MULLEN GROUP LTD. REPORTS 2010 FINANCIAL RESULTS

OKOTOKS, AB, Feb. 24 /CNW/ - (TSX-MTL) Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") reported its financial and operating results for the period ended December 31, 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 twelve month periods ended December 31, 2010 and comparables for the three and twelve month periods ended December 31, 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.

For the twelve month period ended December 31, 2010, Mullen Group generated revenue of $1,039.8 million, operating income of $204.0 million and funds from operations of $150.1 million. Cash was used, among other things, to acquire net property, plant and equipment for $43.7 million, pay cash dividends totaling $39.8 million, fund acquisitions of $39.2 million, repurchase common shares for $27.3 million and purchase investments of $27.2 million.

Mullen Group's revenue of $1,039.8 million for the year ended December 31, 2010 increased by $61.8 million or 6.3 percent from the $978.0 million generated in 2009. This increase in revenue was attributable to greater revenues generated by both the Oilfield Services segment and the Trucking/Logistics segment. The increase in revenue experienced by the Oilfield Services segment resulted from both a year over year increase in oil and natural gas drilling activity in western Canada and from the revenue generated on certain oil sands projects. The Trucking/Logistics segment experienced increased revenue by virtue of the incremental revenue generated by acquisitions as well as higher fuel surcharge revenue.

Mullen Group generated operating income for the year ended December 31, 2010 of $204.0 million, an increase of $11.4 million or 5.9 percent over the $192.6 million generated in 2009. Operating income increased in the Oilfield Services segment and the Trucking/Logistics segment as a direct result of the increase in revenue experienced by both segments.

"The diversified nature of Mullen Group's business model, by geographic region and service, enabled Mullen Group to strategically allocate its resources and thereby recover from a very slow first half and maintain its historical margins throughout the year. Over the second half of 2010, our Operating Entities experienced revenue growth of 22.2 percent and generated growth in operating income of 25.6 percent compared to the same period in 2009. We are obviously very pleased with our performance in 2010," stated Mr. Stephen Lockwood, President and Co-Chief Executive Officer.

In 2010, Mullen Group generated net income of $79.1 million or $1.00 per share, a decrease of $11.7 million compared to $90.8 million or $1.13 per share in 2009. The $11.7 million decrease in net income was mainly attributable to a $25.9 million year over year decrease in unrealized foreign exchange gain and a $5.8 million increase in the provision for income taxes. These items were somewhat offset by the $11.4 million increase in operating income, a $5.9 million change in the fair value of investments, and a $4.1 million decrease in depreciation expense. Mullen Group's adjusted net income was $66.0 million or $0.83 per share compared to $50.1 million or $0.62 per share in 2009. Adjusted net income and earnings per share 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 in 2010 and 2009. These adjustments reflect earnings from an operating perspective.

Mullen Group's revenue of $296.4 million for the three month period ended December 31, 2010, was an increase of $62.8 million or 26.9 percent from the $233.6 million generated for the same period last year. This increase in revenue was attributable to greater revenue being generated by both the Oilfield Services segment and the Trucking/Logistics segment. The increased revenue experienced by the Oilfield Services segment was mainly attributable to the revenue generated by Operating Entities most directly tied to oil and natural gas drilling activity and the revenue generated from certain oil sands projects. The increase in revenue experienced by the Trucking/Logistics segment was mainly attributable to incremental revenue from acquisitions and stronger demand for transportation services particularly in western Canada.

Mullen Group generated operating income for the fourth quarter of $58.3 million, an increase of $14.3 million or 32.5 percent over the same period last year. Operating income increased in both the Oilfield Services segment and the Trucking/Logistics segment as a direct result of the increase in revenue experienced by both segments. Operating income as a percentage of revenue increased to 19.7 percent from 18.8 percent in 2009.

"The fourth quarter of 2010 continued the trend of strengthening demand for the majority of services provided by Mullen Group's Operating Entities. This was driven primarily by a robust recovery in western Canada which is benefiting from higher oil pricing as well as the introduction of new drilling technologies. This combination has reenergized oil focused drilling and is now a major contributor to Mullen Group's growth," stated Mr. Murray Mullen, Chairman and Chief Executive Officer.

