News Releases
<<
(TSX: CUQ)
Q1 2009 Highlights
------------------
- Contract income margin increased to 13.2% from 9.7% year-over-year
- Net earnings increased to $4.6 million from $4.5 million year-over-
year
- Earnings per share increased to $0.26 compared to $0.25 per share in
Q1 2008
- Reduced our long-term debt by $5.3 million, thereby strengthening our
balance sheet
>>
EDMONTON, May 7 /CNW/ - The Churchill Corporation today reported first
quarter contract revenue of $141.5 million, net earnings of $4.6 million, and
earnings per share ("EPS") of $0.26. These results compare to contract revenue
of $184.0 million, net earnings of $4.5 million and EPS of $0.25 in Q1 2008.
<<
-------------------------------------------------------------------------
Three months ended
March 31
----------------------------------
$ %
($ millions, except per share amounts) 2009 2008 Change Change
-------------------------------------------------------------------------
Contract Revenue $141.5 $184.0 (42.5) -23%
Contract Income 18.7 17.9 0.8 4%
EBITDA(1) 7.9 8.1 (0.2) -3%
Earnings before income taxes 6.5 6.9 (0.4) -6%
Net Earnings 4.6 4.5 0.1 2%
EPS - basic $0.26 $0.25 $0.01 4%
Work-in-hand(2) 550.7 639.7 (89.0) -14%
Backlog(3) $1,364.0 $1,428.0 ($64.0) -4%
-------------------------------------------------------------------------
(1)(2)(3) Refer to the "Terminology" section for further details.
>>
"The Corporation delivered strong first quarter results, with a contract
income margin percentage of 13.2% and net earnings comparable to our record
results from Q1 2008," said Jim Houck, President and Chief Executive Officer,
The Churchill Corporation. "Stuart Olson, Insulation Holdings and Laird
Electric all generated pre-tax earnings in excess of their first quarter 2008
performance and our backlog remains at near record levels."
OVERALL PERFORMANCE
For the first quarter of 2009 consolidated contract revenue was $141.5
million, compared to $184.0 million in the same period in 2008. Revenue
decreased due to delays in project starts and tendering in our buildings
segment and lower levels of industrial contracting activity on a
year-over-year basis in our industrial electrical and general contracting
operations.
Contract income increased from $17.9 million in the first quarter of 2008
to $18.7 million in Q1 2009 as stronger margins in our building construction,
industrial insulation and industrial electrical segments improved overall
performance.
Indirect and administrative expenses amounted to $11.1 million in the
quarter, compared to $10.8 million in the comparable period of 2008, primarily
due to increased corporate overhead expenses associated with implementation of
a new incentive based compensation package more closely aligned with
shareholder interests, professional fees and share-based compensation.
Earnings before interest, taxes, depreciation and amortization in the
quarter were $7.9 million, compared to $8.1 million in Q1 2008. Earnings
before tax decreased to $6.5 million compared to $6.9 million reported in Q1
2008. The Corporation's consolidated net earnings for the three months ended
March 31, 2009 were $4.6 million compared to net earnings of $4.5 million in
Q1 2008.
New contract awards of $100.6 million were added to work-in-hand in the
current quarter compared to $109.9 million in Q1 2008. Work-in-hand at March
31, 2009, was $550.7 million, compared to $639.7 million at March 31, 2008. On
a segmented basis, year-over-year work-in-hand decreased $61.5 million in the
buildings segment, decreased $19.7 million in the electrical contracting
segment, decreased $18.5 million in the industrial general contracting segment
and increased $10.7 million in the insulation contracting segment.
Churchill's total backlog, including work-in-hand at March 31, 2009,
decreased to $1.36 billion from $1.43 billion in the prior year.
