Mullen Group Ltd. Reports 2012 Financial Results

               Mullen Group Ltd. Reports 2012 Financial Results

PR Newswire

OKOTOKS, AB, Feb. 20, 2013

OKOTOKS, AB,  Feb.  20,  2013  /PRNewswire/ -  (TSX:MTL)  Mullen  Group  Ltd. 
("Mullen Group" and/or the "Corporation") reported its financial and operating
results for the period ended December  31, 2012, with comparisons to the  same 
period last year.

For the twelve month  period ended December 31,  2012, Mullen Group  generated 
record revenue of $1,427.6 million, operating income of $293.8 million and net
cash from operating activities of $279.9  million. Cash was used, among  other 
things, to acquire net  property, plant and equipment  of $103.2 million,  pay 
cash dividends of $82.6 million and fund an acquisition of $5.8 million.

Mullen Group's revenue  of $1,427.6 million  for the year  ended December  31, 
2012, increased by  $40.3 million  or 2.9  percent from  the $1,387.3  million 
generated in 2011. The  year over year increase  in consolidated revenue  was 
largely attributable to the revenue growth experienced in the first and second
quarters of 2012  compared to the  same quarters in  2011, which was  somewhat 
offset by the decrease  in consolidated revenue experienced  in the third  and 
fourth quarters of 2012 compared to same quarters in 2011.

The Oilfield Services segment generated $897.3 million in revenue for the year
ended December 31, 2012, which represents  a marginal 0.7 percent decrease  in 
revenue compared to $903.8 million reported in 2011. The increase in  revenue 
in the first and second quarters of 2012 compared to 2011 resulted mainly from
increased demand in  drilling activity  along with increased  demand for  core 
drilling services. However, the increases in revenue from the first and second
quarters of 2012 were offset by decreases  in revenue in the third and  fourth 
quarters, which generally  came from  a slow  down in  drilling activity,  the 
completion of the  Thin Fine  Tailings ("TFT")  barge system  project and  the 
delay in  pipeline  construction  activity.  The  Trucking/Logistics  segment 
generated $535.6 million  in revenue  for the  year ended  December 31,  2012, 
which represents a  9.5 percent  increase in  revenue compared  to the  $489.3 
million  reported   in   2011.   This   $46.3   million   increase   in   the 
Trucking/Logistics segment's revenue is  mainly attributable to recognizing  a 
full  year  of  Hi-Way  9  revenue,  increased  demand  for  multi-modal   and 
specialized transportation services in western Canada and an increase in  fuel 
surcharge revenue.

Mullen Group generated record operating income  of $293.8 million in 2012,  an 
increase of $5.8million or 2.0percent  over the $288.0million generated  in 
2011. The increase in operating income  was the combined effect of a  marginal 
$6.4 million decrease in  operating income reported  by the Oilfield  Services 
segment which was more than offset  by an $11.0 million increase in  operating 
income reported  by the  Trucking/Logistics  segment and  decreased  corporate 
costs. Operating income as a percentage of revenue for 2012 was 20.6  percent 
compared to 20.8 percent in 2011.

"Mullen Group's record performance in 2012, in terms of revenue generation and
operating income, reinforces  the strength of  our self-managed business  unit 
model which provides Mullen Group  diversity in service offerings in  multiple 
geographical regions.  This is  not to  say  that 2012  was not  without  its 
challenges. The combined  effect of  the completion  of the  TFT barge  system 
project by Canadian Dewatering L.P. in  the second quarter of 2012,  decreased 
drilling activity in the last  half of the year and  the delay in a number  of 
pipeline construction projects did have an unfavourable impact on our  results 
in 2012.  However,  the  demand  for core  hole  delineation  services,  well 
servicing and fluid hauling  along with the  continued demand for  specialized 
and multi-modal transportation  services benefited  a number  of our  business 
units and was  key in  driving our record  performance," said  Mr. Stephen  H. 
Lockwood, President and Co-Chief Executive Officer.

