quarterly conference call. We'll be discussing our financial and operating performance for the third quarter.

And this will be followed by an update on the near-term outlook as we see it. So, before I commence the review, I'll remind you that our presentation contains forward-looking statements that are based upon current expectations and are subject to a number of uncertainties and risks, and actual results may differ materially.

Further information identifying these risks, uncertainties and assumptions can be found in the disclosure documents, which are filed on SEDAR, and at www.mullen-group.com. With me this morning I have our Executive team, Mr.

Stephen Clark who is our CFO; Richard Maloney, Senior Vice President; and Joanna Scott, Corporate Secretary and VP of Corporate Services. So, this morning Stephen is going to review the third quarter financial and operating results of Mullen Group.

After which, I'll provide an outlook for our organization and discuss my near-term expectations for both the oil and gas industry and the overall economy following which we'll close with our Q&A session. So before I turn it over to Stephen, I'd like to open with a few comments, as I traditionally do.

In our second quarter conference call, I outlined my rationale and reasoning why I referred to 2017 as the year of a transition, for the markets we serve, which is both our Trucking/Logistics segment of the economy as well as for the oil and gas industry in Western Canada, but also for our organization, for the Mullen Group, as we adapt our business model to changing market dynamics. So I am going to spare you this morning from another one of my rents.

What I will reinforce is that the trends we identified early in 2017 have not changed. Firstly, the economy continues on a path of modest growth.

It's not robust and it's not at levels that yet provide pricing leverage for the Trucking/Logistics sector, and, in fact, recent reports have validated this trend, including that inflation numbers remain stubbornly benign. For our business, the good news is that pricing is stabilized.

Unfortunately, at pretty competitive levels and I would like to thank Amazon and online shopping and the online technology for that. It appears that that's the primary reason why we got some deflationary pressures, at least from our perspective.

Now secondly, let me turn to the oil and gas industry. We believe it's in the early stages of recovery and once again is not robust because, truthfully, most of the recovery has been tied to oil and gas drilling, which is up some 80% in Western Canada or last year's seasonal results.

While there's been little to no recovery in major project work, projects have required lead time, lots of capital and an optimistic view of the future. These investments remain on hold.

Overall, however, the industry is doing substantially better than in 2016. Now in the third trend that we identified, it relates to acquisitions.

Competitive market conditions, changing market conditions, these tend to generate more opportunities for consolidation such as it is today. I can be verified is because there is no lack of files on our desk to review these days.

As such, our challenges to drive them out and determine which ones are the either subject to Mullen or good trucking candidates. It is the latter that we are having the most success with, as evidenced by the eight acquisitions we've completed now in the last 12 months.

Now acquisitions of the principal reasons we have generated this past quarter, in fact this year. And will be the reason why I believe we will achieve improved of profitability in the future once we have fully integrated these opportunities into our organization and implemented the disciplines we know are required to produce superior results.

Now the question that is often presented to our senior team is this. What about a larger transaction.

We've looked at many opportunities but the issue that we keep having is will it add value to Mullen shareholders in the long-term. Now this is a major stumbling block if one believes that the markets are in a stated transition as of articulated.

In other words in this disruptive world that we now live in, are yesterday's winners tomorrow's losers. In our view a significant number of large entities might need the demise that is similar to Sears.

These companies build a cost structure based upon yesterday's markets, whereas today every single market is ultra-competitive. So we answer the question, why do we want a legacy-based company in our portfolio of 30 business units?

Well the answer is obvious. What we do want however is a low-cost structure, flexibility and most importantly creativity from our business units.

And we believe these attributes are best achieved in smaller well managed entities. So this answers the question as to why we have not pursued a large transaction.

You might recall, I alluded to this very issue in our last conference call. At that time, I suggested that our strong balance sheet which consisted of over $250 million in cash as of July 2017, allowed us to pursue a large transformative acquisition.

But if we didn't find a suitable candidate, we would simply use the portion of this cash to pay down our debt, which is exactly what we did in September. We redeemed the private debt Series E, US$85 million and Series F CAD20 million notes as these maturities came due, which by the way will reduce our annual interest payments by nearly $7 million.

Now Stephen will talk more about this in his commentary, but from my perspective, this is the right approach. And by the way, if a larger transaction presents itself, that we believe the strategic to Mullen shareholders, we can and will pursue the opportunity, but we do not chase growth.

We invest to be successful tomorrow. A couple of high-level comments on our third quarter performance, before Stephen gets into the details.

Generally, we were on target from our perspective and consistent with what we have articulated last quarter. Revenue continues to grow, up a very nice $25.3 million, a 10% increase and this is due to acquisitions and the recovery in the drilling activity in Western Canada.

Profitability in operating margins on an adjusted basis after removing the impacts of the change in the Canadian dollar declined somewhat year-over-year. And this remains perhaps the last of the headwinds for our Company.

The three reasons for this are very similar to what we've outlined in previous calls, and namely those are; first, last year, we benefited from several high margin projects related to the oil and gas industry. Business has just not been available in 2017 projects like the Suncor Fort Hills projects, the OilSands, the North West Upgrader and some major pipeline activity here in Western Canada.

