News Releases
EDMONTON, Aug. 5 /CNW/ - The Churchill Corporation (TSX: CUQ) today
announced record financial results for its second quarter ended June 30, 2008.
<<
CONSOLIDATED FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------
Three months ended
June 30
------------------------------------------
($ millions, except $ %
per share amounts) 2008 2007 Change Change
-------------------------------------------------------------------------
Contract Revenue $229.5 $186.9 $42.6 23%
Contract Income 25.2 16.9 8.3 49%
EBITDA(1) 14.9 8.3 6.6 80%
Earnings before Tax 13.7 7.4 6.3 85%
Net Earnings 9.5 5.0 4.5 90%
Per Share - Basic $0.53 $0.28 $0.25 89%
Work-in-hand(2) 585.5 757.4 -171.9 -23%
Backlog(3) $1,265.2 $1,223.8 $41.4 3%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Six months ended
June 30
------------------------------------------
($ millions, except $ %
per share amounts) 2008 2007 Change Change
-------------------------------------------------------------------------
Contract Revenue $413.5 $340.8 $72.7 21%
Contract Income 43.1 29.3 13.8 47%
EBITDA(1) 23.1 12.6 10.5 83%
Earnings before Tax 20.5 10.7 9.8 92%
Net Earnings 14.1 7.4 6.7 91%
Per Share - Basic $0.79 $0.42 $0.37 88%
Work-in-hand(2) 585.5 757.4 -171.9 -23%
Backlog(3) $1,265.2 $1,223.8 $41.4 3%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1)(2)(3) Refer to the "Terminology" section for further details.
>>
The Corporation posted second quarter contract revenue of $229.5 million
and net earnings of $9.5 million, or $0.53 per basic common share. These
results compare to contract revenue of $186.9 million and net earnings of
$5.0 million, or $0.28 per basic common share, in Q2 2007.
"Our results in Q2 2008 were our best ever; exceeding those of Q4 2007,"
said Chairman and Interim Chief Executive Officer, Peter Adams. "These results
were made possible by a 23% increase in year-over-year construction activity
on a consolidated basis. The largest percentage gain was made at Triton where
strong field construction activity contributed to a 161% increase in contract
revenue. Insulation Holdings benefited from stronger markets in Alberta and
Saskatchewan growing sales by 83% and Stuart Olson was able to grow general
contracting revenue by 14%, to $148.9 million from $130.2 million in the prior
year. Strong operational execution particularly at Stuart Olson and Laird
Electric resulted in significant margin improvement and a record quarterly
profit of $0.53 per share. Our backlog remains at near-record levels, and our
focus is on converting our work-in-hand volume into near-term shareholder
profits. Our markets remain very strong, with numerous project opportunities
available for our companies."
SECOND QUARTER RESULTS
For the second quarter of 2008, consolidated contract revenue was
$229.5 million, which was $42.6 million or 23% greater than the same period in
2007. This higher level of revenue on a year-over-year basis was a result of
continued strength in our building construction segment, significant growth in
our industrial general contracting segment and a greater volume of work
completed in our industrial insulation segment.
Contract income increased from $16.9 million in the second quarter of
2007 to $25.2 million in the current period as stronger margins in the
buildings and electrical segments improved overall results.
Indirect and administrative expenses amounted to $10.9 million in the
quarter, compared to $9.4 million in the comparable period of 2007, reflecting
increased expenses associated with higher revenue.
Earnings before interest, taxes, depreciation and amortization in the
quarter were $14.9 million, compared to $8.3 million in the second quarter of
2007. Earnings before tax in Q2 2008 increased 85% to $13.7 million, compared
to $7.4 million reported in Q2 2007. All of the operating companies were
profitable in the second quarter of 2008. The Corporation's consolidated net
earnings for the three months ended June 30, 2008 were $9.5 million compared
to net earnings of $5.0 million in 2007.
