UPDATE 2-Mullen Group’s Q1 falls on lower demand; eyeing buys

* Q1 EPS C$0.29/shr vs est EPS C$0.39/shr

* Revenue down 17 percent

* Looking to deploy capital to acquire assets

(Recasts; adds conference call details, analysts comments)

By Aftab Ahmed

BANGALORE, April 29 (BestGrowthStock) – Canada’s Mullen Group Ltd
(MTL.TO: ) posted a lower-than-expected first-quarter profit (Read more your timing to make a profit.),
hurt by lower capital investment and changing profile of wells
drilled, resulting in rig moves of much shorter distances.

The company, which is a provider of transportation and
related services to the oil and gas industry, was also looking
to use capital in acquisitions as it sees no value in sitting
on cash, a company official said on a conference call with
analysts.

Mullen said it was more comfortable now about acquisitions
than it was six months to a year ago, and would deploy capital
in the trucking and logistics business.

“We would not be surprised to see them complete another
deal in 2010,” BMO Capital Markets analyst Jason Granger said.

“I see there is likely to be a shake up in the industry in
the current period, leading to some nice opportunities for some
attractive acquisitions,” RBC Capital Markets Walter analyst
Spracklin said.

Spracklin said he is extremely confident about the
management of the company and thinks the foremost strategy for
Mullen would be to deploy capital for acquisitions.

Q1 RESULTS

The company posted a net income of C$23.7 million ($23.49
million), or 29 Canadian cents a share, compared with C$31
million, or 38 Canadian cents a share, a year ago.

Revenue fell 17 percent to C$259.9 million, while operating
income was 22 percent lower at C$57.2 million.

Analysts on average were expecting the company to report
earnings of 39 Canadian cents a share, excluding items, on
revenue of C$315.7 million, according to Thomson Reuters
I/B/E/S.

“Most concerning is the changing profile of wells drilled
as those are structural changes and not a timing issue, that’s
something that won’t go away,” Spracklin said.

Though the results were much below expectations, analysts
were still confident that the company would hit back.

Granger said, “Yes i believe so,” when asked if the company
could see an uptick in the second half of the year.

He added that the company lost out as there was a lag in
economic conditions stabilizing and money flowing into the
industry.

Shares of the Okotoks, Alberta-based company were trading
down 3 percent at C$15.75 Thursday on the Toronto Stock
Exchange.

Stock Market Research

($1=1.009 Canadian Dollar)
(Reporting by Aftab Ahmed in Bangalore; Editing by Roshni
Menon)
([email protected]; within U.S. +1 646 223
8780;
outside U.S. +91 80 4135 5828; Reuters Messaging:
[email protected]))

UPDATE 2-Mullen Group’s Q1 falls on lower demand; eyeing buys