Mullen Group Ltd. Reports First Quarter Financial Results

OKOTOKS, AB, April 24, 2014 /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 March 31, 2014, with comparisons to the same period last year.

For the three month period ended March 31, 2014, Mullen Group generated consolidated revenue of $412.0 million, operating income of $91.2 million and net cash from operations of $35.1 million.  During the quarter Mullen Group incurred net capital expenditures of $13.3 million, paid dividends of $27.2 million and paid interest obligations of $3.7 million.

Consolidated revenue in the first quarter increased by $26.5 million, or 6.9 percent, to $412.0 million as compared to $385.5 million in 2013. The majority of this increase in revenue was directly attributable to the Oilfield Services segment, which increased by $15.0 million, or 5.8 percent, to $272.6 million as compared to $257.6 million in the same period one year earlier primarily due to increased demand for fluid hauling and related production services as well as an increase in revenue generated by those Operating Entities providing services associated with large diameter pipeline construction projects. Revenue in the Trucking/Logistics segment increased by $11.1 million, or 8.6 percent, to $140.2 million from $129.1 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") that contributed $8.5 million of revenue, small increases in most Operating Entities within this segment and a $0.8 million increase in fuel surcharge revenue.

Operating income for the first quarter increased to $91.2 million, or 3.9 percent, compared to $87.8 million in 2013. The increase of $3.4 million was due to a $1.3 million increase in the Oilfield Services segment, a $1.0 million increase in the Trucking/Logistics segment as well as a decrease in Corporate costs of $1.1 million on a year over year basis. Pricing remained competitive throughout the quarter and the Operating Entities remained focused on cost control, however, colder-than-normal temperatures during the quarter affected fuel efficiency, impacted productivity and increased repairs and maintenance expenses. As a percentage of consolidated revenue, operating income decreased to 22.2 percent as compared to 22.7 percent in 2013.

In the first quarter of 2014, Mullen Group generated net income of $36.3 million, or $0.40 per share, a decrease of $8.1 million, or 18.2 percent compared to $44.4 million, or $0.50 per share in 2013. The $8.1 million decrease in net income was mainly attributable to a $7.4 million negative variance in the fair value of investments and a $4.8 million negative variance in unrealized foreign exchange.  These decreases were somewhat offset by the $3.4 million increase in operating income and a $0.9 million decrease in income tax expense. 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 during the first quarter of 2014 resulted in adjusted net income of $47.2 million and adjusted earnings per share of $0.52, as compared to $45.4 million and $0.52 per share in 2013, respectively. These adjustments more clearly reflect earnings from an operating perspective.

"We are generally pleased with our operating performance in the first quarter of 2014.  We grew revenue by $26.5 million despite the slow growth economic environment and the lack of any real growth in drilling activity in western Canada.  The acquisition of Jay's and market share gains by several of our Operating Entities, most notably Premay Pipeline Hauling L.P., Heavy Crude Hauling L.P. and E-Can Oilfield Services L.P., were the main drivers of the revenue growth.  Operating income while up slightly, were negatively impacted by challenges faced by the extreme weather conditions during the quarter. Productivity levels were certainly impacted as was fuel efficiency, repairs and maintenance, costs we believe will normalize as the year progresses.  Overall we are not disappointed with our first quarter results," said Mr. Murray K. Mullen, Chairman and Chief Executive Officer.

A summary of Mullen Group's results for the three month periods ended March 31, 2014 and 2013, along with revenue and operating results by segment are as follows:

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, shared services and strategic planning 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.