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