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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Herb Duncan who wrote (12002)	8/5/1998 11:25:00 AM
From: SofaSpud	Respond to of 15196

SERVICE SECTOR / Mullen Transportation Q2 results MULLEN TRANSPORTATION INC. - 1998 INTERIM REPORT TO SHAREHOLDERS SIX MONTHS ENDED JUNE 30, 1998 ALDERSYDE, ALBERTA, Aug. 4 /CNW/ - << SUMMARY ''FINANCIAL RESULTS'' Three Months Six Months Ended June 30 Ended June 30 (Unaudited) ------------- ------------- (Millions of Dollars) 1998 1997 Change 1998 1997 Change ---- ---- ------ ---- ---- ------ GROSS REVENUES $50.4 $48.9 3.1% $120.3 $110.4 9.0% EBITDA $ 8.7 $ 8.0 8.7% $ 22.9 $ 19.1 19.9% (Earnings Before Interest, Income Taxes, Depreciation, Amortization NET INCOME $ 3.7 $ 3.4 8.8% $ 10.7 $ 8.6 24.4% EARNINGS PER SHARE (Dollars) $0.27 $0.25 8.0% $ 0.80 $ 0.65 23.1% >> The second quarter proved to be unusually challenging driven by the meltdown in oil and gas drilling activity in western Canada and a mixed Canadian economy. This combination would typically have contributed to a noticeable decline in our financial performance. We are pleased, however, to report that Mullen Transportation Inc. (''MTI'') generated both higher revenues and profits for the three month period ending June 30, 1998 as compared to last year. The fact that the company recorded an increase is a direct result of our diversification strategy and increases in market share, accompanied by effective cost control initiatives throughout the company. The combination of these factors resulted in second quarter consolidated revenues of $50.4 million, an improvement of 3.1% over the same period a year earlier. Net income increased to $3.7 million from $3.4 million, a gain of 8.8%. Earnings per share were $0.27 as compared to $0.25. For the six months ended June 30, 1998 consolidated revenues were up 9.0% over last year to $120.3 million from $110.4 million. Net income was $10.7 million or $0.80 per common share, as compared to $8.6 million or $0.65 per share. Business Unit Review The rapid decline in world oil prices had an almost universal impact on any company with exposure to oil drilling. Our Oilfield Services Division was no exception, but to a lesser degree than most primarily due to our leverage to gas focused drilling companies. These companies have tended to concentrate their drilling programs in the gas prone foothills regions of western Canada, an area where we have terminals and competitive advantages. Results from McGinnis Rathole Drilling Co. Ltd., which was acquired on April 1, 1998, are included in this reporting period. We will, however, need drilling activity to increase for this company to be earnings accretive this year. Revenues were down 5.5% to $10.3 million with operating income falling to $1.5 million from $1.9 million primarily as a result of losses associated with the McGinnis purchase. Pricing pressures were partially offset by productivity enhancements. The Specialized Services Division experienced mixed results with revenues increasing by a slim 1.9%. The downstream segment of the oil and gas industry and pipeline construction remained active contributing to the revenue and profit growth. Shipments of bulk cement to the upstream segment of the oil and gas industry constrained an otherwise very good quarter. Operating income increased by 9.1% to $3.6 million. Revenues in the Truckload Division grew by a very healthy 9.5% - this in spite of a slowing Canadian economy. Operating income increased by 13.0% primarily as a result of the revenue growth and lower diesel fuel prices. The driver shortage, which has for some time been the Achilles' heel of the truckload industry, may in fact be a blessing. Companies are refraining from adding any significant capacity to their fleets due to the lack of new drivers. This appears to be keeping the supply and demand picture in balance. The Regional L.T.L. Division continued at a steady pace growing revenues by 3.6% and operating income by 14.3%. Recent customer service initiatives led to a continued expansion in market share without any significant erosion in pricing. As a result profitability increased. Outlook Predicting the future has always been risky. As such, we will refrain from offering our view of what we expect to happen, even over the next quarter. As fast as events occur today, no one knows for sure what can or will happen. What we can say, however, is that MTI is in great shape. Each business unit is lean and customer service driven. The balance sheet, which is supported by $30 million in cash reserves and virtually no long-term debt, is one of the best in the trucking industry and will be used to grow our business. On July 30, 1998 we announced our first investment in eastern Canada, acquiring 40% of one of Canada's premier transporters of truckload and less-than-truckload (L.T.L.) freight, Mill Creek Inc. of Cambridge, Ontario in an all cash transaction. Mill Creek is an outstanding company with a strong customer base which we will partner with to expand in eastern Canada and the United States. This marks the first occasion that MTI has taken a minority position in a company and we did so only after extensive discussion and review. Mill Creek is currently one of Canada's best managed and fastest growing trucking companies and represents a very attractive investment for MTI in an industry in which we have extensive knowledge and understanding. In terms of the oil and gas service business we believe many opportunities will arise if oil prices and drilling activity remain near current levels. On behalf of your Board of Directors, Murray K. Mullen President & Chief Executive Officer August 4, 1998 << REVENUES AND OPERATING RESULTS BY DIVISION Three Months Six Months Ended June 30 Ended June 30 (Unaudited) ------------- ------------- (Millions of Dollars) 1998 1997 Change 1998 1997 Change ---- ---- ------ ---- ---- ------ $ $ % $ $ % REVENUES OILFIELD SERVICES DIVISION 10.3 10.9 (5.5) 39.2 33.3 17.7 TRUCKLOAD DIVISION 18.5 16.9 9.5 35.5 32.7 8.6 SPECIALIZED SERVICES DIVISION 16.1 15.8 1.9 35.0 33.6 4.2 REGIONAL L.T.L DIVISION 5.8 5.6 3.6 11.0 11.4 (3.5) OTHER AND CONSOLIDATING ADJUSTMENTS (0.3) (0.3) (0.4) (0.6) ---------------------- --------------------- TOTALS 50.4 48.9 3.1 120.3 110.4 9.0 OPERATING INCOME (EBITDA) OILFIELD SERVICES DIVISION 1.5 1.9 (21.1) 8.0 7.2 11.1 TRUCKLOAD DIVISION 2.6 2.3 13.0 4.6 4.1 12.2 SPECIALIZED SERVICES DIVISION 3.6 3.3 9.1 8.3 6.5 27.7 REGIONAL L.T.L. DIVISION 0.8 0.7 14.3 1.3 1.4 (7.1) CONSOLIDATING ADJUSTMENTS 0.2 (0.2) 0.7 (0.1) ---------------------- --------------------- TOTALS 8.7 8.0 8.7 22.9 19.1 19.9 >> -30- For further information: Mr. Murray K. Millen, President & Chief Executive Officer, (403) 652-8888, Fax: (403) 652-2362