News Releases
<<
(TSX: CUQ)
Second Quarter 2009 & YTD Financial Results
-------------------------------------------
- Contract income margin increased to 15.8% compared to 11.4% in Q2
2008.
- $12.3 million of EBITDA from continuing operations in Q2 2009
compared to $13.8 million in Q2 2008.
- $8.0 million of net earnings from continuing operations in Q2 2009
compared to $8.9 million of net earnings from continuing operations
in Q2 2008.
- Earnings per share from continuing operations of $0.45 in Q2 2009
compared to $0.50 in Q2 2008.
- $131.8 million in cash and cash equivalents as at June 30, 2009,
compared to $100.8 million at December 31, 2008.
- $21.5 million of EBITDA from continuing operations in the six month
period ending June 30, 2009, exceeded $20.4 million of EBITDA from
continuing operations in the first six months of 2008.
- $13.7 million of net earnings from continuing operations in the first
half of 2009 was greater than $12.5 million of net earnings from
continuing operations for the same period of 2008.
Highlights & Significant Items
- In the second quarter, Triton's industrial businesses and certain
assets and liabilities of the Corporate and Other Segment were
categorized as discontinued operations and classified as held-for-
sale. Subsequently, on August 12, 2009, the Corporation executed a
purchase and sale agreement to divest of these assets and
liabilities.
- In April, Stuart Olson and its joint venture partner were selected to
build the $298 million Fort St. John Hospital. Financial close
occurred on July 17, 2009 and in excess of $100 million will be added
to our Q3 2009 backlog.
- In May, we announced that Stuart Olson was chosen to build the
$115 million Wal-Mart Perishable Distribution Centre in Balzac,
Alberta.
- In May, Stuart Olson was selected as the lead proponent to construct
the Central Utilities Plant as part of the Edmonton International
Airport Expansion program.
- In June, Fuller Austin was awarded an insulation contract valued at
$15.7 million for an upgrader/refinery project in Fort
Saskatchewan, Alberta.
- In June, Laird was awarded a renewal of a maintenance contract in the
Alberta oil sands for a 2 year term, with a contract value of
$26 million.
- In June, Laird was issued a contract extension to the end of 2009
from Suncor Energy with an approximate value of $20 million.
- In July, Stuart Olson was awarded the $44 million, Simon Fraser
University Shrum Science Complex Renewal - Phase 1 Chemistry project,
which will be added to our Q3 2009 backlog
- Effective August 12, 2009, the Corporation will be consolidating its
operating and corporate offices into Edmonton and Calgary. This
initiative plus other restructuring is expected to generate
$2 million of cost savings annually.
>>
CALGARY, Aug. 13 /CNW/ - The Churchill Corporation today announced EBITDA
of $12.3 million in the second quarter of 2009. Net earnings from continuing
operations were $8.0 million or $0.45 per share and as at June 30, 2009, our
cash balance was $131.8 million or $7.49 per share.
<<
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Three months ended
June 30, 2009
--------------------------------------------------
($ millions, except $ %
per share amounts) 2009 2008 Change Change
-------------------------------------------------------------------------
Contract Revenue $136.7 $202.0 (65.3) -32%
Contract income 21.6 23.1 (1.5) -6%
EBITDA(1) from
continuing operations 12.3 13.8 (1.5) -11%
Earnings from continuing
operations before
income taxes 11.0 12.7 (1.7) -13%
Net earnings from
continuing operations 8.0 8.9 (0.9) -10%
EPS from continuing
operations - basic $0.45 $0.50 (0.05) -10%
EPS basic $0.42 $0.53 (0.11) -21%
Work-in-hand(2) 600.6 560.5 40.1 7%
Backlog(3) $1,344.2 $1,235.8 $108.4 9%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Six months ended
June 30, 2009
--------------------------------------------------
($ millions, except $ %
per share amounts) 2009 2008 Change Change
-------------------------------------------------------------------------
Contract Revenue $265.9 $359.8 (93.9) -26%
Contract income 40.1 38.1 2.0 5%
EBITDA(1) from
continuing operations 21.5 20.4 1.1 5%
Earnings from continuing
operations before
income taxes 19.2 18.1 1.1 6%
Net earnings from
continuing operations 13.7 12.5 1.2 10%
EPS from continuing
operations - basic $0.78 $0.70 0.08 11%
EPS basic $0.68 $0.79 (0.11) -14%
Work-in-hand(2) 600.6 560.5 40.1 7%
Backlog(3) $1,344.2 $1,235.8 $108.4 9%
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(1) (2) (3) Refer to the "Terminology" section for further details.