Work-in-hand at June 30, 2008 was $585.5 million, a decrease of 23%
compared to $757.4 million in the second quarter of 2007. The Corporation's
backlog at the conclusion of the quarter was $1.3 billion dollars, an increase
of 3% relative to the comparable period of 2007. New contract awards of
$175.3 million were booked in the current quarter, which compares with
$347.7 million in Q2 2007. The majority of the variance in new work secured
was from the buildings segment. Stuart Olson is targeting certain large
projects within Alberta and British Columbia with a view to securing new
projects for late 2008 and early 2009 construction.
RESULTS OF OPERATIONS
Buildings
---------
For the three months ended June 30, 2008, Stuart Olson's revenue
increased by $18.7 million to $148.9 million, compared to $130.2 million in
the prior year. The company continues to experience higher levels of activity
in all of its branches; however growth was particularly strong in the Northern
Alberta and British Columbia branches. Stuart Olson was active during the
period on projects ranging from educational and healthcare facilities, to
civic infrastructure and commercial buildings.
Contract income margin in the second quarter increased 67% to
$13.9 million from $8.3 million for the same period in 2007. Contract income
margin percentage increased to 9.3% in 2008 as compared to 6.4% in 2007.
Stuart Olson's operational strength is allowing it to grow margins through
solid project execution.
Earnings before tax from the buildings segment were $9.0 million in Q2
2008, compared to $4.5 million in Q2 2007. This 100% improvement in earnings
was a result of the increase in overall contract volume and strong project
execution.
For the six months ended June 30, 2008, Stuart Olson reported revenues of
$276.3 million compared to revenues of $229.3 million last year. This
$47.0 million growth in revenue on a year-over-year basis was generated by
increased activity in all regions.
Contract income margin for the first six months of 2008 was $24.7 million
compared to $14.5 million in 2007. Contract income margin percentage was 8.9%
compared to 6.3%, respectively. Earnings before tax increased to $14.9 million
compared to $7.2 million. A strong market combined with solid project
execution has allowed Stuart Olson to be more profitable.
Stuart Olson had work-in-hand of $508.6 million and a backlog of
$1.3 billion as at March 31, 2008. In the three months ended June 30, 2008,
the company secured a further $121.1 million of contracts, and executed
$148.9 million of contract revenue. The company completed the quarter with
$480.8 million of work-in-hand, of which $177.2 million is expected to
carryover into 2009. The company continues to focus its efforts on securing
larger projects with construction starts scheduled for the second half of 2008
and into 2009. At June 30, 2008, Stuart Olson's backlog amounted to
$1.14 billion, compared to $1.12 billion in Q2 2007, an increase of 2%.
Industrial General Contracting
------------------------------
Triton's contract revenue for the period ending June 30, 2008, was
$27.7 million; an increase of 161% from the $10.6 million generated in the
comparable quarter of 2007. Revenues from all divisions were higher during the
second quarter of 2008, but most significantly in the construction division.
Contract income margin increased 5% to $2.1 million in Q2 2008 from
$2.0 million in Q2 2007. The company's contract income margin percentage was
lower at 7.6%, down from 18.9% in the second quarter of 2007. The mix of
contract revenue, lower realized contract income margins in the construction
and fabrication divisions and recording a loss provision on a previously
completed contract were responsible for this decrease.
Earnings before tax increased to $0.8 million in the second quarter of
2008, as compared to earnings before tax of $0.5 million in Q2 2007. The
increase in pre-tax earnings was a result of greater activity levels and
profits in all three divisions.
For the six months ended June 30, 2008, Triton reported revenues of
$53.9 million compared to revenues of $19.9 million last year. While all three
divisions have been busier than in 2007, the majority of this revenue
differential can be attributed to a significant year-over-year increase in
activity levels within the construction division.
Contract income for the first six months of 2008 was $4.8 million
compared to $2.9 million in 2007. Contract income margin percentage in 2008
was 8.9% compared to 14.6%, in 2007. Triton's year to date earnings before tax
was $2.1 million, compared to a loss before tax of $0.2 million in 2007.
Triton had work-in-hand of $40.9 million and a backlog of $42.7 million
at March 31, 2008. For the quarter ending June 30, 2008, the company secured a
further $11.9 million of contracts, and executed $27.7 million of contractual
work. Triton was awarded contracts from BA Energy, Encana, IMV Projects, TCPL
and others during the quarter. The company ended the quarter with
$25.1 million of work-in-hand, which it expects to execute during the balance
of 2008. At June 30, 2008, the company's backlog was $29.4 million versus a Q2
2007 backlog of $28.1 million.
