Mullen Group Ltd. Reports Second Quarter Financial Results and Increase to Capital Budget

Mullen Group Ltd. Reports Second Quarter Financial Results and Increase to 
Capital Budget 
OKOTOKS, AB, July 24, 2013 /CNW/ - (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, 2013, with comparisons to the 
same period last year. 
For the three month period ended June 30, 2013, Mullen Group generated 
consolidated revenue of $310.3 million and operating income of $56.0 
million. Mullen Group generated net cash from operating activities of 
$75.1 million, which was used, among other things, to acquire net property, 
plant and equipment of $49.0 million, pay dividends of $27.0 million, fund the 
acquisition of Jay's Moving & Storage Ltd. ("Jay's") for $21.2 million, 
consisting of $15.8 million for the shares and $5.4 million of associated 
debt, and pay interest obligations of $9.5 million. 
Mullen Group's consolidated revenue of $310.3 million was a decrease of $9.8 
million, or 3.1 percent, from the $320.1 million generated in 2012. A 
significant portion of this decrease in revenue, specifically $8.0 million, 
was directly attributable to the reduction in revenue from Canadian Dewatering 
L.P. as a result of its completion of the design, build and commissioning of a 
Thin Fine Tailings ("TFT") barge system project for a large oil sands customer 
during the second quarter of 2012. On a comparative basis, after adjusting for 
the non-recurring TFT barge system project revenue, Mullen Group's revenue 
from its core business decreased by only $1.8 million, or 0.6 percent. 
The Oilfield Services segment contributed revenue of $173.6 million, a 
decrease of $14.4 million from 2012, which was primarily due to a $12.0 
million decline in revenue from those Operating Entities directly tied to 
drilling activity, most notably from rig relocation services, and the $8.0 
million decline from the TFT barge system project. These decreases were 
partially offset by an increase in revenue generated from the greater demand 
for services related to large diameter pipeline construction projects and from 
the additional demand for fluid hauling services in the heavy oil resource 
plays. The Trucking/Logistics segment contributed revenue of $137.3 million, 
an increase of $3.6 million over the prior year period, which was primarily 
due to the incremental revenue generated from the acquisition of Jay's. 
Mullen Group's operating income increased by $2.9 million, or 5.5 percent, to 
$56.0 million from the $53.1 million generated in 2012. Operating income in 
the Oilfield Services segment accounted for $2.5 million of the increase, the 
Trucking/Logistics segment accounted for $0.2 million and Corporate costs 
declined by $0.2 million. The Oilfield Services segment generated a $2.5 
million increase in operating income on a year over year basis. However, 
when factoring out the net operating loss of $3.8 million related to the 
completion of the TFT barge system project in the second quarter of 2012, 
operating income from this segment's core business decreased by only $1.3 
million, or 3.8 percent. 
"Overall we are pleased with Mullen Group's operating performance for the 
quarter considering economic fundamentals that are indicative of a no growth 
or, at best, a slow growth economy. In terms of revenue from our core 
business, we were down marginally due to the decrease in demand for our 
services tied to drilling activity that experienced a slow down in western 
Canada, which in part was the result of unfavourable weather conditions. 
Revenue also declined as a result of the completion of the TFT barge system 
project that was completed in the second quarter of last year. However, 
offsetting these two factors was the continued demand for our Premay Pipeline 
Hauling L.P. services, which are directly tied to the build out of new 
pipeline takeaway capacity in Canada, in addition to the increased revenue 
generated by Heavy Crude Hauling L.P. as a result of it being awarded a major 
crude oil and fluid hauling contract in the Lloydminster region. Even more 
satisfying is the 5.5 percent increase in operating income Mullen Group 
recorded in the quarter compared to last year despite a decrease in revenue. 
These operating results speak to the strength and diversity of our business 
model," stated Mr. Stephen H. Lockwood, President and Co-Chief Executive 
Officer. 
"Also of note is the improvement of our earnings per share in the second 
quarter that was positively impacted by gains made in our strategic 
investments," added Mr. Stephen H. Lockwood. 
In the second quarter of 2013, Mullen Group generated net income of $27.4 
million or $0.30 per share, an increase of $20.0 million, or 270.3 percent, 
compared to $7.4 million or $0.09 per share in 2012. The $20.0 million 
increase in net income was mainly attributable to a $23.4 million positive 
variance in the fair value of investments. These increases were somewhat 
offset by the $3.5 million negative variance in foreign exchange and a $2.9 
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 
$20.9 million and adjusted earnings per share of $0.23 for 2013, as compared 
to $18.5 million and $0.23 per share in 2012, respectively. These 
adjustments more clearly reflect earnings from an operating perspective. 
For the six month period ended June 30, 2013, consolidated revenue decreased 
by 6.7 percent to $695.8 million from $746.1 million in the same period last 
year. Operating income decreased to $143.8 million, down 5.5 percent from 
$152.2 million in 2012. Net income increased to $71.8 million, up 8.5 
percent from $66.2 million in 2012. 
Mullen Group is also pleased to announce that the Board of Directors approved 
a $20.0 million increase to the 2013 capital expenditure budget to $100.0 
million. The majority of the increase will be allocated towards the purchase 
of specialized operating equipment for the Oilfield Services segment, most 
notably for Canadian Dewatering L.P. and for those businesses involved in the 
transporting of production related fluids. Not included in the revised 
$100.0 million capital expenditure budget are amounts related to real property 
or facilities. During the quarter, Mullen Group invested an additional $21.0 
million in real property and will continue to invest in real property and 
facilities considered strategic to Mullen Group. 
"This is a very difficult market to read, a real dilemma when trying to 
determine the appropriate level of capital to deploy. Entering 2013 we took 
a very measured approach to capital allocation given the prospects for the 
overall economy as well as the oil and natural gas industry. Today, however, 
we are of the view that the foundation is set for a rebound in oil and natural 
gas activity levels. Crude oil pricing remains strong accompanied by 
significant optimism related to the export of natural gas from western Canada 
through the west coast. Increasing our capital budget by $20.0 million this 
year will ensure our operating entities can meet the expected increase in 
demand for services and ensure our people have access to the very best 
operating equipment," stated Mr. Murray K. Mullen, Chairman and Chief 
Executive Officer. 
A summary of Mullen Group's results for the three and six month periods ended 
June 30, 2013, and 2012, along with revenue and operating results by segment 
are as follows: 