>>
"The Corporation delivered strong second quarter results, particularly in
its institutional and building construction markets where the Corporation
continues to see significant opportunities for future projects," said Jim
Houck, President and Chief Executive Officer, The Churchill Corporation. "Our
backlog continues to grow as a result of project awards from both our
infrastructure and industrial clientele and the prospect of renewed oil sands
activity is encouraging to our outlook."
OVERALL PERFORMANCE
For the second quarter of 2009 consolidated contract revenue was $136.7
million, compared to $202.0 million in the same period in 2008. Revenue
decreased due to the cumulative effect of delays in project starts and
tendering in our buildings segment in combination with lower levels of
industrial contracting activity on a year-over-year basis in our industrial
insulation and industrial electrical operations.
Contract income decreased from $23.1 million in the second quarter of
2008 to $21.6 million in Q2 2009 as stronger margins in our building
construction segment, were offset by lower year-over-year revenues and
contract income in our industrial insulation and industrial electrical
segments.
Indirect and administrative expenses amounted to $9.7 million in the
quarter, compared to $9.9 million in the comparable period of 2008. These
savings were driven by restructuring activities primarily in our industrial
operations at Laird and smaller reductions in headcount within other business
segments.
Earnings before interest, taxes, depreciation and amortization in the
quarter were $12.3 million, compared to $13.8 million in Q2 2008.
Earnings from continuing operations before income taxes decreased to
$11.0 million compared to $12.7 million reported in Q2 2008. The Corporation's
consolidated net earnings from continuing operations for the three months
ended June 30, 2009 were $8.0 million compared to net earnings from continuing
operations of $8.9 million in Q2 2008. Net earnings from continuing
operations, for the six-month period ended June 30, 2009 were $13.7 million
compared to $12.5 million in the prior year. The increase in net earnings from
continuing operations is due to the strong performance of our Stuart Olson
business in 2009.
New contract awards of $208.9 million were added to work-in-hand in the
current quarter compared to $163.6 million in Q2 2008. Work-in-hand at June
30, 2009, was $600.6 million, compared to $560.5 million at June 30, 2008. On
a segmented basis, year-over-year work-in-hand increased $15.8 million in the
buildings segment, increased $23.2 million in the insulation contracting
segment and increased $1.1 million in the electrical contracting segment.
Churchill's total backlog, including work-in-hand as at June 30, 2009,
increased to $1.34 billion from $1.24 billion in the prior year.
Year-over-year backlog in our buildings segment increased by $90.6 million,
the insulation contracting segment backlog increased by $16.7 million and the
industrial electrical contracting backlog increased by $1.1 million. The
Corporation's backlog consists of work-in-hand of $600.6 million, active
backlog of $626.6 million and delayed backlog of $117.0 million. There have
been no material changes to the delayed projects residing in the Corporation's
backlog. Management remains confident that these project delays can be
overcome and that the majority of the Corporation's backlog will be realized
as revenue in future reporting periods. Additionally, total backlog as
reported does not include volume associated with the Fort St. John hospital
project which reached financial close in mid-July and the award to Stuart
Olson Constructors of the Shrum Science Complex - Chemical Building in July.
These projects will add $152 million to the backlog in the third quarter.
Discontinued Operations
During the second quarter of 2009, the Corporation proceeded to divest
its Industrial General Contracting segment ("Triton") and certain assets and
liabilities of the Corporate and Other segment. The segment has performed
poorly over a period of time and as a result management felt that there may be
a more advantaged owner of the assets held-for-sale and that Churchill could
more profitably deploy its resources and the proceeds from disposition into
its other operating segments. Accordingly, the results of operations and
cashflows for the assets held-for-sale have been accounted for on a
discontinued basis for the current and prior periods. The loss from
discontinued operations for the three and six months ended June 30, 2009 was
$0.6 million and $1.8 million, respectively. These amounts include severance
related costs associated with the restructuring implemented since March 2009.
<<
RESULTS OF OPERATIONS
Buildings
>>
For the three month period ended June 30, 2009, Stuart Olson's revenue
was $113.5 million, compared to $148.9 million in the prior year. This
decrease in revenue was a result of the cumulative impact of the delayed
project starts and tendering referred to in the Corporation's first quarter
MD&A.
Contract income in the second quarter of 2009 increased 21% to $16.8
million, from $13.9 million for the same period in 2008. The Q2 2009 contract
income margin percentage was 14.8% compared to 9.3% in 2008. This margin
increase was driven by the strength of the margins in Stuart Olson's backlog,
strong project execution and the ability to effectively manage construction
costs.
Earnings before tax from the buildings segment were $12.0 million in Q2
2009, compared to $9.0 million in Q2 2008. This 33% improvement in pre-tax
earnings was a result of the higher margins across all branches, particularly
in Northern Alberta.
