Welcome all to Mullen Group’s quarterly conference call. This morning, so we are going to 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 today’s review, I will remind everyone that our presentation contains some 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. Now further information identifying these risks, the 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. Stephen Clark, CFO; Richard Maloney, Senior VP; Joanna Scott, our Corporate Secretary and VP of Corporate Services; and Carson Urlacher, our Corporate Controller.

So, let’s take a look at the headlines. I will address them here this morning before I turn the call over to Stephen to talk about some of the detail of the quarter.

So, let me just say this that the rollercoaster ride continues and no one anticipated that there would be a pandemic this year. And I doubt many would have predicted the many changes that have occurred as a result.

But what amazes me is how the economy is adapted. We see it real time in our business and as evidenced by our results this quarter.

And in fact year-to-date as well, our business model is more than just resilient. It is best-in-class.

So, I’m proud to say the least of our entire team. So today, I’m going to focus on four headline topics that are most important to our shareholders and all investors.

And let me start with revenue. And let me just say this economy is all about the consumer, how much they are spending, and where and how.

So, here is how our business participated in the consumer led economic recovery or economic change, let me call it. And also let’s call it the plus and minus $35 million quarter.

And the reason I say that is this is about the amount of additional revenues we generated over the second quarter. And this is the amount by which we also are down vis-a-vis the third quarter of last year, so let’s just call it the plus or minus $35 million quarter.

The Coles notes is the consolidated revenues continue to recover from the lows earlier this year. When governments bureaucrats and politicians determined that many businesses establishments should be shutdown and individuals forced to shelter in place no thankfully, these decrees were temporary, and a more thoughtful approach has been implemented.

Now as this economy is reopened, we have seen a resurgence in consumer spending. And as I have talked about earlier, this is the predominant engine of economic growth in today’s economy.

How they have spent has changed, but how much they have spent, has not. We see it on our LTL business, we see it in our warehouse and in our logistics business.

And we see it today and our employment levels. Thankfully, on this topic we have returned most not all of our workforce to full employment.

However, we are still not back to pre-COVID levels for one simple reason parts of the economy in certain geographic regions have been ravaged by changes to the economy, the hospitality industry, the air travel industry, and yes, the oil industry have been and are particularly hard. None more than the province of Alberta, where the crude oil and natural gas industries play a significant economic role.

But and I say this, and here is the good news is activity is improving, even in the beaten up oilfield services sector of the economy. Now I’m going to go out on a limb and suggest these industry sectors will eventually recover over time, we will all adjust, just like we always have in the past.

Nobody likes COVID-19, but everything I see suggests we are adapting and this trend will ultimately continue. It might take a year or two but the industries hit - hurt the hardest today will not stay down forever.

Until they do however, our diversified business model provides ample opportunity. So, on a consolidated basis, revenue recovered nicely from the second quarter lows, although they remained down about 10% year-over-year.

And the best news is that we saw revenues improving month-over-month in the latest quarter reflecting strong consumer confidence and continuation of pipeline construction in British Columbia. And even oilfield maintenance and turnaround work returning.

In addition, we set the stage for even higher revenues in the future with the completion of a couple tuck-in acquisitions, along with some very strategic investments in technology facilities and land which we believe will allow our business units to gain market share in this ever changing world. Now let me go to the second highlight.

And let’s talk about profitability. That is the holy grail of any business.

It is up and up nicely. So, how did we do it?

Well, let’s start with the business recovery. Improving revenues is the first key point I will make.

Secondly, we have reduced our cost of business. And I attribute all of this to our business units relentless focus on managing every business process.

Fuel costs are down, which is directly correlated to low crude oil demand and pricing. Thirdly, our high performing business units, such as the Gardewine Group, Kleysen Group and premade pipelines and another strong quarter.

And lastly, the Government of Canada has virtually kept all of our business whole from the economic impacts of COVID-19. Yes, business has been impacted, but the CEWS program has mitigated the negative implications.

Now on this issue, I will be honest, Mullen did not need the government support. Some of our business units did, and as a result, we retained more people in these business units and we would have otherwise done so.

But overall, we entered this year well capitalized and our diversified business model insulated as from much of the economic problem. Our competitors, perhaps were not so fortunate.

Regardless, it is a government program. And we will use the proceeds from views to maintain employment levels and to invest in the future.

Now shareholders getting nothing from CEWS other than our business will remain strong and we will ultimately grow. Let me talk about the third headline from last quarter, lots of cash room to grow, and debt to cash flow declining.

You can read the details in our Q3 interim report and offset. Fourth what about capital allocation.

But how do we allocate our shareholders capital last quarter let me start with CapEx. Equipment purchases and CapEx continue to be constrained by bottlenecks.

However, we have not changed our 2020 CapEx and we expect to be on budget. by year end.

You have to continue to invest in your business if you want to maintain your business in the future. We completed our Regina Smart Terminal last quarter and is designed to facilitate data interconnectivity and tomorrow’s plug in electric vehicles.

It is a new facility the Jay’s Transportation Group has moved into, let me just call it for what it is it is a fantastic facility positioning them for years to come. Undoubtedly they will be able to gain market share from this brand new facility.

We identify some strategic land position level allow for future growth and expand expansion of our expanding LTL segments. In terms of capital allocation, we had some share buybacks, we continue to buy back stock during the quarter.

In fact, we have now completed our annual authorized share repurchase reducing our share count by nearly eight million common shares, we just sold an average cost of 6.70. So, if you were one of those shareholders that stuck with us when the share price was hammered, you were way better off today because of our investment in our own company.

