OKOTOKS, AB, Oct. 28 /CNW/ - (TSX-MTL) Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") reported its financial and operating results for the period ended September 30, 2010 with comparisons to the same period last year. On May 1, 2009, the holders of trust units of Mullen Group Income Fund (the "Fund") and the holders of Class B limited partnership units of Mullen Co. Limited Partnership approved a Plan of Arrangement that resulted in the conversion of the Fund from an open-ended income trust to a corporation called "Mullen Group Ltd." Mullen Group as the successor in interest to the Fund is accounted for as a continuity of interests whereby the consolidated financial statements for the three and nine month periods ended September 30, 2010 and comparables for the three and nine month periods ended September 30, 2009 reflect the financial position, results of operations and cash flows as if Mullen Group had always carried on the business formerly carried on by the Fund. Throughout this news release, references made to cash distributions declared reflect the business of the Fund that occurred prior to conversion from an open-ended income trust to a corporation.
Mullen Group's consolidated revenue of $268.9 million for the three month period ended September 30, 2010, was an increase of $39.2 million or 17.1 percent from the $229.7 million generated for the same period last year. This increase in consolidated revenue was attributable to greater revenue being generated by both the Trucking/Logistics segment and the Oilfield Services segment. The increase in revenue experienced by the Trucking/Logistics segment was mainly due to incremental revenue from acquisitions. The higher revenue experienced by the Oilfield Services segment was by virtue of greater demand in those business units dependent on oil and natural gas drilling activity and from those leveraged to the transportation of fluids and the servicing of wells. This segment also benefitted from the deployment of capital for certain oil sands projects.
"The third quarter of 2010 continued the trend of strengthening demand for the majority of services provided by Mullen Group's business units. The revenue growth experienced in the second and third quarters of 2010 has offset the decrease in consolidated revenue experienced in the first quarter. We are confident that this momentum will continue for the remainder of 2010," stated Mr. Stephen Lockwood, President and Co-Chief Executive Officer.
Mullen Group generated operating income for the quarter of $55.0 million, an increase of $8.8 million or 19.0 percent over the same period last year. Operating income increased in both the Trucking/Logistics segment and the Oilfield Services segment. The increase in the Trucking/Logistics segment was mainly attributable to acquisitions. The increase in the Oilfield Services segment was mainly due to increased drilling activity and its impact on those business units depended on oil and natural gas drilling activity.
For the quarter ended September 30, 2010, Mullen Group generated net income of $28.4 million ($0.36 per share), a decrease of $2.5 million from the $30.9 million ($0.39 per share) generated for the same period last year. The $2.5 million decrease in net income was attributable to the $14.1 million year over year decrease in unrealized foreign exchange gain and a $1.8 million increase in the provision for income taxes. These items were somewhat offset by the $8.8 million increase in operating income, a $4.0 million change in the fair value of investments, and a $0.6 million decrease in depreciation expense. Mullen Group's net income and earnings per share, adjusted, reflect the impact on net income and earnings per share as though Mullen Group had been a corporation since January 1, 2009 as well as before the impact of the unrealized foreign exchange gains or losses in 2010 and 2009. These adjustments reflect earnings from an operating perspective. Adjusted net income is $21.3 million ($0.27 per share) compared to $11.3 million ($0.14 per share) in 2009.
For the quarter ended September 30, 2010, Mullen Group generated funds from operations of $47.5 million, an increase of $11.0 million or 30.1 percent over the $36.5 million generated for the same period last year. These funds were supplemented by a $4.3 million reduction in other assets and used to finance $33.3 million of changes in non-cash working capital items, acquire net property, plant and equipment in the amount of $14.4 million, pay cash dividends of $9.9 million, and repay long-term debt of $2.4 million.
For the nine month period ended September 30, 2010, consolidated revenue decreased by only 0.1 percent to $743.4 million from $744.4 million last year. Operating income decreased to $145.7 million, down 2.0 percent, from $148.6 million in 2009 and net income declined by 42.4 percent to $45.9 million from $79.7 million in 2009. The decrease in net income was almost entirely related to the $30.6 million year over year variance in unrealized foreign exchange.
