|(unaudited) ($ millions)||Three month periods ended December 31|
|Corporate and intersegment eliminations||0.1||0.4||-|
|Operating income before depreciation and amortization (1)|
|Total Operating income before depreciation and amortization (1)||46.0||42.5||8.2|
|Operating income before depreciation and amortization - adjusted (1)||45.9||40.2||14.2|
|(1) Refer to notes section of Summary|
- generated consolidated revenue of $296.1 million, an increase of $38.3 million, or 14.9 percent, as compared to $257.8 million in 2016 due to:• record revenue in the Trucking/Logistics (" T/L") segment, a $33.6 million increase to $206.6 million• a $5.0 million increase in the Oilfield Services (" OFS") segment to $89.4 million
- earned consolidated operating income before depreciation and amortization (" OIBDA") of $46.0 million, an increase of $3.5 million, or 8.2 percent, as compared to $42.5 million in 2016 due to:• record fourth quarter OIBDA in the T/L segment of $31.2 million, an increase of $4.9 million or 18.6 percent• a $0.4 million increase in the OFS segment• a $1.8 million increase in Corporate Office costs due to a $2.2 million negative variance in foreign exchange
- adjusting for the impact of foreign exchange at Corporate Office, operating income before depreciation and amortization (" OIBDA - adjusted") was $45.9 million, or 15.5 percent of revenue, as compared to $40.2 million, or 15.6 percent of revenue, in 2016. These results more accurately reflect our operating performance.
- T/L segment grew by $33.6 million, or 19.4 percent, to $206.6 million - a record compared to any previous quarterly period. Incremental revenue from acquisitions was $14.5 million while fuel surcharge revenue rose by $3.0 million. Growth resulted from a stronger Canadian economy, market share gains and increased demand for freight services in western Canada which was mainly due to the recovery in the Alberta economy.
- OFS segment grew by $5.0 million, or 5.9 percent - acquisitions accounted for $2.6 million. Growth was due to improved demand for fluid hauling being somewhat offset by lower revenue from our pipe and tubular Business Units and a decline in demand for large diameter pipeline hauling and stringing services.
- T/L segment grew by $4.9 million, or 18.6 percent, to $31.2 million - a record compared to any previous fourth quarter period. As a percentage of revenue, operating margin remained relatively stable at 15.1 percent as compared to 15.2 percent in 2016.
- OFS segment up by $0.4 million to $15.4 million - increases from Business Units providing drilling and drilling related services was somewhat offset by a decline from those involved in the transportation of fluids and servicing of wells. Operating margin decreased to 17.2 percent compared to 17.8 percent in 2016 due to higher direct operating expenses (" DOE") as a percentage of segment revenue resulting primarily from increased pump sales at Canadian Dewatering L.P.
- Corporate Office costs up $1.8 million due to a $2.2 million negative variance in foreign exchange.
- A $10.1 million positive variance in net foreign exchange, a $3.5 million increase in OIBDA and a $2.4 million decrease in finance costs.
- The above was partially offset by a $7.8 million increase in depreciation of property, plant and equipment and a $1.4 million increase in the loss on sale of property, plant and equipment.
A summary of Mullen Group's results for the quarter and year ended December 31, 2017, are as follows:
|(unaudited) ($ millions, except per share amounts)||Three month periods ended December 31||Twelve month periods ended December 31|
|Operating income before depreciation and amortization (1)||46.0||42.5||8.2||172.2||181.0||(4.9||)|
|Operating income before depreciation and amortization - adjusted (2)||45.9||40.2||14.2||180.1||184.4||(2.3||)|
|Net foreign exchange loss (gain)||1.3||11.4||(88.6||)||(21.7||)||(5.8||)||274.1|
|Decrease (increase) in fair value of investments||(0.6||)||(1.6||)||(62.5||)||0.7||(1.7||)||(141.2||)|
|Net income (loss)||5.4||(0.7||)||(871.4||)||65.5||52.0||26.0|
|Net Income - adjusted (3)||7.7||10.7||(28.0||)||42.2||46.9||(10.0||)|
|Earnings (loss) per share (4)||0.05||(0.01||)||(600.0||)||0.63||0.52||21.2|
|Earnings per share - adjusted (3)||0.08||0.10||(20.0||)||0.41||0.47||(12.8||)|
|Net cash from operating activities||58.3||46.5||25.4||142.1||174.3||(18.5||)|
|Net cash from operating activities per share (4)||0.56||0.45||24.4||1.37||1.76||(22.2||)|
|Cash dividends declared per Common Share||0.09||0.09||-||0.36||0.56||(35.7||)|
