August 17, 2012

Churchill reports second-quarter loss

The Churchill Corp. (TSX:CUQ) of Calgary released its financial results recently, reporting a loss of $4.2 million on revenues of $295.8 million during the three months ending June 30.

During the same period in 2011, Churchill reported net earnings of $5.753 million on revenues of $340.905 million.

Churchill also announced it has appointed Douglas J. Haughey as its new chief executive officer. David LeMay, who was appointed interim CEO July 31, is now president and chief operating officer.

Churchill operates general contractor Stuart Olson Dominion Construction Ltd. Its subsidiaries include Canem Systems, Insulation Holdings Inc. and Broda Construction Inc.

It also owns Laird Electric of Edmonton, which provides electrical, instrumentation and power-line construction and maintenance services, primarily in the oil and gas industry in the Fort McMurray and Edmonton regions.

A Sudbury, Ontario-based unit, Laird Constructors, provides electrical, instrumentation, power-line, mechanical and structural construction and maintenance services, primarily in the mining industry in Ontario, Manitoba and Saskatchewan.

In its management discussion and analysis posted to SEDAR, Churchill said Stuart Olson Dominion's second-quarter revenue dropped 18 per cent year-over-year, from $215.9 million in 2011 to $177.3 million this year.

The decrease "is primarily attributable to being in the early stages of construction on several new projects, and delays in executing backlog," the firm stated. "For example, construction of three Alberta hospitals that were announced in July 2011 is in the early stages of construction, with initial work started in September 2011 for the Edson hospital, in January 2012 for the Lethbridge hospital, and in February 2012 for the Medicine Hat hospital."

Contract income at Stuart Olson Dominion dropped 45 per cent year over year, from $8.5 million in 2011 to $6.9 million in 2012, due mainly to cost increases for the Investors Group Field stadium project in Winnipeg, future home of the Canadian Football League's Blue Bombers team.

"Construction delays in completing structural steel work resulted in modifications to project schedule and execution, causing additional costs to be incurred and the profitability of the project to be reassessed. Stuart Olson Dominion will be pursuing a claim against the structural steel subcontractor in an effort to recover these additional costs."

Churchill had 3,551 employees as of June 30.

In its financial report posted to SEDAR, Churchill reported its loss for the first six months of the year was $1.007 million. Net earnings for the first six months most of 2011 were $11.517 million. On its balance sheet as of June 30, the firm reported $21.585 million in cash, $414.263 million in current assets and $817.722 million in total assets (which includes $234.256 million in goodwill). Total liabilities were $516.352 million, including $69.622 million in long term debt.

GREG MECKBACH

dcn digital media editor

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