Mullen Group Ltd. Reports Second Quarter Financial Results
OKOTOKS, AB, July 25, 2012 /PRNewswire/ - (TSX:MTL) Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") is pleased to report its financial and operating results for the period ended June 30, 2012, with comparisons to the same period last year.
For the three month period ended June 30, 2012, Mullen Group generated record financial results in terms of consolidated revenue of $320.1 million and operating income of $53.1 million. Mullen Group generated net cash from operating activities of $83.4 million, which was used, among other things, to acquire net property, plant and equipment of $37.2 million, pay dividends of $20.3 million and pay interest obligations of $11.4 million.
Mullen Group's consolidated revenue of $320.1 million was an increase of $29.3 million, or 10.1 percent, from the $290.8 million generated in 2011. The increase in consolidated revenue was attributable to greater revenue generated by both the Oilfield Services segment and the Trucking/Logistics segment.
The Oilfield Services segment contributed revenue of $188.0 million, an increase of $13.0 million from 2011 despite a $7.7 million decline in revenue associated with the Thin Fine Tailings ("TFT") barge system project. The majority of the increase in revenue was experienced in those operating entities involved in fluid hauling and related production services, which benefited from improved weather conditions in southeastern Saskatchewan compared to the second quarter of last year, strong heavy oil production and continued crude oil drilling. Revenue also increased due to project specific rig relocation services. The Trucking/Logistics segment contributed revenue of $133.7 million, which was an increase of $15.6 million over the prior year period. This increase was due to the incremental revenue generated by the Hi-Way 9 Group, continued strong demand for transportation services in western Canada and higher fuel surcharge revenue.
Mullen Group's operating income of $53.1 million increased by $4.4 million or 9.0 percent from the $48.7 million generated in 2011. Operating income in the Oilfield Services segment accounted for $0.3 million of the increase, the Truckling/Logistics segment accounted for $3.6 million and Corporate costs declined by $0.5 million. Activity was relatively strong throughout the Oilfield Services segment, however, it only generated a $0.3 million increase in operating income on a year over year basis. This was due to the segment absorbing a net operating loss of $3.8 million related to the completion of the TFT barge system project in the quarter. Additional costs were incurred on the TFT barge system project to meet the significant increase in size, scale and scope of the project and, upon completion of the project, a portion of these additional costs were not accepted by the customer.
"Overall, we are pleased with Mullen Group's performance for the three month period ended June 30. The overall economy in North America remained relatively stable while activity tied to energy and natural resource development in western Canada continued to grow, albeit modestly, which benefited a number of our business units. During the quarter, Canadian Dewatering L.P. completed the TFT barge system project. While we are disappointed that we were unsuccessful in recouping a portion of the costs associated with the project, which more than doubled in terms of size and scale, Canadian Dewatering L.P. profitably delivered the TFT barge in line with the customer's engineering specifications, timeframes and without any HSE incidents," stated Mr. Stephen H. Lockwood, President and Co-Chief Executive Officer.
In the second quarter of 2012, Mullen Group generated net income of $7.4 million or $0.09 per share, a decrease of $4.9 million, or 39.8 percent, compared to $12.3 million or $0.15 per share in 2011. The $4.9 million decrease in net income was mainly attributable to a $6.1 million negative variance in unrealized foreign exchange and a $3.1 million negative variance in the fair value of investments. These decreases were somewhat offset by the $4.4 million increase in operating income. Adjusting Mullen Group's net income and earnings per share to eliminate the impact of unrealized foreign exchange and change in the fair value of investments results in adjusted net income of $18.5 million and adjusted earnings per share of $0.23 for 2012 as compared to $15.0 million and $0.19 per share in 2011, respectively. These adjustments more clearly reflect earnings from an operating perspective.
For the six month period ended June 30 2012, consolidated revenue increased by 17.8 percent to $746.1 million from $633.5 million in the same period last year. Operating income increased to $152.2 million, up 23.6 percent from $123.1 million in 2011. Net income increased to $66.2 million, up 9.2 percent from $60.6 million in 2011.
