Mullen Group Ltd. Reports Record First Quarter Financial Results and Initial Investment into the Modular Frac Storage Tank Business

OKOTOKS, AB, April 25, 2012 /CNW/ - (TSX: MTL)  Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") is pleased to report its financial and operating results for the period ended March 31, 2012, with comparisons to the same period last year.

For the three month period ended March 31, 2012, Mullen Group generated record financial results in terms of consolidated revenue of $426.0 million, operating income of $99.1 million and net income of $58.8 million.  Mullen Group generated net cash from operating activities of $54.3 million, which was used, among other things, to pay dividends of $20.2 million, acquire net property, plant and equipment of $15.1 million and pay interest obligations of $5.8 million.

Mullen Group's consolidated revenue of $426.0 million was an increase of $83.3 million or 24.3 percent from the $342.7 million generated in 2011.  The increase in consolidated revenue was attributable to greater revenue generated by both the Oilfield Services segment and the Trucking/Logistics segment.

The Oilfield Services segment contributed revenue of $296.6 million, an increase of $56.5 million over the same period in 2011, as most operating entities experienced greater demand for their services.  The demand for fluid hauling and related production services benefited from strong crude oil drilling and increased heavy oil production.  Operating entities providing services related to oil sands development and infrastructure projects experienced strong demand as activity in these sectors remained robust.  Those operating entities providing services related to drilling activity, including core drilling within the oil sands region, also saw increased demand.  The Trucking/Logistics segment contributed revenue of $130.6 million, which was an increase of $26.6 million over the prior year period.  This increase was due to the incremental revenue generated from Hi-Way 9, continued strong demand for transportation services in western Canada and higher fuel surcharge revenue associated with higher diesel fuel prices.

Mullen Group's operating income of $99.1 million was a record compared to all of its previous quarterly periods.  Operating income increased by $24.7 million, or 33.2 percent from the $74.4 million generated in 2011.  Operating income in the Oilfield Services segment accounted for $17.5 million of the increase while the Trucking/Logistics segment added an additional $6.2 million.  Corporate costs declined by $1.0 million on a year over year basis.

"Overall, we are very pleased with the record operating results achieved in the first quarter of 2012, which continued to validate our decentralized business model and demonstrates the success of Mullen Group's strategy of diversification by service offering and geographic location.  The Oilfield Services segment realized strong revenue gains and contributed 69.4 percent of pre-consolidated revenue despite the fact that overall drilling activity, in terms of wells drilled, in the Western Canadian Sedimentary Basin marginally decreased. In particular, TREO Drilling experienced strong demand for their core drilling services as did virtually all of our fluid hauling and well servicing businesses.  The Trucking/Logistics segment also contributed increased revenue, which was mainly attributable to the incremental revenue from the acquisition of Hi-Way 9 and continued strengthening demand for our business units offering over-dimensional and multi-modal services," stated Mr. Stephen H. Lockwood, President and Co-Chief Executive Officer.

In the first quarter of 2012, Mullen Group generated net income of $58.8 million, or $0.73  per share, an increase of $10.5 million, or 21.7 percent, compared to $48.3 million, or $0.61  per share in 2011.  The $10.5 million increase in net income was mainly attributable to the $24.7 million increase in operating income.  This increase was somewhat offset by a $9.2 million negative variance in the fair value of investments and a $6.0 million increase in income tax expense.  Adjusting Mullen Group's net income and earnings per share to eliminate the impact of unrealized foreign exchange gains and changes in the fair value of investments results in adjusted net income of $54.0 million and adjusted earnings per share of $0.67 for 2012 as compared to $34.0 million, or $0.43 per share, in 2011.  These adjustments more clearly reflect earnings from an operating perspective.

Mullen Group is also pleased to announce that it is expanding its service offerings to its oil and gas customers through the addition of onsite modular frac storage tanks or frac corrals.  Mullen Group's initial investment into frac corrals is designed to help customers better manage their overall cost of drilling and completing wells, reduce our customer's environmental footprint on lease sites and generally assist our customers with their overall water usage. Mullen Group's capital investment in these frac corrals forms part of its previously announced $100.0 million capital budget and it is anticipated that the initial order of frac corrals will be in service by the end of the third quarter of 2012.

"Multi-stage fracturing has revolutionized the oil and gas industry from so many different perspectives; one of which is the evolution of on-site frac water storage containment.  This new service offering will provide our production services group with another tool with which to add value to our customers in the oil and gas industry.  It is also a very natural extension of the services we already offer," stated Mr. Murray K. Mullen, Chairman and Chief Executive Officer.

A summary of Mullen Group's results for the three month periods ended March 31, 2012, and 2011, along with revenue and operating results by segment are as follows:

SUMMARY

Three month periods ended

(unaudited)

March 31

 ($ millions, except per share amounts)

2012

2011

Change

$

$

%

Revenue

426

342.7

24.3

Operating income⁽¹⁾

99.1

74.4

33.2

Unrealized foreign exchange gain

(4.6)

(4.8)

(4.2)

Change in fair value of investments

(1.0)

(10.2)

(90.2)

Net income

58.8

48.3

21.7

Net Income - adjusted⁽²⁾

54.0

34.0

58.8

Earnings per share⁽³⁾

0.73

0.61

19.7

Earnings per share - adjusted⁽²⁾

0.67

0.43

55.8

Net cash from operating activities

54.3

50.1

8.4

Net cash from operating activities per share⁽³⁾

0.67

0.64

4.7

Cash dividends declared per Common Share

0.25

0.25

-

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 basic 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 Canadian GAAP and do not have standardized meanings prescribed by Canadian GAAP.  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 March 31

2012

2011

Change

$

$

%

Revenue

    Oilfield Services

296.6

240.1

23.5

    Trucking/Logistics

130.6

104.0

25.6

    Corporate

-

-

-

Intersegment eliminations

    Oilfield Services

(0.2)

(0.1)

-

    Trucking/Logistics

(1.0)

(1.3)

-

Total

426.0

342.7

24.3

Operating Income

    Oilfield Services

77.3

59.8

29.3

    Trucking/Logistics

22.0

15.8

39.2

    Corporate

(0.2)

(1.2)

-

Total

99.1

74.4

33.2

This news release may contain forward-looking statements that are subject to risk factors associated with the oil and natural gas industry 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.  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 or on SEDAR at www.sedar.com.

 

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
Telephone:  [phone]
Fax:  [phone]