Revenue for the six months ended June 30, 2009, was $211.3 million
compared to $276.3 million in 2008. This decrease in revenue was a result of
the cumulative impact of the delayed project starts and tendering referred to
in the Corporation's first quarter MD&A.
Contract income for the six months ended June 30, 2009 increased by 22%,
to $30.1 million from $24.7 million for the same period in 2008. Stuart
Olson's contract income margin percentage increased to 14.2% compared to 8.9%
year-over-year, driven by higher margins in the company's backlog and strong
project execution.
Earnings before tax from the buildings segment for the six month period
ended June 30, 2009 were $20.4 million compared to $14.9 million in the prior
year. This 37% increase resulted from higher margins across all branches,
particularly in Northern Alberta.
Stuart Olson had work-in-hand of $447.1 million and a backlog of $1.23
billion as at March 31, 2009. In the three months ended June 30, 2009, Stuart
Olson secured $162.9 million of new contracts and executed $113.5 million of
work. The company finished the quarter with $496.5 million of work-in-hand, of
which $275.7 million is expected to be executed in 2009. As at June 30, 2009,
Stuart Olson's total backlog was $1.23 billion.
Stuart Olson continues to pursue new project opportunities which fit its
strategy, expertise and price for value proposition. The institutional
spending outlook remains strong and the company is currently competing for two
additional P3 projects in addition to pursuing traditional infrastructure
projects.
Industrial Insulation Contracting
Industrial Insulation Contracting operates under three business units -
Fuller Austin, Northern Industrial Insulation and Lakehead Insulation - all
providing insulation related contracting services for capital projects and
maintenance work. Lakehead is a wholly-owned subsidiary of Fuller Austin.
Revenue for the three months ended June 30, 2009, was $17.4 million,
compared to $20.0 million for the same period of 2008. The revenue decrease
was the result of reduced capital spending mainly in the Saskatchewan
industrial market.
Contract income in the second quarter of 2009 was $3.3 million compared
to $4.0 million for the comparable period in 2008. The contract income margin
percentage in Q2 2009 was 19.0% versus 20.0% in Q2 2008.
Earnings before tax were $1.8 million during the period ending June 30,
2009, compared to $2.6 million in the second quarter of 2008. Strong project
execution by the insulation companies on a variety of maintenance and shutdown
contracts allowed IHI to sustain earnings.
For the six months ended June 30, 2009, Insulation Holdings reported
revenue of $34.9 million compared to $33.6 million for the same period of
2008. The company's revenue for the first six months of 2009 has remained
robust as a result of its near record backlog of work.
Contract income for the first six month period ended June 30, 2009, was
$6.6 million compared to $6.1 million for the comparable period in 2008. The
contract income margin percentage was 18.9% compared to 18.1%, respectively.
Earnings before tax increased 11% year-to-date to $3.9 million in the
period ending June 30, 2009, compared to $3.5 million in 2008. These stronger
earnings were a result of the higher contract margins earned year-to-date.
Industrial Insulation Contracting had work-in-hand of $55.2 million and a
backlog of $69.0 million as at March 31, 2009. During Q2 2009, IHI secured new
awards totaling $25.3 million and executed $17.4 million of contractual work.
The insulation segment ended the quarter with $63.1 million of work-in-hand,
of which $32.4 million is expected to carry over into 2010. At June 30, 2009,
IHI's backlog amounted to $68.5 million compared to $51.8 million in the prior
year. This increase in backlog is primarily related to projects awarded to
Fuller Austin for an upgrader/refinery project in Fort Saskatchewan and for an
emissions reduction project at Syncrude near Fort McMurray.
With its positive start to 2009 and strong backlog of projects,
Insulation Holdings is positioned to perform favourably over the next 12
months. However, industrial project delays and owner requests for rate resets
continue to create increased competition for new work and apply downward
pressure on contract income margins.
Industrial Electrical Contracting
For the three months ended June 30, 2009, Laird's contract revenue was
$5.9 million compared to $33.1 million reported in Q2 2008. This decrease in
revenue was primarily due to a reduction in activity levels associated with
several oil sands projects in the Fort McMurray area and no significant shut
down activity in the quarter. Management believes that activity levels are
likely to remain lower on a year-over-year basis for the balance of 2009.
Contract income was $1.4 million in Q2 2009 compared to $5.1 million
during the prior year. This decrease was due to lower activity levels. The
contract income margin percentage was higher at 23.7% during the second
quarter of 2009 compared to 15.4% in Q2 2008 due to strong project execution,
operational improvements and favourable resolution of project contingencies.
Laird reported a loss before tax of $0.1 million for the period, compared
to earnings before income tax of $3.0 million in Q2 2008. Laird's initiatives
to right size the organization for the expected reduced activity levels paid
dividends this quarter as the company was able to withstand a significant
revenue drop. The company was able to offset the impact of lower revenues in
the period with higher margins and control of its indirect and administrative
expenses.