In 2012 Mullen  Group generated  net income of  $130.9 million,  or $1.58  per 
share, an increase  of $11.5  million or 9.6  percent, as  compared to  $119.4 
million or $1.50 per share in 2011. The $11.5 million increase in net  income 
was mainly attributable to  an $11.6 million  positive variance in  unrealized 
foreign exchange  and Mullen  Group's  improved operating  performance,  which 
contributed $5.8 million of additional operating income. These increases were
somewhat offset  by $5.1  million of  higher  income tax  expense and  a  $2.8 
million negative variance in the fair value of investments. Adjusting  Mullen 
Group's net  income  and  earnings  per  share  to  eliminate  the  impact  of 
unrealized foreign  exchange  and the  change  in fair  value  of  investments 
resulted in adjusted net  income of $133.0 million  and adjusted earnings  per 
share of $1.60, as  compared to $125.4  million and $1.57  per share in  2011, 
respectively.  These  adjustments  more  clearly  reflect  earnings  from  an 
operating perspective.

In the  fourth  quarter of  2012  Mullen  Group generated  revenue  of  $346.1 
million, a decrease of $48.0 million  or 12.2 percent from the $394.1  million 
generated for the same period in  2011. The decrease in revenue is  primarily 
due to decreased revenue experienced  in the Oilfield Services segment,  which 
reported a $47.7 million  reduction in revenue in  the fourth quarter of  2012 
compared to the same period in 2011. The decrease in revenue in the  Oilfield 
Services segment generally  reflects the  completion of the  TFT barge  system 
project along  with  a  reduction  in revenue  related  to  tailing  reduction 
operations for a large oil sands customer, reduced drilling activity, and  the 
delay of a  number of large  pipeline construction projects.  Revenue in  the 
Trucking/Logistics segment was generally  flat in the  fourth quarter of  2012 
compared to the same period last year.

Mullen Group  generated  operating income  for  the fourth  quarter  of  $71.2 
million, a decrease of $12.6million or  15.0percent over the same period  in 
2011. Generally  the  decrease in  operating  income came  from  the  reduced 
revenue recorded by the Oilfield Services segment while the Trucking/Logistics
segment reported  a marginal  increase in  operating income  in the  quarter. 
Operating income as a  percentage of revenue was  20.6 percent for the  fourth 
quarter of 2012 compared to 21.3 percent in 2011.

"At the start  of 2012, Mullen  Group expected our  operating results for  the 
year to be consistent with 2011 as we did not see any catalyst for significant
growth.  This,  as  our  results  show,  was  fairly  accurate.  What  I  am 
particularly pleased with, in addition to our record operating results, is the
validation that our  business model  works very well  as is  evidenced in  the 
strength of  Mullen Group's  balance sheet  which includes  $122.8 million  in 
cash. This strength in our  balance sheet is imperative  as we enter what  we 
expect to be somewhat of an  unpredictable 2013. The fact remains that  Mullen 
Group will continue to invest in our business units to ensure they remain best
in class, be  opportunistic when accretive  acquisitions meeting our  economic 
model are presented and very importantly, reward our shareholders,'' said  Mr. 
Murray K. Mullen, Chairman and Chief Executive Officer.

A summary of Mullen  Group's results for the  quarter and year ended  December 
31,2012, along with revenue and operating results by segment are as follows:

                                                                          
SUMMARY                                                                    
(unaudited)             Three month periods ended  Twelve month periods ended
(millions, except per          December 31                December 31
share amounts)             2012    2011    Change       2012     2011  Change
                             $       $         %          $        $       %
Revenue                   346.1   394.1    (12.2)    1,427.6  1,387.3     2.9
                                                                      
Operating income^(1)       71.2    83.8    (15.0)      293.8    288.0     2.0
Unrealized foreign                                
exchange (gain) loss        2.7   (7.3)   (137.0)       (5.2)      6.4   181.3
Change in fair value of                           
investments                 6.0       —   (100.0)         6.7      3.9  (71.8)
Net income                 21.8    47.5    (54.1)      130.9    119.4     9.6
Net Income -                                      
adjusted^(2)               29.7    38.8    (23.5)       133.0    125.4     6.1
Earnings per share^(3)     0.25    0.59    (57.6)       1.58     1.50     5.3
Earnings per share -                              
adjusted^(2)               0.34    0.48    (29.2)        1.60     1.57     1.9
Net cash from operating                           
activities                 67.7    71.6     (5.5)       279.9    221.4    26.4
Net cash from operating                           
activities per
share^(3)                  0.77    0.89    (13.5)        3.37     2.77    21.7
Cash dividends declared                           
per Common Share           0.25    0.25         —        1.00     1.00       —

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.
  (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.
  (3) Earnings per share and net cash from operating activities per
        share are calculated based on the weighted
        average number of Common Shares outstanding for the period.