Another form of capital allocation was dividend, we reinstated the dividend, albeit at a lower rate pre-COVID. And as evidenced by our quarterly profit performance, our decision has been more than justified.

And we are going to continue to monitor what happens with the economy and COVID-19 over the next couple of months. And we will address the 2021 as part of our 2021 annual budget and business plan.

So, suffice to say however, our business model is both diversified and robust. So, in summary, all-in-all, I’m going to say this was a great quarter in many, many respects.

In terms of safety, I got a comment about that, our people worked diligently to make sure that we protected each other and we did a fantastic job. We had a couple cases of COVID.

But overall, everyone is doing fine. And other than some inconveniences and disruptions, I would say on the safety front, always good.

And now for the details on the financial results. I will turn the call over to Stephen.

Yes. Thank you, Murray, and good morning fellow shareholders.

I will get a little bit more granular. However, our third quarter interim report contains the details that fully explains our performance as such, I will only provide some high level commentary.

In the midst of these tumultuous times it appears some normalcy has returned, and consumer spending has for the most part rebounded in areas we serve. Although revenue in all three segments declined, each segment recovered from their Q2 lows at different phases.

On a consolidated basis, revenue declined by approximately 10%, year-over-year revenue declined by $34.4 million, we will call it 35 million to $219.9 million. A part of the decline was due to lower fuel surcharge revenue excluding the effect of acquisitions and fuel surcharge fluctuations revenue decreased by more normalized $30.9 million.

Specifically revenue in the LTL logistics and warehousing and specialized and industrial segments declined by 2.8, 12.8 and 17.1%, respectively. This is a considerable improvement from Q2.

The LTL segment revenue decreased by $3.2 million, or mere 2.8% to 112.7 million as compared to 115.9 million in 2019. This decrease was due to the $3.2 million declining fuel surcharge.

We experienced a $2 million decline in same store sales that was offset by $2 million of acquisition revenue. So this is really reflective of the return of the consumer.

And in fact it is September same-store sales was up once adjusted for acquisitions into the decline in fuel surcharge revenue. Again, we are seeing regional differences, but for the most part, the consumer is back spending again.

Logistics and warehouse segment revenue fell by 12.6 million to 86.2 million. This is down year-over-year by 12.8% and sequentially by about 10%.

Simply put, the investment in capital goods economy still lacks confidence. Projects executed in 2019 has not been repeated.

The specialized in industrial segment decreased by 19.1 million or 17.1% due to the COVID-19 related collapse in commodity prices that hampered, no, I would say killed oilfield activity. This was somewhat offset by improved results by premade pipeline and smooth.

As well as revenue generated in our production services group due to turn around and plant maintenance work that occurred in September. As for profitability, operating income before depreciation and amortization commonly referred to as EBITDA increased by $9.6 million, or 17.3% 65.2 million.

This is almost a new record, and second only to Q3 of 2015 when the specialized and industrial segment generated over $33 million of EBITDA and the logistics and warehousing segment benefited from the Suncor Fort Hills build out. So, this period we have no projects, but steady consumer spending.

Of course, this number comes as a result also CEWS. The underlying number is 54.9 million as compared to 55.6 in 2019, so virtually flat, dollar wise on reduced revenue.

The underlying EBITDA number reflects the strength of our business model, but also of one fundamental diesel prices fell by an average of 9.3% during the quarter. This benefited our businesses and reduced fuel as a percentage of revenue from 8.1% to 6.9%.

The 1.2% difference added about $2.6 million to the bottom-line. Now for the EBITDA segment detail, the LTL segment was up 3.2 million or 16.7% to 22.4 million.

EBITDA improved due to the $1.7 million of CEWS in this segments and the incremental $400,000 of EBITDA generated from the acquisition of Pacific Coast Express and a $1.1 million of savings resulting from our COVID-19 action plan and fuel savings. Operating margin increased 19.9, but CEWS adjusted 18.4%, so still up handsomely from 16.6% generated in 2019, primarily due to lower diesel prices and cost control initiatives.

The logistics and warehousing segment was up $2.5 million, or 16.4% to $17.7 million of EBITDA. Operating margin improved to 20.5% from 15.4% in 2019, again due to CEWS $2.3 million of CEWS in this segment and lower diesel prices.

The CEWS adjusted margin was still out handsomely though at 17.9%, or up 2.5% from as a percent of revenue. The specialized industrial segment was up $3.8 million or about 16% to $27.5 million.

EBITDA improve due to recognizing $6.3 million of CEWS in this segment during the quarter and from higher margin large diameter pipe hauling and stringing revenue. These increases were partially offset by lower EBITDA from those business units involved in the transportation of fluids in the services of wells and from the views, most directly tied to drilling activity.

So it was a tough quarter in those segments. But the strong quarter in our more specialized groups.

Operating margin improved to an unprecedented 29.8% from 21.3% in 2019, again, primarily because of CEWS and a greater proportion of higher margin revenue, lower diesel prices and our COVID-19 action plan. CEWS adjusted margin was 22.9%, and improvement still of 1.6% as a percentage of revenue.

Looking at other notable items, net cash from operating activities was up to approximately $47 million. We used some of this cash to buy back shares.

We bought back our last shares on September 30th. And we bought the maximum allowable of approximately eight million shares for an average price of $6.70.

During the quarter we invested $23.9 million for share buybacks and a total of $53.4 million of buybacks in 2020. We also reinstituted our dividend paying our shareholders $5.9 million during the quarter and we continued our CapEx program which Murray spoke to.

year-to-date, our CapEx is $31.7 million. And we announced the purchase of some adjacent lands in Calgary that closed earlier this month, but post quarter, this $31.7 million is comprised of $6.9 million of facilities, and $24.8 million for rolling stock.

