The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from CNW Group

The Churchill Corporation Reports Record 2010 Results

Monday, March 14, 2011

The Churchill Corporation Reports Record 2010 Results04:00 EDT Monday, March 14, 2011Annual Net Earnings Increase by 27%CALGARY, March 14 /CNW/ - The Churchill Corporation (TSX: CUQ) ("Churchill" or the "Corporation") today announced its results for the three and twelve months ending December 31, 2010.All figures are in Canadian dollars unless otherwise noted. Certain financial and operational measures referred to in this press release, including "EBITDA" and "backlog", are not prescribed under Canadian Generally Accepted Accounting Principles ("GAAP"). For a description of these measures, see the Terminology section in Churchill's 2010 management discussion and analysis ("MD&A").ANNUAL highlightsRecord net earnings were $44.2 million for 2010, a 27% improvement over the $34.8 million recorded in 2009. Basic earnings per share were $2.14 for 2010, compared to $1.98 for 2009 ($2.03 diluted compared to $1.94 diluted for 2009).Revenue growth more than offset lower margins as Churchill posted annual earnings before interest, taxes, depreciation and amortization ("EBITDA") of $84.3 million, a 64% increase over EBITDA of $51.3 million reported in 2009.Churchill's acquisition of Seacliff Construction Corp. ("Seacliff") for $387.4 million in July 2010 placed Churchill among the three largest publicly-listed Canadian construction and industrial services companies. With the Seacliff acquisition, Churchill added three operating companies: Dominion Company Inc. ("Dominion"), Canem Systems Ltd. ("Canem") and Broda Construction Inc. ("Broda").Stuart Olson Dominion Construction Ltd. ("SODCL"), Churchill's General Contracting segment, was formed from the combination of Dominion and Stuart Olson Constructors Inc. SODCL's 2010 EBITDA was $65.3 million. As well, SODCL was responsible for approximately two-thirds of Churchill's consolidated revenues and operating earnings in 2010, and comprised 80% of total backlog at December 31, 2010. SODCL is expected to continue to comprise the majority of the Corporation's revenues, earnings and backlog in 2011.Strong organic growth from Churchill's Industrial Services segment, producing 2010 annual EBITDA of $24.6 million, was driven by Laird Electric Inc. ("Laird") and Insulation Holdings Inc. ("IHI"), which benefitted from growing Alberta oil sands activity. Broda, the third company in this segment, is expected to benefit from Saskatchewan's large and growing uranium and potash mining industries, which are forecasting expanding construction and maintenance expenditures in 2011.Canem, an electrical and data systems contractor, forms the Commercial Systems segment. Canem, in its 5½ months as a Churchill company, produced EBITDA of $11.7 million with an EBITDA margin of 14.6%.FINANCIAL HIGHLIGHTS      12 Months Ended December 31($millions, except per share amounts)20102009$ Change% ChangeContract revenue$1,175.3$601.2$574.195%Contract income148.392.056.361%EBITDA from continuing operations (1)84.351.333.064%Net earnings from continuing operations43.133.59.629%Net earnings44.234.89.427%Net earnings per common share - Basic2.141.980.168% - Diluted2.031.940.095%Backlog  (1)1,555.01,388.6166.412%Long-term indebtedness148.40.2148.2nmTotal assets876.1367.4508.7138%      3 Months Ended December 31($millions, except per share amounts)20102009$ Change% ChangeContract revenue$389.7$173.9$215.8124%Contract income51.224.726.5107%EBITDA from continuing operations (1)29.612.517.1137%Net earnings from continuing operations13.78.15.669%Net earnings14.67.76.990%Net earnings per common share - Basic0.620.440.1841% - Diluted0.580.420.1638%(1) Refer to the "Terminology" section of the 2010 MD&A for further details.For 2010, the Corporation reported total contract revenue of $1,175.3 million and net earnings of $44.2 million, or $2.03 per diluted share ($2.14 per basic share). These results include amortization of intangible assets related to the Seacliff acquisition of $8.8 million. This compares favourably to contract revenues of $601.2 million and net earnings of $34.8 million or $1.94 per diluted share for 2009. EBITDA from continuing operations for 2010 was $84.3 million as compared to $51.3 million in 2009, a 64% increase. Backlog grew 12% year-over year to $1.6 billion."The strength of our annual results reflects the contribution of the legacy Seacliff's companies for the last 5½ months of the