"Today we are in near full recovery mode, with the lone exception being our business directly tied to drilling activity - in particular rig moving, which will not return to prior activity and profit levels any time soon. Overall, however, we expect virtually all 26 Operating Entities in the Mullen Group to show year over year growth with the highest growth levels in those businesses with close ties to oil sands activity and oil production, two sectors in which we will continue to deploy capital," stated Mr. Murray Mullen.

A summary of Mullen Group's results for the quarter and year ended December 31, 2010, along with revenues and operating results by segment are as follows:

    <<
    -------------------------------------------------------------------------
    SUMMARY               Three Months Ended          Twelve Months Ended
                              December 31                  December 31
    --------------------------------------------  ---------------------------
                         2010     2009   Change       2010     2009   Change
    -------------------------------------------------------------------------
    (Unaudited)
    ($ millions,
     except per share
     and per unit
     amounts)               $        $        %          $        $        %

    Revenue             296.4    233.6     26.9    1,039.8    978.0      6.3

    Operating
     income (1)          58.3     44.0     32.5      204.0    192.6      5.9
    Unrealized foreign
     exchange gain        9.4      4.7    100.0       14.1     40.0    (64.8)
    Net income           33.2     11.1    199.1       79.1     90.8    (12.9)
    Net income
     - adjusted(2)       23.3      5.9    294.9       66.0     50.1     31.7
    Earnings per
     share (3)          $0.42    $0.14    200.0      $1.00    $1.13    (11.5)
    Earnings per share
     - adjusted(2)      $0.30    $0.07    328.6      $0.83    $0.62     33.9

    Funds from
     operations (4)      52.3     33.5     56.1      150.1    121.0     24.1
    Funds from
     operations per
     share (5)          $0.66    $0.41     61.0      $1.89    $1.50     26.0
    Cash dividends
     declared per
     common share      $0.125   $0.125        -      $0.50    $0.25    100.0
    Cash distributions
     declared per unit      -        -        -          -   $0.225   (100.0)
    -------------------------------------------------------------------------
    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 expense, 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 eliminate
          the impact of unrealized foreign exchange gains and losses. As well
          as 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
          common 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 from
          operating activities.
      (5) Funds from operations per share is calculated by dividing funds
          from operations by the weighted average number of common shares
          outstanding for the period ended. Operating income, funds from
          operations and funds from operations per share are not recognized
          measures under Canadian generally accepted accounting principles
          ("Canadian 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 Canadian GAAP and do not have standardized meanings
      prescribed by Canadian GAAP. Investors should be cautioned that these
      indicators should not replace net income as an indicator of Canadian
      GAAP performance.
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    SEGMENTED RESULTS     Three Months Ended          Twelve Months Ended
                              December 31                  December 31
                       -------------------------  ---------------------------
    --------------------------------------------  ---------------------------
                         2010     2009   Change       2010     2009   Change
    -------------------------------------------------------------------------
    (Unaudited)
    ($ millions)            $        $        %          $        $        %

    Revenue
      Oilfield
       Services         189.2    146.1     29.5      650.7    612.6      6.2
      Trucking/
       Logistics        107.9     89.5     20.6      392.1    372.1      5.4
      Corporate           0.3      0.3        -        0.9      0.9        -
    Intersegment
     eliminations
      Oilfield
       Services          (0.3)    (1.8)       -       (1.9)    (4.9)       -
      Trucking/
       Logistics         (0.7)    (0.5)       -       (2.0)    (2.7)       -
    -------------------------------------------------------------------------
    Totals              296.4    233.6     26.9    1,039.8    978.0      6.3

    Operating income
      Oilfield
       Services          41.4     31.3     32.3      145.2    139.5      4.1
      Trucking/
       Logistics         18.7     14.8     26.4       66.2     61.6      7.5
      Corporate          (1.8)    (2.1)       -       (7.4)    (8.5)       -
    -------------------------------------------------------------------------
    Totals               58.3     44.0     32.5      204.0    192.6      5.9
    -------------------------------------------------------------------------


