OKOTOKS, AB, Oct. 23, 2019 /PRNewswire/ - (TSX:MTL)
Mullen Group Ltd. ("Mullen Group", "We",
"Our" and/or the "Corporation"), one of
Canada's largest suppliers of
trucking and logistics services as well as specialized
transportation services to the oil and natural gas industry in
Canada, today reported its
financial and operating results for the period ended September 30, 2019, with comparisons to the same
period last year. Full details of our results may be found within
our Third Quarter Interim Report, which is available on SEDAR at
www.sedar.com or on our website at www.mullen-group.com.
"As frustrating as this market is, our financial results
continue to be very impressive. We generated the best quarterly
results of this fiscal year, cash flow was very strong and with our
well capitalized balance sheet there is little doubt in my mind
that we will continue to grow our business for many years. The
acquisition opportunities are significant and I am confident that
we will gain market share as our competition struggles within the
current macro environment.
There is no denying the fact that freight demand has been
softer this year than last year, especially as it relates to the
movement of goods associated with capital investment within
Canada, and that the oil and
natural gas industry remains under duress but consumer demand
remains solid as evidenced by another strong showing from our
regional LTL Business Units. This is precisely why we have a
diversified portfolio of companies within our group and why we have
invested heavily in servicing the consumer through one of the most
comprehensive terminal networks in Canada. LTL is the most stable part of our
business because it is tied to the consumer. Through our expansive
network we provide that critical "final mile" solution to hundreds
of communities on a daily basis, absolutely a necessity in today's
growing e-commerce world. It is also why we have a significant
investment in real estate.
There was also a flurry of activity related to pipeline
construction during the quarter, the majority related to the
transportation of natural gas as companies position for the build
out of LNG projects on Canada's
west coast, the gateway to Asian markets for Canada's land locked natural gas. This is
extremely positive and one of the few signs that there is some hope
for Canada's energy
producers," commented Mr. Murray K. Mullen,
Chairman and Chief Executive Officer.
Key financial highlights for the third quarter of 2019 with
comparison to 2018 are as follows:
|
|
HIGHLIGHTS
|
|
(unaudited)
($
millions)
|
Three month
periods ended
September
30
|
2019
|
2018
|
Change
|
|
$
|
$
|
%
|
Revenue
|
|
|
|
Trucking/Logistics
|
222.2
|
226.7
|
(2.0)
|
Oilfield
Services
|
103.9
|
114.5
|
(9.3)
|
Corporate and
intersegment eliminations
|
(0.8)
|
(1.5)
|
-
|
Total
Revenue
|
325.3
|
339.7
|
(4.2)
|
Operating income
before depreciation and amortization (1)
|
|
|
|
Trucking/Logistics
|
35.8
|
36.0
|
(0.6)
|
Oilfield
Services
|
22.3
|
21.6
|
3.2
|
Corporate
|
(2.5)
|
(2.5)
|
-
|
Total Operating
income before depreciation and amortization
(1)
|
55.6
|
55.1
|
0.9
|
(1) Refer to notes section of
Summary
|
|
|
|
Mullen Group operates a diversified business model combined with
a highly adaptable and variable cost structure. The financial
results for the three month period ended September 30, 2019, are as follows:
- generated consolidated revenue of $325.3
million, a decrease of $14.4
million, or 4.2 percent, as compared to $339.7 million in 2018 due to:
-
- a decrease of $4.5 million or 2.0
percent in the Trucking/Logistics ("T/L") segment primarily
due to weakness in the demand for truckload freight services
- a decrease of $10.6 million or
9.3 percent in the Oilfield Services ("OFS") segment due to
significant declines in drilling activity and mandated crude oil
curtailments by the Alberta Government being somewhat offset by
greater demand for pipeline hauling and stringing services
- earned consolidated operating income before depreciation and
amortization ("OIBDA") of $55.6
million, an increase of $0.5
million as compared to $55.1
million in 2018 due to:
-
- a decrease of $0.2 million or 0.6
percent to $35.8 million in the T/L
segment
- an increase of $0.7 million or
3.2 percent to $22.3 million in the
OFS segment
- Corporate costs were consistent on a year over year basis at
$2.5 million
- net cash from operating activities up by $20.0 million, or 75.5 percent, to $46.5 million (highest third quarter amount since
2014)
Third Quarter Financial Results
Revenue decreased by
$14.4 million, or
4.2 percent, to $325.3 million
and is summarized as follows:
- T/L segment decreased by $4.5
million, or 2.0 percent, to $222.2
million - revenue from truckload freight services decreased
by $11.0 million and resulted from
lower gross domestic products growth, a lack of project work
associated with capital investments and a $1.8 million reduction in fuel surcharge revenue.
