SYS-CON MEDIA Authors: Xenia von Wedel, Peter Silva, Glenn Rossman, Ava Smith, Elizabeth White

News Feed Item

Mullen Group Ltd. Reports 2013 Financial Results

OKOTOKS, AB, Feb. 12, 2014 /PRNewswire/ - (TSX:MTL)  Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") reported financial and operating results for the quarter and year ended December 31, 2013, with comparisons to the same periods last year.

For the three month period ended December 31, 2013, Mullen Group generated revenue of $367.4 million, an increase of $21.3 million or 6.2 percent as compared to $346.1 million in 2012.  The majority of this increase in revenue was directly attributable to the Oilfield Services segment. Revenue in the Oilfield Services segment increased by $16.3 million, or 7.8 percent, to $226.1 million as compared to $209.8 million in the same period one year earlier primarily due to an increase in revenue generated by those Operating Entities providing services associated with large diameter pipeline construction projects as well as increased revenue generated by fluid hauling services tied to heavy oil. Revenue in the Trucking/Logistics segment increased by $4.3 million, or 3.1 percent, to $141.9 million as compared to $137.6 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"), as well as a $0.9 million increase in fuel surcharge revenue. These increases were offset by decreased demand for over-dimensional and heavy haul freight services related to the oil sands and mining sectors as well as decreased demand associated with inclement weather and the timing of the mid-week holidays in the month of December.

Operating income for the fourth quarter was $71.1 million, a decrease of $0.1 million or 0.1 percent over the same period in 2012. The decrease of $0.1 million was primarily due to the Trucking/Logistics segment that experienced a $4.4 million decrease, as well as an increase in Corporate costs that rose by $0.3 million on a year over year basis. This decrease was mostly offset by the Oilfield Services segment that experienced a $4.6 million increase in operating income. Heavy snowfall events and colder-than-normal temperatures during the quarter negatively affected productivity across nearly all of the Operating Entities. As a percentage of consolidated revenue, operating income decreased to 19.3 percent as compared to 20.6 percent in 2012.

For the three month period ended December 31, 2013, Mullen Group generated net income of $20.3 million or $0.22 per share, a decrease of $1.5 million, or 6.9 percent, compared to $21.8 million or $0.25 per share in 2012.  The $1.5 million decrease in net income was mainly attributable to a $5.2 million negative variance in unrealized foreign exchange that was partially offset by a $1.8 million positive variance in the fair value of investments.  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 resulted in adjusted net income of $31.5 million and adjusted earnings per share of $0.35 for 2013 as compared to $29.7 million and $0.34 per share in 2012, respectively.  These adjustments more clearly reflect earnings from an operating perspective.

"Our operating performance in the fourth quarter was somewhat below our expectations due to a couple of factors.  First, the positive trends that we saw at the start of the quarter were negatively impacted by weather related issues.  Western Canada experienced some extreme snowfall and a severe cold snap in December, which adversely affected our Operating Entities.  Second, the timing of the mid-week holidays in the month of December resulted in a substantial slow down during the last 15-days of the month.  Profitability was negatively impacted to an even greater extent due to a combination of reduced productivity levels and higher operating expenses notably wages, fuel, repairs and maintenance.  Despite these external factors, Mullen Group increased revenue for the quarter, however, operating costs were significantly higher than normal," said Mr. Stephen H. Lockwood, President and Co-Chief Executive Officer.

For the year ended December 31, 2013, Mullen Group generated revenue of $1,437.2 million, an increase of $9.6 million or 0.7 percent as compared to $1,427.6 million in 2012. This was the highest level of annual revenue recorded by Mullen Group.  The 2013 results include $23.7 million of revenue from the Jay's acquisition, which was acquired on May 31, 2013. Revenue, when adjusted for the completion of the non-recurring Thin Fine Tailings barge system project in the second quarter of 2012 by Canadian Dewatering L.P. (the "Non-Core Project"), increased by $39.4 million, or 2.8 percent as compared to last year.

Revenue in the Oilfield Services segment decreased by $11.0 million, or 1.2 percent, to $886.3 million as compared to $897.3 million in 2012. This decrease was primarily due to the $29.8 million reduction from the Non-Core Project that was somewhat offset by greater demand for services associated with pipeline activity and by fluid hauling services tied to heavy oil. On a comparative basis, after adjusting for the Non-Core Project, revenue from this segment's core business increased by $18.8 million, or 2.2 percent, from the same period one year earlier. Revenue in the Trucking/Logistics segment increased by $18.3 million, or 3.4 percent, to $553.9 million as compared to $535.6 million in 2012. This increase was largely due to incremental revenue resulting from the acquisition of Jay's, increased demand at most Operating Entities within this segment and a modest increase in fuel surcharge revenue. These increases were offset by decreased demand for over-dimensional and heavy haul freight services related to movement of equipment for the oil sands and mining sectors.