What we have seen, however, has been a very nice rebound in drilling activity, but this has not replaced all of the work displays for the completion of those major projects last year. The second rationale or the second reason why our profitability was not as robust as what we hope for, is the business still remains price sensitive, leaving little room for pricing leverage with the lone exception being in the stock market now, where we are seeing rates move higher and in some cases quite significantly higher.

The Alberta economy is certainly stronger than last year, and the Canadian economic activity has been steady, but not to the levels that we believe are required to see more broad-based recovery in pricing, but we are close I believe. More on this later.

And third is related to our acquisition strategy. The companies we have acquired, all have the same characteristics.

They generally do not generate the same margin as our business units. Over the course of the next few quarters, we will surely improve their margins as we integrate them into our organization, instill our business systems, our disciplines.

But in the short-term, the overall margins negatively impact our overall margins. However, I should point out that I don't expect the margins in the majority of these acquisitions to reach our historical average levels, and this is due to the fact that most of them are asset light acquisitions, with a high degree of logistics in three PL components.

As such, it will generate lower margins, but on the flip side they also have little ongoing capital requirements. But taking all of these factors into consideration, we were still profitable, for example, OIBDA adjusted of $49 million versus last year $52 million.

Now I am pretty pleased with this because all of our results, last year, were very good for the reasons I've already outlined. The fact remains that this year's results reflect a really nice recovery in the vast majority of your business units, which gives me the confidence to believe that my statement last quarter remains achievable.

And that is that I hold the view that the second half of 2017 will be sequentially better than the first half of the year. In terms of operating margins, last quarter was certainly lower than 2016, and in fact lower than the past five years, but this simply reflects the changing mix of business associated with a few things.

Number one is the capital investment in the Alberta economy. Now without capital projects, our specialized business outcome our specialized hauling, our related services and our highest margin businesses, due to the capital investment required in these businesses and the nature of the business, becomes marginalized and as a result, and quite simply our margins are going to suffer.

But truthfully, given the loss of the specialized businesses, compared to prior years, along with the reality that every market that we served is ultra-competitive, I'm very pleased that we see generated best-in-class operating margins in excess of 17%. It wasn't easy, and the robustness of our diversified business model was severely tested, but we survived quite well due to the hard work and diligence of our business units.

Lastly, I want to talk a little bit now, most importantly just take look at our cash flow. We generated a very healthy and $44 million from operating activities, and as we move our business model away from capital-intensive activities, the 17% operating margin will generate the same cash as yesterday's higher margins because of our capital requirements are that much less.

And this is what really matters to shareholders. The cash we generated will either fund future growth or we'll give it back to shareholders.

As such, I am not fussed about our current margins because our capital requirements are that much less. Now I'll turn the call over to Stephen for a more detailed analysis of the quarter, and year-to and year-to-date results, after which I will offer some closing comments, prior to opening the call up for questions.

So Stephen, it's all yours.

Thank you, Murray and good morning fellow shareholders. With respect to our financial and operating results for the third quarter, our October 25, 2017 news release and our Q3 interim report, which consists of our MD&A and consolidated financial results, contains the details to fully explain our performance.

I will center the bulk of my comments, this morning, on the elements within our results that warrant further explanation, although Murray did quite a good job there. The third quarter saw much improvement with record Trucking/Logistics revenue and improved Oilfield Services results in most business lines.

Fundamentals improved across most businesses with the notable exception being major project work. Although revenue increased nicely, margin was challenged because of a lack of capital spend in Western Canada and the addition of our lower margin, but as Murray noted, asset-light revenue streams.

Lower margin, yes, but less capital intensive. Consolidated revenue was $283.9 million, an increase of approximately $25 million or 9.8% as compared to 2016.

On a sequential basis, consolidated revenue increased by $10.3 million. Specifically in the current quarter, there was a $17.4 million increase in revenue in the Trucking/Logistics, year-over-year and $6.8 million increase in the Oilfield Services segment.

Revenue was impacted by various factors. Positively, the completion of a series of eight acquisitions that began in fall 2016, which added $14.4 million of incremental revenue.

We also saw improved drilling activity in the Western Canadian sedimentary basin that resulted in increased demand for oilfield services and supported increase demand for trucking services in Western Canada. And we've higher fuel surcharge revenue to the tune of about $1.7 million.

These positive factors were offset by the completion of major capital projects as Murray alluded to earlier, such as Fort Hills OilSands and the North West Upgrader projects, which have not been replaced. There is also competitive pricing environment for many of our services, most notably our truckhold services and production services.

There was also a decrease in demand for pumps and water management services and the decline in pipeline construction related services due to the timing of certain projects. Specifically, from a segment perspective, the Trucking/Logistics segment contributed approximately two-thirds of the pre-consolidated revenue approximately $191 million.

It is a new record, not just for our third quarter, but for any quarter. This increase was primarily due to the incremental revenue related to our recent acquisitions and the increase demand for freight services in Western Canada.

