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Mullen Group Estimates Revised By CIBC After Q1, 'Sector Performer' Maintained

 April 30, 2012 02:59 PM


CIBC World Markets Inc. revised its estimates for Mullen Group Ltd. (TSE:MTL) after the company's first quarter results. The brokerage maintained its "Sector Performer" rating and $24 price target on shares of MTL.

Mullen reported a record Q1, with EBITDA of $99.1 million versus CIBC's estimate of $87.4 million and consensus of $89.3 million. EBITDA was up 33% year-over-year and revenue was up 24%. The company maintained its cautious outlook, reflecting its outlook for drilling as natural gas remains near historical lows.

While MTL believes that drilling activity could be down 10% year-over-year, the diversity of its operations has created a less volatile earning stream; the company has not invested significantly into drilling in recent years. The outlook for MTL's other divisions remains favorable.

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The move into frac corrals is a natural extension of MTL's production services offering (already providing frac trailers). The company has ordered 25 frac corrals, which should be in the market place in early Q3 and will be ready for the 2012/2013 winter season.

The brokerage raised its 2012 EBITDA estimate to $320.6 million from $311.6 million as the firm actualized Q1 results, more than offsetting the slower growth expected in the second half of 2012, while marginally lowering 2013 estimate to $326.47 million from $326.98 million.

Mullen Group is a provider of specialized transportation and related services to the oil and natural gas industry in western Canada and is a supplier of trucking and logistics services in Canada. Mullen Group operates in two segments: Oilfield Services and Trucking/Logistics.

MTL is trading up 0.71% at $21.30 on Monday.

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