For the six months ended June 30, 2009, Laird's reported revenue was
$19.6 million compared to $49.9 million reported in 2008. This decrease in
revenue was primarily due to a reduction in activity levels associated with
several oil sands projects in the Fort McMurray area and very little client
shut down and maintenance activity in the quarter.
Contract income for the six months ended June 30, 2009 was $3.4 million
compared to $7.4 million during 2008. This decrease in contract income was due
to lower activity levels. The contract income margin percentage was higher at
17.4% in 2009 compared to 14.8% in 2008 due to operational efficiency in the
field and favourable resolution of project contingencies.
Laird reported earnings before tax of $0.5 million for the period ending
June 30, 2009, compared to earnings before tax of $3.4 million in 2008. The
variance in earnings is attributable to lower levels of client activity.
Laird's reported Q1 2009 work-in-hand and backlog was $26.1 million. New
contract awards of $20.7 million were secured in the second quarter of 2009
and $5.9 million of contracts were executed. Laird concluded the second
quarter with $40.9 million of work-in-hand and backlog, of which $12.3 million
is expected to be completed in 2010. This compares to a backlog of $39.8
million at the end of Q2 2008.
Laird has increased its focus on business development activities during
this slowdown and successfully concluded agreements with clients such as Shell
Albian and Suncor during the second quarter of 2009.
Corporate and Other
In the second quarter of 2009, the Corporate and Other segment incurred a
loss before tax of $2.7 million compared to a loss before tax of $1.9 million
in 2008. For the six months ended June 30, 2009 and 2008 the Corporate and
Other segment generated a loss before tax of $5.6 million and $3.6 million
respectively. The increase in 2009 Corporate and Other expenditures is
attributable to indirect and administrative expenses associated primarily with
implementation of a new incentive based compensation program more closely
aligned with shareholder interests, professional fees and stock based
compensation.
CAPITAL RESOURCES AND LIQUIDITY
Cash and cash equivalents at June 30, 2009, totaled $131.8 million, which
compares with $100.8 million at the end of 2008. Included in the cash and cash
equivalents balance is $18.8 million which is subject to deemed trust
conditions under the British Columbia Builders Lien Act, compared to $17.5
million at December 31, 2008. As such, this cash is restricted to the payment
of direct costs related to specific construction projects.
Cash flow provided from operating activities was $32.8 million, compared
to $18.1 million of cash used in operations during the second quarter of 2008.
The Corporation expects to increase its cash and cash equivalents from the
proceeds associated with the sale of its discontinued operations.
Investing activities resulted in a use of cash of $0.7 million during the
second quarter of 2009, which compares with cash used of $1.5 million in Q2
2008. The cash was invested in the acquisition of construction equipment for
long term projects under contract.
During the second quarter of 2009, cash used in financing activities
associated with net repayments of long term debt amounted to $1.1 million,
compared to cash used in financing of $0.3 million in Q2 2008. Stock options
exercised by directors and officers of the Corporation contributed $0.2
million to the cash generated from financing in Q2 2008.
Cash generated from operations of $32.6 million in the first six months
of 2009 was in contrast to cash used in operations of $30.1 million in the
same period of 2008. This reversal can be attributed to the collection of
accounts receivables and lower activity in the Corporation's industrial
operations.
Investing activities resulted in a use of cash of $1.5 million during the
six months ended June 30, 2009, which compares with cash used of $3.2 million
in the same period of 2008. The cash was invested in the acquisition of
construction equipment for long term projects under contract.
For the six months ended June 30, 2009, cash used in financing amounted
to $7.6 million, compared to cash used in financing of $0.8 million in 2008.
Net repayments of long-term debt in the six month period ended June 30, 2009,
amounted to $6.8 million, compared to net repayments of $1.1 million in 2008.
Stock options exercised by directors and officers of the Corporation
contributed $0.2 million to the cash generated from financing in the first
half of 2009 compared to $0.2 million in 2008.
As at June 30, 2009, Churchill had working capital of $84.4 million,
compared to its working capital position of $78.3 million at December 31,
2008.
Management believes that the Corporation has the capital resources and
liquidity necessary to meet its commitments, support its operations and
finance its growth strategies. In addition to the Corporation's cash and cash
equivalents, ability to generate cash from operations, and its $60.0 million
credit facility, the Corporation is also able to issue additional common
shares to provide for capital spending and sustain its property and equipment.
The Corporation is a partner in three joint ventures. In each instance
the Corporation has provided a joint and several guarantee, increasing the
maximum potential exposure to the full value of the work remaining under the
contract. Public-Private Partnerships ("PPP") infrastructure projects may
expose the Corporation to financial penalties or liquidated damages under the
contract for project delays. PPP projects require security in the form of
letters of credit to support the obligations that the Corporation undertakes
on these projects.
