The Churchill Corporation Reports 2012 Annual Results, Declares Quarterly Dividend
CALGARY, March 18, 2013 /CNW/ - The Churchill Corporation (TSX: CUQ, CUQ.DB) ("Churchill" or the "Corporation") today announced its 2012 annual and fourth quarter results and declared a quarterly dividend of $0.12 per common share.
|3 Months Ended Dec. 31||12 Months Ended Dec. 31|
|($millions, except per share amounts)||2012||2011||2012||2011|
|EBITDA from continuing operations||9.0||19.6||39.6||72.0|
|Net earnings (loss) (1)||(62.6)||7.3||(61.9)||24.9|
|Net earnings (loss) per common share (1)||- Basic||(2.56)||0.31||(2.54)||1.02|
|As of Dec. 31, 2012||As of Dec. 31, 2011|
|Long-term debt (excluding current portion)||51.9||60.4|
Notes: (1) Net earnings, basic earnings per share and diluted earnings per
share for the three months ended Dec. 31, 2012,
would have been $(0.4) million, $(0.02) and $(0.02), respectively without the $64.6 million goodwill, equipment and intangible
asset impairment charge recorded in 2012. Net earnings, basic earnings per share and diluted earnings per share for the year
ended Dec. 31, 2012, would have been $0.4 million, $0.02 and $0.02, respectively without the $64.6 million goodwill, equipment
and intangible asset impairment charge recorded in 2012.
These financial results are presented in conformance with International Financial Reporting Standards ("IFRS"). All figures are in Canadian dollars unless otherwise noted. Certain financial and operational measures referred to in this press release, including "EBITDA" and "backlog", are not prescribed measures under IFRS. For a description of these measures, see the Terminology section in Churchill's 2012 management discussion and analysis ("MD&A").
- Annual contract revenue decreased 13% year-over-year to $1,222.1 million from $1,409.2 million, primarily as a result of being in the early stages of construction on new projects and delays in executing backlog within the general contracting segment.
- Annual EBITDA decreased 45% to $39.6 million, compared to $72.0 million reported in 2011. The decrease in EBITDA resulted from lower revenue in the general contracting segment and lower contract income margins across all segments driven by project execution challenges incurred by the general contracting and commercial systems segments along with Broda's operations.
- Driven by a $64.6 million non-cash goodwill, equipment and intangible asset impairment, Churchill reported a net loss of $61.9 million and diluted loss per share of $2.54 in 2012, compared to reported net earnings of $24.9 million and diluted earnings per share of $0.94 in 2011. Excluding the impact of the non-cash goodwill, equipment and intangible asset impairment, net earnings and diluted earnings per share for 2012 were $0.4 million and $0.02, respectively.
- Backlog decreased 8% to $1,690.5 million as of December 31, 2012 from $1,842.6 million at December 31, 2011, as negative adjustments to backlog in the general contracting segment impacted full year totals.
- Subsequent to year end, the Churchill Board of Directors declared a quarterly dividend of $0.12 per common share. The dividend will be paid April 16, 2013 to shareholders of record on March 28, 2013. The Corporation has a dividend reinvestment plan in place for which details are available on Churchill's website (www.churchillcorporation.com).
During the fourth quarter, the Corporation performed its annual goodwill impairment test. As a result management concluded that goodwill related to Canem and Broda, businesses acquired in 2010, was impaired, which resulted in a $64.6 million goodwill, equipment and intangible asset impairment charge. This charge is non-cash in nature and does not affect the Corporation's liquidity, cash flows from operating activities, debt covenants, business operations or its decision to declare a dividend.
"Since the organizational changes that took place at Churchill in August of 2012, the Corporation has implemented significant G&A cost reductions, recalibrated its corporate strategy and reviewed the goodwill related to the Seacliff acquisition in 2010," said Doug Haughey, Churchill's CEO. "While 2012 was a very difficult year for Churchill, management is focused on material improvements in performance for 2013."
FOURTH QUARTER HIGHLIGHTS
- Revenue for the fourth quarter of 2012 was $289.9 million compared to $384.3 million in the three months ended December 31, 2011, a 25% decrease. Revenue declined in the General Contracting, Commercial Systems and Industrial Services operating segments by $84.1 million (36%), $6.4 million (12%), and $13.4 million (12%) respectively, primarily as a result of being in the early stages of construction on new projects and delays in executing backlog.