A summary of Mullen Group's results for the three and six month periods ended June 30, 2012, and 2011, along with revenue and operating results by segment are as follows:
| SUMMARY | |||||||||||
| (unaudited) | Three month periods ended June 30 |
Six month periods ended June 30 |
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| ($ millions, except per share amounts) | 2012 | 2011 | Change | 2012 | 2011 | Change | |||||
| $ | $ | % | $ | $ | % | ||||||
| Revenue | 320.1 | 290.8 | 10.1 | 746.1 | 633.5 | 17.8 | |||||
| Operating income(1) | 53.1 | 48.7 | 9.0 | 152.2 | 123.1 | 23.6 | |||||
| Net income | 7.4 | 12.3 | (39.8) | 66.2 | 60.6 | 9.2 | |||||
| Net Income - adjusted(2) | 18.5 | 15.0 | 23.3 | 72.5 | 49.0 | 48.0 | |||||
| Earnings per share(3) | 0.09 | 0.15 | (40.0) | 0.82 | 0.76 | 7.9 | |||||
| Earnings per share - adjusted(2) | 0.23 | 0.19 | 21.1 | 0.89 | 0.62 | 43.5 | |||||
| Net cash from operations | 83.4 | 49.0 | 70.2 | 137.7 | 99.1 | 39.0 | |||||
| Net cash from operations per share(3) | 1.03 | 0.62 | 66.1 | 1.70 | 1.25 | 36.0 | |||||
| Cash dividends declared per Common Share | 0.25 | 0.25 | - | 0.50 | 0.50 | - | |||||
| Notes: | |||||||||||
| (1) | Operating income is defined as net income before depreciation on property, plant and equipment, amortization on intangible assets, finance costs, unrealized foreign exchange gains and losses, other (income) expense and income tax expense. |
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| (2) | Net income - adjusted and earnings per share - adjusted are calculated by adjusting net income and basic earnings per share by the amount of any unrealized foreign exchange gains and losses and by the change in fair value of investments. |
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| (3) | Earnings per share and net cash from operating activities per share are calculated based on the basic weighted average number of Common Shares outstanding for the period. |
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| Operating income, net income - adjusted and earnings per share - adjusted are not recognized terms under Canadian GAAP and do not have standardized meanings prescribed by Canadian GAAP. Management believes these measures are useful supplemental measures. Investors should be cautioned that these indicators should not replace net income and earnings per share as indicators of performance. |
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| SEGMENTED RESULTS | ||||||||
| (unaudited) | Three month periods ended June 30 |
Six month periods ended June 30 |
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| ($ millions, except per share amounts) | 2012 | 2011 | Change | 2012 | 2011 | Change | ||
| $ | $ | % | $ | $ | % | |||
| Revenue | ||||||||
| Oilfield Services | 188.0 | 175.0 | 7.4 | 484.6 | 415.1 | 16.7 | ||
| Trucking/Logistics | 133.7 | 118.1 | 13.2 | 264.3 | 222.1 | 19.0 | ||
| Corporate | 0.5 | (0.1) | - | 0.5 | - | - | ||
| Intersegment eliminations | ||||||||
| Oilfield Services | (0.7) | (0.2) | - | (0.9) | (0.4) | - | ||
| Trucking/Logistics | (1.4) | (2.0) | - | (2.4) | (3.3) | - | ||
| Total | 320.1 | 290.8 | 10.1 | 746.1 | 633.5 | 17.8 | ||
| Operating Income | ||||||||
| Oilfield Services | 30.5 | 30.2 | 1.0 | 107.8 | 90.0 | 19.8 | ||
| Trucking/Logistics | 23.9 | 20.3 | 17.7 | 45.9 | 36.1 | 27.1 | ||
| Corporate | (1.3) | (1.8) | - | (1.5) | (3.0) | - | ||
| Total | 53.1 | 48.7 | 9.0 | 152.2 | 123.1 | 23.6 | ||
This news release may contain forward-looking statements that are subject to risk factors associated with the oil and natural gas industry and the overall economy. Mullen Group believes that the expectations reflected in this news release are reasonable, but results may be affected by a variety of variables. Mullen Group relies on litigation protection for "forward-looking" statements.
Mullen Group is a company that owns a network of independently operated businesses. Today the Mullen Group is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in western Canada and as one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen Group has strong business relationships and industry leadership. Mullen Group provides management and financial expertise, technology and systems support to its independent businesses.
Mullen Group is a publicly traded corporation listed on the Toronto Stock Exchange under the symbol "MTL". Additional information is available on our website at www.mullen-group.com or on SEDAR at www.sedar.com.
SOURCE Mullen Group Ltd.
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