Shareholders' equity was $117.3 million at June 30, 2009, as compared to
$105.6 million at December 31, 2008.
Share Data
On October 15, 2008, the Corporation commenced a Normal Course Issuer Bid
("NCIB"), under which it is entitled to purchase up to 1,391,090 common shares
in a 12 month period. During the second quarter of 2009, no common shares were
repurchased under the NCIB, however 44,100 common shares purchased in March
2009, were cancelled during the reporting period. In total, the Corporation
has repurchased and cancelled 432,500 common shares year-to-date. The
Corporation has expended $1.0 million in the first six months of 2009 under
its normal course issuer bid. The funding for the NCIB is from the
Corporation's cash and cash equivalents balance.
As at August 11, 2009, the Corporation had 17,599,491 common shares
issued and outstanding and 876,842 options convertible into common shares upon
exercise (December 31, 2008 - 17,822,091 common shares and 519,660 options).
The Corporation has an Employee Share Purchase Plan (the "ESPP")
available to all full-time employees. At June 30, 2009, the ESPP held 913,200
common shares for employees. Under the ESPP, common shares are acquired in the
open market.
OUTLOOK
With the sale of the Triton companies subsequent to the completion of the
quarter, management has demonstrated its commitment to reshape the
organization to focus on its most profitable segments and businesses where we
can compete effectively to grow shareholder value. In addition, our
restructuring and office consolidation initiatives are expected to generate
savings of $2.0 million annually, deliver improved customer service and
increase productivity.
The Corporation continues to demonstrate the strength of its business
model reporting strong margins and profits driven primarily by our
infrastructure business. Our industrial companies, Laird and IHI, are well
positioned to participate in the spending in the oil and gas sector as
projects resume in the latter part of 2009 and into 2010. The cost reductions,
creative thinking and entrepreneurial culture demonstrated by the management
team in this period of reduced activity are traits which we want to sustain
when activity levels increase in the future. The performance of Stuart Olson
which is the growth engine of the business and holder of 91% of the
Corporation's backlog of $1.4 billion, excluding the incremental $152 million
of additions from the closing of Fort St. John Hospital and SFU Shrum Science
Complex, will play an important role in our future outlook. Government
spending plans should they translate into funding for new projects and
"shovel-ready" projects will be key to our growth, however we continue to see
opportunities on the private side of the non-residential construction market.
Overall, the outlook for Churchill remains positive as we believe the
prospects are strong that we will continue to secure new critical
infrastructure and industrial projects.
<<
CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE
INCOME AND RETAINED EARNINGS
(unaudited, $ thousands, Three months ended Six months ended
except per share amounts) June 30 June 30
---------------------------------- ------------ ------------ ------------
2009 2008 2009 2008
---------------------------------- ------------ ------------ ------------
Contract revenue $ 136,745 $ 202,006 $ 265,848 $ 359,786
Contract costs 115,187 178,937 225,732 321,668
---------------------------------- ------------ ------------ ------------
Contract income 21,558 23,069 40,116 38,118
Interest income 97 579 347 1,525
Sundry income 264 101 263 194
Indirect and
administrative
expenses (9,684) (9,878) (19,169) (19,513)
Depreciation and
amortization (1,091) (1,001) (2,227) (1,907)
Interest expense (100) (128) (180) (268)
---------------------------------- ------------ ------------ ------------
Earnings from
continuing operations
before income taxes 11,044 12,742 19,150 18,149
---------------------------------- ------------ ------------ ------------
Income tax (expense)
recovery
Current income tax (10,700) (5,743) (22,639) (8,834)
Future income tax 7,609 1,926 17,205 3,156
---------------------------------- ------------ ------------ ------------
(3,091) (3,817) (5,434) (5,678)
---------------------------------- ------------ ------------ ------------
Earnings from
continuing operations
and comprehensive
income 7,953 8,925 13,716 12,471
Net earnings (loss)
from discontinued
operations (603) 619 (1,762) 1,599
---------------------------------- ------------ ------------ ------------
Net earnings and
comprehensive income 7,350 9,544 11,954 14,070
Retained earnings,
beginning of period 86,324 52,054 83,132 47,528
Adjustment arising
from shares purchased
under a normal course
issuer bid (258) - (1,670) -
---------------------------------- ------------ ------------ ------------
Retained earnings,
end of period $ 93,416 $ 61,598 $ 93,416 $ 61,598
---------------------------------- ------------ ------------ ------------
---------------------------------- ------------ ------------ ------------
Net earnings per
common share:
Basic from continuing
operations $ 0.45 $ 0.50 $ 0.78 $ 0.70
Basic from
discontinued
operations $ (0.03) $ 0.03 $ (0.11) $ 0.09
Basic net earnings