These increases were somewhat offset by the completion of the Suncor Fort Hills, OilSands, and other projects. Excluding the effect of acquisitions and fuel surcharge fluctuations, the Trucking/Logistics segment revenue improved by $3.1 million, demonstrating the underlying strength of our LTL business units that more than replaced the loss of project-based revenue.

Further details on the Trucking/Logistics segment performance in a breakdown of revenue by category can be found starting on Page 24 of our Q3 MD&A. As for the Oilfield Services segment, they contributed approximately one-third preconsolidated revenue or approximately $94 million, which was an increase to $7 million or 7.8% year-over-year.

This increase in revenue can be attributed to improve drilling activity which benefited those business units most directly tied to oil and natural gas drilling. Indeed the rig and well counts were up 80% year-over-year.

However, drilling related businesses were up only by 50%. There is a noted disparity, business units like Formula Powell, correlated almost perfectly to the well count increase.

However, Mullen Oilfield, our rig moving business, didn't. There is a shift in some of that, it's not directly correlated to just the simply the rig or well count.

In addition, there is a greater demand for services related to the transportation of fluids, and servicing of wells as well as the incremental revenue generated by our acquisition there involved energy. These increases were partially offset by $5.7 million decrease in revenue, in what we call our specialized group.

So pumps and related services, heavy haul services, pipeline hauling and stringing services, those were down largely because of capital projects. Further details on the Oilfield Services segment performance in a breakdown of revenue by category can be found starting on Page 28 of our Q3 MD&A.

Operating income before depreciation and amortization, or what we call OIBDA, was $44.7 million, a decrease of $8.9 million or 16.6% compared to the same period in 2016. This decrease was due to the $0.8 million decrease in the Trucking/Logistics segment, a $1.2 million decrease in Oilfield Services segment, a most notably a $6.9 million increase in the corporate office cost mainly due to foreign exchange.

Secondly, repairs and maintenance were up year-over-year by $3.2 million. The reason for this was twofold.

First, we are prepping for busier winter season. Secondly, reduce capital expenditures in the Oilfield Services segment, over the past couple of years, means our trucks and trailers are that much older.

So obviously, the increase in repairs and maintenance effect the both segment but most notably in Oilfield Services. Operating income prior to foreign exchange gains or losses recognized within the corporate office, or what is referred to as OIBDA adjusted, was $49.2 million, a decrease of $2.9 million or 5.6% as compared to the $52.1 million in 2016.

In terms of percentage of consolidated revenue, operating margin adjusted declined to 17.3% as compared to 20.1% in 2016, primarily due to the declining margin in both segments as a result of the change in the revenue mix due to the completion of certain large capital infrastructure projects the competitive pricing environment, and as noted earlier, our acquisitions. Net income in the quarter was $26 million or $0.25 a share, an increase of $8.4 million from the $17.6 million or $0.17 per share that we experience in 2016.

This increase was primarily due to the $16.3 positive variance in net foreign exchange. A more detailed breakdown of the factors affecting net income can be found on Page 20 of our Q3 MD&A.

As for our cash position, it changed quite a bit over the quarter. We paid our 10-year notes upon maturity, reducing our annual interest costs by approximately $7.5 million.

In addition, we used - in total, sorry, we used a $128.2 million of cash to reduce our debt. Further, we invested $15.1 million for acquisitions and $10.6 million for some new trucks and trailers or PP&E.

During the quarter we also generated, as Murray noted, $44 million of cash from operations. I would be remiss if I did not mention that many of our recent acquisitions are asset light in combined these asset light acquisitions namely Caneda, RDK and Kel-West, will generate annualized revenue of approximately $70 million.

But collectively, we will require about $1 million of annual CapEx. Margin is negatively impacted, yes, but free cash flow is enhanced.

Touching briefly now to our results for the nine-month period consolidated revenue was approximately $842 million, an increase of approximately $65 million, or 8.4% over 2016, largely, again, because of acquisition. As for the balance sheet, it continues to be well capitalized.

At the end of the quarter, we had working capital of approximately $181 million, which includes $124 million of cash and cash equivalents and again, our $75 million credit facility continues to be remain undrawn, so with another $70 million of debt maturing 2018 included in that working capital number. So with Murray, I'll pass that conference back to you.

All right. Thanks Stephen.

There is a lot of information that Stephen gave you there, that's all contained in our document the MD&A that's been disclosed and posted on our website on SEDAR. So for anybody that wants to get the full detail or maybe missed some of that just refer to that document.

There's a lot of detail in there. So well done to our team on that.

Before we go to the Q&A session, I'll spent a couple seconds here on what I think is the outlook, and some of the big macro trends that we're seeing and maybe sometimes what we're hopeful for, but we will give you our perspective. So to our ever-faithful listeners, you may recall that I ended last quarter's call stating that business is looking better, which follows on the heels of really what I said in early 2017, and that was that I was more optimistic, and then I had a more constructive view of the markets that Mullen was leverage to.

Well today, I'm going further out on a limb to proclaim that business is actually looking positive. So my rationale remains the same.

It is simply that the fundamentals are stronger today in my view. So what are those fundamentals?