Our announced capital plan was intended to be a repeat of 2019. However, in the first nine months of 2019, we had invested about $40 million into rolling stock, we are behind because the OEMs shut down their factories and delivery times have been pushed out.

It is a timing issue, nothing more, nothing less. We also funded the acquisition of Pacific Coast Express for approximately $14 million, which included two strategic properties.

After all, that we have approximately $105 million of cash only down $6 million dollars from Q2. In addition to our cash, we have an under $150 million line of credit and substantial positive working capital.

Our total net debt to operating cash flow financial covenants under a private placement agreement, which gives us the benefit of our in the money currency hedges was 2.1221 or about two times cash flow, rather conservative position to be in during the recession. So Murray, with that I will pass the conference back to you.

Thanks, Stephen. And I will just remind all of you for those that are so inclined, that the Q3 MD&A contains all of the detail and Stephen just highlighted some of before you.

As we look at the outlook for the balance of 2020, and always say it is easier to be optimistic on the heels of a solid quarter, such as the one we just completed and based upon everything we see today, we do expect to finish the year on a positive note. Now there is always a potential for another round of COVID-19 induced shutdowns.

Everyone is aware of that, but we don’t large sectors of the economy will be as impacted as severely as earlier this year. So with this as a backdrop, it seems that the consumer led economy remains on solid footing difficult to see how it is going to grow at the moment, but it looks to remain on solid footing.

As such, we expect our LTL and logistics warehousing segments to continue to produce solid results, which is a good place to start from. In our specialized industrial service segment there is always a bit more volatility due to the nature of the business cycle, and project work.

Nevertheless, we see a continuation of work associated with the major pipeline construction work, as well as some incremental on natural gas drilling activity and maintenance work. So all-in-all, we expect results at least in terms of profitability to be similar to last year’s fourth quarter.

So, this ultimately speaks to a very solid year for our company, despite COVID-19 what this tells you is pivot and adapt, are key to performance. Now, in terms of the balance sheet, let me just highlight a little bit of what Stephen said, it should be pretty obvious that cash at 100 million plus and an untapped line of 150 million provides a lot of dry powder.

But you should all know me by now, I do not chase growth for the sake of growth, we target growth where we can add value, which is the ultimate long-term creator of wealth for shareholders. So currently, already, we are inundated with acquisition opportunities that needs each that needs to be better now.

So, I asked myself, why are so many companies all of a sudden on the block, my use case you are telling me the 2021 is the great is the is going to be a great year of opportunity in which opportunities will be available, especially as government support payments start to run out, then it is back to basics. And you better have a good business model, like we do here at Mullen Group.

On this topic, I’m often reminded that our stock trades at a significant discount to our Canadian peers, which is amazing considering the diversity of our business model and our best in class operating performance. So, let me give you one example.

A peer of ours which is by the way, an excellent company in its own right has a market value of nearly two times or despite the fact that we generate more EBITDA per month, more cash flow per month than they do in a quarter. No one does not have to sell it now to realize something is amiss here.

Well, let me put it another way, our LTL segment alone is virtually the same size as this peer in terms of EBITDA revenues, etcetera. It is steady.

And we have grown this segment significantly over the years. We have the entire market cap of Mullen as half and we compete against each other in many lanes and product delivery lines.

So, when I tell investors that Mullen Group is a solid investment, I speak with confidence. We operate a very successful company.

We returned 1.3 billion to shareholders over the years since we went public, and this continues to grow each year. And we will grow the business off of our strong balance sheet perhaps this might explain why we acquired eight million of our own shares over the last past few quarters.

So, to the sellers, I say thank you for giving us the opportunity to invest in our company at such a steep discount value creation one-on-one in my books. Now I will turn the call over to the operator for a Q&A session.

But before I do our next meeting will be in mid December. December 10th we will confirm that shortly.

But let’s hear mark around December 10th, in which we will outline our 2021 budget and business plan is only a few weeks away, folks, so stay tuned. And operator, I will turn it over to you.

Thank you.

Thanks, and good morning everyone and congrats on a great quarter. My first one would be on your expectations into the end of the year.

I think you know that, you want to kind of finish on a strong note and probably flattish was this last year if I heard correctly. Obviously you heading into Q3, you had some expectation that your second quarter EBITDA would be kind of flattish heading into the second half.

And obviously, that did not happen to you kind of exceeded that expectation. I’m just trying to understand, like, what really is the kind of big nuance between Q4 and Q3 that you anticipate, perhaps revenue EBITDA to be down sequentially.

Is that the CEWS? Is that something that took place in Q3?

Well, CEWS will be down for sure as your business recovers, Stephan?

Well, that is one for sure. But let’s just CEWS out of the equation and look at just same-store sales and same operating performance.

I don’t know, what is going to happen. I’m kind of hedging my comments a bit, because my general sense is, is that we got to see what happens over the next month or so with the spike in COVID.

And how, both the governments and consumers are going to react to what is happening. So I like none of us can predict it spot on.

But my general sense is one should be a little cautious. And just that that is why I’m just, I’m being maybe that is explains part of it for you.

But I don’t expect anything too draconian, but I’m hedging my book here right now, because I don’t see it growing at the moment. I wouldn’t be surprised to see the consumer led recovery slow a little bit on the heels of some of these COVID issues.

And then we got to wait and see when there is more stimulus comes in from the fiscal side, in my opinion. But the testimony, and then you have your traditional kind of year-end, slow down things that happen in the business, and those kind of things.

But all-in-all, I still think it will be a pretty solid fourth quarter, relative to last year. And that is why I gave you that.

I think it will be about the same as last year. I will just start with that.

