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Mullen Group Ltd. Reports 2013 Financial Results

               Mullen Group Ltd. Reports 2013 Financial Results

PR Newswire

OKOTOKS, AB, Feb. 12, 2014

OKOTOKS, AB,  Feb.  12,  2014  /PRNewswire/ -  (TSX:MTL)  Mullen  Group  Ltd. 
("Mullen Group"  and/or the  "Corporation") reported  financial and  operating 
results for the quarter and year ended December 31, 2013, with comparisons  to 
the same periods last year.

For the three  month period ended  December 31, 2013,  Mullen Group  generated 
revenue of $367.4  million, an  increase of $21.3  million or  6.2 percent  as 
compared to $346.1 million in 2012. The majority of this increase in  revenue 
was directly attributable  to the  Oilfield Services segment.  Revenue in  the 
Oilfield Services  segment increased  by  $16.3 million,  or 7.8  percent,  to 
$226.1 million  as compared  to $209.8  million in  the same  period one  year 
earlier primarily due to an increase  in revenue generated by those  Operating 
Entities  providing   services  associated   with  large   diameter   pipeline 
construction projects as well as increased revenue generated by fluid  hauling 
services  tied  to  heavy  oil.  Revenue  in  the  Trucking/Logistics  segment 
increased by $4.3 million,  or 3.1percent, to $141.9  million as compared  to 
$137.6 million in the same period one  year earlier. This increase was due  to 
incremental revenue resulting from the  acquisition of Jay's Moving &  Storage 
Ltd. ("Jay's"), as well as a $0.9million increase in fuel surcharge  revenue. 
These increases were offset by decreased demand for over-dimensional and heavy
haul freight services related to the oil  sands and mining sectors as well  as 
decreased demand  associated with  inclement  weather and  the timing  of  the 
mid-week holidays in the month of December.

Operating income for the fourth quarter was $71.1 million, a decrease of  $0.1 
million or 0.1percent  over the  same period in  2012. The  decrease of  $0.1 
million was primarily due to the Trucking/Logistics segment that experienced a
$4.4 million decrease, as well as an increase in Corporate costs that rose  by 
$0.3 million on a year over year basis. This decrease was mostly offset by the
Oilfield  Services  segment  that  experienced  a  $4.6  million  increase  in 
operating income. Heavy  snowfall events  and colder-than-normal  temperatures 
during the quarter negatively affected  productivity across nearly all of  the 
Operating Entities. As a percentage of consolidated revenue, operating  income 
decreased to 19.3 percent as compared to 20.6 percent in 2012.

For the three month period ended December 31, 2013, Mullen Group generated net
income of $20.3 million or $0.22 per share, a decrease of $1.5 million, or 6.9
percent, compared  to $21.8  million or  $0.25 per  share in  2012. The  $1.5 
million decrease  in net  income was  mainly attributable  to a  $5.2  million 
negative variance in unrealized foreign exchange that was partially offset  by 
a $1.8 million positive 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  $31.5 million and  adjusted earnings  per 
share of $0.35 for 2013  as compared to $29.7 million  and $0.34 per share  in 
2012, respectively. These adjustments more  clearly reflect earnings from  an 
operating perspective.

"Our operating  performance  in the  fourth  quarter was  somewhat  below  our 
expectations due to a couple of  factors. First, the positive trends that  we 
saw at the start  of the quarter were  negatively impacted by weather  related 
issues. Western Canada experienced  some extreme snowfall  and a severe  cold 
snap in December,  which adversely affected  our Operating Entities.  Second, 
the timing of the  mid-week holidays in  the month of  December resulted in  a 
substantial slow down during the last 15-days of the month. Profitability was
negatively impacted to an even greater extent due to a combination of  reduced 
productivity levels and higher operating expenses notably wages, fuel, repairs
and maintenance.  Despite  these  external factors,  Mullen  Group  increased 
revenue for the  quarter, however, operating  costs were significantly  higher 
than normal," said Mr. Stephen  H. Lockwood, President and Co-Chief  Executive 
Officer.

For the  year ended  December  31, 2013,  Mullen  Group generated  revenue  of 
$1,437.2 million, an increase  of $9.6million or 0.7  percent as compared  to 
$1,427.6 million  in  2012. This  was  the  highest level  of  annual  revenue 
recorded by Mullen Group. The 2013  results include $23.7 million of  revenue 
from the Jay's acquisition, which was acquired on May 31, 2013. Revenue,  when 
adjusted for  the completion  of the  non-recurring Thin  Fine Tailings  barge 
system project in the second quarter of 2012 by Canadian Dewatering L.P.  (the 
"Non-Core Project"), increased by $39.4 million, or 2.8 percent as compared to
last year.