    Operating income, net income - adjusted and earnings per share - adjusted
    are not recognized terms under IFRS
    and do not have standardized meanings prescribed by IFRS. 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.

                                                                          
SEGMENTED RESULTS                                                          
                           Three month periods
                                  ended            Twelve month periods ended
(unaudited)                    December 31                December 31
(millions)                  2012    2011   Change       2012     2011  Change
                              $       $        %          $        $       %
Revenue                                                                
   Oilfield Services      209.8   257.5   (18.5)      897.3    903.8   (0.7)
   Trucking/Logistics     137.6   137.5      0.1      535.6    489.3     9.5
   Corporate              (0.1)       —        —        0.7      0.1       —
Intersegment                                                                
eliminations                                                     
   Oilfield Services      (0.4)   (0.2)        —      (1.9)    (0.7)       —
   Trucking/Logistics     (0.8)   (0.7)        —      (4.1)    (5.2)       —
Total                      346.1   394.1   (12.2)    1,427.6  1,387.3     2.9
Operating Income                                                       
   Oilfield Services       45.9    59.5   (22.9)      200.1    206.5   (3.1)
   Trucking/Logistics      26.3    25.8      1.9       98.4     87.4    12.6
   Corporate              (1.0)   (1.5)        —      (4.7)    (5.9)       —
Total                       71.2    83.8   (15.0)      293.8    288.0     2.0



                                                              
CONSOLIDATED STATEMENT OF FINANCIAL POSITION                   
                                                  December 31
(thousands)                                         2012      2011
                                                     $         $
Assets                                                         
Current assets:                                                
  Cash and cash equivalents                    122,772    65,934
  Trade and other receivables                  219,423   262,587
  Inventory                                     32,097    38,826
  Prepaid expenses                              10,663    10,498
  Current tax receivable                         2,083       916
                                               387,038   378,761
Non-current assets:                                            
Property, plant and equipment                   843,318   798,362
Goodwill                                        239,595   241,513
Intangible assets                                52,985    69,297
Investments                                      27,612    34,319
Deferred tax assets                               5,029     4,583
Other assets                                        327       302
                                             1,168,866 1,148,376
Total Assets                                  1,555,904 1,527,137
                                                              
Liabilities and Equity                                         
Current liabilities:                                           
  Accounts payable and accrued liabilities     104,810   125,002
  Dividends payable                             21,917    20,209
  Current tax payable                           20,902    12,724
  Current portion of long-term debt              1,471     4,974
                                               149,100   162,909
Non-current liabilities:                                       
Long-term debt                                  392,814   399,232
Convertible debentures - debt component          39,773   103,276
Deferred tax liabilities                        147,092   157,421
                                               579,679   659,929
Equity:                                                        
  Share capital                                720,836   641,918
  Convertible debentures - equity component      1,843     4,826
  Contributed surplus                           12,125    11,844
  Retained earnings                             92,321    45,711
                                               827,125   704,299
                                                              
Total Liabilities and Equity                  1,555,904 1,527,137




CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND RETAINED EARNINGS
                      Three month periods ended  Twelve month periods ended
                              December 31                 December 31
(thousands, except per           2012       2011           2012         2011
share amounts)
                                   $          $              $            $
                             (unaudited)                                 
Revenue                       346,166    394,069      1,427,640    1,387,293
                                                                       
Direct operating              238,648    270,257        983,535      951,825
expenses
Selling and                    36,332     40,009        150,298      147,493
administrative
expenses
                              71,186     83,803        293,807      287,975
                                                                       
Depreciation on                18,026     16,574         65,335       61,803
property, plant and
equipment
Amortization on                 4,610      4,714         18,334       19,015
intangible assets
Finance costs                   7,084      8,877         32,897       36,279
Unrealized foreign              2,749    (7,332)        (5,194)        6,345
exchange (gain) loss
Other (income) expense          7,993      1,089          6,668        5,335
Income before income           30,724     59,881        175,767      159,198
taxes
                                                                       
Income tax expense              8,954     12,388         44,858       39,765
                                                                       
Net income and total           21,770     47,493        130,909      119,433
comprehensive income
                                                                       