Year-over-year backlog in our buildings segment decreased by $54.5 million,
the industrial electrical contracting backlog decreased by $19.7 million, the
industrial general contracting segment backlog decreased by $6.2 million and
the insulation contracting segment backlog increased by $16.4 million. The
Corporation's backlog consists of work-in-hand of $550.7 million, active
backlog of $691.1 million and delayed backlog of $122.2 million. The
Corporation has moved the fully-funded $91.9 million Lethbridge Hospital
Expansion into delayed backlog as a result of funding issues associated with
the construction of a related parking structure. While, the delayed component
of Churchill's total backlog has risen, management remains confident that
these delays can be overcome and that the majority of the Corporation's
backlog will be realized as revenue in future reporting periods. Additionally,
while total backlog appears to have decreased in the first quarter of 2009,
Churchill's Q1 2009 reported backlog excludes Stuart Olson's recent award of
the Fort St. John hospital project. This project will be added to the backlog
once financial close has been reached.
RESULTS OF OPERATIONS
Buildings
For the period ending March 31, 2009, Stuart Olson's revenue was $97.8
million, compared to $127.4 million in the prior year. This decrease in
revenue was a result of delayed project starts in Southern Alberta and British
Columbia and delays in tendering in Northern Alberta.
Contract income in the first quarter of 2009 increased 23% to $13.2
million, from $10.7 million for the same period in 2008. The Q1 2009 contract
income margin percentage was 13.5% compared to 8.4% 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 $8.4 million in Q1
2009, compared to $5.9 million in Q1 2008. This 42% improvement in pre-tax
earnings was a result of strong project execution particularly in the Northern
Alberta and British Columbia branches and managed decreases in indirect and
administrative expenses.
Stuart Olson completed 2008 with $472.8 million of work-in-hand and a
backlog of $1.3 billion. Stuart Olson secured $72.1 million of new work during
Q1 2009 and executed $97.8 million of work, ending the quarter with $447.1
million of work-in-hand, of which $347.7 million is expected to be executed in
2009. As at March 31, 2009, Stuart Olson's total backlog was $1.2 billion.
Stuart Olson is part of a team selected as the preferred proponent to
construct the new Fort St. John Hospital and Residential Care Facility, with
financial close slated for July 2009. The value associated with this project
will likely add over $100 million to our Q3 2009 backlog.
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 non-residential private sector
spending outlook is showing signs of improvement as a result of lower
financing and construction costs.
Industrial General Contracting
Triton's revenue for the three months ended March 31, 2009, was $12.4
million compared to $26.2 million for the comparable period in 2008. Revenues
from all divisions were lower during Q1 2009 relative to the prior year. The
economic slowdown in the oil and gas sector has significantly impacted
Triton's revenue base in Q1 2009 and the effects of the slowdown will likely
continue to be felt throughout the remainder of 2009.
Contract income margin in Q1 2009 was 0.4%, compared to 10.1% delivered
in Q1 2008. Triton continues to experience project execution challenges in its
fabrication division resulting in lower margins.
Triton reported a loss before tax of $1.7 million in the first quarter of
2009 compared to earnings before tax of $1.3 million in Q1 2008. During Q1
2009, Triton incurred $0.3 million of business restructuring expenses. As
further right-sizing occurs during the second quarter, we expect to incur
additional restructuring charges in the range of $0.3 to $0.6 million.
Triton entered the year with $26.3 million of work-in-hand and a backlog
of $45.8 million. For the quarter ending March 31, 2009, the company secured a
further $8.4 million of contracts and executed $12.4 million of contractual
work. As a result, the company concluded the quarter with $22.3 million of
work-in-hand, of which it expects to execute $18.7 million during 2009. At
March 31, 2009, Triton's backlog amounted to $36.5 million compared to $42.7
million in the prior year.
The market slowdown due to the curtailment of activities in the oil sands
has significantly impacted incoming bid requests. The majority of project work
is either being cancelled or delayed until late 2009 or early 2010, when
activity levels are expected to improve. In addition to headcount reductions,
Triton management has taken steps to reduce discretionary and capital
expenditures and dispose of excess inventory and assets.