                                  

SUMMARY                                        

(unaudited)         Three month period ended    Six month period ended
($ millions, except          June 30                    June 30
per share amounts)
                     2013  2012      Change      2013  2012     Change
                         $     $            %        $     $          %

Revenue              310.3 320.1        (3.1)    695.8 746.1      (6.7)
                                                                       

Operating income(     56.0  53.1          5.5    143.8 152.2      (5.5)
(1))

Unrealized foreign     8.4   4.9         71.4     13.4   0.3          -
exchange loss

Decrease (increase) (16.3)   7.1        329.6   (20.8)   6.1      441.0
in fair value of
investments

Net income            27.4   7.4        270.3     71.8  66.2        8.5

Net Income -          20.9  18.5         13.0     66.4  72.5      (8.4)
adjusted((2))

Earnings per share(   0.30  0.09        233.3     0.81  0.82      (1.2)
(3))

Earnings per share    0.23  0.23            -     0.75  0.89     (15.7)
-adjusted((2))

Net cash from         75.1  83.4       (10.0)     92.5 137.7     (32.8)
operating
activities

Net cash from         0.83  1.03       (19.4)     1.04  1.70     (38.8)
operating
activities per
share((3))

Cash dividends        0.30  0.25         20.0     0.60  0.50       20.0
declared per Common
Share

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 taxes.
(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 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 an indicator of performance.
                                    

SEGMENTED RESULTS      Three month period   Six month period ended


                         ended                  June 30
(unaudited)                 June 30        
($ millions) 
                    2013  2012 Change    2013  2012      Change 


                           $     $      %       $     $           %

Revenue                                                            
    Oilfield Services  173.6 188.0  (7.7)   431.2 484.6      (11.0)
    Trucking/Logistics 137.3 133.7    2.7   266.4 264.3         0.8
    Corporate            0.2   0.5      -     0.3   0.5           -

Intersegment                                                       
eliminations
    Oilfield Services  (0.2) (0.7)      -   (0.7) (0.9)           -
    Trucking/Logistics (0.6) (1.4)      -   (1.4) (2.4)           -

Total                  310.3 320.1  (3.1)   695.8 746.1       (6.7)

Operating Income                                                   
    Oilfield Services   33.0  30.5    8.2   101.6 107.8       (5.8)
    Trucking/Logistics  24.1  23.9    0.8    44.2  45.9       (3.7)
    Corporate          (1.1) (1.3)      -   (2.0) (1.5)           -

Total                   56.0  53.1    5.5   143.8 152.2       (5.5)

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.







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

SOURCE: Mullen Group Ltd.

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CO: Mullen Group Ltd.
ST: Alberta
NI: TRN ERN 

-0- Jul/24/2013 19:35 GMT


 
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