Well, let's look at acquisitions. You hear us talk about it all the time, but they really are part of our growth strategy.

Over the course of the last year, we have completed eight transactions. Yes, they're smaller in nature, but all are either complementary to our existing business lines or in many cases we're totally integrating into our business units.

And given the stresses in the markets and the toll that this has had on entrepreneurs, it is reasonable to assume that we will continue to grow the acquisition model. So let's give acquisitions a positive check mark.

In terms of the oil and gas sector, commodity prices –they've been pretty volatile over the last course of the last quarter or so, and they've taken a bit of the shine off the recovery in the near-term, but there are enough reasons to remain positive that the rebound the oil and gas industry in Western Canada is experiencing is well entrenched. Now, it's not robust by any stretch, but I think it's clearly positive, so let's give that another check mark.

And when we look at the overall economic outlook, both from a national perspective as well as the Alberta economy, there is enough momentum I believe to maintain the upward trend. Slow to modern growth will eventually give us some much-needed pricing leverage.

We already see it in the spot market and I have to believe this will eventually spill over into the contract market as well. And on this issue, I recently returned from a trip to the U.S.

and met with several industry players and leaders of the American Trucking Association Management Conference. The mood of this year's conference was a solid as I have witnessed in years, so let's give the economic outlook also a positive.

In summary, there's ample reasons to have a positive outlook for our business. Now to be fair and totally transparent, we still have some headwinds that will continue to hold us back from attaining the stellar results we produced prior to the collapse in the price of crude oil in 2015.

We have not seen core drilling as an example come back yet to the OilSands, which has virtually immobilized our trio drilling fleet, the large major capital projects such as OilSands expansion, et cetera are nowhere to be found. Now maybe LNG on the West Coast of Canada will replaces some of this activity, but not as of yet.

But did I just read that the BCMBP party just announced maybe LNG was good for BC. Should I be optimistic?

I don't know. I was taken aback by that, but I think maybe most of us were, but that's an interesting development.

In pipelines, the very supply lines that would enable the oil companies to access new markets, achieve better prices for their oil. They remain hostage to the environmental movement in the regulatory process.

Until and unless these issues are resolved, it will be more difficult for Mullen to return to seek profitability, but let's not get too distracted by yesterday. Our business is doing just fine.

We are growing our balance sheets in great shape. We're investing for the future, and we will improve profitability as we integrate the new acquisitions into our organization.

And when a little pricing leverage returns, which I fully expect in 2018, all in all I fully expect we will close out 2017 on positive note. So let's turn it over to the Q&A session.

And myself and the senior team here would be glad to answer any questions.

Thanks so much. Good morning everyone.

Walter, good morning.

Yes. So just, Murray, on pricing and zero in on trucking here for a second.

We've been doing, surely some channel checks with most shippers and carriers and attended some of the industry conferences here in Canada, and really noted a shift in what carrier or what the shippers are telling us that truckers are coming in with pricing increases. It's very recent.

They've indicated that it's only in the last weeks or months that we're seeing that. And I think you alluded to and the spot market's certainly seeing that.

U.S. is already there.

It's been there for a while. That's what kind of raised our antennas that maybe it will be happening here in Canada, we are getting early signs of that.

You're mentioning more 2018. Are you not seeing that?

Is this more of a - is this, could it be because it's Western Canada is just not picking up as quickly perhaps as Eastern Canada or are you seeing a little bit of signs of life here on the pricing environment, specific to trucking?

Well, I think we have to respect the fact that we are coming off some pretty, what I call, ultra-competitive market situations and you have some commitments to your clients that you got to honor those commitments. So when I say that the market's starting to move, well that doesn't mean I can go back in and change all of the commitment that we've made with our clients.

Right.

But as those contracts come due and materialize then you're negotiating higher rates, but like it's not an event. It's going to take - they don't all come due on the same day.

So my general sense is, it's moving and that's the trend that will be is starting now, and I think will be in full momentum in 2018.

Okay.

But it doesn't happen just over night. But I think what I was trying to allude to there.

Understood. Okay that makes a lot over there.

It's pretty clear is that the industry has been just involved in this ultra-competitive market. The prices are way too low for the industry to make an appropriate return.

Particularly, when I talk about, I'm talking about the asset-based industry. Anybody that owns a truck, and made a commitment on capital, has not had an appropriate return on that capital because the market's been too competitive.

But that's starting to tighten up and that's what happens, prices go down, market tightens, customers get busy, you go to pay. And I think those prices will start to recover back somewhat what we lost over the last couple of years.

That's what I'm sensing for 2018.

Okay, and now just moving over to oil and gas, just on a seasonal basis, I know we are trying to offset the seasonality in your business with the expectation for growth, right? So it's not always necessarily the seasonal will play itself out, but it looks like the growth that we were hoping would come up it's still, kind of we're in the early stages.

So is it fair to say that looking at seasonality is still the right thing to do, that your fourth quarter is typically lower than your third quarter? And any reason why that shouldn't be the case again here on the revenue side for oil and gas?

Yes, I think that the oil and gas. Remember the oil and gas sectors are very multi-facetted business.