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 March 31, 2009, increased 29% to $17.5
million compared to $13.6 million for the same period of 2008. The revenue
increase was the result of strong insulation and siding activity in all of the
company's markets, particularly among Fuller Austin's Northern Alberta
clientele.
Contract income in the current quarter increased to $3.3 million from
$2.1 million for the comparable period in 2008. Contract income margins were
higher at 18.9% in Q1 2009 versus 15.4% in Q1 2008, as a result of continued
strong project execution and closeout margins on a number of projects carried
over from 2008.
Earnings before tax increased by 133% to $2.1 million during the period
ending March 31, 2009, compared to earnings before tax of $0.9 million in the
first quarter of 2008.
Industrial Insulation Contracting ended 2008 with work-in-hand of $63.1
million and a backlog of $78.3 million. During Q1 2009, IHI secured new awards
totaling $9.6 million and executed $17.5 million of contractual work. The
insulation segment ended the quarter with $55.2 million of work-in-hand, of
which $16.0 million is expected to carry over into 2010 and beyond. At March
31, 2009, IHI's backlog amounted to $69.0 million compared to $52.6 million at
the end of March 2008.
Industrial project delays and cancellations continue to create increased
competition for work and apply pressure on margins. The high level backlog
within our insulation segment has likely shielded the IHI companies from the
worst of the economic slowdown.
Industrial Electrical Contracting
For the three months ended March 31, 2009, Laird's revenue was $13.7
million compared to $16.8 million reported in Q1 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. Management believes that
activity levels are likely to remain lower for most of 2009.
Contract income was $1.9 million in Q1 2009 compared to $2.3 million
during the prior year. This decrease was due to lower activity levels. The
contract income margin percentage was higher at 13.9% during the first quarter
of 2009 compared to 13.7% in Q1 2008 due to strong project execution and
operational improvements.
Laird reported earnings before tax of $0.5 million for the period,
compared to earnings before tax of $0.3 million in Q1 2008. 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.
Laird ended 2008 with work-in-hand of $29.3 million and a backlog of
$30.7 million. New contract awards of $10.5 million were secured in the first
quarter and $13.7 million of contracts were executed. Laird concluded the
first quarter with $26.1 million of work-in-hand and backlog, all of which is
expected to be executed during 2009. This compares to a backlog of $45.8
million at the end of Q1 2008. The reduction in backlog is primarily a result
of Laird's Suncor maintenance contract being renewed on a quarterly basis for
2009 due to uncertainty around activity levels on various Suncor projects. The
financial impact of project delays and cancellations at Suncor and other oil
sands clients will continue to impact results in 2009.
Corporate and Other
In the first quarter of 2009, the Corporate and Other segment incurred a
loss before tax of $2.9 million compared to a loss before tax of $1.5 million
in Q1 2008. The $1.4 million increase was attributable to indirect and
administrative expenses associated primarily with implementation of a new
incentive based compensation package more closely aligned with shareholder
interests, professional fees and share-based compensation.
CAPITAL RESOURCES AND LIQUIDITY
Cash and cash equivalents at March 31, 2009, totaled $98.1 million, which
compares with $100.8 million at the end of 2008. Of the $98.1 million of cash
and cash equivalents, $15.9 million was 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 $4.7 million compared to
$21.1 million of cash used in operations during the first quarter of 2008. The
Corporation expects to increase its cash and cash equivalents as its accounts
receivable balance declines as a result of a slowdown in activity, primarily
in the industrial general and electrical segments.
Investing activities resulted in a use of cash of $0.9 million during the
first quarter of 2009, which compares with cash used of $1.5 million in Q1
2008. The cash was invested in the acquisition of construction equipment for
long term projects under contract.
During the first quarter of 2009 cash used in financing activities
amounted to $6.4 million, compared to cash used in financing of $0.5 million
in Q1 2008. Net repayments of long-term debt in Q1 2009 amounted to $5.6
million, compared to net repayments of $0.5 million in Q1 2008. The
Corporation expended $1.0 million to repurchase shares under its normal course
issuer bid during the first quarter of 2009. Stock options exercised by
directors and officers of the Corporation contributed $0.2 million to the cash
generated from financing compared to $nil in Q1 2008.