But as we said, I have been surprised and how strongly consumers mean. So I rather gives you a positive surprise and a negative one.

And then you also noted that some recovery has taken place in the Alberta market. I’m just curious as to, is that all related to trucking and logistics?

Are you seeing anything and cooling in the oil patch as well, because we are going to look at your Q3 numbers for the specialized and industrial segment. Your incremental EBITDA, or call it EBITDA growth quarter-over-quarter in Q3 came in at that product 40% margin.

So that is a pretty strong margin. So I’m just curious as to what happened in Q3, that lifted the margin so much the leverage.

Is it the big pipeline hauling margin alone or something else?

On a year-over-year being clearly pipeline. We have been commenting to our shareholders since earlier this year that the big pipeline projects that were going on.

We were going to have a robust year. In terms of pipeline construction, what these projects are they got to finish off.

And we still got clear visibility right through end of next year, maybe into 2022 on the projects that are going on. So that is been clear when, but in our specialized industrial service side, as I said to you, there is a couple things.

One is, it is more cyclical. It is for sure, because it is tied to project work, and really more capital intensive work.

So I was quite impressed with some of the recovery there. I think it was mostly pipeline related, some ties and we had some good activity with our construction company Smook, it is in BC.

But, overall, solid recovery in maintenance and turn around work by the oil and gas companies that had to go back in and start spending money again. You can reduce maintenance and do things for a little bit, but you can’t forever.

So we saw a nice recovery in that side, strong pipeline construction activity, a good quarter in terms of our Smook business unit. I think a solid in terms of our Dewatering business.

So all-in-all, that is what we saw in that. Now remember, we always refer to our specialized in industrial segment as kind of our segment of little gems.

There is probably nothing in here that is totally scalable. But, we have made some good investments in the companies that really when we go in and provide our skill set in terms of capital allocations and position in their respective markets, they may not be scalable, but they can generate some pretty good returns especially, and I got to tell you, they generate some pretty good cash returns.

So, that is the nice recovery of that sector, solid segment for us.

Yes, and if I could just add for the analyst community and those that are really wanting a little bit more granular detail is that, those specialized gems that Murray is talking about used to be about a third of our segment revenue and a third was drilling and drilling related, and the third was production services. So, it used to be rather balanced.

But now they are about 50% or 60% of revenue, that specialized group, because of the decline. And so, that gives you a relative indication of sort of what the revenue was like, and then you are very, your observations.

And we break it down between those three groups within our MD&A. You are correct in that, that marginal EBITDA from that specialized group is higher.

So, that is why that the lift in margin.

Okay. That is great color and last one for me before I kind of go offline.

On the real estate side so you identified I think two more real estate opportunities subsequent to the quarter end I think Calgary. Can you provide any color as to what the kind of size and magnitude of those acquisitions and what is the purpose for that?

And are you considering monetization of any pieces of real estate around the country, just given lease prices have gone up?

Good. I will give two to our investors on the call and if you are going to be involved in the consumer part of the economy, I mean, you have to investments in real estate.

You cannot manage the supply chain without having real estate. That is a fact.

So, and we see a changing consumer landscape. We see they are more demanding, and that means you got again, and they want a quicker, better, faster that lends itself to you got to have your facilities in the right spots.

So, that is creating opportunity to say, make sure you put your facilities in the right area, and facilities is one of our core competencies here. We have made some great investments over the years and land and buildings, if you are going to invest in the consumer driven economy, I don’t care whether you are Amazon or your Mullen, you better have some facilities.

And so that is why we consider that an important part of our business model. And we will continue to make those investments.

They are both long term and their strategic.

Perfect. Thanks for the color.

Thank you.

Thank you.

Just a couple quick ones, even adjusting for the CEWS margins are up meaningfully across all three segments. Some of that, as you noted, has been driven by extraneous factors like lower diesel prices, but other drivers of that increase have been from your cost controls.

How should we be thinking about that margin strength as we head into 2021? Would you consider a lot of those improvements to be sustainable next year?

Some of the costs, look, I will be blunt with you, some of it is changing, this is processing or give all the credit to the business units for driving out cost. And that is what I talked about earlier.

That part is sustainable. They just everybody’s figured out, I didn’t have to have that cost.

Now there are some new costs that came into let’s be clear, you got to invest in some safety related costs. And any so that is the net, the net-net effect, though, is we are running pretty efficient businesses, I think the other thing that we have got is, to the extent it is all of us really don’t have too many distractions, these days due to COVID, we are 100% focused on the business and, our first liners are really intense and then focus on what is going on.

And they have done a great job on driving some good change. Right throughout the whole business.

So, that feels good. On the - let me talk about a little bit about diesel costs.

So, diesel costs are down, because crude oil costs are down. Our thesis is, is that diesel costs make a lot.

But when diesel costs go up, then our doing activity will improve because of the margins and the fundamentals in the only gas sector will improve. So, thinking about diesel cars, we really have built in edges within our diversified business model that says okay, if diesel costs go up, yes, maybe the margin goes down our trucking logistics side, anything to do with trucking logistics and LTL.

Yes, maybe that might happen. But conversely, we will probably have more activity on the specialist side.

So, that is a built in edge if you ask me. So, this is outside of our control, but we have hedges in place.

Overall it reduced costs. It also reduced revenue the right step as we said about our, because our because our fuel surcharges, so we hinge it on multiple different ways.

But yes, that margin improved because we fuel costs, we are down to less our second biggest cost in the transportation business outside of outside of wages.

That makes sense. I appreciate the color.

And then it how can also certainly relate to being 100% focused on work during a pandemic. I know in some previous years, where visibility has been muddy, you have often does somewhat delay year ahead, luck or business plan.