Revenue from less-than-truckload ("LTL") services improved
by $6.7 million due to $7.1 million of incremental revenue from
acquisitions and revenue gains at Gardewine Group Limited
Partnership being somewhat offset by a $1.3
million reduction in fuel surcharge revenue.
- OFS segment decreased by $10.6
million, or 9.3 percent to $103.9
million - revenue from those Business Units involved in the
transportation of fluids and servicing of wells declined by
$12.3 million due to a very
competitive pricing environment coupled with lower customer demand
due to the impact of the Alberta Government's crude oil curtailment
program while revenue generated by those Business Units most
directly tied to drilling and drilling related services decreased
by $9.1 million as drilling activity
levels hit multi-year lows in the third quarter. These decreases
were partially offset by a $9.5
million increase in revenue from large diameter pipeline
hauling and stringing services.
OIBDA increased by $0.5 million, or
0.9 percent, to $55.6 million and is
summarized as follows:
- T/L segment declined by $0.2
million, or 0.6 percent, to $35.8
million - OIBDA generated by our truckload services Business
Units declined and was somewhat offset by a $2.7 million increase in OIBDA due to the
adoption of IFRS 16 - Leases, $1.1
million of incremental OIBDA associated with acquisitions
and improved results generated by our regional LTL Business Units.
When comparing our operating margin without the impact of IFRS 16 -
Leases, it was 14.9 percent, a decrease of 100-bps as compared to
2018, primarily due to competitive market conditions and spot
market pricing declines.
- OFS segment up by $0.7 million,
or 3.2 percent, to $22.3 million -
transportation of fluids and servicing of wells Business Units
decreased by $1.3 million due to
competitive pricing and the Alberta Government's crude oil
curtailment program while those Business Units tied to drilling
related activity experienced a $1.5
million decrease in OIBDA. These decreases were partially
offset by a $4.0 million increase
from those Business Units providing specialized services including
that of Premay Pipeline Hauling L.P. Operating margin adjusted for
the impact of IFRS 16 - Leases increased to 21.0 percent from 18.9
percent in 2018 due to a greater proportion of higher margin
specialized services revenue and cost control measures.
Net income decreased by $1.4
million to $20.5 million, or
$0.20 per Common Share due
to:
- A $2.8 million increase in
depreciation of right-of-use assets, a $2.2
million increase in finance costs and a $1.2 million increase in amortization of
intangible assets.
- The above was partially offset by a $2.1
million positive variance in net foreign exchange, a
$1.9 million decrease in income tax
expense, a $0.5 million increase in
OIBDA and a $0.3 million increase in
earnings from equity investments.