As at March 31, 2009, Churchill had working capital of $77.4 million,
comparable 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 remains a partner in two 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. In aggregate, the Corporation's exposure is not significant relative
to its operations.
Shareholders' equity was $109.8 million at March 31, 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 first quarter of 2009, the Corporation
repurchased 127,600 common shares at an average of $7.59 per share. Of the
shares repurchased, 83,500 were cancelled during the reporting period. In
total, the Corporation has repurchased 432,500 common shares to date. The
funding for the NCIB is from the Corporation's cash and cash equivalents
balance.
As at May 5, 2009, the Corporation had 17,643,591 common shares issued
and outstanding and 923,266 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 March 31, 2009, the ESPP held 902,656
common shares for employees. Under the ESPP, common shares are acquired in the
open market.
OUTLOOK
The outlook for Churchill remains positive, notwithstanding the impact of
some project start-up delays. This is true particularly in our institutional
construction markets where we have a great deal of skill, expertise and a
track record of success. We are also seeing an improvement in private sector
non-residential construction activity due to the reduction in construction
costs and lower interest rates. Our most significant challenge will continue
to be work procurement however, our Stuart Olson team has identified a number
of new "shovel-ready" projects which should receive approval and funding over
the next couple of quarters.
In the more challenging and competitive industrial construction and
maintenance environment, we expect revenues to soften and margins to come
under pressure as project deferrals and cancellations result in fewer
contracting opportunities. We will continue to monitor market conditions and
adjust our operational levels to match forecasted activity. Additionally, we
will continue to focus on cost reductions and productivity enhancements, which
can facilitate our clients decisions to sanction oil sands projects even in a
lower commodity price environment. These productivity improvements will result
in right sizing our industrial segments to improve our organizational
capabilities to deliver more cost effective services to our clients.
<<
CONSOLIDATED STATEMENTS OF EARNINGS,
COMPREHENSIVE INCOME AND RETAINED EARNINGS
(unaudited, $ thousands, except Three months ended
per share amounts) March 31
------------------------------------------------------------ ------------
2009 2008
------------------------------------------------------------ ------------
Contract revenue $ 141,450 $ 183,984
Contract costs 122,773 166,109
------------------------------------------------------------ ------------
Contract income 18,677 17,875
Interest income 261 956
Sundry income 8 96
Indirect and administrative expenses (11,077) (10,839)
Depreciation and amortization (1,308) (1,070)
Interest expense (99) (160)
------------------------------------------------------------ ------------
Earnings before income taxes 6,462 6,858
------------------------------------------------------------ ------------
Income tax (expense) recovery
Current income tax (11,939) (3,091)
Future income tax 10,081 759
------------------------------------------------------------ ------------
(1,858) (2,332)
------------------------------------------------------------ ------------
Net earnings and comprehensive income 4,604 4,526
Retained earnings, beginning of period 83,132 47,528
Adjustment arising from shares purchased
under a normal course issuer bid (1,412) -
------------------------------------------------------------ ------------
Retained earnings, end of period $ 86,324 $ 52,054
------------------------------------------------------------ ------------
------------------------------------------------------------ ------------
Net earnings per common share:
Basic $ 0.26 $ 0.25
------------------------------------------------------------ ------------
Diluted $ 0.26 $ 0.25
------------------------------------------------------------ ------------
------------------------------------------------------------ ------------
Weighted average common shares:
Basic 17,680,588 17,886,991
------------------------------------------------------------ ------------
Diluted 17,881,016 18,099,719
------------------------------------------------------------ ------------
CONSOLIDATED BALANCE SHEETS
(unaudited, $ thousands)
------------------------------------------------------------ ------------
March 31, December 31,
2009 2008
------------------------------------------------------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 98,116 $ 100,768
Accounts receivable 160,791 139,508
Inventories and prepaid expenses 2,514 1,493