Revenue in the Oilfield  Services segment decreased by  $11.0 million, or  1.2 
percent, to  $886.3  million as  compared  to  $897.3 million  in  2012.  This 
decrease was primarily due  to the $29.8 million  reduction from the  Non-Core 
Project that was  somewhat offset  by greater demand  for services  associated 
with pipeline activity and by fluid hauling  services tied to heavy oil. On  a 
comparative basis, after adjusting for the Non-Core Project, revenue from this
segment's core business increased by $18.8  million, or 2.2 percent, from  the 
same period  one  year  earlier. Revenue  in  the  Trucking/Logistics  segment 
increased by $18.3 million, or 3.4  percent, to $553.9 million as compared  to 
$535.6 million in 2012. This increase  was largely due to incremental  revenue 
resulting from the acquisition  of Jay's, increased  demand at most  Operating 
Entities within this segment and a modest increase in fuel surcharge  revenue. 
These increases were offset by decreased demand for over-dimensional and heavy
haul freight services related to movement  of equipment for the oil sands  and 
mining sectors.

In 2013,  Mullen  Group  generated  operating income  of  $300.7  million,  an 
increase of $6.9 million or 2.3  percent over the $293.8 million generated  in 
2012. This was  the highest level  recorded by Mullen  Group. The increase  of 
$6.9 million was primarily  due to a $12.2  million increase generated by  the 
Oilfield Services segment being somewhat offset by a $5.6 million decrease  in 
the Trucking/Logistics segment. As a  percentage of revenue, operating  income 
increased to  20.9 percent  as compared  to  20.6 percent  in 2012.  This  0.3 
percent increase in operating margin  was directly attributable to the  higher 
margins achieved on  large diameter  pipeline projects  and other  specialized 
services, as well  as the completion  of the  Non-Core Project in  2012. On  a 
comparative basis, after  adjusting for  revenue and expenses  related to  the 
Non-Core Project, consolidated operating margin in 2012 was 21.1 percent.

In 2013, Mullen  Group generated net  income of $143.3  million, or $1.60  per 
share, an increase  of $12.4  million or 9.5  percent, as  compared to  $130.9 
million or $1.58 per share in 2012. The $12.4 million increase in net  income 
was mainly attributable to a $27.6 million positive variance in the fair value
of investments  and  a  $6.9  million  increase  in  operating  income.  These 
increases were  somewhat  offset  by  a $21.4  million  negative  variance  in 
unrealized foreign exchange. 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  $141.0 
million and  adjusted earnings  per  share of  $1.57,  as compared  to  $133.0 
million and $1.60 per share in 2012, respectively.

"I am pleased with our  operating performance in 2013.  This is all the  more 
satisfying in light of  the challenges we  faced in 2013  of which there  were 
many, including, slow economic growth, flat drilling activity  year-over-year, 
a very competitive  operating environment, adverse  weather conditions and  an 
extremely challenging December. Notwithstanding these challenges, we achieved
record results, which speaks to the strength of our business model," said  Mr. 
Murray K. Mullen, Chairman and Chief Executive Officer.

"For 2014 I am optimistic that the market conditions will provide Mullen Group
the opportunity  to  produce another  year  of record  results,  although  the 
improvements will be  modest due to  the competitiveness of  the market.  The 
outlook for GDP growth in North America is expected to be positive but at 2  - 
3 percent that suggests our  Trucking/Logistics segment will be challenged  to 
grow. In our Oilfield  Services segment the  opportunities are brighter  with 
overall spending  by  the oil  and  natural  gas industry  in  western  Canada 
projected to  increase  by 8  -  10 percent  in  2014. This  increased  spend 
accompanied by the $100 million in new capital we will invest in our Operating
Entities should translate into growth. I  believe the foundation is in  place 
for Mullen Group to have another record year," said Mr. Mullen.