Do you have an idea of when we should be expecting that update? Or is the timing still up in the time being?

I think, we will probably release, a news release on the evening of December the 9th and then maybe hold the call on the 10th. We haven’t quite done that.

That is barring any, I think we are getting some more clarity now, right? Like, last year, as you recall, we typically had done in December prior to last year.

Last year, though, was very uncertain, we had WCS hit $5 a barrel, and there was just too much fog for us to really say, okay, what is 2020 going to look like? I think it will revert back to the norm and likely news release on the 9th of December and have a call on the 10th.

Typically, we would like to release our business model, our business plan story in December for what we expect in the next year. The last couple years, we have kind of hedged that a little bit, because we are really trying to see what the heck are the plans for the oil and gas sector for capital investment that is one thing.

We were always waiting to see what they came up with. And they were all over the map.

So we said, well, let us find out and we can tell you what we think is going to happen this year. I’m not so worried about that.

I’m just worried about, I think we will know by mid-December, how the COVID is going to hurt the economy and whether it is or whether it is not. And so we will be, we will lay out our game plan, mid-December.

And then let people know, what our business plan is? What we expect to do in terms of revenue and operating performance, capital allocation, share buyback, dividend, all that.

We will have all of that in December. It is only a few weeks away.

So I tell everybody, just let us see what happens with the COVID here over the next little bit and then it will be a little clearer for us. I hope.

Alright, well looking forward to the next update and I will turn it back. Thanks for taking my questions.

Thanks Michael.

So starting first question, I will focus on the capital side of your business, you mentioned tend to be more cyclical, more project driven. When you look at your current book of business, would you characterize next year as being fairly full in terms of the longevity of these contracts?

Carrying you sufficiently into 2021 to give you good visibility? Or do you have some of these projects ending sooner rather than later that if not replace creates a lot of uncertainty around next year’s level of business activity in your capital segment?

Yes. I think we are pretty confident that every fundamental has lined up, and it is going to be tough to turn off those stats.

So we have some pretty good visibility. What we currently see right now, we will confirm that.

As I said in December. But if you are asking me right now.

As I said, I think those projects once they start, you got to keep going. So pretty good visibility, and we will be busy next year.

The wild card is probably going to be, Walter is this, what the heck is going to happen with commodity prices? Commodity prices, drive cash flow for the oil and gas sector investment activity.

Right now, the oil and gas sector is so under-invested that, that is going to lead one day to a response. Now, whether that is 2021 or 2022, I don’t know for sure.

But I guarantee you, we are getting closer to the day, when we are going to have a response and it is going to require capital investment again. Now it could happen on the natural gas side this winter, because natural gas is pretty much in balance at the moment, and that is not COVID-related, that is weather related.

And let’s see what happens with weather. We have a cold winter, natural gas prices have nowhere to go but up.

If natural gas, the only way to add supply is not by turning on tabs despite drilling, but that is going to lag. So, I don’t know exactly when, but I would be very, very surprised if we are not going to have to have a response in the future on the drilling sector side, which is really capital investment.

Yes. So, it sounds like with the project you see going forward, good stability, bit of a wildcard with commodity prices.

That is correct. That is correct.

Good stability from what we see right now on the project work maybe Dewatering will be busy, Smook will be pretty steady, Pipelines is going to be steady, maintenance work for the oil and gas business is going to be pretty stable, they have got to spend money. They are wearing out stuff and doing things.

They have got to spend money on maintenance and turn around, and then let’s see what happens on the drilling side. That is going to be commodity price related.

And then, one day you are going to have a response. I’m not predicting it in Q1.

But one of these things is going to happen. That is correct.

Yes. That makes sense.

Okay. And now moving to consumer, I know Murray you now talked about the remarkably resilient here they are spending.

Why they are spending is a good question, right? Is it due to government liquidity being injected?

What happens when that stops and so forth? So, would you say then that there might be in fact, a little bit more and given second wave and uncertainty around that.

Is there perhaps a little bit more now, less or less visibility now in your consumer segment? All things said, with what you just said about your capital segment.

There is still seems to be a lot more uncertainty out there with how the consumers going to react to a task that might be turned off with regards to liquidity. Is that a fair statement?

Well, I mean, look, I don’t know for sure obviously. I think nobody does.

I’m absolutely amazed that how resilient the consumer is. The consumer is probably going to be the most stable part of the economy on a go forward basis.

So let’s just call it for what it is. I think the consumer is going to continue to spend.

I don’t know if they are, I don’t think they are going to spend any more than they are right now. But I would still be pretty confident that, consumers are not going to sit at home and do nothing.

They are going to get bored and they are going to spend, they are going to get more than they are going to spend, they are going to do something just like they have on the last day. And my general sense is if you are going to get elected as a politician, you’ll only get elected if you give gift people something.

So, expect more fiscal stimulus, I would suspect.

And on that, and that near-term fiscal stimulus certainly continues into the Christmas season and a peak that we are going through now. Lots of tight capacity out there lots of opportunity to price.

Are you seeing the ability to benefit from both i.e. Do you have the capacity to handle the surge?

And B, do you have, are you getting the pricing that comes with, with that from a general market standpoint as well?

Yes, so we have I don’t know, if there is going to be another surge, that is, I think your next layer of pricing service would come with more consumer spending, and that will come from more confidence that the consumer has, and then a better job creation, market, etcetera, etcetera. But we are tight on capacity right now, which is why we are investing in, in new facilities and what we call the smart facilities that are all going to be interconnected with what we call the smart terminals.