    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
    December 31, 2010 and 2009                            2010          2009
    ($ thousands)

    Assets

    Current assets:
      Cash and cash equivalents                    $   113,313   $   204,899
      Accounts receivable                              204,898       151,049
      Inventory                                         25,053        22,505
      Prepaid expenses                                   8,809         7,922
      Investments                                       37,706         6,101
    -------------------------------------------------------------------------
                                                       389,779       392,476

    Property, plant and equipment                      622,262       613,281
    Goodwill                                           851,549       846,441
    Intangible assets                                   62,546        72,406
    Other assets                                        14,878         2,283
    -------------------------------------------------------------------------
                                                   $ 1,941,014   $ 1,926,887
    -------------------------------------------------------------------------

    Liabilities and Shareholders' Equity

    Current liabilities:
      Accounts payable and accrued liabilities     $    96,864    $   69,288
      Dividends payable                                  9,840        10,076
      Current portion of future income taxes            32,170        26,719
      Income tax payable                                 5,171        36,044
      Current portion of long-term debt                  3,035         1,830
    -------------------------------------------------------------------------
                                                       147,080       143,957

    Long-term debt                                     396,994       410,811
    Convertible debentures - debt component            117,067       116,162

    Future income taxes                                 98,145        88,726

    Shareholders' equity:
      Share capital                                  1,158,022     1,185,821
      Convertible debentures - equity component          7,192         7,200
      Contributed surplus                               10,186         8,103
      Retained earnings (deficit)                        6,328       (33,893)
    -------------------------------------------------------------------------
                                                     1,181,728     1,167,231
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                   $ 1,941,014   $ 1,926,887
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------

    CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (DEFICIT)

    ($ thousand, except share and per share amounts)

                              Three Months Ended        Twelve Months Ended
                                  December 31               December 31
                                  2010        2009          2010        2009
    -------------------------------------------------------------------------
                                  (Unaudited)

    Revenue                  $ 296,389   $ 233,568   $ 1,039,804   $ 978,046

    Direct operating
     expenses                  204,163     159,701       709,443     662,522
    Selling and
     administrative expenses    33,950      29,945       126,406     122,960
    Depreciation on property,
     plant and equipment        15,332      16,011        57,511      61,576
    Amortization on
     intangible assets           4,478       4,702        18,963      18,608
    Interest and accretion
     expense                     9,436       9,828        39,098      36,163
    Unrealized foreign
     exchange gain              (9,400)     (4,700)      (14,100)    (39,950)
    Change in fair value of
     investments                (2,439)       (787)       (7,244)     (1,381)
    Stock-based
     compensation expense          299         255         2,120         946
    (Gain) loss on sale of
     property, plant and
     equipment                  (1,049)      5,361         1,962       5,056
    -------------------------------------------------------------------------
    Income before income
     taxes and earnings
     from equity investment     41,619      13,252       105,645     111,546
    -------------------------------------------------------------------------

    Provision for income
     taxes:
      Current (recovery)        (3,170)        983        16,418      36,465
      Future (reduction)        11,579       1,184        10,127     (15,607)
    -------------------------------------------------------------------------
                                 8,409       2,167        26,545      20,858
    -------------------------------------------------------------------------

    Income before earnings
     from equity investment     33,210      11,085        79,100      90,688
    Earnings from equity
     investment                      -           -             -         122
    -------------------------------------------------------------------------
    Net income and
     comprehensive income    $  33,210   $  11,085     $  79,100   $  90,810

    Deficit, beginning of
     period                  $ (17,042)  $ (34,902)    $ (33,893)  $ (86,415)
    Cash distributions
     declared to unitholders         -           -             -     (18,136)
    Cash dividends declared
     to common shareholders     (9,840)    (10,076)      (39,592)    (20,152)
    Repurchase of common
     shares                          -           -           713           -
    -------------------------------------------------------------------------
    Retained earnings
     (deficit), end of
     period                  $   6,328   $ (33,893)    $   6,328   $ (33,893)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share:
      Basic                  $    0.42   $    0.14     $    1.00   $    1.13
      Diluted                $    0.40   $    0.14     $    0.98   $    1.10