It's not just drilling. And that's reflected in our business model of our oilfield sector business units.

Its production services, its specialized services, some drilling related. So it's the oil and gas drilling that's been the major beneficiary thus far, had a very nice rebound.

I think, Stephen it's up about 80% year-over-year. Now that's coming off of just dismal numbers last year, but the recoveries are well entrenched in terms of that.

Capital investment, that still seems a little bit constrained and that is really a function and I think that everybody has to live within their cash flow today. There is not a lot of additional capital available for the industry.

So everybody's got to live within their means, live within their cash flow, and that forces some discipline. And we're going to see in the fourth quarter just how well are customers can manage through.

They've invested. They're spend a lot already this.

The cash flow strong for them to continue that trend in the fourth quarter. There is been some indications that maybe it'll slowdown in December.

You're saying some in the United States, for example, rig count goes down, kind of every week by a few 4, 8, 15. Canada has been holding reasonably steady, but I mean, I don't know exactly how it's going to play out, but I don't think we're going to have a rush now as we go into the end of the year.

I think, if anything, it'll be just a little pause for the cause, reset the bar. And for 2018, I wouldn't be surprised for it to be just up a little bit from 2017.

Not 80%, but I still think it will be reasonably good in 2018. And I think our business units are reasonably well suited to perform in that market.

So doing better, but that's about how we just classify it.

On the acquisitions then, you mentioned the Amazons a disruptive aspect of e-commerce Have you ever considered, obviously, some of your - one of your competitors has, kind of, jumped into that market. Have you ever considered going into that market to tap that avenue for growth?

On the e-commerce side?

Yes. Like down in the personal.

Everybody's in the e-commerce side a little bit. For example, our LTL business is involved in e-commerce.

We are doing a little bit more, but we don't have as big a presence as them. To enter the game now, you're going to - you're late to the party.

So give them credit, they made the right call at the right time, did a good job on that. Whether that [indiscernible] that way or not, I think it probably will, to be honest with you.

But we'll just migrate more of our LTL business into do in more of that. In the markets that we have good market presence and some competitive advantage.

So those are the things that we are contemplating right now. I think that's how we would access the market to be honest with you.

Last question's on CapEx. I think you are guiding to us for a little bit higher CapEx spend for 2017?

Can you update us on what you expect for your net CapEx after proceeds of sale equipment would be for 2017? And any view in 2018 as well would be helpful?

Well we haven't got 2018 figured out yet. So budgets are just coming in, I think we'll have that done in early November and then we'll articulate that to the shareholders in mid-December is when we hold the conference call once the boards approved it.

But earlier, this year, we had earmarked a $25 million CapEx and then after the first quarter, we said eight, things are looking pretty reasonable we made a couple investments and acquisitions or bump it up to about $50 million and added another $25 million. I don't know if we're going to get to that $50 million, as what we had anticipated.

And part of that reason is, to be honest with you is that lead times are now out 6 months to 12 months for any capital investments. If you want to buy trailers, trucks, specialized equipment, it's being stretched out now.

It's a strong order book. So we are not going to - we've made orders and commitments, but the money is not going to be spent unit next year.

Okay. All right.

Thank you very much for the answers.

Thank you.

Yes, hi, good afternoon. Thank you for taking my question.

I guess maybe I'll want to talk a little bit about the P&C business as well. I think you referenced that Amazon's a tough customers.

Is that, kind of, what you're talking about Murray, when you say the trucking remain negatively impacted due to e-commerce? Or is there something else that's going on that maybe I'm not aware of?

I mean, that's an observation that we are all kind of happened just over the last bit, in which it's snuck up on everybody. But you can see how the retail sector has been impacted, dramatically, by the online experience in e-commerce.

That add two things, one is if you're in the partial business, it's been a nice boom. But if you've been a traditional retailer, you're killed, you're crushed.

And to the extent that we do business with customers that are under increasing pressure, it's pretty tough to get pricing from them. And then you do business with anybody that was doing business with people like Sears and then you get hung out to dry, those things are very complicated.

So that's I think was really kept pricing below levels, where it really needs to be. But that's the market.

I mean everything is gone to e-commerce, and it's that experience that everybody wants just in time and what I want. I'm not saying it is the most sufficient supply chain, but that's what customers want.

They want instantaneous gratification which is really what Amazon is all about. And that's put pressure in the whole system.

And once pressure goes in it's kind of materialized throughout. The extent that the economy can grow out of that, we think maybe we can start to get surprising leverage, but that's the thesis, we'll see what happens.

But we need the economy to grow to get the pricing leverage and it appears that - particularly I was more optimistic it's what I heard in the U.S. It's very, very robust down there right now.

They're getting pricing leverage for sure.

Absolutely, that's what we've been hearing as well. I guess maybe directionally, can you talk a little bit about CapEx like as it's still moving up next year or do you think because of all these acquisitions that are more assets light you can maybe grow at a faster rate next year without maybe necessarily having to move CapEx up?

Yes. That's going to be a good one.

I'm just given a guess right now, but I don't think it'll be materially different than this year. And that's our core business.