Both in terms of data transfer, and also plug-ins for tomorrow’s delivery vehicles, electric vehicles, so invest in real estate, because that is your future growth, you got to you have got to have to beat demand, the supply chain is changing period point blank. And that is because consumers are changing.

And you are going - inventories going from just in time to just in case, you have to have that inventory in warehouses, so that you can deliver to when the customer calls. And that tells me you need facilities.

So, we are going to continue to invest in those areas, and going to be smart on behalf of our shareholders so we can meet future demand, it is going to continue to change. There is no doubt about it.

I think that -

I know you are going to answer this question in December. But I mean, everything you are saying now suggest that after, a year of a fairly depressed capital program, looking back net - on a net CapEx basis not gross, but net proceeds.

You have done as high as you know, 90 million in the past, obviously, you are not investing in the industrial side as much. But I got I think you would be more you would be closer to your 2019, 70 million than you are to your 2020, 50 Is that Is that a fair assessment.

Yes, in a couple in a few short weeks, I will be able to tell you exactly what I mean - we are just getting out of this quarter. Why don’t you let me digest that one for a little bit.

But sufficed to say, Yes, I tell you what, we will spend more capital, when I see the capital part of investment of this economy, starting to get the confidence to go to work. I haven’t seen that yet.

I see a strong consumer that supports our LTL business and our logistics warehousing. But our peak capital investment will come when we see the capital investment and business confidence come back to spend capital that will give us the cover to go in welcome.

You know why. Because our because our profitability goes up.

So, until then there is no sense trying to guess when that is going to happen. But we are will outline our plan Walter through here and in a few weeks.

It is only six weeks away. So, just hold that thought.

Yes. And last question here.

You said you are inundated with calls with regards to M&A. Would you characterize that in nearly your consumer 10-year LTL logistics?

Or would you say that did more in your capital side that you are getting those? Or is it across the across the board and both?

We see it across the board. In the specialized industrial side, the capital side, we don’t even bet them, we don’t have time.

The ones that we are vetting out are all in the LTL side. And the logistics and warehousing side.

Those are the ones we are vetting out. And then we will look at investing in those, where we think that we can see that value can be added.

There is no sense just paying up to get something that just to add the numbers together. We got to see where we can add value, is that synergy, is that margin improvement, is that we can use that as a growth platform?

We have got to see some value proposition, if we are going to allocate that shareholders capital towards them.

I appreciate it.

We are keeping our days busy. I got my senior executive there.

They are looking at me like no more for bit. But I’m whipping them.

They are just going like crazy.

Okay. Thanks very much.

That is all I have.

Walter, just one more thing, just on the CapEx from 2019 and 2018. I would remind everybody that we had facilities in those numbers.

So those were high numbers, but we had $20 million and $25 million of facility purchases during those years. So just for that.

Good point. Yes thanks Stephen.

You sort of referenced it indirectly in the prepared remarks in the context of valuation. Perhaps more specifically in the Q&A.

But I kind of want to maybe try and pry a bit of a different answer out of you. You are specialized in industrial segments, predominantly features, local services businesses, but those businesses like your various Hydrovac businesses, Canadian Dewatering smooth.

You have some non-energy exposure aren’t really energy weighted at all. I think perhaps unfairly, you are being painted with the local services and energy brush.

So I guess my question is, what do you think your revenue and EBITDA exposure is on a percentage basis of the consolidated that is directly tied to the oilfield services sector?

Well oilfield service is two parts. And I just, the first thing over the umpteenth time, I will try and tell people this.

Oilfield services really two things. One is the maintenance of everything that is going on today that has nothing to do with growth.

But once you have got these terminals, once you have got these plants, once you have got these refineries, once you have got all this, well, they got to be maintained. That is just work.

That goes on everyday that is very stable part. Now the oil and gas sector, when they were trying to protect their balance sheet, they changed a little bit in the second quarter, trying to protect their balance sheets.

Well, that started to come back in Q3, we saw that and that is what we reported in our numbers. And I think they are going back in and got to make sure that those assets are going.

The secondary part of oil and gas is tied to new capital investment, which is really, which means new demand that is constrained at the moment. But that is, golly, we have got it.

It is so small today of our business model, even talking about it. It is de minimis step drilling side.

And so, it is just one part of our portfolio, in our company. And, now when it comes back, there will be, it is not going to go back to anywhere near where it was before.

But I guarantee you, if we are going to be involved in it, we will make margin for our shareholders. If we don’t make margin, we don’t do it.

But, that drawing side got to come back. It is maybe a year away at max, but the maintenance side, I suggest too, they are going to do maintenance this quarter, next quarter, the year after quarter, and quarters after that.

So, maybe just a 10-year down on a number, I mean, you mentioned that 50% to 60% of that would be specialized and the other 50 would be services. So, I would say that segment’s 35%, 40% of EBITDA maybe half of that is directly tied to those kind of maintenance businesses and drilling and completion businesses.

Well, let’s just put it this, there is a very little EBITDA right now from anything to do with drilling activity. I mean Smook will do more money than our oil field service side, on the drilling side right now.

But on the maintenance side, it is pretty stable. So, I don’t know if we break that out into each granular way.

We have got 34 companies in our Group. We don’t break it down in each company.

But, it is a, what is it, Stephen.

I will help you out here a little bit in the sense that, we have had two quarters now of really non-existing drilling activity. I mean, there was 360 wells drilled in the third quarter, virtually nothing in the second quarter.

The rig count in the second quarter was like 20 or 25. In the third quarter, now it improved a little bit, but way down.

So you can see that, we have really worked hard at trying to get that beta out. It doesn’t make sense for us to be a dividend paying stock and having this big ebbs and flows.

