Mullen Group Income Fund reports second quarter financial results
Tue Aug 12, 7:11 PMOKOTOKS, AB, Aug. 12 /PRNewswire-FirstCall/ - 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 $17.0 million variance in unrealized foreign exchange gains and losses associated with the Fund's long-term U.S. denominated debt.
Financial Summary
A summary of the Fund's results for the quarter ended June 30, 2008, along
with revenues and operating results by segment is as follows:
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SUMMARY Three Months Ended Six Months Ended
June 30 June 30
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2008 2007 Change 2008 2007 Change
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(Unaudited)
($ 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 $0.90 -
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Notes:
(1) Operating income is defined as net income before interest, income
taxes, depreciation on property, plant and equipment, amortization on
intangible assets, earnings or losses from equity investments,
unrealized gains or losses on foreign exchange and investment and
gains or losses on sale of property, plant and equipment and
investments.
(2) Earnings per unit is based on weighted average number of units
outstanding for the period.
(3) Funds from operations is defined as cash flow from operating
activities before changes in non-cash working capital items.
(4) Funds from operations per unit is calculated by dividing funds from
operations by the weighted average number of units outstanding for
the period.
Operating income, funds from operations and funds from operations per
unit are not recognized measures under Canadian generally accepted
accounting principles ("GAAP"). Management believes these measures are
useful supplemental measures. Operating income provides an indication of
the results generated by the Fund's principal business activities prior
to financing activities, amortization of assets, or taxation in various
jurisdictions. Funds from operations indicate the Fund's ability to
generate funds from its operations without the seasonality effect on its
working capital. References to operating income, funds from operations
and funds from operations per unit are not measures recognized by GAAP
and do not have standardized meanings prescribed by GAAP. Investors
should be cautioned that these indicators should not replace net earnings
as an indicator of GAAP performance.
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SEGMENTED RESULTS Three Months Ended Six Months Ended
June 30 June 30
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2008 2007 Change 2008 2007 Change
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(Unaudited)
($ 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)
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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)
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Totals 34.6 24.7 40.1 118.2 111.4 6.1
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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.
SOURCE Mullen Group Income Fund
11.08 (0.12%)