Industrial Insulation Contracting
---------------------------------
Insulation Holdings Inc. operates 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, 2008, increased to
$20.0 million, compared to $10.9 million for the comparable period in 2007.
The increase in revenue was a result of greater activity in Fuller Austin
Saskatchewan and Northern Industrial divisions.
Contract income margin increased to $4.0 million in Q2 2008 from
$2.5 million for the comparable period of 2007. The increase in margin was a
result of continued strong project execution and the greater volume of work
executed. The contract income margin percentage was 20.0% in this quarter as
compared to 22.9% in the prior year.
The company's earnings before tax increased 100% to $2.6 million during
the period, compared to earnings before tax of $1.3 million in the second
quarter of 2007.
For the six months ended June 30, 2008, Insulation Holdings reported
revenues of $33.6 million compared to revenues of $22.8 million last year. The
majority of the $10.8 million revenue differential is associated with work
completed in the Saskatchewan market.
Contract income for the first six months of 2008 was $6.1 million
compared to $4.2 million in the comparable period of 2007. Contract income
margin percentage was 18.2% compared to 18.4%, respectively. This high
contract income margin percentage was due to solid project execution. Earnings
before tax year to date increased to $3.5 million from $1.9 million in 2007.
Insulation Holdings had work-in-hand of $44.4 million and backlog of
$52.6 million at March 31, 2008. During Q2 2008, they secured a further
$15.5 million of contracts and executed $20.0 million of contracts. New
contracts were secured from clients such as Agrium, Comstock, Flint, TransAlta
and Suncor. The insulation segment ended the quarter with $39.9 million of
work-in-hand, of which $7.0 million is expected to be completed in 2009. At
June 30, 2008, the company had a backlog of $51.8 million, as compared to
$27.2 million in the prior year.
Industrial Electrical Contracting
---------------------------------
For the three months ended June 30, 2008, Laird's contract revenue was
$32.9 million compared to the $35.3 million reported in Q2 2007. Q2 2007
revenue was a record quarter for Laird, with significant manpower employed on
several major oil sands projects.
Contract income increased from $4.1 million in 2007 to $4.9 million in Q2
2008, due to improved project execution. The contract income margin percentage
was higher during the second quarter at 14.9% as compared to 11.6% in Q2 2007.
This was a result of the revenue mix from contracts under construction, strong
project execution and ongoing systems and process improvements.
Laird achieved earnings before tax of $3.0 million for the period,
compared to earnings before tax of $2.6 million in Q2 2007. The increase in
earnings was a result of the higher contract income margin in Q2 2008 as
compared to the prior year.
For the six months ended June 30, 2008, Laird reported revenues of
$49.7 million compared to revenues of $68.9 million last year, a decrease of
$19.2 million. In the first six months of 2007, Laird undertook a significant
amount of maintenance related activities for a major oil sands client, which
contributed to the greater prior year volume.
Contract income for the first six months of 2008 was $7.2 million
compared to $7.4 million in 2007. This consistent contract income,
notwithstanding the year-over-year revenue decrease of $19.2 million, is
mainly due to systems and process improvements. Contract income margin
percentage was 14.5% compared to 10.7%, respectively. Earnings before tax year
to date decreased to $3.4 million compared to $4.3 million in 2007. The
$0.9 million decrease in earnings before tax is attributable to the reduction
in contract revenue of $19.2 million.
Laird reported work-in-hand and backlog amounting to $45.8 million at
March 31, 2008. New contract awards of $26.8 million were secured in the
second quarter and $32.9 million of contracts were executed. Projects were
secured from clients including Albian, Nexen, TransAlta and Suncor. Laird
ended the second quarter with $39.7 million of work-in-hand and backlog, all
of which is expected to be completed in 2008. Laird's backlog at the end of Q2
2007 was $46.6 million.