So, we purposely done that started maybe with Canadian Dewatering a number of years ago, in 2018, which is the AECOM acquisition, where we really were $70 million of revenue, maintenance based revenue, to the oil sands and such. And yes, they have had some hiccups here in second quarter and through most of the third quarter.

But they are back to doing maintenance, they have to do maintenance. To get a little bit more granular, our rig moving used to be 60% of our revenue and EBITDA 20 years ago.

It is now 4%, 3% of revenue and EBITDA is constrained even lower than that. So, it is really not that high beta, and we really are a logistics company.

We have always moved stuff for the oil field and it is always been about smart logistics and we are less so an oil field service company. And I think we are painted with a bad brush there as far as some investor sentiment, and I think that is been changing over the last couple of years.

So, we have proven that we are able to get that variability out of our earnings and the stability in our dividend. So, but, we don’t give discrete information on each business unit.

It is just something that is difficult.

It is Murray again. It is so diminimous.

You are chasing the wrong car here. I mean, our gas group does more money than our whole drilling size at Saskatchewan?

So why do you think we put a new terminal in there, and help them there. So, it is just diminimous enough said.

I think on the flip side, what do you think the percentage of your consolidated business would be entirely consumer driven, and basically back to pre-COVID levels?

Well, LTL is 100% consumer driven and it is nearly back 100% to it. The logistics and warehouses business has some - it is not quite backing because there is some capital goods that when it is moving on logistics side heavy equipment, capital goods and whatever, that that is still a laggard in this economy.

But a lot of consumer goods still have to be moved into the warehouse or whatever. That is the full truckload size.

So, anything to do with the consumers here is virtually back to 100%. Anything to do with capital goods, is still not even close to pre-COVID levels.

Anything specific sub sectors like the energy is an industry or the hospitality business or the air travel business is still out in the woodshed getting a beating.

Final question for me. Walter asked in more general terms, in the premium business books are the visibility on the continued strength of that book of business that you have got in hand today?

On [Green Bay] (Ph) pipeline?

That is right.

Right and just you know, to go back to that era, so we get pretty good visibility right through the end of 2021. Because those are big project goals.

And you can’t prove you don’t turn the tap off on a project. So, we get good visibility once the project starts, so that is right through 2021.

Great, thanks. That is all for me, I will turn it over.

Thank you.

Thanks and congrats on the strong quarter. Just first off here, just a follow on to the question on margin improvement.

So, you receive 10 million in waste subsidies, the squirt net-net, if you live in a world with outrage subsidies, how much do you think you could recover on that 10 million and I guess you know -

Yes, let’s just say same store sales say there was no COVID. Right.

Without COVID, then there would be no government response. Correct?

That is what you are asking.

Exactly yes.

I say at least 50%. Because clearly, our revenues would be higher, if you have this, if you had the same economy as you had going in and what we thought we would be virtually spot-on to what we articulated to shareholders in February, early February.

So, I would say at least 50% of that we would have been maybe not quite 100% to 60%. But I will bet you I will bet you pretty close to it.

Because the we just had strong recovery, we saw process improvement, we saw investments in some of the real estate that we have been making some of the technology, et cetera, et cetera. So, maybe not 100% but I will bet you 50% is good rule of thumb is anything.

I guess more what I’m trying to get at is how much further would you have cut costs and without the wage subsidies, so say that revenue, is in this post COVID world.

I don’t think we would have - I don’t think you would have cut costs anywhere to the same extent. Because once you have a good crisis, there is always a response to that.

So I don’t know if we would have been able to cut costs as much, but we would have had more business. And so maybe the margin wouldn’t go off gone up quite as much.

But we would have certainly had way more business. Certainly more than were down.

So we might have been up very nicely on business, you might have the same EBITDA and maybe margin was enough. We responded to COVID with margin improvement on the margin side.

But without COVID, we would have still had higher EBITDA, because our business model was pretty robust. And we saw pretty good visibility with the things that we talked about in our business.

We are just, we were improving in gaining market share, and the economy was doing reasonably well. So I’m not sure, we would have anywhere near the same margin improvement.

But we would have had even gone improvement.

Okay fair enough and then just last one for me, you were pretty aggressive on the normal course did this quarter. I guess, in fact, you finished it.

Just for fairly things. So if you continue repurchasing shares under a new normal course did and how do you balance share buybacks versus M&A?

Especially with regard to your view on valuation?

Well, this is exactly the same as you know, as I said just a few minutes ago to Walter is about what do we expect for capitalism? Why don’t you wait till all that thought until we come out in a couple weeks, I will tell you how we are going to allocate our capital for next year?

We can’t do anything on the normal course issuer. Until next year, the question is, are we going to renew it and to what level?

And I will just be blunt, without telling you the Guatemala is if shareholders want to continue to sell our stock at a steep discount, give it to us.

Okay that is fair. Thanks lot and I will turn it back.

Thank you.

I got a couple questions to ask. Murray, you alluded to tight capacity, I think within warehousing.

Could that lead to some inflationary pressures? And if that does sort of appear?

Are you able to sort of move that push that through?

Yes, I think that is a good observation. There are some bottlenecks.

Clearly, there are some issues in the economy that have led to price disruption and price reductions. But conversely, there has been some big moves as the consumer has shifted, and that is causing some price rises.

And we are seeing bottlenecks and some in that part of the economy and some pricing leverage. We will be able to recover in those areas where the economy is strong through pricing improvements.

And most of that has to do with just the changing consumer. My view is that if that consumer continues to spend as much as that consumer is.

If we have any type of recovery in additional spend, and that capital gets moving or that the money gets moving and that velocity goes. I think we are going to have some inflationary pressures, so we will be able to pass those on, but that is inflationary pressure.

