Mullen Group Income Fund reports first quarter financial results



    OKOTOKS, AB, April 28 /CNW/ - (TSX-MTL.UN) Mullen Group Income Fund
("Mullen" and/or the "Fund") reported its financial and operating results for
the period ended March 31, 2009 with comparisons to the same period last year.
    For the three month period ended March 31, 2009, the Fund generated
consolidated revenue of $312.0 million and operating income of $73.4 million.
The Fund generated $31.1 million of funds from operations, which were
supplemented by $44.8 million of non-cash working capital items. These funds
were mainly used to fund distributions of $24.2 million, repay long-term debt
of $45.1 million and fund net capital expenditures of $1.7 million.
    The Fund's revenue of $312.0 million for the three month period ended
March 31, 2009, was a decrease of $46.1 million or 12.9 percent over the
$358.1 million generated for the same period last year. This decrease in
consolidated revenue was mainly attributable to a decline in revenue in the
Oilfield Services segment which experienced a significant drop in demand for
core drilling services. Demand in the segment for its other drilling related
services also weakened due to the significant year over year decline in oil
and natural gas drilling activity in western Canada. The decline in segment
revenue was somewhat offset by new revenue generated by R.E. Line Trucking
(Coleville) Ltd. and the Transport Division of Essential Energy Services
Trust. The Trucking/Logistics segment also experienced a decline in revenue
due to the current economic environment and its impact on demand for freight
services especially in western Canada.
    "The Fund is relatively pleased with the overall financial performance of
its business units in the first quarter, especially considering the severe
decline in oil and natural gas drilling activity in western Canada. It was
satisfying to see our overall operating margin improve slightly despite an
overall decrease in revenue of $46.1 million on a year over year basis. This
ability to hold our operating margin was attributable to the cost control
measures which were implemented by our business units in 2008," stated Mr.
Stephen Lockwood, President and Co-Chief Executive Officer.
    The Fund generated operating income for the quarter of $73.4 million, a
decrease of $10.2 million or 12.2 percent over the same period last year. The
decrease in operating income was almost entirely attributable to the Oilfield
Services segment. Operating income in the Trucking/Logistics segment only
decreased slightly despite lower revenue as higher margins were generated by
virtue of utilizing specialized equipment to perform larger oversized loads,
performing project work, and due to an increase in U.S. dollar sales coupled
with a weakening CDN. dollar.
    For the period ended March 31, 2009, the Fund generated funds from
operations of $31.1 million, a decrease of $46.8 million or 60.1 percent over
the $77.9 million generated for the same period last year. The decrease was
mainly due to a $34.5 million reclass from future income tax to current income
tax by virtue of a restructuring of the Fund's corporate structure to
facilitate the proposed conversion of the Fund to a corporation. To a lesser
extent, the decrease was also due to a decline in net income of $18.8 million.
At March 31, 2009, the Fund had $119.0 million of working capital and had
access to approximately $130.0 million of unused bank lines of credit.
    For the period ended March 31, 2009, the Fund generated net income of
$31.0 million ($0.38 per unit), a decrease of $18.8 million, or 37.8 percent
over the $49.8 million ($0.62 per unit) generated for the same period last
year. The decrease was mainly attributable to the $10.2 million decline in
operating income and a year over year increase of $3.9 million in unrealized
foreign exchange loss. To a lesser extent, net income was negatively impacted
by a $1.3 million increase to both interest on long-term debt, and the loss on
sale of property, plant and equipment.
    A summary of the Fund's results for the quarter ended March 31, 2009,
along with revenues and operating results by segment are as follows:

    
    -------------------------------------------------------------------------
    SUMMARY                                       Three Months Ended
                                                        March 31
                                           ----------------------------------
    -------------------------------------------------------------------------
                                                2009        2008      Change
    -------------------------------------------------------------------------
    (Unaudited)
    ($ millions, except per unit amounts)          $           $           %

    Revenue                                    312.0       358.1       (12.9)
    Operating income(1)                         73.4        83.6       (12.2)

    Net income                                  31.0        49.8       (37.8)

    Earnings per unit(2)                       $0.38       $0.62       (38.7)

    Funds from operations(3)                    31.1        77.9       (60.1)
    Funds from operations per unit
     (dollars)(4)                              $0.39       $0.97       (59.8)
    Distributions declared per unit           $0.225       $0.45       (50.0)
    -------------------------------------------------------------------------
    Note:
    -------------------------------------------------------------------------
    (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 unit is based on weighted average number of units
        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 unit is calculated by dividing funds from
        operations by the weighted average number of units outstanding for
        the period.

    Operating income, funds from operations and funds from operations per
    unit 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 Fund's principal business activities prior
    to financing activities, amortization of assets, or taxation in various
    jurisdictions. Funds from operations indicate the Fund'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 unit 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.
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    SEGMENTED RESULTS                             Three Months Ended
                                                        March 31
                                           ----------------------------------
    -------------------------------------------------------------------------
                                                2009        2008      Change
    -------------------------------------------------------------------------
    (Unaudited)
    ($ millions)                                   $           $           %
    Revenues
      Oilfield Services                        209.1       242.7       (13.8)
      Trucking/Logistics                       104.6       115.7        (9.6)
      Other                                      0.5         1.1           -
    Intersegment eliminations
      Oilfield Services                         (1.7)       (0.6)          -
      Trucking/Logistics                        (0.5)       (0.8)          -
    -------------------------------------------------------------------------
    Totals                                     312.0       358.1       (12.9)

    Operating income
      Oilfield Services                         57.8        68.4       (15.5)
      Trucking/Logistics                        16.9        17.2        (1.7)
      Other                                     (1.3)       (2.0)          -
    -------------------------------------------------------------------------
    Totals                                      73.4        83.6        12.2
    -------------------------------------------------------------------------
    

    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. The Fund believes that the expectations reflected in this
press release are reasonable, but results may be affected by a variety of
variables. The Fund relies on litigation protection for "forward-looking"
statements.

    Mullen is an open-ended income fund 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 the Fund has strong business relationships and industry leadership.
Administration of the Fund is delegated to Mullen Group Inc. which, in
addition to managing the Fund, provides management and financial expertise,
technology and systems support to its independent businesses.
    Additional information on the Fund, including the First Quarter Interim
Report, which includes the Management's Discussion and Analysis for the period
ended March 31, 2009, is available on our website at www.mullen-group.com and
on www.sedar.com. The above is provided to unitholders and interested parties
on an information only basis. Mullen is a publicly traded income trust listed
on the Toronto Stock Exchange under the symbol "MTL.UN". Additional
information is available on our website at www.mullen-group.com.

    %SEDAR: 00022408E




For further information:

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. David E. Olson - Vice President, Finance and Chief
Financial Officer, 121A, 31 Southridge Drive, Okotoks, Alberta, Canada, T1S
2N3, Tel: (403) 995-5200, Fax: (403) 995-5296

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Mullen Group Ltd.

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