Corporate and Other
-------------------
In the second quarter of 2008, the Corporate and Other segment incurred a
loss before tax of $1.7 million compared to a loss before tax of $1.6 million
in 2007. For the six months ended June 30, 2008, the Corporate and Other
segment generated a loss before tax of $3.3 million compared to a loss before
tax of $2.5 million for the same period in 2007. Corporate expenses were
higher due to recognition of stock based compensation expenses, consulting
fees and a larger work force.
CASH FLOW, FINANCING, CAPITAL REQUIREMENTS, LIQUIDITY
Cash and cash equivalents at June 30, 2008, totaled $75.9 million, which
compares with $108.1 million at the end of 2007. Of the $75.9 million of cash
and cash equivalents, $18.1 million was subject to deemed trust conditions
under the British Columbia Lien Act, compared to $25.3 million at December 31,
2007. As such, this cash is restricted to the payment of direct costs related
to specific construction projects.
Operating activities used $7.1 million of cash during the quarter as
compared to providing $11.4 million of cash during the second quarter of 2007.
This change was primarily due to an increase in accounts receivable during the
second quarter of 2008 resulting from increased activity.
Investing activities resulted in the use of $1.7 million of cash during
the second quarter of 2008, which compares with cash used of $1.5 million in
Q2 2007. The investments were made in construction equipment to support
operations.
During the second quarter of 2008 net cash used in financing activities
amounted to $0.3 million, compared to cash used in financing activities of
$0.5 million in the second quarter of 2007. The Corporation repaid
$0.5 million of long-term debt during Q2 2008, and received proceeds of
$0.2 million from the exercise of stock options.
Cash used in operations of $28.2 million in the first six months of 2008
was in contrast to cash generated from operations of $16.7 million in the same
period last year. This change can be attributed to additional income taxes
paid and greater working capital investment to support revenue growth on a
year-over-year basis.
For the six months ended June 30, 2008, investing activities resulted in
a use of cash of $3.2 million compared to $2.2 million of cash used in the
prior year. The Corporation has primarily used this cash to acquire
construction equipment in both periods.
For the six months ended June 30, 2008, cash used in financing activities
amounted to $0.8 million compared to proceeds of $2.5 million received in
2007. Proceeds and repayments applied to the operating line of credit during
the year to date offset each other compared to $3.5 million of net cash
received in 2007. Repayment of long-term debt in the first six months of 2008
was $1.1 million and $0.6 million in 2007. Repayment of the demand term loan
in 2007 was $0.4 million; subsequent to the second quarter of 2007 this demand
term loan was converted to a committed debt facility. As at June 30, 2008, the
Corporation was in compliance with the repayment terms associated with its
contractual obligations. The Corporation received proceeds of $0.2 million
from the exercise of stock options in the first six months of 2008, and
proceeds of $nil in the corresponding period of 2007.
As at June 30, 2008, Churchill had working capital of $60.1 million,
which compares favourably to the working capital position of $47.9 million at
the end of 2007.
The Corporation remains a partner in two joint ventures. In each instance
the Corporation has provided joint and several guarantees, increasing the
maximum potential exposure to the full value of the work remaining under the
contract.
Shareholders' equity was $84.4 million at June 30, 2008, as compared to
$69.7 million at December 31, 2007. Share capital has increased by $328
thousand during the first six months of 2008 to recognize options exercised.
Year-to-date, contributed surplus increased $278 thousand as a result of the
recognition of stock-based compensation. Retained earnings increased from
$47.5 million at December 31, 2007 to $61.6 million at June 30, 2008,
reflecting the year-to-date addition of $14.1 million of net earnings.
Share Data
As at June 30, 2008, the Corporation had 17,961,991 common shares issued
and outstanding and 350,026 options convertible into common shares upon
exercise (June 30, 2007 - 17,667,491 common shares and 455,000 options).
During the period from July 1, 2008, to July 31, 2008, no new share options
were granted, exercised or cancelled.
The Corporation has an Employee Share Purchase Plan available to all
full-time employees. At June 30, 2008, the plan held 827,585 Churchill common
shares for employees (Q2 2007 - 1,323,080 common shares). Under the plan,
shares are acquired in the open market.