So we are monitoring it very, very carefully. Clearly with getting us margin improvement, we had to, we had to get costs down, but we are able to recover all of our costs with pricing at the moment.

Except in the capital goods movement of the economy, that will be the laggard of it. I suspect you are not, you are going to have some recovery in that end of the economy shortly.

You can only cheat on capital investment for so long before that cycle starts again. So, I’m a little bit concerned about what the inflationary implications might be.

But I know one thing, that is another reason why we want to own our own real estate, because if there is inflation, that is going to show up in lease payments and we own a vast majority of our own real estate. So we are protected from that inflation cycle to a large cent, that lever make us more competitive or will have pricing leverage one of the two.

Okay. I appreciate that color.

Just sort of briefly on the land, just sort of acquisitions. And I might have missed this, I apologize if I have.

The land acquisitions that you are thinking are generally outside. I know acquisitions are outside your capital budget.

But are some of the incremental land acquisitions that you are looking out also outside of your stated capital budget number?

Yes. The reason is, those are long-term assets.

What we will call sustainable replacement CapEx is, basically for rolling stock. But anything to do with land is about positioning for future growth for sure.

Right. They are non-depreciable.

So, I understand, but I just want it to be clear.

No. You are spot on that.

Last thing Murray, you made a comment about margin improvement and you threw in the word technology. Is there something, and of course you talked about, I guess the warehouse purchase.

But is there something on the technology side and of course I am thinking a bit about moving online, but not specifically, that is giving you a couple of basis points or something that is helping you because you did bring that up.

Well, I think, I mean, we live in a digital world. So, everything has been digitized.

You have to, your business model has to have that technology platform to even survive, and that is one of the things we continue to invest very, very strongly in and heavily, and I guess is a better word. So, part of it is moving online and that really helps your logistics non-asset business about just how you handle the transaction in a digital marketplace.

We had to make that investment to protect our company, there is no doubt about it. But when I talk about technology, it is about, there is so many different types of uses of technology, but everything is about how can you work remotely that is investment technology so that we can manage our business effectively.

How can we put technology into our new facilities, right? What we call the smart facility to make sure that everything is bar coded and digitize coming in so that everything moves quickly and efficiently and with no misdirects.

And particularly, if you are going to be in the ecommerce world, it has to be a digital world, you cannot be in ecommerce, if you are not if you are not in the digital space because it moves way too fast. So, you have got to invest in technology as both an enabler as well as a business protector.

So, I think investing in technology is just like investing in. I mean, that is your future and investing in your education of your people and those kind of things sustainable for sure.

Okay. I wanted to cut it off, but maybe I will ask one last question with the increased need of technology and potentially, the wage subsidy which benefited Mullen, but probably would have disproportionately benefited some of the companies that you might be looking at, is there a potential for a I’m going to use tsunami, but maybe I want to use larger wave of acquisitions to come into 2021, or a larger pipeline into 2021?

I don’t know fills a larger pipeline, because the pipeline is full right now. And therefore, that gives me cause for concern way, way too many people want to sell their businesses right now.

It is whenever there is too many, whenever so much happens all at once. It gives me pause for cause my general senses.

I think that the sellers might be a little more realistic next year when they realize that their margins aren’t quite as good. And servers aren’t stupid.

They know what, and there is a reason why they are so hey, maybe they are counting on the buyer being stupid. I can guarantee your I won’t say the other word, but I can guarantee you that we will not be stupid.

But when I get this many starting to think they might think we are stupid with our money just because we got it. So about, I think they will be allowed to go read some great deals next year.

That is exact way.

I will leave it t that and turn the call over. Thank you very much for the color.

Thanks Elias.

Just one question on my end, just want to touch on future contract prices and more spot rates are. Have you started discussions, feelings, renewals, or any color you can provide those conversations would be great?

Well, I think there still is a little bit of uncertainty out there. We have seen in our LTL our rates.

Now we are recovering inflation. So, we have put in some rate increases here due to schedule to go in November.

But basically rate of inflation type of there but for longer term contracts and logistics and warehousing and certainly pricing and they will call it the field services segment. I slipped there, especially as an industrial but for the winter season.

There is no rate increases on our hourly oilfield work. So, it is still pretty uncertain there.

But we are at least recovering inflation in the LTL bill, part of the business which is the main state right now.

I haven’t seen Miguel I haven’t seen enough demand response in Canada. The Canadian marketplace a little different than the U.S.

marketplace. They have had a massive demand response, but they have a much higher propensity of manufacturing and et cetera and capital investment than we have in Canada.

There is still some cautiousness, from what we see on behalf of business and investment. We need to see that for me to say, we are back.

And every piece of information and every report to hear it come out, which say that is still the laggard in the Canadian marketplace. And so I’m hopeful, but I don’t know.

We have to see, that is all confidence driven. And I think there is still a lack of conviction amongst the business community to invest capital significantly on lead life assets in the Canadian marketplace.

Not on the consumer side, the consumers are spending like crazy. But on the capital side, so that is what is going to drive pricing on that part of our business.

The consumer lab, we are being able to keep hold on that side.

Perfect. Thanks for taking my question.

That is all for me.

Thank you.

Okay thanks for joining us today, folks. And as I say, we will come out in early December, probably I think the early date is December 10th.

And we will outline our plan, CapEx everything for 2021. And let’s just all hope that we can handle the second wave and adapt to it and pivot and everyone stays safe and then we will talk to everybody in December and hopefully we have some good news.

So good news on the economic front and good news from a safety perspective, everybody stay safe. We will talk again.

Thank you very much.