In 2013, Mullen Group generated operating income of $300.7 million, an increase of $6.9 million or 2.3 percent over the $293.8 million generated in 2012. This was the highest level recorded by Mullen Group. The increase of $6.9 million was primarily due to a $12.2 million increase generated by the Oilfield Services segment being somewhat offset by a $5.6 million decrease in the Trucking/Logistics segment. As a percentage of revenue, operating income increased to 20.9 percent as compared to 20.6 percent in 2012. This 0.3 percent increase in operating margin was directly attributable to the higher margins achieved on large diameter pipeline projects and other specialized services, as well as the completion of the Non-Core Project in 2012. On a comparative basis, after adjusting for revenue and expenses related to the Non-Core Project, consolidated operating margin in 2012 was 21.1 percent.

In 2013, Mullen Group generated net income of $143.3 million, or $1.60 per share, an increase of $12.4 million or 9.5 percent, as compared to $130.9 million or $1.58 per share in 2012.  The $12.4 million increase in net income was mainly attributable to a $27.6 million positive variance in the fair value of investments and a $6.9 million increase in operating income. These increases were somewhat offset by a $21.4 million negative variance in unrealized foreign exchange.  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 resulted in adjusted net income of $141.0 million and adjusted earnings per share of $1.57, as compared to $133.0 million and $1.60 per share in 2012, respectively.

"I am pleased with our operating performance in 2013.  This is all the more satisfying in light of the challenges we faced in 2013 of which there were many, including, slow economic growth, flat drilling activity year-over-year, a very competitive operating environment, adverse weather conditions and an extremely challenging December.  Notwithstanding these challenges, we achieved record results, which speaks to the strength of our business model," said Mr. Murray K. Mullen, Chairman and Chief Executive Officer.

"For 2014 I am optimistic that the market conditions will provide Mullen Group the opportunity to produce another year of record results, although the improvements will be modest due to the competitiveness of the market.  The outlook for GDP growth in North America is expected to be positive but at 2 - 3 percent that suggests our Trucking/Logistics segment will be challenged to grow.  In our Oilfield Services segment the opportunities are brighter with overall spending by the oil and natural gas industry in western Canada projected to increase by 8 - 10 percent in 2014.  This increased spend accompanied by the $100 million in new capital we will invest in our Operating Entities should translate into growth.  I believe the foundation is in place for Mullen Group to have another record year," said Mr. Mullen.

A summary of Mullen Group's results for the quarter and year ended December 31, 2013, along with revenue and operating results by segment are as follows:

               
SUMMARY      
(unaudited)
(millions, except per share amounts)
Three month periods ended
December 31
  Twelve month periods ended
December 31
 
2013 2012 Change   2013 2012 Change
  $ $ %   $ $ %
Revenue 367.4 346.1 6.2   1,437.2 1,427.6 0.7
               
Operating income(1) 71.1 71.2 (0.1)   300.7 293.8 2.3
Unrealized foreign exchange loss (gain) 7.9 2.7 (192.6)   16.2 (5.2) (411.5)
Decrease (increase) in fair value of investments 4.2 6.0 30.0   (20.9) 6.7 411.9
Net income 20.3 21.8 (6.9)   143.3 130.9 9.5
Net Income - adjusted(2) 31.5 29.7 6.1   141.0 133.0 6.0
Earnings per share(3) 0.22 0.25 (12.0)   1.60 1.58 1.3
Earnings per share - adjusted(2) 0.35 0.34 2.9   1.57 1.60 (1.9)
Net cash from operating activities 67.6 67.7 (0.1)   214.4 279.9 (23.4)
Net cash from operating activities per share(3) 0.75 0.77 (2.6)   2.39 3.37 (29.1)
Cash dividends declared per Common Share 0.30 0.25 20.0   1.20 1.00 20.0
Notes:  
(1)  Operating income is defined as net income before depreciation on property, plant and equipment, amortization on intangible assets,
finance costs, unrealized foreign exchange gains and losses, other (income) expense and income tax expense.
(2)  Net income - adjusted and earnings per share - adjusted are calculated by adjusting net income and basic earnings per share by the
amount of any unrealized foreign exchange gains and losses and by the change in fair value of investments.
(3)  Earnings per share and net cash from operating activities per share are calculated based on the weighted average number of
Common Shares outstanding for the period.
   
Operating income, net income - adjusted and earnings per share - adjusted are not recognized terms under IFRS and do not have
standardized meanings prescribed by IFRS. Management believes these measures are useful supplemental measures. 
Investors should be cautioned that these indicators should not replace net income and earnings per share as indicators of performance.
 