OUTLOOK
The total value of major construction projects expected to be built in
Alberta grew to more than $273 billion by the end of June 2008, an increase of
more than $90 billion from June 2007. The total number of major construction
projects stands at 1,177 up from 955 a year ago. The oil sands sector
continues to make up the biggest piece of this inventory with 53 projects
valued at more than $170 billion. Last year, the oil sands sector was listed
with 52 projects valued at $110.7 billion. The institutional sector with 220
projects was valued at $13.9 billion in June 2008 compared to 181
institutional projects valued at $10.8 billion in June 2007.
Clearly infrastructure spending continues to remain strong in Western
Canada and particularly Alberta. Stuart Olson is successfully converting its
$1.1 billion of backlog into revenue, executing extremely well on the projects
in its possession and delivering record earnings year-over-year. Stuart Olson
remains a sought-after general contractor with numerous project opportunities
in the pipeline.
Triton is off to a great start in 2008, with activity levels higher
within all business units. The accelerated pace of construction activity in
the first half of 2008 has resulted in Triton working through its backlog
faster than planned. Activity levels are forecast to soften in the third and
fourth quarters and have a corresponding impact on profitability. However, the
strength of the market and the repositioning of the company with customers
have us optimistic that Triton will be able to secure significant construction
projects for 2009.
Insulation Holdings is executing well and market conditions in all
regions are strong enough to enable them to return to the revenue levels and
associated profitability experienced in 2005 and 2006. The backlog remains at
near record levels and provides substantial near-term visibility.
Laird is making the operational and systems improvements necessary to
position itself for long-term success in the oil sands construction and
maintenance market. Laird's maintenance role on a major oil sands site has
been extended by the general contractor through the balance of fiscal 2008 and
the backlog of work remains high.
Churchill is well on its way to delivering improved operational and
financial results once again in 2008. We have initiated projects at various
levels within the company to increase efficiencies and generate higher
margins.
<<
CONSOLIDATED STATEMENTS OF EARNINGS,
COMPREHENSIVE INCOME AND RETAINED EARNINGS
($ thousands, except Three months ended Six months ended
per share amounts) June 30 (unaudited) June 30 (unaudited)
---------------------------------- ------------ ------------ ------------
2008 2007 2008 2007
---------------------------------- ------------ ------------ ------------
Contract revenue $ 229,544 $ 186,937 $ 413,528 $ 340,841
Contract costs 204,348 170,063 370,457 311,533
---------------------------------- ------------ ------------ ------------
Contract income 25,196 16,874 43,071 29,308
Interest income 598 516 1,554 929
Sundry income 122 292 218 296
Indirect and
administrative
expenses (10,937) (9,370) (21,776) (17,950)
Depreciation and
amortization (1,169) (770) (2,239) (1,510)
Interest expense (147) (179) (307) (373)
---------------------------------- ------------ ------------ ------------
Earnings before
income taxes 13,663 7,363 20,521 10,700
---------------------------------- ------------ ------------ ------------
Income tax (expense)
recovery
Current income tax (5,743) (2,241) (8,834) (2,611)
Future income tax 1,624 (88) 2,383 (736)
---------------------------------- ------------ ------------ ------------
(4,119) (2,329) (6,451) (3,347)
---------------------------------- ------------ ------------ ------------
Net earnings 9,544 5,034 14,070 7,353
Comprehensive income - - - -
---------------------------------- ------------ ------------ ------------
Net earnings and
comprehensive income 9,544 5,034 14,070 7,353
Retained earnings,
beginning of period 52,054 28,721 47,528 26,402
---------------------------------- ------------ ------------ ------------
Retained earnings,
end of period $ 61,598 $ 33,755 $ 61,598 $ 33,755
Accumulated
comprehensive
income, beginning
of period $ - $ - $ - $ -
Comprehensive
income for the
period - - - -
---------------------------------- ------------ ------------ ------------
Accumulated
comprehensive
income,
end of period $ - $ - $ - $ -
---------------------------------- ------------ ------------ ------------
---------------------------------- ------------ ------------ ------------
Net earnings
per common share:
