News Releases

Industrial Services Segment Drives Revenue Growth

CALGARY, May 8, 2012 /CNW/ - The Churchill Corporation (TSX: CUQ) (TSX: CUQ.DB) ("Churchill" or the "Corporation") today released its 2012 first quarter results and declared a quarterly dividend of $0.12 per common share. Revenue for the first quarter of 2012 was $333.2 million compared to $304.7 million in the three months ended March 31, 2011, a 9% increase due to organic growth in the Corporation's Industrial Services segment driven largely by Western Canada oilsands and mining activity. Quarterly earnings before interest, taxes, depreciation and amortization ("EBITDA") was $13.9 million, compared to $17.2 million reported in the first quarter of 2011, as strong results from the Industrial Services segment partially offset lower results from the General Contracting segment. Net earnings were $3.2 million in the first three months of 2012, compared to $5.8 million recorded in the first quarter of 2011. Backlog as of March 31, 2012 was $1,751.5 million compared to a record $1,842.6 million as of December 31, 2011.

The dividend will be paid July 17, 2012 to shareholders of record on June 29, 2012. The ex-dividend date is June 27, 2012. The Corporation has a dividend reinvestment plan in place for which details are available on Churchill's website (www.churchillcorporation.com).

FIRST QUARTER OPERATIONAL HIGHLIGHTS

• The Industrial Services operating segment, consisting of Churchill Services Group Inc. ("CSG") and Broda Construction Inc. ("Broda"), delivered a 63% revenue increase as demand for CSG's services expanded along with Western Canada's oilsands and mining sectors, and Broda benefited from expansion of its operations into southern Alberta and a relatively mild winter.
• Canem Holdings Ltd. ("Canem"), which forms Churchill's Commercial Systems segment, grew first quarter revenue by 13% as it benefited from the revenue generated by its Manitoba operations.
• Stuart Olson Dominion Construction Ltd. ("Stuart Olson Dominion"), which forms Churchill's General Contracting segment, improved the risk profile of its $1.3 billion backlog to 97% low-risk construction management assignments, from 90% at December 31, 2011, as it nears completion of certain underperforming fixed price projects.

FIRST QUARTER FINANCIAL HIGHLIGHTS

These financial results are presented in conformance with International Financial Reporting Standards ("IFRS"). 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 measures under IFRS. For a description of these measures, see the Terminology section in Churchill's first quarter 2012 management discussion and analysis ("MD&A").

• Backlog of $1,751.5 million as of March 31, 2012, compared to $1,842.6 million on December 31, 2011, was comprised of General Contracting backlog of $1,307.6 million (December 31, 2011 - $1,445.3 million), Commercial Systems backlog of $204.4 million (December 31, 2011 - $133.3 million), and Industrial Services backlog of $239.5 million (December 31, 2011 - $264.0 million).
• Revenue for the first quarter of 2012 was $333.2 million compared to $304.7 million in the three months ended March 31, 2011, a 9% increase. Revenue growth in the Commercial Systems and Industrial Services operating segments of $5.3 million (13%) and $40.6 million (63%), respectively, was partly offset by a $13.5 million (7%) quarterly revenue decrease in the General Contracting segment.
• First quarter 2012 EBITDA was $13.9 million, compared to $17.2 million reported in the first quarter of 2011. Revenue growth was offset by a $2.2 million net loss on underperforming Dominion fixed price projects nearing completion, execution of lower margin projects at Canem, and the inclusion of high close-out margins in the Industrial Services segment in the comparable 2011 quarter.
• Net earnings were $3.2 million in the first quarter of 2012, compared to $5.8 million recorded in the three months ended March 31, 2011. The difference was primarily attributable to the change in EBITDA set out above, partially offset by a $1.2 million tax reduction and a $1.0 million gain on sale of non-core assets.
• Stuart Olson Dominion generated first quarter 2012 revenue of $194.2 million and EBITDA of $5.3 million (2011 first quarter revenue of $207.7 million and EBITDA of $9.0 million).
• Canem produced first quarter 2012 revenue of $46.6 million and EBITDA of $4.9 million (2011 first quarter revenue of $41.3 million and EBITDA of $6.2 million).
• Churchill's Industrial Services segment produced 2012 first quarter revenue of $104.9 million and EBITDA of $7.3 million (2011 first quarter revenue of $64.2 million and EBITDA of $6.3 million).