    Weighted average number
     of common shares
     outstanding:
      Basic                     78,707      80,605        79,411      80,605
      Diluted                   90,341      92,254        91,047      88,421


    -------------------------------------------------------------------------

    CONSOLIDATED STATEMENTS OF CASH FLOWS
    ($ thousands)
                              Three Months Ended        Twelve Months Ended
                                  December 31               December 31
                                  2010        2009          2010        2009
    -------------------------------------------------------------------------
                                    (Unaudited)
    Cash provided by (used
     in):
    Operations:
      Net income             $  33,210   $  11,085     $  79,100   $  90,810
      Items not involving
       cash:
      Depreciation on
       property, plant and
       equipment                15,332      16,011        57,511      61,576
      Amortization on
       intangible assets         4,478       4,702        18,963      18,608
      Stock-based
       compensation expense        299         255         2,120         946
      Amortization of debt
       issuance costs              128         167           886         520
      Interest expense on
       convertible
       debentures settled
       in common shares              3           -             3           -
      Unrealized foreign
       exchange gain            (9,400)     (4,700)      (14,100)    (39,950)
      Accretion on
       convertible
       debentures                  203         198           791         527
      Change in fair value
       of investments           (2,439)       (787)       (7,244)     (1,381)
      (Gain) loss on sale
       of property, plant
       and equipment            (1,049)      5,361         1,962       5,056
      Future income taxes
       (reduction)              11,579       1,184        10,127     (15,607)
      Earnings from equity
       investment                    -           -             -        (122)
    -------------------------------------------------------------------------
                                52,344      33,476       150,119     120,983
    Changes in non-cash
     working capital items
     from operating
     activities                 (9,150)       (950)      (55,608)     91,219
    -------------------------------------------------------------------------
                                43,194      32,526        94,511     212,202
    Financing activities:
      Proceeds of
       convertible debentures        -           -             -     125,000
      Debt issuance costs            -           -             -      (3,036)
      Repayment of long-term
       debt and loans           (1,552)       (740)      (14,637)    (70,262)
      Net proceeds from
       share issuances               -           -            12           -
      Cash dividends paid to
       common shareholders      (9,838)    (10,076)      (39,828)    (10,076)
      Cash distributions
       paid to unitholders           -           -             -     (30,227)
      Repurchase of common
       shares                        -           -       (27,276)          -
    -------------------------------------------------------------------------
                               (11,390)    (10,816)      (81,729)     11,399
    Investing activities:
      Acquisitions              (6,223)     (1,332)      (25,182)     (5,337)
      Property, plant and
       equipment additions     (22,272)    (11,657)      (61,600)    (28,307)
      Proceeds on sale of
       property, plant and
       equipment                 7,995       5,773        17,926      16,237
      Proceeds on sale of
       investments                   -           -         2,826           -
      Purchases of
       investments              (4,192)          -       (27,187)          -
      Other assets             (12,911)     (1,778)      (14,009)     (1,586)
      Changes in non-cash
       working capital
       items from investing
       activities                2,858           -         2,858           -
    -------------------------------------------------------------------------
                               (34,745)     (8,994)     (104,368)    (18,993)
    -------------------------------------------------------------------------
    Change in cash and cash
     equivalents                (2,941)     12,716       (91,586)    204,608
    Cash and cash
     equivalents, beginning
     of period                 116,254     192,183       204,899         291
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end of
     period                  $ 113,313   $ 204,899     $ 113,313   $ 204,899
    -------------------------------------------------------------------------

    Supplemental cash flow
     information:
      Interest paid          $  12,017   $  12,763     $  37,492   $  36,376
      Income taxes paid
       (received)            $   2,252   $     (84)    $  47,161   $   2,056

    -------------------------------------------------------------------------
    >>

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 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.

SOURCE Mullen Group Ltd.

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. P. Stephen Clark - Chief Financial Officer, 121A, 31 Southridge Drive, Okotoks, Alberta, Canada, T1S 2N3, Tel: (403) 995-5200, Fax: (403) 995-5296

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