per share $ 0.42 $ 0.53 $ 0.68 $ 0.79
---------------------------------- ------------ ------------ ------------
Diluted from
continuing
operations $ 0.44 $ 0.50 $ 0.77 $ 0.69
Diluted from
discontinued
operations $ (0.03) $ 0.03 $ (0.10) $ 0.09
Diluted net
earnings per share $ 0.41 $ 0.53 $ 0.67 $ 0.78
---------------------------------- ------------ ------------ ------------
---------------------------------- ------------ ------------ ------------
Weighted average
common shares:
Basic 17,603,368 17,922,156 17,641,765 17,904,573
---------------------------------- ------------ ------------ ------------
Diluted 17,823,621 18,131,675 17,812,702 18,115,697
---------------------------------- ------------ ------------ ------------
---------------------------------- ------------ ------------ ------------
CONSOLIDATED BALANCE SHEETS
(unaudited, $ thousands)
------------------------------------------------------------ ------------
June 30, December 31,
2009 2008
------------------------------------------------------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 131,817 $ 100,768
Accounts receivable 138,066 119,248
Inventories and prepaid expenses 1,651 1,285
Costs in excess of billings 5,469 17,692
Income taxes recoverable 3,572 3,615
Future income tax assets 32,694 1,390
Assets held for sale 13,693 24,528
------------------------------------------------------------ ------------
326,962 268,526
Future income tax assets 211 568
Property and equipment 15,911 16,547
Assets held for sale 10,119 9,844
Goodwill and intangible assets 7,315 7,336
------------------------------------------------------------ ------------
$ 360,518 $ 302,821
------------------------------------------------------------ ------------
------------------------------------------------------------ ------------
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 119,603 $ 134,194
Contract advances and unearned income 81,701 41,088
Income taxes payable 16,561 2,462
Future income tax liabilities 15,281 3,177
Current portion of long-term debt 702 1,082
Liabilities related to assets held for sale 8,781 8,220
------------------------------------------------------------ ------------
242,629 190,223
Long-term debt 463 6,787
Future income tax liabilities 54 204
Liabilities related to assets held for sale 24 34
------------------------------------------------------------ ------------
243,170 197,248
SHAREHOLDERS' EQUITY
Share capital 16,625 16,663
Shares repurchased under a normal course issuer
bid, not cancelled - (956)
Contributed surplus 7,307 6,734
Retained earnings 93,416 83,132
------------------------------------------------------------ ------------
117,348 105,573
------------------------------------------------------------ ------------
$ 360,518 $ 302,821
------------------------------------------------------------ ------------
------------------------------------------------------------ ------------
CONSOLIDATED STATEMENTS OF CASH FLOW
Three months ended Six months ended
(unaudited, $ thousands) June 30 June 30
---------------------------------- ------------ ------------ ------------
2009 2008 2009 2008
---------------------------------- ------------ ------------ ------------
OPERATING ACTIVITIES
Net earnings from
continuing operations
and comprehensive
income $ 7,953 $ 8,925 $ 13,716 $ 12,471
Depreciation and
amortization 1,091 1,001 2,227 1,907
Gain (loss) on
disposal of
equipment 13 3 (18) (20)
Share-based
compensation 154 303 634 370
Future income taxes (7,124) (1,624) (17,205) (2,383)
---------------------------------- ------------ ------------ ------------
2,087 8,608 (646) 12,345
Change in non-cash
balances relating to
operations 30,716 (26,729) 33,202 (42,465)
---------------------------------- ------------ ------------ ------------
32,803 (18,121) 32,556 (30,120)
---------------------------------- ------------ ------------ ------------
INVESTING ACTIVITIES
Proceeds on disposal
of equipment 128 158 152 182
Additions to property
and equipment (863) (1,670) (1,657) (3,371)
---------------------------------- ------------ ------------ ------------
(735) (1,512) (1,505) (3,189)
---------------------------------- ------------ ------------ ------------
FINANCING ACTIVITIES
Proceeds under
operating line of
credit - 4,000 - 9,000
Repayments under
operating line of
credit - (4,000) - (9,000)
Repayment of long-term
debt (1,136) (569) (6,752) (1,054)
Share purchase under
a normal course issuer
bid - - (970) -
Issuance of common
shares - 236 158 236
---------------------------------- ------------ ------------ ------------
(1,136) (333) (7,564) (818)
---------------------------------- ------------ ------------ ------------
Cash provided by (used
in) continuing
operations 30,933 (19,966) 23,487 (34,127)
Cash provided by
discontinued
operations 2,769 10,895 7,562 1,931
---------------------------------- ------------ ------------ ------------
Change in cash and
cash equivalents
during the period 33,701 (9,071) 31,049 (32,196)
Cash and cash
equivalents, beginning
of period 98,116 84,980 100,768 108,105
---------------------------------- ------------ ------------ ------------
Cash and cash
equivalents, end of
period $ 131,817 $ 75,909 $ 131,817 $ 75,909
---------------------------------- ------------ ------------ ------------