So I don't see a whole bunch more. We were pleased to make sure our business is best in class, but as you know we've kind of got a hybrid business model that doesn't require a ton of CapEx.

And that's been by design. We've done that over the last several decades to get to the point.

And that's because I just didn't believe that for example in the trucking business that we got paid to own the truck. Hence, we were a little bit light on that side.

Now it'll be both the same I think trend next year. The economy is not going to go by 5% next year.

There will be I think some steady improvement and we will replace assets to make sure we get the best productivity and get to manage our cost and those things and be as productive as we can. But I don't know if you're going to be able to grow the business enough because I'll be honest with you.

There's no people. So there's no sense getting a bunch of trucks if you don't have the people.

That's why I think we're probably going to get. Our acquisitions will help us with the topline, but I think the market and the pricing leverage will help us on the bottom line next year is our expectation and thesis at this moment.

Great. Thank you.

Maybe just a one more question for me here in terms of the EBITDA outlook for 2018. I know you referenced the fact that you're sort of still going through your planning, but could you give us some sense of where maybe that's moving to potentially next year?

Do you think we can get a year that's up on oil and gas business or do you think we're still kind of be flat to down next year as a whole?

Well, I have more detail in December obviously, but my general sense is I'd think EBITDA based up on what I'm expecting today it would be up in those segments next year.

Great. That's helpful.

Thank you very much.

Good morning, all. Murray, as the rate of pressure from e-commerce seen a step change in the past three months, that's tempering your views on freight volumes in trucking, pricing in the T&L segment because maybe just my imagination, but I interpreted the commentary from the release last night and the call here today to be slightly more tempered compared to the message in Q2, is that fair?

I think what we saw in the last quarter, Jon was that that was the reality in the last quarter, but it seems like those pressures are being alleviated, and I think you've heard that from Walter Spracklin too, a lot of the data coming out on the trucking side is that prices are starting to move in the contract side. They've moved first on the spot market.

It's tightening, but I think that really that pricing is at 2018 kind of trend. I can feel it changing, but I haven't - like I haven't signed any contracts with 20% increases or anything like that yet.

So e-commerce is still a real issue, but the economy is tightening up the supply, that's it for sure. So I would expect that pricing will be a little bit stronger in 2018 for sure.

It's my thinking.

Okay. And so it's fair to assume that the e-commerce and Amazon talk is just continuing to highlight a macro trend that we should that we should all be cognizant of, and it's really not tempering your view to be more negative at this point?

That's correct. I think that's a good way to summarize it, John.

It's a realization, there will be no freebies. We're still going to have to be competitive.

We're going to have to be this, but you're starting to feel some inflationary pressures coming into the system Jon. That's what I'm giving you right now.

I'm feeling some inflationary pressures. We're feeling it on the cost side a little bit, a very little labor availability.

So if the economy grows and demand goes up, we're just saying if you want service, the price is going to go up that's what we're saying.

Can you give any more color on how you think about something like thrivehood management, just in the context of the size of your business, compared to the investment you're making and when you make a small investment in a company like that, is it fair to assume that we should probably think that there is a high likelihood that you can continue to invest in that platform, and there is good growth opportunities for them?

Yes, I think there's going to be growth opportunities. I'd have love to be able to get this company in, but they're all entrepreneurs, they want to grow, and we took our very next thing.

I've said in the past all these companies where we make kind of a small investment in, I would have loved to own the whole. But we made the next best call, which is we'll have an equity participation and we'll be your banker and we get - we issue the dividend to help them the other growth very quickly because traditional financing is not available in the industry right now.

And then they get into our system, they can leverage of our shared services groups, Stephen?

Yes.

And we can help them scale up their business and it's all about who gets the people, and these small entrepreneur are the ones that are able to attract the people now. It not the big companies that can go put an ad in the paper and get people.

That's going to be a bit of a mugs game. So that's why we'll make - we will spot your entrepreneurs.

So long as we get an equity participation to participate along with them.

Stephen, can you talk about how wide the margin belt across is in services business units right now? Like it was very strong in the quarter and is that signaling that you're giving out market share in some of the more challenged service lines that you guys operate in today?

Yes, I'm not quite sure. I understand the question, but...?

Did the average indicative of all the business units I guess?

Yes, I think last year we had things like Fort Hills and Heavy Haul, and Premay, which just hasn't been replaced. We had the Prince Albert Water Rentals, we obtained dewatering, we're the temporary provider for water Prince Albert again very high margins.

I think now back to business both in Trucking/Logistics and in Oilfield Services, where we are back to the mean, more or less, and without capital projects this is sort of what you could expect.

You've been successful in divesting the assets?

Just to add a little bit on that. So we're down because of the reason that we've articulated, but, generally I think you were highlighting is that our margins in the Oilfield Services were not that bad?

Exactly.

Okay, so part of that reason is, you're exactly right. We are demarketing, where customers want us to do something for free.

I said well, you go do it or get somebody else. But if we can't make money at it, will be marketed.

That's your exactly right on that. And that of course immature growth perhaps a little bit.