               
SEGMENTED RESULTS      
(unaudited)
(millions)
Three month periods ended
December 31
  Twelve month periods ended
December 31
 
2013 2012 Change   2013 2012 Change
  $ $ %   $ $ %
Revenue              
  Oilfield Services 226.1 209.8 7.8   886.3 897.3 (1.2)
  Trucking/Logistics 141.9 137.6 3.1   553.9 535.6 3.4
  Corporate 0.4 (0.1) -   1.0 0.7 -
Intersegment eliminations              
  Oilfield Services (0.1) (0.4) -   (1.0) (1.9) -
  Trucking/Logistics (0.9) (0.8) -   (3.0) (4.1) -
Total 367.4 346.1 6.2   1,437.2 1,427.6 0.7
Operating Income              
  Oilfield Services 50.5 45.9 10.0   212.3 200.1 6.1
  Trucking/Logistics 21.9 26.3 (16.7)   92.8 98.4 (5.7)
  Corporate (1.3) (1.0) -   (4.4) (4.7) -
Total 71.1 71.2 (0.1)   300.7 293.8 2.3





         
CONSOLIDATED STATEMENT OF FINANCIAL POSITION        
(thousands)   December 31
2013   2012
    $   $
Assets        
Current assets:        
  Cash and cash equivalents   58,236   122,772
  Trade and other receivables   234,485   219,423
  Inventory   34,143   32,097
  Prepaid expenses   10,946   10,663
  Current tax receivable   6,318   2,083
    344,128   387,038
Non-current assets:        
Property, plant and equipment   903,256   843,318
Goodwill   244,440   239,595
Intangible assets   41,742   52,985
Investments   49,463   27,612
Deferred tax assets   3,015   5,029
Other assets   1,565   327
    1,243,481   1,168,866
Total Assets   1,587,609   1,555,904
           
Liabilities and Equity        
Current liabilities:        
  Accounts payable and accrued liabilities   108,963   104,810
  Dividends payable   9,066   21,917
  Current tax payable   4,993   20,902
  Current portion of long-term debt   277   1,471
    123,299   149,100
Non-current liabilities:        
Long-term debt   409,209   392,814
Convertible debentures - debt component   16,070   39,773
Deferred tax liabilities   138,919   147,092
    564,198   579,679
Equity:        
  Share capital   760,310   720,836
  Convertible debentures - equity component   738   1,843
  Contributed surplus   11,327   12,125
  Retained earnings   127,737   92,321
    900,112   827,125
         
Total Liabilities and Equity   1,587,609   1,555,904



           
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AND RETAINED EARNINGS
  Three month periods ended
December 31
  Twelve month periods ended
December 31
(thousands, except per share amounts) 2013 2012   2013 2012
  $ $   $ $
  (unaudited)      
Revenue 367,388 346,166   1,437,166 1,427,640
           
Direct operating expenses 257,494 238,648   983,382 983,535
Selling and administrative expenses 38,847 36,332   153,101 150,298
  71,047 71,186   300,683 293,807
           
Depreciation on property, plant and equipment 18,498 18,026   69,499 65,335
Amortization on intangible assets 3,873 4,610   16,743 18,334
Finance costs 6,591 7,084   26,305 32,897
Unrealized foreign exchange loss (gain) 7,825 2,749   16,144 (5,194)
Other (income) expense 4,351 7,993   (20,710) 6,668
Income before income taxes 29,909 30,724   192,702 175,767
           
Income tax expense 9,558 8,954   49,407 44,858
           
Net income and total comprehensive income 20,351 21,770   143,295 130,909
           
Retained earnings, beginning of period 134,568 92,468   92,321 45,711
Dividends declared to common shareholders (27,182) (21,917)   (107,879) (84,299)
Retained earnings, end of period 127,737 92,321   127,737 92,321
           
Earnings per share:          
  Basic 0.22 0.25   1.60 1.58
  Diluted 0.22 0.25   1.57 1.52
Weighted average number of Common Shares outstanding:          
  Basic 90,559 87,384   89,764 82,961
  Diluted 92,695 87,901   92,502 91,785

