Mullen Group Q3 net profit slides almost 80% on note repayment, exchange variance

OKOTOKS, Alta. – Mullen Group Ltd. (TSX:MTL) has reported a big decline in net income in the third quarter, with the oilfield services and transportation company citing a one-time repayment of notes and an unrealized foreign exchange loss as major factors.

The Alberta-based concern said net income for the three months ended Sept. 30 was $10.5 million or 11 cents per share, down almost 80 per cent from $51.2 million or 56 cents in the same 2013 period.

Adjusted net income was $36.4 million or 40 cent per share, compared with $43.1 million or 47 cents in the 2013 quarter.

Consolidated revenue was down $16.7 million or 4.5 per cent to $357.3 million from $374 million in the prior-year period, directly attributable to a decline of $18.2 million or 7.9 per cent in its oilfield services segment to $210.8 million from $229 million.

Revenue in the truck/logistics segment increased by $1.1 million or 0.8 per cent to $146.7 million from $145.6 million, primarily due to the greater demand for general freight services, offset by lower demand for pneumatic bulk transportation services following completion of a large construction project in 2013 and a decline in demand for heavy haul freight services in Western Canada.

The company said the $40.7 million decrease in net income was mainly attributable to a $19-million one-time expense related to the prepayment of its Series A and Series B notes and a $15.2-million negative variance in net unrealized foreign exchange, as well as a $9.2-million decrease in operating income and a $7.1-million negative variance in the fair value of investments.

Those were partially offset by a $9-million reduction in income tax expense.

“While we are disappointed with our third-quarter performance the fact remains that our core business continues to generate solid results particularly giving consideration to the overall economic conditions in Canada, which is stable but certainly not showing any real growth, accompanied by the fact that the oil and gas industry in Western Canada is not investing with the same intensity as in prior years,” chairman, president and CEO Murray Mullen said in a statement accompanying the results.

“There were certain pockets of activity such as oil and gas drilling, but the reality is that markets are very competitive. Our results reflect this fact. In addition, when comparing our results to last year, it is important to note that last year’s results were a record for the third quarter. As such we had some pretty difficult comparisons to match up against.”