But we are prepared to take that stands. And then secondly, there is been a decent rebound on the drilling activity side and our businesses come to construct in line and they performed reasonably well.

So is that combination. Even though we lost a really good business that was a lot of a topline stuff.

But are pretty good margin, but overall, I'm pretty pleased with our hotel services division. And kind of the trends I see.

I see decent margin, but not a lot of growth. Until we get some nice catalyst and get some capital investment going again.

I think growth is going to be somewhat muted. I think the drilling activity will grow next year and you study this all day long and I'm sure you've got similar views when I read your information out.

It will be okay, but it's tough to see a massive improvement in drilling activity unless cash flow up.

Yes, it's very true.

Yes, so I just probably more the same next year, with maybe a little of growth and then let's hope some long-lead capital projects like LNG get the momentum in 2018.

You guys have been successful in divesting your idle or underutilized assets in the past couple of years. Do you expect there to be more those opportunities over the next six months to 12 months to be a source of capital?

Or is the garage effectively all cleared out at this point?

No, we'll continue to - and I think you saw that last quarter, we'll have some more again this quarter much for a clean out the garage. And you got to remember I mean, from peak to trough.

We loss $600 million in revenue because the oil patch got crushed. We lost 1500 people.

We have assets to do $600 million and we still have too many assets and we will continue to clean them out. But we are not in a panic, because we don't to raise the capital, but we are telling our business units in the oil patch, if you want new assets, sell your old assets, I'll get you new ones.

But it's kind of one new and get three old. And so therefore CapEx we're still in a 100-commitment size on Oilfield Services side for that reason.

Is the bulk of those divestiture opportunities weighted towards the large capital projects that are going on Western Canada right now or it would be spread across the general business?

Yes, it will spread across because we just had a broad-based decline. So we just add, we have too many assets for what I think the short to medium term looks like for the oil and gas sector in general.

So we are not a - it's just going to be more in a very timely fashion. It's not a panic but when we see that we can get good prices because the buyers are out there, we'll sell into the market.

And that's why I say to you I think there will be some entrepreneurialism come back in to the oil patch again and so.

Is there any update and you can get the Moveitonline initiatives and investments you made in Trakopolis recently?

Yes, so the investment in Trakopolis. And I'll turn this, so Richard and Joanna did all the negotiating on this, and whatever.

But we partnered with Trakopolis earlier on in 2017 or was it late 2016 that we - I guess we connected with that.

I remember this year we started working with Trakopolis and they have, essentially, a low board that they had that we dusted off and we started using internally. And it was really designed first and foremost make our own business units more efficient along the way.

We understood they had a pretty decent software program and in low board. So we are into negotiations to discuss acquiring them.

The Moveitonline we can hold software which Moveitonline. So at the end of the day the investment we have made allows us we effectively loan the can hold Moveitonline software it is hosted by a track off of us and they will continue to develop it for us as well we have another commercial agreement and development agreement in place for that as well.

And we are an equity owner within the Trakopolis group. There are some other interesting applications they have to help with workflow and certain other hardware applications that are in the midst of looking at as well.

So it's an early innings but it's certainly something that we're keeping an eye on. So John, there hosting they have all the back-end infrastructure and they're hosting the infrastructure.

So let's call them the cloud from Moveitonline.

Do you believe that grows your logistics business from a 2018 perspective or it's more of a longer-term story than something out of media?

Well, I think let's thing sure we're clear on this. Moveitonline as we're building it out as a marketplace and what we're trying to do is aggregate and build a platform and which carriers and shippers and truckers want to come in and say, this is a better way for us to do our business.

And we've made some significant headway on that we've released MOV 2 last quarter will probably release MOV 3 later three later this quarter maybe early, early 2018 it depends on whether I get my way, or the IT department gets their way. And that's just all enhanced to make sure that they give - we give a better user experience.

But we've made substantial headway, added a lot of carriers in, but you won't ever be able to monetize Moveitonline until you get the content in there and you get everybody using it and becomes something that everybody uses all the time. So we're not even worried about whether it adds any economic value.

Right now, I can tell you it's gaining momentum and I'm pleased with that direction and then we'll figure out how we keep just getting that user experience better, but clearly, it's a better way of moving data and going into the marketplace, and we've made some good headway there. So a lot compared to where we were this time last year.

I doubted many marketplaces kind of as far as we have to be honest really.

Appreciate that color. Last one just for me.

In regards to Kriska, I realize it's entirely independent company, but is there any reason to believe that that could be a potential investment that requires more capital in the coming years for us guys?

From our perspective?

Yes.

No I don't see that, but that's up to Mr. Seymour, who owns the company as to whether where he wants to take it.

I think the big thing for Kriska and we get all the data, we get the data from every trucker, and I get the data from Kriska and what they're doing and they're not telling this. Everything we're giving you is based up on or seeing down there too.

That was a tough quarter last quarter in the truck and logistic side, but we're turning the corner on it and truckers are pushing back saying no, no, no, I need higher prices and Mark is saying the same thing at Kriska. I'm doing a lot of work.

And revenue is not the problem in trucking. It's profitability.