A summary of Mullen  Group's results for the  quarter and year ended  December 
31,2013, 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)             2013    2012    Change      2013     2012   Change
                             $       $         %         $        $        %
Revenue                   367.4   346.1       6.2   1,437.2  1,427.6      0.7
                                                                      
Operating income^(1)       71.1    71.2     (0.1)     300.7    293.8      2.3
Unrealized foreign                                
exchange loss (gain)        7.9     2.7   (192.6)       16.2    (5.2)  (411.5)
Decrease (increase) in                            
fair value of
investments                 4.2     6.0      30.0     (20.9)      6.7    411.9
Net income                 20.3    21.8     (6.9)     143.3    130.9      9.5
Net Income -                                      
adjusted^(2)               31.5    29.7       6.1      141.0    133.0      6.0
Earnings per share^(3)     0.22    0.25    (12.0)      1.60     1.58      1.3
Earnings per share -                              
adjusted^(2)               0.35    0.34       2.9       1.57     1.60    (1.9)
Net cash from operating                           
activities                 67.6    67.7     (0.1)      214.4    279.9   (23.4)
Net cash from operating                           
activities per
share^(3)                  0.75    0.77     (2.6)       2.39     3.37   (29.1)
Cash dividends declared                           
per Common Share           0.30    0.25      20.0       1.20     1.00     20.0

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)               2013       2012   Change       2013     2012  Change
                              $       $        %          $        $       %
Revenue                                                                
   Oilfield Services      226.1   209.8      7.8      886.3    897.3   (1.2)
   Trucking/Logistics     141.9   137.6      3.1      553.9    535.6     3.4
   Corporate                0.4   (0.1)        -        1.0      0.7       -
Intersegment                                                           
eliminations
   Oilfield Services      (0.1)   (0.4)        -      (1.0)    (1.9)       -
   Trucking/Logistics     (0.9)   (0.8)        -      (3.0)    (4.1)       -
Total                      367.4   346.1      6.2    1,437.2  1,427.6     0.7
Operating Income                                                       
   Oilfield Services       50.5    45.9     10.0      212.3    200.1     6.1
   Trucking/Logistics      21.9    26.3   (16.7)       92.8     98.4   (5.7)
   Corporate              (1.3)   (1.0)        -      (4.4)    (4.7)       -
Total                       71.1    71.2    (0.1)      300.7    293.8     2.3

                                                               
CONSOLIDATED STATEMENT OF FINANCIAL POSITION                    
                                                   December 31
(thousands)                                         2013       2012
                                                     $          $
Assets                                                          
Current assets:                                                 
  Cash and cash equivalents                     58,236    122,772
  Trade and other receivables                  234,485    219,423
  Inventory                                     34,143     32,097
  Prepaid expenses                              10,946     10,663
  Current tax receivable                         6,318      2,083
                                               344,128    387,038
Non-current assets:                                             
Property, plant and equipment                   903,256    843,318
Goodwill                                        244,440    239,595
Intangible assets                                41,742     52,985
Investments                                      49,463     27,612
Deferred tax assets                               3,015      5,029
Other assets                                      1,565        327
                                             1,243,481  1,168,866
Total Assets                                  1,587,609  1,555,904
                                                              
Liabilities and Equity                                          
Current liabilities:                                            
  Accounts payable and accrued liabilities     108,963    104,810
  Dividends payable                              9,066     21,917
  Current tax payable                            4,993     20,902
  Current portion of long-term debt                277      1,471
                                               123,299    149,100
Non-current liabilities:                                        
Long-term debt                                  409,209    392,814
Convertible debentures - debt component          16,070     39,773
Deferred tax liabilities                        138,919    147,092
                                               564,198    579,679
Equity:                                                         
  Share capital                                760,310    720,836
  Convertible debentures - equity component        738      1,843
  Contributed surplus                           11,327     12,125
  Retained earnings                            127,737     92,321
                                               900,112    827,125
                                                               
Total Liabilities and Equity                  1,587,609  1,555,904

                                                               
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND RETAINED EARNINGS
                                  Three month periods  Twelve month periods
                                          ended                  ended
                                       December 31            December 31
(thousands, except per share            2013      2012        2013       2012
amounts)
                                          $         $           $          $
                                      (unaudited)                         
Revenue                              367,388   346,166   1,437,166  1,427,640
                                                                        
Direct operating expenses            257,494   238,648     983,382    983,535
Selling and administrative            38,847    36,332     153,101    150,298
expenses
                                     71,047    71,186     300,683    293,807
                                                                        
Depreciation on property, plant       18,498    18,026      69,499     65,335
and equipment
Amortization on intangible assets      3,873     4,610      16,743     18,334
Finance costs                          6,591     7,084      26,305     32,897
Unrealized foreign exchange loss       7,825     2,749      16,144    (5,194)
(gain)
Other (income) expense                 4,351     7,993    (20,710)      6,668
Income before income taxes            29,909    30,724     192,702    175,767
                                                                        