---------------------------------- ------------ ------------ ------------
SUPPLEMENTAL CASH FLOW
INFORMATION
---------------------------------- ------------ ------------ ------------
Cash received (paid)
during the year for:
Interest $ 13 $ 1,124 $ 194 $ 1,942
Income taxes $ (2,470) $ (5,106) $ (8,442) $ (22,683)
---------------------------------- ------------ ------------ ------------
SELECTED FINANCIAL STATEMENT DISCLOSURE
Three months ended Industrial Industrial Corporate
June 30, 2009 Buildings Insulation Electric and Other Total
-------------------------------------------------------------------------
Revenues $ 113,526 $ 17,364 $ 5,855 $ - $ 136,745
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 12,581 1,852 228 (2,426) 12,235
Depreciation and
amortization 546 77 273 195 1,091
Interest expense 21 1 10 68 100
-------------------------------------------------------------------------
Earnings (loss)
from continuing
operations before
income taxes $ 12,014 $ 1,774 $ (55) $ (2,689) $ 11,044
----------
Income taxes (3,091)
----------
Earnings from
continuing
operations 7,953
Net loss from
discontinued
operations $ (603)
----------
Net earnings $ 7,350
----------
----------
Goodwill $ 7,315
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Assets in
continuing
operations $ 232,658 $ 23,082 $ 24,836 $ 56,130 $ 336,706
Assets held for
sale 23,812
----------
Total Assets $ 360,518
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital
Expenditures $ 401 $ 160 $ 1 $ 236 $ 798
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Industrial Industrial Corporate
June 30, 2008 Buildings Insulation Electric and Other Total
-------------------------------------------------------------------------
Revenues $ 148,932 $ 20,001 $ 33,073 $ - $ 202,006
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 9,469 2,661 3,317 (1,576) 13,871
Depreciation and
amortization 489 53 250 209 1,001
Interest expense 14 - 22 92 128
-------------------------------------------------------------------------
Earnings (loss)
from continuing
operations before
income taxes $ 8,966 $ 2,608 $ 3,045 $ (1,877) $ 12,742
----------
Income taxes (3,817)
----------
Earnings from
continuing
operations 8,925
Net earnings from
discontinued
operations $ 619
----------
Net earnings $ 9,544
----------
----------
Goodwill and
intangible assets $ 7,399
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Assets in
continuing
operations $ 216,213 $ 20,166 $ 32,813 $ 1,289 $ 270,481
Assets held for
sale 49,454
----------
Total Assets $ 319,935
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital
Expenditures $ 930 $ (93) $ 572 $ 409 $ 1,818
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Six months ended Industrial Industrial Corporate
June 30, 2009 Buildings Insulation Electric and Other Total
-------------------------------------------------------------------------
Revenues $ 211,339 $ 34,874 $ 19,635 $ - $ 265,848
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 21,534 4,045 1,041 (5,063) 21,557
Depreciation and
amortization 1,111 152 540 424 2,227
Interest expense 32 2 23 123 180
-------------------------------------------------------------------------
Earnings (loss)
from continuing
operations before
income taxes $ 20,391 $ 3,891 $ 478 $ (5,610) $ 19,150
----------
Income taxes (5,434)
----------
Earnings from
continuing
operations 13,716
Net loss from
discontinued
operations (1,762)
----------
Net earnings $ 11,954
----------
----------
Goodwill and
intangible assets $ 7,315
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Assets in
continuing
operations $ 232,658 $ 23,082 $ 24,836 $ 56,130 $ 336,706
Assets held for
sale 23,812
----------
Total Assets $ 360,518
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital
Expenditures $ 871 $ 196 $ 271 $ 367 $ 1,705
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Six months ended Industrial Industrial Corporate
June 30, 2008 Buildings Insulation Electric and Other Total
-------------------------------------------------------------------------
Revenues $ 276,330 $ 33,604 $ 49,852 $ - $ 359,786
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 15,862 3,571 3,887 (2,996) 20,324
Depreciation and
amortization 949 108 487 363 1,907
Interest expense 29 - 40 199 268
-------------------------------------------------------------------------
Earnings (loss)
from continuing
operations before
income taxes $ 14,884 $ 3,463 $ 3,360 $ (3,558) $ 18,149
----------
Income taxes (5,678)
----------
Earnings from
continuing
operations 12,471
Net earnings from
discontinued
operations 1,599
----------
Net earnings $ 14,070
----------
----------
Goodwill and
intangible assets $ 7,378
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Assets in
continuing
operations $ 216,213 $ 20,166 $ 32,813 $ 1,289 $ 270,481
Assets held for
sale 49,454
----------
Total Assets $ 319,935
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital
Expenditures $ 1,660 $ 62 $ 626 $ 985 $ 3,333
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
The Churchill Corporation provides building construction, industrial
insulation, industrial electrical and maintenance related services throughout
Western Canada. Churchill common shares are listed on The Toronto Stock
Exchange under the symbol "CUQ".