Basic $ 0.53 $ 0.28 $ 0.79 $ 0.42
---------------------------------- ------------ ------------ ------------
Fully diluted $ 0.53 $ 0.28 $ 0.78 $ 0.41
---------------------------------- ------------ ------------ ------------
---------------------------------- ------------ ------------ ------------
Weighted average
common shares:
Basic 17,922,156 17,667,491 17,904,573 17,667,491
---------------------------------- ------------ ------------ ------------
Diluted 18,131,675 17,949,780 18,115,697 17,932,268
---------------------------------- ------------ ------------ ------------
---------------------------------- ------------ ------------ ------------
CONSOLIDATED BALANCE SHEETS
($ thousands)
------------------------------------------------------------ ------------
June 30, December 31,
2008 2007
(unaudited)
------------------------------------------------------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $ 75,909 $ 108,105
Accounts receivable 190,526 123,906
Inventories and prepaid expenses 1,903 859
Income taxes recoverable 3,844 -
Future income tax assets 2,756 759
------------------------------------------------------------ ------------
274,938 233,629
Future income tax assets 1,481 788
Property and equipment 23,968 22,832
Goodwill and intangible assets 7,378 7,420
------------------------------------------------------------ ------------
$ 307,765 $ 264,669
------------------------------------------------------------ ------------
------------------------------------------------------------ ------------
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 165,251 $ 149,057
Contract advances and unearned income 47,606 24,611
Income taxes payable - 10,148
Current portion of long-term debt 1,971 1,963
------------------------------------------------------------ ------------
214,828 185,779
Long-term debt 7,817 8,755
Future income tax liabilities 766 457
------------------------------------------------------------ ------------
223,411 194,991
SHAREHOLDERS' EQUITY
Share capital 16,742 16,414
Contributed surplus 6,014 5,736
Retained earnings 61,598 47,528
Accumulated other comprehensive income - -
------------------------------------------------------------ ------------
84,354 69,678
------------------------------------------------------------ ------------
$ 307,765 $ 264,669
------------------------------------------------------------ ------------
------------------------------------------------------------ ------------
CONSOLIDATED STATEMENTS OF CASH FLOW
Three months ended Six months ended
($ thousands) June 30 (unaudited) June 30 (unaudited)
---------------------------------- ------------ ------------ ------------
2008 2007 2008 2007
---------------------------------- ------------ ------------ ------------
OPERATING ACTIVITIES
Net earnings $ 9,544 $ 5,034 $ 14,070 $ 7,353
Depreciation and
amortization 1,169 770 2,239 1,510
(Gain) loss on
disposal of
equipment 3 (14) (20) (16)
Share-based
compensation 303 30 370 37
Future income
taxes (1,624) 88 (2,383) 736
---------------------------------- ------------ ------------ ------------
9,395 5,908 14,276 9,620
Net change in
accounts receivable,
inventories and
prepaid expenses (25,307) (17,254) (67,663) (57,928)
Net change in
accounts payable
and accrued
liabilities 18,642 19,396 16,195 34,301
Net change in
contract advances
and unearned
income and costs
in excess of billings (10,321) 3,284 22,995 34,622
Net change in income
taxes payable 494 66 (13,992) (3,894)
---------------------------------- ------------ ------------ ------------
(7,097) 11,400 (28,189) 16,721
---------------------------------- ------------ ------------ ------------
INVESTING ACTIVITIES
Proceeds on disposal
of equipment 158 148 182 150
Additions to property
and equipment (1,825) (1,603) (3,371) (2,343)
---------------------------------- ------------ ------------ ------------
(1,667) (1,455) (3,189) (2,193)
---------------------------------- ------------ ------------ ------------
FINANCING ACTIVITIES
Proceeds under
operating
line of credit 4,000 - 9,000 5,000
Repayments under
operating line of credit (4,000) - (9,000) (1,500)
Repayment of
long-term debt (543) (373) (1,054) (635)
Repayment of demand
term loan - (130) - (390)
Issuance of common shares 236 - 236 -
---------------------------------- ------------ ------------ ------------
(307) (503) (818) 2,475
---------------------------------- ------------ ------------ ------------
(Decrease) increase
in cash (9,071) 9,442 (32,196) 17,003
Cash, beginning of
period 84,980 57,948 108,105 50,387
---------------------------------- ------------ ------------ ------------
