Mullen Group Income Fund reports second quarter financial results



    OKOTOKS, AB, Aug. 12 /CNW/ - Mullen Group Income Fund ("Mullen" and/or
the "Fund") reported its financial and operating results for the period ended
June 30, 2008 with comparisons to the same period last year.
    For the three month period ended June 30, 2008, the Fund recorded
consolidated revenue of $249.1 million, a record for the quarter, and
operating income of $34.6 million. The Fund generated $28.9 million of funds
from operations, which were supplemented by $83.0 million of non-cash working
capital items. These funds were mainly used, in conjunction with the Fund's
cash reserves, to fund distributions of $36.1 million, fund net capital
expenditures of $22.5 million, acquire R.E. Line Trucking (Coleville) Ltd. and
David Tuffs Holdings Ltd. (collectively "R.E. Line Trucking") and repay
long-term debt of $1.3 million.
    The Fund's revenue of $249.1 million for the three month period ended
June 30, 2008, was an increase of $30.2 million, or 13.8 percent, over the
same period in 2007. This increase was attributable to a $10.9 million
increase in revenue generated by the Trucking/Logistics segment and an
$18.8 million increase generated by the Oilfield Services segment. The
increase in revenue generated by the Trucking/Logistics segment was due to the
continued strong demand for freight services in western Canada accompanied by
an increase in fuel surcharges during the quarter. The increase in revenue in
the Oilfield Services segment was attributable to the addition of Pro North
Oilfield Services and R.E. Line Trucking, the recovery of additional fuel
surcharges and an increase in revenue generated by the business units
leveraged to the transportation of fluids and the servicing of oil and gas
wells, especially in Saskatchewan.
    Operating income for the quarter was $34.6 million, an increase of
$9.9 million, or 40.1 percent, over the same period last year. This increase
can be attributed to the year over year increases in revenue due to additional
fuel surcharges and the strong demand for services in the Trucking/Logistics
segment as well as in those business units in the Oilfield Services segment
involved with the transportation of fluids and servicing of wells. In
addition, operating income was positively impacted by the continued efforts in
all the business units to reduce expenses accompanied by improvements in
operational efficiencies.
    Net income for the period was $19.9 million, an increase of $3.3 million,
or 19.9 percent, compared to the same period last year. The increase was
mainly attributable to the $9.9 million increase in operating income offset by
a decline in foreign exchange gains of $8.5 million year over year.
    "We were very pleased with the overall financial performance of our
businesses in the second quarter. Both of our operating segments contributed
to the growth last quarter, this despite the well publicized economic
challenges that persist in the market and a 6.9 percent decline in oil and gas
drilling activity in western Canada year over year. Our improved results can
be attributed to a few fundamental factors. First of all, our business units
continued to perform well with demand remaining strong in several markets.
Second, we added two established companies to our group over the past year,
R.E. Line Trucking and Pro North Oilfield Services. Third, our rates and
pricing structure were adjusted to reflect the 40.0 percent yearly increase in
fuel cost. Lastly, we were able to realize on our efforts and initiatives to
control and manage our costs. For example, we realized a $1.9 million decrease
in our selling and administrative expenses at a time when our revenue was
increasing by over $30.0 million. As a result of all these factors both
segments increased their operating margins and the Fund's overall operating
margin improved from 11.3 percent in 2007 to 13.9 percent in 2008," commented
Mr. Murray K. Mullen, Chairman and Chief Executive Officer.
    For the six month period ended June 30, 2008, consolidated revenues rose
by 3.9 percent to $607.2 million from $584.6 million. Operating income
improved to $118.2 million, up 6.1 percent, from $111.4 million in 2007 and
net income declined by 6.9 percent to $69.7 million due to a $17.0 million
variance in unrealized foreign exchange gains and losses associated with the
Fund's long-term U.S. denominated debt.

    
    Financial Summary

    A summary of the Fund's results for the quarter ended June 30, 2008, along
with revenues and operating results by segment is as follows:

    -------------------------------------------------------------------------
    SUMMARY                      Three Months Ended       Six Months Ended
                                      June 30                  June 30
    -------------------------------------------------  ----------------------
                                2008    2007  Change    2008    2007  Change
    -------------------------------------------------------------------------
    (Unaudited)
    ($ millions, except per
     unit amounts)                 $       $       %       $       $       %

    Revenue                    249.1   218.9    13.8   607.2   584.6     3.9

    Operating income(1)         34.6    24.7    40.1   118.2   111.4     6.1
    Net income                  19.9    16.6    19.9    69.7    74.9    (6.9)
    Earnings per unit(2)       $0.25   $0.21    19.0   $0.87   $0.92    (5.4)

    Funds from operations(3)    28.9    23.3    24.0   106.8   104.8     1.9
    Funds from operations
     per unit(4)               $0.36   $0.29    24.1   $1.33   $1.28     3.9
    Distributions declared
     per unit                   0.45   $0.45       -    0.90   $0.90       -
    -------------------------------------------------------------------------

    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 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       Six Months Ended
                                      June 30                  June 30
                              -----------------------  ----------------------
    -------------------------------------------------  ----------------------
                                2008    2007  Change    2008    2007  Change
    -------------------------------------------------------------------------
    (Unaudited)
    ($ millions)
                                   $       $       %       $       $       %
    Revenue
      Oilfield Services        132.3   113.5    16.6   375.0   371.1     1.1
      Trucking\Logistics       117.0   106.1    10.3   232.7   215.3     8.1
      Corporate                  0.6     0.5             1.4     0.7
    Intersegment eliminations
      Oilfield Services         (0.4)   (0.6)           (0.8)   (1.0)
      Trucking\Logistics        (0.4)   (0.6)           (1.1)   (1.5)
    -------------------------------------------------------------------------
    Totals                     249.1   218.9    13.8   607.2   584.6     3.9

    Operating income
      Oilfield Services         20.8    12.5    66.4    89.2    85.6     4.2
      Trucking\Logistics        17.7    14.6    21.2    34.9    29.1    19.9
      Corporate                 (3.9)   (2.4)           (5.9)   (3.3)
    -------------------------------------------------------------------------
    Totals                      34.6    24.7    40.1   118.2   111.4     6.1
    -------------------------------------------------------------------------
    

    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. 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 Second Quarter Interim
Report, which includes the Management's Discussion and Analysis and
consolidated financial statements for the period ended June 30, 2008, is
available on our website at www.mullen-group.com and on SEDAR at
www.sedar.com.
    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. 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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