OKOTOKS, AB, July 30 /CNW/ - (TSX-MTL) Mullen Group Ltd. ("Mullen Group"
and/or the "Corporation") reported its financial and operating results for the
period ended June 30, 2009 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 will
be accounted for as a continuity of interest whereby the consolidated
financial statements for the three and six month periods ended June 30, 2009
and comparables for the three and six month periods ended June 30, 2008 will
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 and cash distributions paid reflect business of the Fund that
occurred prior to conversion from an open-ended income trust to Mullen Group.
For the three month period ended June 30, 2009, Mullen Group generated
consolidated revenue of $202.7 million and operating income of $28.6 million.
Mullen Group generated $19.9 million of funds from operations, which were
supplemented by $52.6 million of non-cash working capital items. These funds
were mainly used to fund the final $6.0 million of cash distributions as an
income trust paid on April 15, 2009, repay long-term debt of $21.9 million and
fund net capital expenditures of $2.3 million.
Mullen Group's revenue of $202.7 million for the three month period ended
June 30, 2009 was a decrease of $46.4 million or 18.6 percent over the $249.1
million generated for the same period last year. This decrease in consolidated
revenue was attributable to lower revenues generated by both the
Trucking/Logistics segment and the Oilfield Services segment. The
Trucking/Logistics segment experienced lower revenues by virtue of the
continuing recession and its impact on demand for freight services especially
in western Canada, as well as less fuel surcharge revenue being generated due
to the reduction in the average cost of diesel fuel on a year over year basis.
The Oilfield Services segment experienced lower revenues by virtue of a
decrease in demand for its services resulting from the significant year over
year reduction in oil and natural gas drilling activity in western Canada.
Demand in this segment was also weakened by virtue of lower activity in the
Alberta oilsands. New infrastructure projects were postponed while the build
out of a number of ongoing projects was delayed due to the impact of lower
commodity prices and restricted credit markets.
"The operating environment within the second quarter of 2009 was
extremely challenging due to the combined impact of the continuing recession
coupled with a significant decrease in drilling activity in western Canada.
However, we are relatively pleased with our overall financial performance. The
flexibility and strength of our business model provided us with the
opportunity to adapt our cost structure within such a challenging operating
environment to the point where we were able to maintain our operating margin
on a year over year basis. However, we continue to be diligent and aggressive
in pursuing opportunities to reduce costs and improve processes and
productivity." stated Mr. Stephen Lockwood, President and Co-Chief Executive
Officer.
Mullen Group generated operating income for the quarter of $28.6 million,
a decrease of $6.0 million or 17.3 percent over the same period last year. The
decrease in operating income was mainly attributable to the year over year
decrease in consolidated revenues. Operating income decreased in both the
Trucking/Logistics segment and the Oilfield Services segment by virtue of the
decrease in demand for their services resulting from the impact of the
continuing recession and the reduction in drilling activity, respectively.
For the quarter ended June 30, 2009, Mullen Group generated funds from
operations of $19.9 million, a decrease of $9.0 million or 31.1 percent over
the $28.9 million generated for the same period last year. This decrease was
mainly due to a $21.1 million year over year variance in unrealized gain on
foreign exchange which resulted from the change in the value of the CDN.
dollar relative to the U.S. dollar and its impact on the Corporation's $235.0
million U.S. dollar denominated debt. This variance was somewhat offset by the
year over year increase of $13.8 million in future tax expense which mainly
resulted from the tax implications surrounding the change in corporate
structure required to facilitate the conversion from an income trust to a
corporation.
For the quarter ended June 30, 2009, Mullen Group generated net income of
$17.8 million ($0.22 per unit), a decrease of $2.1 million, or 10.6 percent
from the $19.9 million ($0.25 per unit) generated for the same period last
year. The $2.1 million decrease in net income was mainly due to the $6.0
million decrease in operating income and a $14.3 million increase in the
provision for income taxes which were offset by a $21.1 million increase in
the unrealized gain on foreign exchange. To a lesser extent, net income was
negatively impacted by a $2.6 million increase in interest expense on the
Corporation's long-term debt and convertible unsecured subordinated
debentures.
For the six month period ended June 30, 2009, consolidated revenue
decreased by 15.2 percent to $514.7 million from $607.2 million. Operating
income decreased to $102.0 million, down 13.7 percent, from $118.2 million in
2008 and net income declined by 30.0 percent to $48.8 million from $69.7
million in 2008.
A summary of Mullen Group's results for the quarter ended June 30, 2009,
along with revenues and operating results by segment are as follows:-------------------------------------------------------------------------
SUMMARY Three Months Ended Six Months Ended
June 30 June 30
------------------------------------------------- ---------------------
2009 2008 Change 2009 2008 Change
-------------------------------------------------------------------------
(Unaudited)
($ millions, except per
share amounts) $ $ % $ $ %
Revenue 202.7 249.1 (18.6) 514.7 607.2 (15.2)
Operating income(1) 28.6 34.6 (17.3) 102.0 118.2 (13.7)
Net income 17.8 19.9 (10.6) 48.8 69.7 (30.0)
Earnings per share(2) $0.22 $0.25 (12.0) $0.60 $0.87 (31.0)
Funds from operations(3) 19.9 28.9 (31.1) 51.0 106.8 (52.2)
Funds from operations
per share(4) $0.24 $0.36 (33.3) $0.63 $1.33 (52.6)
Distributions declared
per unit - $0.45 100.0 $0.225 $0.90 (75.0)
-------------------------------------------------------------------------
Notes:
(1) Operating income is defined as net income before interest, income
taxes, depreciation on property, plant and equipment, amortization on
intangible assets, earnings or losses from equity investments,
unrealized gains or losses on foreign exchange and investment and
gains or losses on sale of property, plant and equipment and
investments.
(2) Earnings per share is based on weighted average number of shares
outstanding for the period.
(3) Funds from operations is defined as cash flow from operating
activities before changes in non-cash working capital items.
(4) 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 earnings as an indicator of GAAP performance.
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-------------------------------------------------------------------------
SEGMENTED RESULTS Three Months Ended Six Months Ended
June 30 June 30
------------------------------------------------- ---------------------
2009 2008 Change 2009 2008 Change
-------------------------------------------------------------------------
(Unaudited)
($ millions) $ $ % $ $ %
Revenue
Oilfield Services 116.4 132.3 (12.0) 325.5 375.0 (13.2)
Trucking\Logistics 87.4 117.0 (25.3) 192.0 232.7 (17.5)
Corporate 0.1 0.6 - 0.6 1.4 -
Intersegment eliminations
Oilfield Services (0.3) (0.4) - (2.0) (0.8) -
Trucking\Logistics (0.9) (0.4) - (1.4) (1.1) -
-------------------------------------------------------------------------
Totals 202.7 249.1 (18.6) 514.7 607.2 (15.2)
Operating income
Oilfield Services 18.1 20.8 (13.0) 75.9 89.2 (14.9)
Trucking\Logistics 13.6 17.7 (23.2) 30.5 34.9 (12.6)
Corporate (3.1) (3.9) - (4.4) (5.9) -
-------------------------------------------------------------------------
Totals 28.6 34.6 (17.3) 102.0 118.2 (13.7)
-------------------------------------------------------------------------This press release may contain forward-looking statements that are
subject to risk factors associated with the oil and 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.
%SEDAR: 00028425E