A summary of Mullen Group's results for the quarter ended September 30, 2010, along with revenues and operating results by segment are as follows:
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SUMMARY Three Months Ended Nine Months Ended
September 30 September 30
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2010 2009 Change 2010 2009 Change
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(Unaudited)
($ millions, except
per share amounts) $ $ % $ $ %
Revenue 268.9 229.7 17.1 743.4 744.4 (0.1)
Operating income (1) 55.0 46.2 19.0 145.7 148.6 (2.0)
Unrealized foreign
exchange gain (7.1) (21.2) - (4.7) (35.3) -
Net income 28.4 30.9 (8.1) 45.9 79.7 (42.4)
Net income - adjusted(2) 21.3 11.3 88.5 42.7 44.2 (3.4)
Earnings per share (3) $0.36 $0.39 (7.7) $0.58 $0.99 (41.4)
Earnings per share -
adjusted(2) $0.27 $0.14 92.9 $0.54 $0.55 (1.8)
Funds from operations(4) 47.5 36.5 30.1 97.8 87.5 11.8
Funds from operations per
share(5) $0.60 $0.46 30.4 $1.23 $1.09 12.8
Cash dividends declared
per common share $0.125 $0.125 - $0.375 $0.125 200.0
Cash Distributions
declared per unit - - - - $0.225 (100.0)
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Notes:
(1) Operating income is defined as net income before interest and
accretion, income taxes, depreciation on property, plant and
equipment, amortization on intangible assets, earnings from equity
investment, stock-based compensation, unrealized foreign exchange
gains or losses, changes in fair value of investments, and gains or
losses on sale of property, plant and equipment.
(2) Net income and earnings per share have been adjusted to reflect
earnings before the impact of unrealized foreign exchange gains and
losses. Net income and earnings per share have also been adjusted
for the tax impact as though Mullen Group had been a corporation
since January 1, 2009.
(3) Earnings per share is based on the weighted average number of shares
outstanding for the period.
(4) Funds from operations is defined as cash flow from operating
activities before changes in non-cash working capital items.
(5) Funds from operations per share is calculated by dividing funds from
operations by the weighted average number of shares outstanding for
the period.
Operating income, funds from operations and funds from operations per
share are not recognized measures under Canadian generally accepted
accounting principles ("GAAP"). Management believes these measures are
useful supplemental measures. Operating income provides an indication of
the results generated by the Corporation's principal business activities
prior to financing activities, amortization of assets, or taxation in
various jurisdictions. Funds from operations indicate the Corporation's
ability to generate funds from its operations without the seasonality
effect on its working capital. References to operating income, funds from
operations and funds from operations per share are not measures
recognized by GAAP and do not have standardized meanings prescribed by
GAAP. Investors should be cautioned that these indicators should not
replace net income as an indicator of GAAP performance.
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SEGMENTED RESULTS Three Months Ended Nine Months Ended
September 30 September 30
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2010 2009 Change 2010 2009 Change
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(Unaudited)
($ millions) $ $ % $ $ %
Revenue
Oilfield Services 162.6 141.0 15.3 461.5 466.5 (1.1)
Trucking\Logistics 106.5 90.6 17.5 284.2 282.6 0.6
Corporate 0.3 0.1 - 0.6 0.6 -
Intersegment eliminations
Oilfield Services (0.1) (1.2) - (1.6) (3.1) -
Trucking\Logistics (0.4) (0.8) - (1.3) (2.2) -
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Totals 268.9 229.7 17.1 743.4 744.4 (0.1)
Operating income
Oilfield Services 38.1 32.3 18.0 103.8 108.2 (4.1)
Trucking\Logistics 18.4 16.3 12.9 47.5 46.8 1.5
Corporate (1.5) (2.4) - (5.6) (6.4) -
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Totals 55.0 46.2 19.0 145.7 148.6 (2.0)
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This press 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 press 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.
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