|Notes: (1) Operating income before depreciation and amortization (" OIBDA ") is defined as net income before depreciation of property, plant and equipment, amortization of intangible assets, finance costs, net foreign exchange gains and losses, other (income) expense and income taxes. (2) Operating income before depreciation and amortization - adjusted (" OIBDA - adjusted ") is defined as net income before depreciation of property, plant and equipment, amortization of intangible assets, finance costs, net foreign exchange gains and losses, other (income) expense, income taxes and foreign exchange gains and losses recognized within the Corporate office. (3) 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, the change in fair value of investments, the gain on contingent consideration and the gain on fair value of equity investment. (4) 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 and Additional 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 and Additional 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 and Additional GAAP Terms are useful supplemental measures. These Non-GAAP and Additional GAAP Terms do not have standardized meanings and may not be comparable to similar measures presented by other entities. Specifically, OIBDA, operating margin, OIBDA - adjusted, operating margin - adjusted, 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.|
- T/L segment grew by $71.9 million, or 10.4 percent, to a record of $761.4 million. Incremental revenue from acquisitions was $45.3 million while fuel surcharge revenue rose by $12.4 million. Experienced growth in our regional less-than-truckload business due to market share gains and the recovery in the Alberta economy. Truckload services excluding acquisitions - down due to the completion of various major capital projects in western Canada in 2016, most notable the Suncor Fort Hills oil sands and North West Upgrader projects.
- OFS segment grew by $27.9 million, or 8.0 percent - acquisitions accounting for $7.6 million. Growth was due to improved drilling activity which benefitted those Business Units most directly tied to oil and natural gas drilling activity as well as from greater demand for pumps and related dewatering services. These increases were partially offset by a decline in demand for pipeline hauling and stringing services due to the timing and regulatory hurdles of various projects.
- T/L segment decreased by $7.0 million, or 6.0 percent, to $109.7 million due to the completion of major capital projects that have not been replaced being partially offset by incremental OIBDA from acquisitions, market share gains and the recovery in the Alberta economy. As a percentage of revenue, operating margin decreased to 14.4 percent from 16.9 percent in 2016 due to the change in revenue mix, competitive pricing and from the acquisition of asset light businesses which have lower margin but higher return on invested capital.
- OFS segment up by $1.8 million to $74.2 million due to improved drilling activity and from the acquisition of Envolve Energy Services Corp. Specifically, increases from Business Units providing drilling and drilling related services was mostly offset by a decline from those leveraged to the oil sands and pipeline construction projects. Operating margin decreased to 19.6 percent compared to 20.7 percent in 2016 due to a change in revenue mix and higher DOE as a percentage of segment revenue from increased pump sales at Canadian Dewatering L.P.
- Corporate Office costs up $3.6 million due to a $4.5 million negative variance in foreign exchange.
- A $15.9 million positive variance in net foreign exchange, a $5.0 million decrease in finance costs, a $2.9 million decrease in income tax expense, a $2.8 million decrease in amortization of intangible assets and a $2.0 million gain on contingent consideration.
- The above was partially offset by an $8.8 million decrease in OIBDA, a $4.1 million increase in depreciation of property, plant and equipment and a $2.4 million negative variance in the fair value of investments.
- Repaid U.S. $85.0 million (5.90 percent Series E Notes) and $20.0 million (5.47 percent Series F Notes) of debt reducing our annual interest obligation by approximately $7.5 million.
- Reduced the weighted average interest rate on our debt to 4.21 percent.
- Exited 2017 with working capital of $181.6 million that included $134.5 million of cash and cash equivalents.
- Total net debt ($421.8 million) to operating cash flow ($175.8 million) of 2.40:1 as defined per our Private Placement Debt agreement.
- Net book value of property, plant and equipment of $916.1 million consisting of $467.6 million of real property (carrying cost of $527.7 million).
- Cross-currency swaps valued at $25.6 million that swaps the principal portion of our U.S. $229.0 million debt to a Canadian currency equivalent of $254.1 million.
- Series D ($70.0 million) Notes and $12.4 million of Debentures (conversion price of $10.73) mature on June 30, 2018 and July 1, 2018, respectively.
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. For further information, please contact:Mr. Murray K. Mullen - Chairman of the Board, Chief Executive Officer and PresidentMr. P. Stephen Clark - Chief Financial OfficerMr. Richard J. Maloney - Senior Vice President 121A - 31 Southridge DriveOkotoks, Alberta, Canada T1S 2N3Telephone: 403-995-5200Fax: 403-995-5296