OKOTOKS, Alta. – Mullen’s trucking business was the bright spot on the balance sheet when the company released its third-quarter results.
While the trucking business grew slightly, Mullen’s oilfield service division was weaker in 2014 than it was in 2013, which accounted for an overall decline in revenue for both the three month period ending September 30, and the nine month period ending September 30, when compared with the same periods last year.
In Q3 2014, Mullen generated revenue of $357.3 million, operating income of $76.6 million and net cash from operations of $51.0 million. During Q3 2013, those same figures were $374 million in revenue (down 4.5%), $85.5 million in operating income (down 10.7%) and $54.3 million in net cash (down 6.1%).
According to Mullen, “the decrease in revenue was directly attributable to the oilfield services segment, which decreased by $18.2 million, or 7.9%, to $210.8 million as compared to $229.0 million in the same period one year earlier. The decrease in segment revenue was primarily due to the decrease in revenue by those operating entities involved in the transportation of fluids and servicing of wells as well as the anticipated decline in revenue related to large diameter pipeline construction projects.”
Revenue from the company’s trucking and logistics division was up slightly “primarily due to the greater demand for general freight services being offset by lower demand for pneumatic bulk transportation services resulting from the completion of a large construction project that occurred in 2013 and a decline in demand for heavy haul freight services in western Canada.” It increased to $146.7 million in Q3 2014 from $145.6 million in Q3 2013, up 0.8%. Looking at the first nine months of the year, trucking revenue was 3.1% higher this year than it was in 2013 ($424.8 million in 2014 versus $412 in 2013).
Mullen attributed the increase in trucking revenue “largely due to the $15.3 million of incremental revenue resulting from the acquisition of Jay’s Moving & Storage Ltd. and a $3.9 million increase in fuel surcharge revenue.
“These increases were partially offset by decreased demand for construction related services in northern Manitoba, over-dimensional and heavy haul freight services in western Canada and lower demand for pneumatic bulk transportation services resulting from the completion of a large construction project in 2013.”
While the company had hoped for stronger numbers, Mullen’s overall outlook is still strong, said company chair, CEO and president Murray K. Mullen.
“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. 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. It is also worth noting that we refrained from pursuing acquisitions, principally due to valuation concerns. We remained disciplined in terms of our allocation of shareholders’ capital opting to take a longer term view of the markets.”
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