Income tax expense                     9,558     8,954      49,407     44,858
                                                                        
Net income and total comprehensive    20,351    21,770     143,295    130,909
income
                                                                        
Retained earnings, beginning of      134,568    92,468      92,321     45,711
period
Dividends declared to common        (27,182)  (21,917)   (107,879)   (84,299)
shareholders
Retained earnings, end of period     127,737    92,321     127,737     92,321
                                                                        
Earnings per share:                                                      
          Basic                        0.22      0.25        1.60       1.58
          Diluted                      0.22      0.25        1.57       1.52
Weighted average number of Common                                        
Shares outstanding:
          Basic                      90,559    87,384      89,764     82,961
          Diluted                    92,695    87,901      92,502     91,785

                                                              
CONSOLIDATED STATEMENT OF CASH FLOWS
                                 Three month periods  Twelve month periods
                                         ended                  ended
                                      December 31            December 31
(thousands)                            2013      2012        2013       2012
                                         $         $           $          $
                                     (unaudited)                         
Cash provided by (used in):                                             
Cash flows from operating                                               
activities:
Net income                           20,351    21,770     143,295    130,909
Adjustments for:                                                        
 Depreciation on property, plant    18,498    18,026      69,499     65,335
  and equipment
 Amortization on intangible          3,873     4,610      16,743     18,334
  assets
 Finance costs                       6,591     7,084      26,305     32,897
 Stock-based compensation              836       390       2,588      2,768
  expense
 Foreign exchange                    7,380     2,615      15,294    (4,913)
 Change in fair value of             4,206     6,049    (20,935)      6,707
  investments
 Loss (gain) on sale of                173       944       1,118    (1,039)
  property, plant and equipment
 Income tax expense                  9,558     8,954      49,407     44,858
 Earnings from equity investment      (28)         -       (893)          -
 Impairment of goodwill                  -     3,000           -      3,000
 Gain on contingent                      -   (2,000)           -    (2,000)
  consideration
                                    71,438    71,442     302,421    296,856
Changes in non-cash working                                             
capital items from operating
activities:
 Trade and other receivables        13,304    10,794    (10,413)     45,097
 Inventory                         (1,166)        78     (1,776)      6,915
 Prepaid expenses                    1,711     1,410        (10)       (81)
 Accounts payable and accrued      (3,659)   (7,716)       2,466   (19,329)
  liabilities
Cash generated from operating        81,628    76,008     292,688    329,458
activities
Income tax paid                    (13,987)   (8,401)    (78,287)   (49,604)
Net cash from operating              67,641    67,607     214,401    279,854
activities
                                                                       
Cash flows from financing                                               
activities:
 Cash dividends paid to common    (27,158)  (21,836)   (120,730)   (82,591)
  shareholders
 Interest paid                     (9,476)  (10,050)    (26,210)   (31,538)
 Proceeds of long-term debt            311         -         311          -
 Repayment of long-term debt and     (238)   (2,510)     (7,423)    (7,753)
  loans
 Net proceeds from Common Share      3,367     5,451      10,407      7,054
  issuances
 Changes in non-cash working             8        33          86       (28)
  capital items from financing
  activities
Net cash used in financing         (33,186)  (28,912)   (143,559)  (114,856)
activities
Cash flows from investing                                               
activities:
 Acquisitions                            -         -    (15,665)    (5,781)
 Purchase of property, plant and  (32,208)  (23,924)   (133,686)  (122,750)
  equipment
 Proceeds on sale of property,       5,560     6,591      14,315     19,508
  plant and equipment
 Purchase of investments                 -         -        (23)          -
 Interest received                     167       316         839        931
 Other assets                            3         2     (1,238)       (25)
 Changes in non-cash working         (330)   (1,521)       (770)        238
  capital items from investment
  activities
Net cash used in investing         (26,808)  (18,536)   (136,228)  (107,879)
activities
Change in cash and cash               7,647    20,159    (65,386)     57,119
equivalents
Cash and cash equivalents,           50,144   102,479     122,772     65,934
beginning of period
Effect of exchange rate                 445       134         850      (281)
fluctuations on cash held
Cash and cash equivalents, end of    58,236   122,772      58,236    122,772
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. Mullen Group provides a wide range of specialized  transportation 
and related services to the oil and natural gas industry in western Canada and
is 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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