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Press release from CNW Group

Mullen Group Ltd. Record Second Quarter Financial Results

Tuesday, July 26, 2011

Mullen Group Ltd. Record Second Quarter Financial Results12:22 EDT Tuesday, July 26, 2011OKOTOKS, AB, July 26, 2011 /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, 2011, with comparisons to the same period last year.  Effective January 1, 2011, the Corporation commenced reporting its financial operating results in accordance with International Financial Reporting Standards ("IFRS"), which requires the restatement of its prior year results for comparative purposes.Mullen Group generated record second quarter consolidated revenue and operating income of $290.8 million and $48.7 million, respectively. The consolidated revenue of $290.8 million was an increase of $76.3 million, or 35.6 percent, from the $214.5 million generated in 2010, and was primarily driven by revenue gains at most operating entities, incremental revenue from acquisitions, and fuel surcharge revenue relating to higher diesel fuel prices.Revenue gains were strongest in the Oilfield Services segment with most operating entities benefiting from improved industry conditions. Despite unusual wet weather conditions in southeastern Saskatchewan, overall drilling activity in western Canada improved in the current quarter as compared to the prior year, and activity related to oil sands development and infrastructure projects remained robust. In the Trucking/Logistics segment revenue grew primarily due to the incremental revenue generated from acquisitions; stronger demand for freight services related to capital investments in oil sands development, mining and infrastructure projects in western Canada; and to fuel surcharge revenue related to higher diesel fuel prices.Mullen Group's record operating income of $48.7 million was an increase of $15.6 million, or 47.1 percent, over the $33.1 million generated in 2010.  Operating income in the Oilfield Services segment accounted for $10.5 million of the increase while the Trucking/Logistics segment added an additional $4.2 million. Corporate office costs declined by $0.9 million on a year over year basis."We are very pleased with the record results Mullen Group reported for the three month period ending June 30.  The Alberta economy continued to show signs of growth driven in large part by higher commodity prices, particularly oil prices.  This strength in oil prices translated into increased drilling activity on a year over year basis and benefited our businesses tied to drilling activity.  In addition, Canadian Dewatering L.P. recorded a significant increase in revenue primarily related to the one time Thin Fine Tailings barge system project.  We also continue to see the increasing demand for our Trucking/Logistics businesses, which reflects the shrinking capacity the North American trucking industry is experiencing and reinforces our rationale for the Hi-Way 9 acquisition," stated Mr. Stephen H. Lockwood, President and Co- Chief Executive Officer.In the second quarter of 2011, Mullen Group generated net income of $12.3 million, or $0.15 per share, an increase of $18.5 million compared to a net loss of $(6.2) million, or $(0.08) per share in 2010.  The $18.5 million increase in net income was mainly attributable to the $15.6 million increase in operating income as discussed above.  Net income also increased by virtue of a $10.6 million year over year variance in unrealized foreign exchange.  These items were offset by a $4.7 million increase in income tax expense and a $3.5 million change in the fair value of investments.  Adjusting Mullen Group's net income and earnings per share to eliminate the impact of unrealized foreign exchange (gains) losses and changes in fair value of investments resulted in adjusted net income of $15.0 million and adjusted earnings per share of $0.19 for 2011 compared to $3.0 million, or $0.04 per share, in 2010.  These adjustments more clearly reflect earnings from an operating perspective.For the six month period ended June 30, 2011, consolidated revenue increased by 33.6 percent to $633.5 million from $474.3 million.  Operating income increased to $123.1 million, up 38.3 percent, from $89.0 million in 2010.  Net income increased to $60.6 million, up 244.3 percent, from 17.6 million in 2010.A summary of Mullen Group's results for the three and six month periods ended June 30, 2011, along with revenue and operating results by segment are as follows:        SUMMARYThree month period ended Six month period ended(unaudited)($ millions, except per share amounts)June 30 June 3020112010Change 20112010Change $$% $$%Revenue290.8214.535.6 633.5474.333.6        Operating income(1)48.733.147.1 income (loss)12.3(6.2)— 60.617.6244.3Net income - adjusted(2)15.03.0400.0 49.021.5127.9Earnings (loss) per share(3)$0.15$(0.08)— $0.76$0.22245.5Earnings per share - adjusted(2)$0.19$0.04375.0 $0.62$0.27129.6Net cash from operations49.056.7(13.6) 99.155.877.6Net cash from operations per share (3)$0.62$0.71(12.7) $1.25$0.7078.6Cash dividends declared per Common Share$0.25$0.125100.0 $0.50$0.25100.0Notes:(1)     Operating income is defined as net income (loss) before depreciation on property, plant and equipment, amortization on intangible assets, finance costs, unrealized foreign exchange gains and losses, other (income) expense and income taxes.(2)     Net income - adjusted and earnings per share - adjusted is calculated by adjusting net income (loss) and basic earnings (loss) per share by the amount of any unrealized foreign exchange gains and losses and the change in fair value of investments.(3)     Earnings (loss) per share and net cash from operations per share are calculated based on the weighted average number of Common Shares outstanding for the period. Operating income, net income - adjusted and earnings per share - adjusted are not recognized terms under IFRS and do not have standardized meanings prescribed by IFRS. Management believes these measures are useful supplemental measures.  Investors should be cautioned that these indicators should not replace net income as an indicator of performance.         SEGMENTED RESULTSThree month period ended Six month period ended(unaudited)($ millions, except per share amounts)June 30 June 3020112010Change 20112010Change $$% $$%Revenue        Oilfield Services175.0121.743.8 415.1298.938.9 Trucking/Logistics118.194.525.0 222.1177.725.0 Corporate(0.1)(0.1)— ———Intersegment eliminations        Oilfield Services(0.2)(1.2)— (0.4)(1.5)— Trucking/Logistics(2.0)(0.4)— (3.3)(0.8)—Total290.8214.535.6 633.5474.333.6          Operating income        Oilfield Services30.219.753.3 90.065.737.0 Trucking/Logistics20.316.126.1 Corporate(1.8)(2.7)— (3.0)(5.9)—Total48.733.147.1 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 For further information: 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