year and the organic growth of the Churchill legacy companies," said Jim Houck, President and Chief Executive Officer. "Furthermore, the realization of annual synergies from the acquisition is progressing well, and we have increased our annual cost savings target from $7 million to between $10 million and $13 million. As well, we expect to gain revenue synergies due to the ability of SODCL to secure certain large projects that may not have been awarded to either Dominion or Stuart Olson as stand-alone entities. In addition, revenue synergies within the Industrial Services segment are being pursued by producing bundled products and services offerings to customers.""In terms of our outlook, for the remainder of 2011 the institutional spending forecast in Western Canada remains strong and the non-residential private sector spending outlook is continuing to improve as a result of generally strong commodity prices and favourable financing and construction costs. This is expected to support continued revenue growth for SODCL and Canem, but margin pressure will continue in a very competitive bidding environment. SODCL intends to partially offset this margin pressure by focusing its marketing activities on large relationship-based construction management projects that provide better margin upside and by establishing an industrial sector presence. Canem intends to counteract this margin pressure by differentiating itself from the competition with building systems integration solutions to support its core operations. Laird and IHI are expecting revenue growth to moderate, following spectacular growth in 2010, and margins to begin to improve in 2011 with a large sustainable industrial project spend and increased major project activity. Assuming a return to more normal weather conditions, Broda's results are expected to improve in 2011."A full copy of Churchill's fourth quarter management's discussion and analysis, financial statements and notes can be obtained at www.sedar.com.To listen to the conference call discussing Churchill's fourth quarter results at 9:30 a.m. Eastern Time on March 14, visit www.churchillcorporation.com/live_events.php.About The Churchill Corporation:The Churchill Corporation provides building construction, commercial and industrial electrical contracting, earthmoving and industrial insulation services to an array of public and private sector clients. Churchill operates from office locations throughout British Columbia, Alberta, Saskatchewan, Manitoba, northwest Ontario and the Yukon.  Churchill common shares are listed on the Toronto Stock Exchange under the symbol "CUQ". www.churchillcorporation.comFORWARD LOOKING STATEMENTSCertain statements in this press release may constitute "forward-looking statements". Forward-looking statements include, without limitation, statements regarding the future financial position, business strategy, budgets, litigation, projected costs, capital expenditures, anticipated synergies, financial results, taxes, plans and objectives of the Corporation. Many of these statements can be identified by looking for words such as "believes," "expects," "may," "will," "intends," "anticipates," "estimates," "continues," or the negative thereof, or other variations thereon. Although management of Churchill believes its expectations regarding future performance of the Corporation are based on reasonable assumptions and currently available competitive, financial and economic data, market conditions and operating plans, it can give no assurance its expectations will be achieved. The Corporation cautions that, by their nature, forward-looking statements, involve risks, and uncertainties and that its actual actions, and/or results could differ materially from those expressed or implied in such forward-looking statements, and that the aforementioned risks, uncertainties and actions could affect the extent to which a particular projection materializes. The Corporation assumes no obligation to update the forward-looking statements should circumstances or the Corporation's management's estimates or opinions change, except as may be required by law.For further information: James C. Houck, B.Sc., MBA President and Chief Executive Officer The Churchill Corporation (403) 685-7777Andrew Apedoe Vice President Investor Relations & Secretary The Churchill Corporation (403) 685-7775 Email: inquiries@churchill-cuq.comKen Wetherell, CFA Director, Investor Relations The Churchill Corporation (403) 685-7776 Email: inquiries@churchill-cuq.com