TERMINOLOGY
Throughout this Press Release, and other documents referred to,
management refers to certain terms when explaining its financial results that
do not have any standardized meaning under Canadian GAAP as set out in the
CICA Handbook. Specifically, the terms "contract income margin percentage",
"work-in-hand", "backlog", "working capital", "EBITDA" and "book value per
share" have been defined as: Contract income margin percentage is the
percentage derived by dividing contract income by contract revenue. Contract
income is calculated by deducting all associated direct and indirect costs
from contract revenue in the period. Work-in-hand is the unexecuted portion of
work that has been contractually awarded for construction to the Corporation.
It includes an estimate of the revenue to be generated from maintenance
contracts during the shorter of (a) twelve months, or (b) the remaining life
of the contract.
Backlog means the total value of work including work-in-hand that has not
yet been completed that; (a) is assessed by the Corporation as having high
certainty of being performed by the Corporation or its subsidiaries by either
the existence of a contract or work order specifying job scope, value and
timing; or (b) has been awarded to the Corporation or its subsidiaries, as
evidenced by an executed binding or non-binding letter of intent or agreement,
describing the general job scope, value and timing of such work, and with the
finalization of a formal contract respecting such work currently assessed by
the Corporation as being reasonably assured. All projects within backlog are
classified as active unless the Company has received written or verbal
notification from the client that a job/project/contract has been delayed, at
which point the backlog is classified as delayed backlog. The Corporation
provides no assurance that additional clients will not choose to defer or
cancel their projects in the future. There can be no assurance that the client
will resume the project or that the delayed backlog will not be retendered.
Jobs or projects subsequently retendered and not awarded to the Corporation or
its subsidiaries would at that time be removed from the Corporation's backlog.
<<
As at June 30, 2009
($ millions)
Active Delayed Total
Work-in-hand Backlog Backlog Backlog
---------------------------------------------------------
$600.6 $626.6 $117.0 $1,344.2
---------------------------------------------------------
---------------------------------------------------------
As at December 31, 2008
($ millions)
Active Delayed Total
Work-in-hand Backlog Backlog Backlog
---------------------------------------------------------
$565.2 $794.8 $30.3 $1,390.3
---------------------------------------------------------
---------------------------------------------------------
Working capital is current assets less current liabilities. Our
calculation of working capital is provided in the table below:
-------------------------------------------------------------------------
As at June 30 December 31,
($ millions) 2009 2008
-------------------------------------------------------------------------
Current assets $327.0 $268.5
Less:
Current liabilities 242.6 190.2
-------------------------------------------------------------------------
Working Capital $84.4 $78.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
EBITDA is a common financial measure widely used by investors to
facilitate an "enterprise level" valuation of an entity. The Corporation
follows the standardized definition of EBITDA. Standardized EBITDA represents
an indication of the Corporation's capacity to generate income from operations
before taking into account management's financing decisions and costs of
consuming tangible and intangible capital assets, which vary according to
their vintage, technological currency, and management's estimate of their
useful life. Accordingly standardized EBITDA comprises revenues less operating
cost before interest expense, capital asset amortization and impairment
charges, and income taxes. This measure as reported by the Corporation may not
be comparable to similar measures presented by other reporting issuers. The
following is a reconciliation of net earnings to EBITDA from continuing
operations for each of the periods presented in this MD&A in accordance with
GAAP.
<<
-------------------------------------------------------------------------
Three months ended Six months ended
($ millions) June 30, June 30,
------------------- -------------------
2009 2008 2009 2008
-------------------------------------------------------------------------
Net Earnings $8.0 $8.9 $13.7 $12.5
Add:
Income Taxes 3.1 3.8 5.4 5.7
Depreciation &
Amortization 1.1 1.0 2.2 1.9
Interest expense 0.1 0.1 0.2 0.3
-------------------------------------------------------------------------
EBITDA $12.3 $13.8 $21.5 $20.4
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
FORWARD LOOKING STATEMENTS
Certain statements in this Second Quarter 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,
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.
