Mullen Group Income Fund reports second quarter financial results

    CALGARY, Aug. 8 /CNW/ - Mullen Group Income Fund ("Mullen" and/or the
"Fund") reported its financial and operating results for the period ended
June 30, 2007 with comparisons to the same period last year. In comparing
these results with the results for 2006 consideration must be given to the
material impact on the Fund and its operations of the many significant
transactions that were successfully completed during 2006.
    For the three month period ended June 30, 2007 the Fund generated
consolidated revenue of $218.9 million and operating income of $24.7 million.
From a cash perspective, the Fund generated $23.3 million of funds from
operations which were used, in conjunction with the Fund's cash reserves and
$76.9 million of non-cash working capital items, to fund monthly distributions
of $36.7 million, net capital expenditures of $18.7 million, trust unit
repurchases of $9.4 million, acquisitions of $2.4 million and to repay
$0.9 million of long-term debt.
    "The operating environment during the quarter was challenging for both of
our operating segments. Nevertheless, we were very pleased with the operating
performance of our Trucking/Logistics segment and the business units in
Production Services and Specialized Services. Our diversified business model
and our focus on cost controls and operational efficiencies enabled us to
achieve reasonable overall results during the quarter," stated Stephen H.
Lockwood, President and Co-Chief Executive Officer.
    "As we look ahead to the remainder of the year we are comfortable with
the operating models that exist in most of our business units. We will
continue to focus substantial time and effort to ensure that all our business
units are able to operate profitably in all economic environments.
Furthermore, the strength of our balance sheet will allow us to maintain
unitholder distributions at current levels and it has us well positioned to
capitalize on acquisition opportunities as they arise," stated Stephen H.
    The Fund's revenue of $218.9 million for the three month period ended
June 30, 2007, was an increase of $18.9 million or 9.5 percent over the same
period in 2006. This increase was primarily attributable to the revenue
generated by the six new businesses added to the Mullen group since April of
2006. The business units in Production Services and Specialized Services also
contributed to this growth in revenue. Revenue in the quarter was negatively
impacted by the decline in revenue experienced by all the Fund's business
units dependant on drilling activity in western Canada.
    The Fund's operating income of $24.7 million was a decrease of
$9.8 million or 28.4 percent compared to the same period last year. This
decrease was attributable to the operating losses generated by the business
units in Drilling Related Services caused by the decline in drilling activity
and the increase in selling and administrative costs associated with operating
the Fund. "The 28.4 percent decrease in our operating income overshadows the
steady year-over-year performance of our Trucking/Logistics segment and the
excellent performance of the business units in Production Services and
Specialized Services. On the Trucking/Logistics side, this segment experienced
overall growth in operating income due to the addition of Kleysen and E.K.
Inc. and the steady performance of the other business units despite a slowdown
in the overall economy, especially in eastern Canada," stated Stephen H.
    Net income for the period was $16.6 million, a decrease of $22.3 million
or 57.3 percent compared to the same period last year. This decrease reflects
the weak operating performance of the business units reliant on drilling
activity in western Canada and the lower future income tax recovery which
reduced net income by $14.5 million.
    In June of 2007 the federal government enacted legislation concerning
SIFT's. This legislation has created uncertainty for many of our oil and gas
customers. In 2006, we completed a number of acquisitions based upon the rules
relating to income funds at the time. Today, we have a much different tax
regime and economic environment which may impact the goodwill the Fund booked
in conjunction with the oilfield services acquisitions completed in 2006.

    Financial Summary

    A summary of the Fund's results for the three and six month period ended
June 30, 2007, along with revenues and operating results by segment is as

    SUMMARY                      Three Months Ended       Six  Months Ended
                                      June 30                 June 30
                               ----------------------  ----------------------
                                2007    2006  Change    2007    2006  Change
    ($ millions, except per
     unit amounts)                 $       $       %       $       $       %

    Revenue                    218.9   200.0     9.5   584.6   445.9    31.1

    Operating income(1)         24.7    34.5   (28.4)  111.4    94.3    18.1
    Net income                  16.6    38.9   (57.3)   74.9    82.0    (8.7)
    Earnings per unit(2)       $0.21   $0.64   (67.2)  $0.92   $1.47   (37.4)

    Funds from operations(3)    23.3    34.2   (31.9)  104.8    92.5    13.3
    Funds from operations per
     unit(4)                   $0.29   $0.56   (48.2)  $1.28   $1.66   (22.3)
    Distributions declared
     per unit                  $0.45   $0.45       -   $0.90   $0.90       -

    (1) Operating income is defined as net income before interest, income
        taxes, depreciation on property, plant and equipment, amortization on
        intangible assets, earnings (loss) from equity investments,
        unrealized gains or losses on foreign exchange 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 for
        the period.
    (3) Funds from operations is defined as cash provided by operations
        before change 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 funds available for
    finance and investing activities. References to operating income, funds
    from operations and distributable funds 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
                               ----------------------  ----------------------
                                2007    2006  Change    2007    2006  Change
    ($ millions)                   $       $       %       $       $       %

      Oilfield Services        113.5   101.5    11.8   371.1   264.7    40.2
      Trucking\Logistics       106.1    98.4     7.8   215.3   182.0    18.3
      Corporate                  0.5     0.7       -     0.7     0.7       -
    Intersegment eliminations
      Oilfield Services         (0.6)   (0.2)      -    (1.0)   (0.7)      -
      Trucking\Logistics        (0.6)   (0.4)      -    (1.5)   (0.8)      -
    Totals                     218.9   200.0     9.5   584.6   445.9    31.1

    Operating income
      Oilfield Services         12.5    21.6   (42.1)   85.6    67.9    26.1
      Trucking\Logistics        14.7    13.4     9.7    29.1    26.1    11.5
      Corporate                 (2.5)   (0.5)      -    (3.3)    0.3       -
    Totals                      24.7    34.5   (28.4)  111.4    94.3    18.1

    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"

    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 2006 Financial Report,
the 2007 First Quarter Interim Report and the 2007 Second Quarter Interim
Report, which includes the Management's Discussion and Analysis and financial
statements for the period ended June 30, 2007, is available on our website at and on SEDAR at 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

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, P.O. Box 87, 1 Maple Leaf Road, Aldersyde, Alberta, Canada,
T0L 0A0, Tel: (403) 652-8888, Fax: (403) 601-8301

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Mullen Group Ltd.

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