           
CONSOLIDATED STATEMENT OF CASH FLOWS
  Three month periods ended
December 31
  Twelve month periods ended
December 31
(thousands) 2013 2012   2013 2012
  $ $   $ $
  (unaudited)      
Cash provided by (used in):          
Cash flows from operating activities:          
Net income 20,351 21,770   143,295 130,909
Adjustments for:          
  Depreciation on property, plant and equipment 18,498 18,026   69,499 65,335
  Amortization on intangible assets 3,873 4,610   16,743 18,334
  Finance costs 6,591 7,084   26,305 32,897
  Stock-based compensation expense 836 390   2,588 2,768
  Foreign exchange 7,380 2,615   15,294 (4,913)
  Change in fair value of investments 4,206 6,049   (20,935) 6,707
  Loss (gain) on sale of property, plant and equipment 173 944   1,118 (1,039)
  Income tax expense 9,558 8,954   49,407 44,858
  Earnings from equity investment (28) -   (893) -
  Impairment of goodwill - 3,000   - 3,000
  Gain on contingent consideration - (2,000)   - (2,000)
  71,438 71,442   302,421 296,856
Changes in non-cash working capital items from operating activities:          
  Trade and other receivables 13,304 10,794   (10,413) 45,097
  Inventory (1,166) 78   (1,776) 6,915
  Prepaid expenses 1,711 1,410   (10) (81)
  Accounts payable and accrued liabilities (3,659) (7,716)   2,466 (19,329)
Cash generated from operating activities 81,628 76,008   292,688 329,458
Income tax paid (13,987) (8,401)   (78,287) (49,604)
Net cash from operating activities 67,641 67,607   214,401 279,854
           
Cash flows from financing activities:          
  Cash dividends paid to common shareholders (27,158) (21,836)   (120,730) (82,591)
  Interest paid (9,476) (10,050)   (26,210) (31,538)
  Proceeds of long-term debt 311 -   311 -
  Repayment of long-term debt and loans (238) (2,510)   (7,423) (7,753)
  Net proceeds from Common Share issuances 3,367 5,451   10,407 7,054
  Changes in non-cash working capital items from financing activities 8 33   86 (28)
Net cash used in financing activities (33,186) (28,912)   (143,559) (114,856)
Cash flows from investing activities:          
  Acquisitions - -   (15,665) (5,781)
  Purchase of property, plant and equipment (32,208) (23,924)   (133,686) (122,750)
  Proceeds on sale of property, plant and equipment 5,560 6,591   14,315 19,508
  Purchase of investments - -   (23) -
  Interest received 167 316   839 931
  Other assets 3 2   (1,238) (25)
  Changes in non-cash working capital items from investment activities (330) (1,521)   (770) 238
Net cash used in investing activities (26,808) (18,536)   (136,228) (107,879)
Change in cash and cash equivalents 7,647 20,159   (65,386) 57,119
Cash and cash equivalents, beginning of period 50,144 102,479   122,772 65,934
Effect of exchange rate fluctuations on cash held 445 134   850 (281)
Cash and cash equivalents, end of period 58,236 122,772   58,236 122,772

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 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.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
We are reaching the end of the beginning with WebRTC, and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will w...
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective ...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrateg...
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water,...
When an enterprise builds a hybrid IaaS cloud connecting its data center to one or more public clouds, security is often a major topic along with the other challenges involved. Security is closely intertwined with the networking choices made for the hybrid cloud. Traditional networking approaches for building a hybrid cloud try to kludge together the enterprise infrastructure with the public cloud. Consequently this approach requires risky, deep "surgery" including changes to firewalls, subnets...
DevOps is all about agility. However, you don't want to be on a high-speed bus to nowhere. The right DevOps approach controls velocity with a tight feedback loop that not only consists of operational data but also incorporates business context. With a business context in the decision making, the right business priorities are incorporated, which results in a higher value creation. In his session at DevOps Summit, Todd Rader, Solutions Architect at AppDynamics, discussed key monitoring techniques...
Want to enable self-service provisioning of application environments in minutes that mirror production? Can you automatically provide rich data with code-level detail back to the developers when issues occur in production? In his session at DevOps Summit, David Tesar, Microsoft Technical Evangelist on Microsoft Azure and DevOps, will discuss how to accomplish this and more utilizing technologies such as Microsoft Azure, Visual Studio online, and Application Insights in this demo-heavy session.
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
One of the biggest challenges when developing connected devices is identifying user value and delivering it through successful user experiences. In his session at Internet of @ThingsExpo, Mike Kuniavsky, Principal Scientist, Innovation Services at PARC, described an IoT-specific approach to user experience design that combines approaches from interaction design, industrial design and service design to create experiences that go beyond simple connected gadgets to create lasting, multi-device exp...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect...
High-performing enterprise Software Quality Assurance (SQA) teams validate systems that are ready for use - getting most actively involved as components integrate and form complete systems. These teams catch and report on defects, making sure the customer gets the best software possible. SQA teams have leveraged automation and virtualization to execute more thorough testing in less time - bringing Dev and Ops together, ensuring production readiness. Does the emergence of DevOps mean the end of E...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...