Costs in excess of billings 11,406 21,238
Income taxes recoverable 3,623 3,669
Future income tax assets 29,153 1,850
------------------------------------------------------------- -----------
305,603 268,526
Future income tax assets 610 905
Property and equipment 25,836 26,054
Goodwill and intangible assets 7,315 7,336
------------------------------------------------------------- -----------
$ 339,364 $ 302,821
------------------------------------------------------------- -----------
------------------------------------------------------------- -----------
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 126,370 $ 140,806
Contract advances and unearned income 70,840 41,525
Income taxes payable 8,383 2,462
Future income tax liabilities 20,321 3,179
Current portion of long-term debt 2,286 2,251
------------------------------------------------------------- -----------
228,200 190,223
Long-term debt 1,297 6,787
Future income tax liabilities 23 238
------------------------------------------------------------- -----------
229,520 197,248
SHAREHOLDERS' EQUITY
Share capital 16,667 16,663
Shares repurchased under a normal course
issuer bid, not cancelled (300) (956)
Contributed surplus 7,153 6,734
Retained earnings 86,324 83,132
------------------------------------------------------------- -----------
109,844 105,573
------------------------------------------------------------- -----------
$ 339,364 $ 302,821
------------------------------------------------------------- -----------
------------------------------------------------------------- -----------
CONSOLIDATED STATEMENTS OF CASH FLOW
Three months ended
(unaudited, $ thousands) March 31
------------------------------------------------------------ ------------
2009 2008
------------------------------------------------------------ ------------
OPERATING ACTIVITIES
Net earnings and comprehensive income $ 4,604 $ 4,526
Depreciation and amortization 1,308 1,070
Gain on disposal of equipment (20) (23)
Share-based compensation 480 67
Future income taxes (10,081) (759)
------------------------------------------------------------ ------------
(3,709) 4,881
Change in non-cash balances relating
to operations 8,373 (25,973)
------------------------------------------------------------ ------------
4,664 (21,092)
------------------------------------------------------------ ------------
INVESTING ACTIVITIES
Proceeds on disposal of equipment 37 24
Additions to property and equipment (973) (1,546)
------------------------------------------------------------ ------------
(936) (1,522)
------------------------------------------------------------ ------------
FINANCING ACTIVITIES
Proceeds under operating line of credit - 5,000
Repayments under operating line of credit - (5,000)
Repayment of long-term debt (5,568) (511)
Share purchase under a normal course issuer bid (970) -
Issuance of common shares 158 -
------------------------------------------------------------ ------------
(6,380) (511)
------------------------------------------------------------ ------------
Decrease in cash (2,652) (23,125)
Cash and cash equivalents, beginning of period 100,768 108,105
------------------------------------------------------------ ------------
Cash and cash equivalents, end of period $ 98,116 $ 84,980
------------------------------------------------------------ ------------
------------------------------------------------------------ ------------
SUPPLEMENTAL CASH FLOW INFORMATION
------------------------------------------------------------ ------------
Cash received (paid) during the year for:
Interest $ 163 $ 798
Income taxes $ (5,972) $ (17,577)
------------------------------------------------------------ ------------
SELECTED FINANCIAL STATEMENT DISCLOSURE
Three months ended Industrial Industrial
March 31, 2009 Buildings General Insulation
-------------------------------------------------------------------------
Revenues $ 97,813 $ 12,407 $ 17,510
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 8,953 (1,589) 2,193
Depreciation and amortization 565 104 75
Interest expense 11 19 1
-------------------------------------------------------------------------
Earnings (loss) before tax $ 8,377 $ (1,712) $ 2,117
Income taxes
Net earnings
Goodwill and intangible assets
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total Assets $ 208,283 $ 24,358 $ 21,955
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Expenditures $ 470 $ 179 $ 36
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Industrial Corporate
March 31, 2009 Electric and Other Total
-------------------------------------------------------------------------
Revenues $ 13,720 $ - $ 141,450
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 813 (2,501) 7,869
Depreciation and amortization 267 297 1,308
Interest expense 13 55 99
-------------------------------------------------------------------------