That's a problem, and I think that maybe is a story that we can talk about in 2018 and that's my view. I've said to Mark, there is no sense of getting more capacity, unless you get higher prices.

If you get more higher prices, let's stop capacity, which means capacity means capital.

Appreciate the color. Good quarter.

I'll turn it back.

All right. Thanks.

Yes. So my first question is on the CapEx.

For longer term sense, would depreciation be a good measure for maintenance CapEx for the Company in the two segments?

I would think it would be in the trucking/logistics side. I think that's a reasonable benchmark, but in the trucking/logistics side - in the Oilfield Service side, we still have too many assets that are underutilized for the reasons I just explained in the last call with Jon.

So it won't be that high in the Oilfield Service side. Stephen, I think you can…

Yes. I would concur.

That's not the right denominator to use in the truck and the Oilfield Service side. And until we see prices go up and the activity go up in Oilfield Service will still under commit capital to the Oilfield Service.

Okay. That makes sense.

So it sounds like TLS, OFS, you may accumulate assets for some time to come?

Yes. I think that's the right way to look at it.

Eventually you're going to get to where your depreciation should equal CapEx just to stay even or get ahead a little bit, but we still have some readjustment. And we're in the early stages of the recovery in the oil and gas business, so that tells me that we'll still under commit capital to the Oilfield Service side until we see a better long-term trend developing.

Based on what you're seeing right now is - is that maybe another couple years you think on oilfield?

It's really complicated on that. There's people a lot smarter than I am on this issue, so we're guesstimating, but the industry had a wonderful time and we grew because commodity prices were high and maybe we over committed capital, and now we're under committing capital.

So when does it hit that tipping point when the world realizes we actually need another million and a half barrels every year and then the capital is not coming in as enough right now to do that. When do we hit that point?

Early 2020 some, but then this electrification come in and start eating away demand. These are conflicting data points that I just don't have the answer to it right now.

So what we will do is under commit until we see enough evidence to stay commit. But we are watching it like a hawk.

Okay, that's very helpful. Second question, on the pricing side, you came back from the conference, sounds like it was very bullish in the U.S.

side. I guess, one of the main rig drivers there in the U.S.

is electronic logging devices. Do you think that the fact in your markets will be less since you're on the other side of the board to significant degree or do you think that will be similar to the U.S.

maybe with a bit of a lag?

I think a bit of a lag in local markets. But it's funny, once markets start tightening.

It kind of tightens all over. So I would expect a little tighter across the board, but way more robust of pricing robust of pricing down south than up in Canada.

Okay, and then just when we think about pricing, you mentioned cost, they're also rising. Is there going to be much room in the next year to actually get net margin benefit from this?

Or are the prices in the cost going to go up?

That's a very, very good point and in fact we debate that as our senior team all the time. It will not be linear.

You're not going to be able to get pricing leverage equal margin. So I would expect some - it will be some hybrid of that.

But because I do sense there is going to be some pricing, some cost pressures coming in also particularly labor. I think labor is going to be something.

Like that's what capacity really means. Capacity means I don't have enough labor.

If you want my labor, well, then that's going to have some impact there. So it won't be a direct correction but, let's say, we will get margin improvement.

Don't you think Stephen?

No, I think net-net we should but we're already seeing labor constrained in certain markets and we've had to give raises. And so we've had rate increases, we've given raises, but net-net we're still improved.

Yes, so when you take a look at where we are right now, it's bit of a trap, David because we are not going to lose our people. And then we know that pricing leverage is coming, so because we're telling our customers.

We're not paying more and not getting more because we're already operating at in a very competitive situation. So I think it'll help improve the margin somewhat, but don't.

It's not going to go up by 10 points or something like that. That's not what we are saying.

But I think it will give us a more positive trend on margins on our trucking/logistics side. That's our expectation for next year.

Okay. That's helpful.

Thank you. And the last question for me.

The Series D comes up in the middle of next year; you have $123 million of cash that's only $70 million. Any thoughts on just taking that out at that point?

Well our first priority would be to grow, which means we found a good transaction and acquisition and use of proceeds to grow our business, and then we would consider just - we will pay it off. That's not an issue.

The issue would be are we going to use in bank debt or some other form of debt or are we going to use the cash. That we haven't decided yet, David that will be depend upon totally about opportunities.

Okay.

But our bias is we want to grow. We sense that that's our bias, but we're not going to grow just to grow and say we did it.

So once again, as I said we paid off the debt we're going to reduce our annual interest cost by net $7 million. So there will be a win for shareholders.

The question is a growth there is a reducing cost. It's one of the drilling the deleverage.

Okay. Good enough.

Thank you very much.

Thank you. This concludes the question-and-answer session.

I would like to turn the conference back over to Mr. Mullen for any closing remarks.

No further comments folks the hours up. Thank you very much for joining us.

Today wish everybody a good Halloween and the end of the quarter. So we'll talk to you again in December when we have - I think it's December we're going to do with probably late December or early Jan will come up with what our plan is for 2018 and we'll give you a little more color exactly as to what our expectations or at that time and some more color that.

Thank you very much for joining us. We'll talk soon.