"In the first quarter of 2012 CSG and Broda together produced near-record revenue and increased EBITDA of the Industrial Services segment in spite of the seasonal nature of their businesses," said Jim Houck, Churchill's President and CEO. "Canem grew revenue and maintained strong margins due to its contract mix, efficient operating practices and best-in-class marketing programs. Stuart Olson Dominion replaced projects executed in its $1.3 billion backlog with quality projects that provide visibility of future revenue and earnings growth, while nearing the announcement of some large projects that we expect to add in the coming quarters. Underperforming fixed price projects are nearly complete and Stuart Olson Dominion's backlog is now 97% low-risk construction management and cost-plus projects, compared to 90% at 2011 year-end. These projects provide reasonable returns while limiting the risk of losses, and most of them have additional profit opportunities available through self-perform work and the potential for conversion to higher yield contract structures as risk/return profiles improve with project maturity."

OUTLOOK

"Western Canada's economy, driven by growing global demand for petroleum, metals and minerals, continues to thrive," continued Mr. Houck. "Activity in the oilsands and mining sectors is accelerating and Western Canadian governments are continuing to update and make new investments in infrastructure. Our Industrial Services segment is benefiting directly from this significant industrial capital and maintenance spending. Our General Contracting and Commercial Systems segments, with a preponderance of institutional government-funded projects such as hospitals, schools, prisons and recreation centres, and commercial projects such as office towers, business parks and data centres, are profiting from government and private sector spending to build the infrastructure required to support a growing workforce."

"We intend to continue on our road to higher value mainly through accelerating the profitable organic growth of our operating companies. We may also move forward with tuck-in acquisitions that enhance our strategic goals and fit our entrepreneurial culture, but only when financial, operational and market conditions make economic sense."

CONFERENCE CALL

Churchill will hold a conference call and webcast to discuss the 2012 first quarter results on Wednesday, May 9, 2012 at 7:30 a.m. Mountain Time (9:30 a.m. Eastern).

A presentation will be posted on Churchill's website prior to the call at www.churchillcorporation.com under the "News and Events" tab. Management's prepared remarks on the call will follow the presentation. Choose "Churchill First Quarter 2012 Conference Call" to view the presentation.

The conference call will include prepared remarks from Jim Houck, Churchill's President and CEO, and Daryl Sands, Executive Vice President and CFO.  After the prepared remarks, Churchill will accept questions from analysts and institutional investors.

Participants are asked to call at least 10 minutes prior to the start of the call.  For those unable to participate on the live call, a replay will be made available until Saturday, June 9, 2012 by dialling 1-800-319-6413 (Canada and USA) or 1-604-638-9010 (outside Canada and USA), passcode 1514#.  The public is invited to listen to the live conference call or the replay.

This conference call will be webcast live over the internet and can be accessed by all interested parties on Churchill's website through the News & Events / Events tab at:

http://www.churchillcorporation.com/news/events/.

To listen to the live webcast, visit Churchill's website at least 10 minutes early to register, download and install any necessary audio software.  For those unable to listen during the live webcast, an audio replay will be available on Churchill's website shortly after the conclusion of the conference call for a period of 90 days.

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 office locations throughout British Columbia, Alberta, Saskatchewan, Manitoba, northern Ontario and the Yukon. Churchill common shares and convertible debentures are listed on the Toronto Stock Exchange under the symbols "CUQ" and "CUQ.DB", respectively. www.churchillcorporation.com