Cash, end of period $ 75,909 $ 67,390 $ 75,909 $ 67,390
---------------------------------- ------------ ------------ ------------
---------------------------------- ------------ ------------ ------------
SUPPLEMENTAL CASH FLOW INFORMATION
---------------------------------- ------------ ------------ ------------
Cash received (paid)
during the year for:
Interest $ 457 $ 338 $ 1,255 $ 579
Income taxes $ (5,106) $ (2,175) $ (22,683) $ (6,505)
---------------------------------- ------------ ------------ ------------
SELECTED FINANCIAL STATEMENT DISCLOSURE
Three months ended Industrial Industrial Industrial
June 30, 2008 Buildings General Insulation Electric
-------------------------------------------------------------------------
Revenues $ 148,932 $ 27,719 $ 20,001 $ 32,892
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 9,469 899 2,661 3,317
Depreciation and
amortization 489 99 53 250
Interest expense 14 19 - 22
-------------------------------------------------------------------------
Earnings (loss)
before tax $ 8,966 $ 781 $ 2,608 $ 3,045
Income taxes
Net earnings
Goodwill and
intangible assets $ - $ - $ - $ 7,315
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total Assets $ 216,213 $ 27,379 $ 20,166 $ 32,813
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Expenditures $ 930 $ 7 $ 31 $ 572
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Corporate
June 30, 2008 and Other Total
-----------------------------------------------
Revenues $ - $ 229,544
-----------------------------------------------
-----------------------------------------------
EBITDA(1) (1,367) 14,979
Depreciation and
amortization 278 1,169
Interest expense 92 147
-----------------------------------------------
Earnings (loss)
before tax $ (1,737) $ 13,663
------------
Income taxes (4,119)
------------
Net earnings $ 9,544
------------
------------
Goodwill and
intangible assets $ 63 $ 7,378
-----------------------------------------------
-----------------------------------------------
Total Assets $ 11,194 $ 307,765
-----------------------------------------------
-----------------------------------------------
Capital Expenditures $ 409 $ 1,949
-----------------------------------------------
-----------------------------------------------
Three months ended Industrial Industrial Industrial
June 30, 2007 Buildings General Insulation Electric
-------------------------------------------------------------------------
Revenues $ 130,169 $ 10,599 $ 10,895 $ 35,274
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 4,781 634 1,376 2,823
Depreciation and
amortization 278 103 60 206
Interest expense 7 16 - 4
-------------------------------------------------------------------------
Earnings (loss)
before tax $ 4,496 $ 515 $ 1,316 $ 2,613
Income taxes
Net earnings
Goodwill and
intangible assets $ - $ - $ - $ 7,315
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total Assets $ 161,659 $ 15,409 $ 15,755 $ 37,328
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Expenditures $ 1,434 $ 7 $ 67 $ 479
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three months ended Corporate
June 30, 2007 and Other Total
-----------------------------------------------
Revenues $ - $ 186,937
-----------------------------------------------
-----------------------------------------------
EBITDA(1) (1,302) 8,312
Depreciation and
amortization 123 770
Interest expense 152 179
-----------------------------------------------
Earnings (loss)
before tax $ (1,577) $ 7,363
------------
Income taxes (2,329)
------------
Net earnings $ 5,034
------------
------------
Goodwill and
intangible assets $ 147 $ 7,462
-----------------------------------------------
-----------------------------------------------
Total Assets $ 11,417 $ 241,568
-----------------------------------------------
-----------------------------------------------
Capital Expenditures $ 34 $ 2,021
-----------------------------------------------
-----------------------------------------------
Six months ended Industrial Industrial Industrial
June 30, 2008 Buildings General Insulation Electric
-------------------------------------------------------------------------
Revenues $ 276,330 $ 53,923 $ 33,604 $ 49,671
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 15,862 2,310 3,571 3,887
Depreciation and
amortization 949 195 108 487
Interest expense 29 39 - 40
-------------------------------------------------------------------------
Earnings (loss)
before tax $ 14,884 $ 2,076 $ 3,463 $ 3,360
Income taxes
Net earnings
Goodwill and
intangible assets $ - $ - $ - $ 7,315
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total Assets $ 216,213 $ 27,379 $ 20,166 $ 32,813