Retained earnings              92,468     18,427         45,711    (538,917)
(deficit), beginning
of period
Dividends declared to        (21,917)   (20,209)       (84,299)     (80,255)
common shareholders
Reduction of stated                 —          —              —      545,450
capital
Retained earnings, end         92,321     45,711         92,321       45,711
of period
                                                                       
Earnings per share:                                                     
Basic                        0.25       0.59           1.58         1.50
Diluted                      0.25       0.54           1.52         1.43
Weighted average                                                        
number of Common
Shares outstanding:
Basic                      87,384     80,835         82,961       79,885
Diluted                    87,901     91,171         91,785       90,258


CONSOLIDATED STATEMENT OF CASH FLOWS
                           Three month periods ended   Twelve month periods
                                   December 31                   ended
                                                              December 31
(thousands)                         2012          2011        2012       2011
                                      $             $           $          $
                          (unaudited)                     
Cash provided by (used                                                   
in):
Cash flows from operating                                                
activities:
 Net income                      21,770        47,493     130,909    119,433
 Adjustments for:                                                       
   Depreciation on              18,026        16,574      65,335     61,803
     property, plant and
     equipment
   Amortization on               4,610         4,714      18,334     19,015
     intangible assets
   Finance costs                 7,084         8,877      32,897     36,279
   Stock-based                     390           616       2,768      2,464
     compensation expense
   Foreign exchange              2,615       (7,198)     (4,913)      5,983
   Change in fair value          6,049             9       6,707      3,933
     of investments
   Loss (gain) on sale             944         1,080     (1,039)      1,402
     of property, plant
     and equipment
   Income tax expense            8,954        12,388      44,858     39,765
   Impairment of                 3,000             —       3,000          —
     goodwill
   Gain on contingent          (2,000)             —     (2,000)          —
     consideration
                                 71,442        84,553     296,856    290,077
Changes in non-cash                                                      
working capital items from
operating
activities:
 Trade and other                 10,794       (8,321)      45,097   (43,684)
  receivables
 Inventory                           78       (4,582)       6,915   (13,236)
 Prepaid expenses                 1,410           612        (81)    (1,273)
 Accounts payable and           (7,716)         3,927    (19,329)     16,215
  accrued liabilities
Cash generated from               76,008        76,189     329,458    248,099
operating activities
Income tax paid                  (8,401)       (4,629)    (49,604)   (26,689)
Net cash from operating           67,607        71,560     279,854    221,410
activities
                                                                        
Cash flows from financing                                                
activities:
 Cash dividends paid to        (21,836)      (20,207)    (82,591)   (69,886)
  common shareholders
 Interest paid                 (10,050)      (11,631)    (31,538)   (35,488)
 Repayment of long-term         (2,510)       (1,146)     (7,753)   (22,688)
  debt and loans
 Net proceeds from Common         5,451           106       7,054      2,141
  Share issuances
 Changes in non-cash                 33          (93)        (28)         34
  working capital items
  from financing
  activities
Net cash used in financing      (28,912)      (32,971)   (114,856)  (125,887)
activities
Cash flows from investing                                                
activities:
 Acquisitions                         —           221     (5,781)   (72,100)
 Purchase of property,         (23,924)      (17,449)   (122,750)   (87,101)
  plant and equipment
 Proceeds on sale of              6,591         5,490      19,508     13,538
  property, plant and
  equipment
 Purchase of investments              —         (546)           —      (546)
 Interest received                  316           119         931        740
 Other assets                         2            10        (25)      1,466
 Changes in non-cash            (1,521)           779         238        739
  working capital items
  from investment
  activities
Net cash used in investing      (18,536)      (11,376)   (107,879)  (143,264)
activities
Change in cash and cash           20,159        27,213      57,119   (47,741)
equivalents
Cash and cash equivalents,       102,479        38,855      65,934    113,313
beginning of period
Effect of exchange rate              134         (134)       (281)        362
fluctuations on cash held
Cash and cash equivalents,       122,772        65,934     122,772     65,934
end of period
                                                                




This news release may contain  forward-looking statements that are subject  to 
risk factors associated with the oil and natural gas business 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.

Contact:

Mr. Murray K. Mullen - Chairman of the Board and Chief Executive Officer
Mr. Stephen H. Lockwood - Co-Chief Executive Officer and President
Mr. P. Stephen Clark - Chief Financial Officer

121A - 31 Southridge Drive
Okotoks, Alberta, Canada T1S 2N3
Telephone: 403-995-5200
Fax: 403-995-5296
 
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