A summary of Mullen Group's results for the three and
nine month periods ended September 30,
2019, and 2018 are as follows:
|
|
|
|
SUMMARY
|
|
|
|
(unaudited)
($ millions,
except per share amounts)
|
Three month
periods ended
September
30
|
|
Nine month periods
ended
September
30
|
2019
|
2018
|
Change
|
|
2019
|
2018
|
Change
|
|
$
|
$
|
%
|
|
$
|
$
|
%
|
Revenue
|
325.3
|
339.7
|
(4.2)
|
|
963.9
|
927.5
|
3.9
|
|
|
|
|
|
|
|
|
Operating income
before depreciation and
|
55.6
|
55.1
|
0.9
|
|
151.0
|
137.3
|
10.0
|
amortization(1)
|
|
|
|
|
|
|
|
Net foreign exchange
(gain) loss
|
(3.9)
|
(1.8)
|
116.7
|
|
(11.8)
|
6.3
|
(287.3)
|
Decrease (increase)
in fair value of investments
|
0.3
|
0.3
|
-
|
|
0.3
|
1.4
|
(78.6)
|
Net income
|
20.5
|
21.9
|
(6.4)
|
|
63.8
|
37.3
|
71.0
|
Net Income -
adjusted(2)
|
16.5
|
20.5
|
(19.5)
|
|
42.6
|
45.1
|
(5.5)
|
Earnings per
share(3)
|
0.20
|
0.21
|
(4.8)
|
|
0.61
|
0.36
|
69.4
|
Earnings per share -
adjusted(2)
|
0.16
|
0.19
|
(15.8)
|
|
0.41
|
0.43
|
(4.7)
|
Net cash from
operating activities
|
46.5
|
26.5
|
75.5
|
|
116.4
|
84.2
|
38.2
|
Net cash from
operating activities per share(3)
|
0.44
|
0.25
|
76.0
|
|
1.11
|
0.81
|
37.0
|
Cash dividends
declared per Common Share
|
0.15
|
0.15
|
-
|
|
0.45
|
0.45
|
-
|
Notes:
|
(1)
|
Operating income
before depreciation and amortization ("OIBDA") is defined as
net income before depreciation of right-of-use assets
and of property, plant and equipment, amortization of intangible
assets, finance costs, net foreign exchange gains and losses,
other
(income) expense and income taxes.
|
(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 net foreign exchange gains and losses and 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.
|
|
Non-GAAP Terms -
Mullen Group reports on certain financial performance measures that
are described and presented in order to provide
shareholders and potential investors with additional measures to
evaluate Mullen Group's ability to fund its operations and
information
regarding its liquidity. In addition, these measures are used by
management in its evaluation of performance. These financial
performance measures ("Non-GAAP Terms") are not recognized
financial terms under Canadian generally accepted accounting
principles ("Canadian GAAP"). For publicly accountable
enterprises, such as Mullen Group, Canadian GAAP is governed by
principles
based on IFRS and interpretations of IFRIC. Management believes
these Non-GAAP Terms are useful supplemental measures. These
Non-GAAP Terms do not have standardized meanings and may not be
comparable to similar measures presented by other
entities.
Specifically, operating margin, 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 an indicator of
performance.
|
Financial Position
The following summarizes our financial position as at
September 30, 2019, along with some
of the key changes that occurred during the third quarter of
2019:
- Exited the third quarter with working capital of $240.6 million, which included $77.5 million of cash and cash equivalents and
had access to our undrawn Bank Credit Facility of $150.0 million.
- Total net debt ($474.1 million)
to operating cash flow ($206.1
million) of 2.30:1 as defined per our Private Placement Debt
agreement.
- The value of our cross-currency swaps increased by $7.5 million to $44.9
million (June 30, 2019 -
$37.4 million), which swaps the
principal portion of our U.S. $229.0
million debt to a Canadian currency equivalent of
$254.1 million.
About Mullen Group Ltd.
Mullen Group is a company that owns a network of
independently operated businesses. The Corporation is recognized as
one of the leading suppliers of trucking and logistics services in
Canada and provides a wide range
of specialized transportation and related services to the oil and
natural gas industry in western Canada - two sectors of the economy in
which Mullen Group has strong business relationships and industry
leadership. The corporate office provides the
capital and financial expertise, legal
support, technology and systems support, shared services and
strategic planning 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.
Disclaimer
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. The
forward-looking information contained herein is made as of the date
of this news release and Mullen Group disclaims any intent or
obligation to update publicly any such forward-looking information,
whether as a result of new information, future events or results or
otherwise, other than as required by applicable Canadian securities
laws. Mullen Group relies on litigation protection for
"forward-looking" statements. Additional information regarding the
forward-looking statements is found on pages 1, 56 and
57 of Mullen Group's Management's Discussion and Analysis.
Contact Information
Mr. Murray K. Mullen -
Chairman of the Board, Chief Executive Officer and President
Mr. P. Stephen Clark - Chief
Financial Officer
Mr. Richard J. Maloney - Senior Vice
President
121A - 31 Southridge Drive
Okotoks, Alberta,
Canada T1S 2N3
Telephone: 403-995-5200
Fax: 403-995-5296
View original content to download
multimedia:http://www.prnewswire.com/news-releases/mullen-group-ltd-reports-third-quarter-financial-results-300944439.html
SOURCE Mullen Group Ltd.