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Expenditures $ 1,660 $ 162 $ 62 $ 626
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Six months ended Corporate
June 30, 2008 and Other Total
-----------------------------------------------
Revenues $ - $ 413,528
-----------------------------------------------
-----------------------------------------------
EBITDA(1) (2,563) 23,067
Depreciation and
amortization 500 2,239
Interest expense 199 307
-----------------------------------------------
Earnings (loss)
before tax $ (3,262) $ 20,521
------------
Income taxes (6,451)
------------
Net earnings $ 14,070
------------
------------
Goodwill and
intangible assets $ 63 $ 7,378
-----------------------------------------------
-----------------------------------------------
Total Assets $ 11,194 $ 307,765
-----------------------------------------------
-----------------------------------------------
Capital Expenditures $ 985 $ 3,495
-----------------------------------------------
-----------------------------------------------
Six months ended Industrial Industrial Industrial
June 30, 2007 Buildings General Insulation Electric
-------------------------------------------------------------------------
Revenues $ 229,331 $ 19,868 $ 22,782 $ 68,860
-------------------------------------------------------------------------
-------------------------------------------------------------------------
EBITDA(1) 7,783 121 2,018 4,664
Depreciation and
amortization 519 235 124 390
Interest expense 34 41 1 20
-------------------------------------------------------------------------
Earnings (loss)
before tax $ 7,230 $ (155) $ 1,893 $ 4,254
Income taxes
Net earnings
Goodwill and
intangible assets $ - $ - $ - $ 7,315
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total Assets $ 161,659 $ 15,409 $ 15,755 $ 37,328
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Expenditures $ 2,128 $ 11 $ 126 $ 1,085
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Six months ended Corporate
June 30, 2007 and Other Total
-----------------------------------------------
Revenues $ - $ 340,841
-----------------------------------------------
-----------------------------------------------
EBITDA(1) (2,003) 12,583
Depreciation and
amortization 242 1,510
Interest expense 277 373
-----------------------------------------------
Earnings (loss)
before tax $ (2,522) $ 10,700
------------
Income taxes (3,347)
------------
Net earnings $ 7,353
------------
------------
Goodwill and
intangible assets $ 147 $ 7,462
-----------------------------------------------
-----------------------------------------------
Total Assets $ 11,417 $ 241,568
-----------------------------------------------
-----------------------------------------------
Capital Expenditures $ 47 $ 3,397
-----------------------------------------------
-----------------------------------------------
>>
The Churchill Corporation provides building construction, industrial
construction and maintenance services throughout Western Canada.
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 contracts during the shorter of
(a) twelve months, or (b) the remaining life of the contract.
Backlog means the total value of work 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.
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) 2008 2007
-------------------------------------------------------------------------
Current assets $ 274.9 $ 233.6
Less:
Current liabilities 214.8 185.7
-------------------------------------------------------------------------
Working Capital $ 60.1 $ 47.9
-------------------------------------------------------------------------
>>
EBITDA is equal to earnings before interest expense, taxes, depreciation
and amortization. This measure as reported by the Corporation may not be
comparable to similar measures presented by other reporting issuers.
<<
Three months ended Six months ended
($ millions) June 30, June 30,
------------------------- -------------------------
2008 2007 2008 2007
-------------------------------------------------------------------------
Net Earnings $ 9.5 $ 5.0 $ 14.1 $ 7.4
Add:
Income Taxes 4.1 2.3 6.5 3.3
Depreciation &
Amortization 1.2 0.8 2.2 1.5
Interest expense 0.1 0.2 0.3 0.4
-------------------------------------------------------------------------
EBITDA $ 14.9 $ 8.3 $ 23.1 $ 12.6
-------------------------------------------------------------------------
-------------------------------------------------------------------------
>>
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 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.