Earnings (loss) before tax $ 533 $ (2,853) $ 6,462
------------
Income taxes (1,858)
------------
Net earnings $ 4,604
------------
------------
Goodwill and intangible assets $ 7,315
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total Assets $ 33,174 $ 51,594 $ 339,364
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Expenditures $ 270 $ 131 $ 1,086
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Industrial Industrial
March 31, 2008 Buildings General Insulation
-------------------------------------------------------------------------
Revenues $ 127,398 $ 26,204 $ 13,603
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 6,393 1,411 910
Depreciation and amortization 460 96 55
Interest expense 15 20 -
-------------------------------------------------------------------------
Earnings (loss) before tax $ 5,918 $ 1,295 $ 855
Income taxes
Net earnings
Goodwill and intangible assets
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total Assets $ 200,494 $ 28,442 $ 17,116
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Expenditures $ 730 $ 31 $ 155
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Industrial Corporate
March 31, 2008 Electric and Other Total
-------------------------------------------------------------------------
Revenues $ 16,779 $ - $ 183,984
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 570 (1,196) 8,088
Depreciation and amortization 237 222 1,070
Interest expense 18 107 160
-------------------------------------------------------------------------
Earnings (loss) before tax $ 315 $ (1,525) $ 6,858
------------
Income taxes (2,332)
------------
Net earnings $ 4,526
------------
------------
Goodwill and intangible assets $ 7,399
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total Assets $ 24,420 $ 19,206 $ 289,678
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Expenditures $ 54 $ 576 $ 1,546
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
The Churchill Corporation provides building construction, industrial
construction and maintenance 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", "Delayed 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 March 31, 2009
($ millions)
Work-in-hand Active Backlog Delayed Backlog Total Backlog
-------------------------------------------------------------------------
$550.7 $691.1 $122.2 $1,364.0
-------------------------------------------------------------------------
As at December 31, 2008
($ millions)
Work-in-hand Active Backlog Delayed Backlog Total Backlog
-------------------------------------------------------------------------
$591.5 $814.3 $30.3 $1,436.1
-------------------------------------------------------------------------
Working capital is current assets less current liabilities. Our
calculation of working capital is provided in the table below:
-------------------------------------------------------------------------
As at March 31, December 31,
($ millions) 2009 2008
-------------------------------------------------------------------------
Current assets $305.6 $268.5
Less:
Current liabilities 228.2 190.2
-------------------------------------------------------------------------
Working Capital $77.4 $78.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
EBITDA is a common financial measure widely used by investors to
facilitate an "enterprise level" valuation of an entity. The Corporation
follows the standardized definition of EBITDA. Standardized EBITDA represents
an indication of the Corporation's capacity to generate income from operations
before taking into account management's financing decisions and costs of
consuming tangible and intangible capital assets, which vary according to
their vintage, technological currency, and management's estimate of their
useful life. Accordingly standardized EBITDA comprises revenues less operating
cost before interest expense, capital asset amortization and impairment
charges, and income taxes. This measure as reported by the Corporation may not
be comparable to similar measures presented by other reporting issuers. The
following is a reconciliation of net earnings to EBITDA for each of the
periods presented in this MD&A in accordance with GAAP.
<<
--------------------------------------------------
Three months ended
($ millions) March 31,
-------------------
2009 2008
--------------------------------------------------
Net Earnings $4.6 $4.5
Add:
Income Taxes 1.9 2.3
Depreciation & Amortization 1.3 1.1
Interest expense 0.1 0.2
--------------------------------------------------
EBITDA $7.9 $8.1
--------------------------------------------------
--------------------------------------------------
>>
Book value per share is the value of shareholders' equity less value of
preferred stock divided by basic shares outstanding at the end of the period.
FORWARD LOOKING STATEMENTS
Certain statements in this First 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.