- Fourth quarter 2012 EBITDA was $9.0 million, compared to $19.6 million reported in the fourth quarter of 2011. The decrease in EBITDA resulted primarily from lower margins and project execution challenges.
- Driven by the non-cash goodwill, equipment and intangible impairment charge, Churchill reported a net loss of $62.6 million and diluted loss per share of $2.56 in the fourth quarter of 2012, compared to reported net earnings of $7.3 million and diluted earnings per share of $0.27 in the three months ended December 31, 2011.
- Backlog of $1,690.5 million as of December 31, 2012, (December 31, 2011 - $1,842.6 million) was comprised of General Contracting segment backlog of $1,115.8 million (December 31, 2011 - $1,445.3 million); Commercial Systems segment backlog of $194.3 million (December 31, 2011 - $133.3 million); and Industrial Services segment backlog of $380.4 million (December 31, 2011 - $264.0 million).
- Complete Financial Statements, Notes to the Financial Statements and Management's Discussion and Analysis will be filed on SEDAR (www.sedar.com) on March 18, 2013. Alternatively, the documents will be available to download from the Investors section of www.churchillcorporation.com.
Churchill is well positioned in Western Canada to compete for projects through its three operating business segments.
- Margins for Stuart Olson Dominion are expected to gradually improve in 2013 as recently awarded projects transition from design to the tendering and construction phase.
- During 2013, Canem expects modest revenue growth but EBITDA margins to be flat year-over-year, as a result of more competitive go-in fees and the timing of project phases in 2013.
- Within the Industrial Services segment, CSG & Broda expect to continue delivering strong revenues at comparable EBITDA margins to consolidated 2012 results.
Management is reiterating its 2013 EBITDA guidance range of between $45 million and $55 million. Management is also reiterating its first quarter 2013 net earnings expectation of breakeven to a modest loss driven by normal seasonal factors in Churchill's earthmoving business, as well as a ramp-up of new building construction projects during the quarter. However, operational and financial results are expected to improve substantially beginning with Q2/13 results.
Churchill will hold a conference call and webcast to discuss its 2012 Annual and Fourth Quarter results today at 7:30 a.m. Mountain Time (9:30 a.m. Eastern) which will be broadcast live and archived in the News & Events section at www.churchillcorporation.com. Financial analysts and institutional investors who wish to ask questions during the conference call are invited to call 1-800-319-4610 or email their questions directly to investor relations via the webcast.
2013 ANNUAL GENERAL MEETING
Churchill confirms that it will hold its annual general meeting of shareholders on Thursday, May 23, 2013 (the "Meeting") at the Metropolitan Conference Centre, 333 - 4th Avenue SW, Calgary, Alberta. The Meeting will start at 2:00 p.m. (Mountain Time) and the agenda will address the standard annual business items. The Corporation will also be placing before shareholders for approval at the meeting a resolution seeking approval of the unallocated options pursuant to Churchill's Amended 2007 Stock Option Plan (the "Option Plan"), a resolution seeking approval of Churchill's Amended and Restated Shareholder Rights Plan (the "Amended and Restated Rights Plan") and a resolution seeking confirmation and ratification of a new By-Law No. 2 of the Corporation ("By-Law No. 2"). In addition, election of director nominees at this and subsequent shareholders' meetings will be conducted in accordance with a newly adopted majority voting policy.
The rules of the Toronto Stock Exchange require that a majority of the shareholders of the Corporation approve all of the unallocated options under the Option Plan every three years. As the Option Plan and the unallocated options thereunder were most recently approved in 2010, a resolution approving all of the rights and other entitlements to purchase common shares pursuant to the Option Plan will be placed before shareholders for approval at the Meeting.
Amended and Restated Shareholder Rights Plan
Shareholders will also be asked to approve the continuation, amendment and restatement of the Corporation's existing shareholder rights plan pursuant to the Amended and Restated Rights Plan. Churchill's shareholder rights plan is intended to allow the Corporation's board of directors sufficient time to explore and develop alternatives for maximizing shareholder value if a take-over bid is made for Churchill and to provide every shareholder an equal opportunity to participate in such a bid. The Amended and Restated Rights Plan provides for the continuation of the shareholder rights plan for further three year periods, subject to approval by the Corporation's shareholders, and includes certain additional amendments intended to make the Amended and Restated Rights Plan consistent with the current rights plans of other Canadian public companies. Churchill is not aware of any pending or threatened take-over bid for the Corporation.
By-Law No. 2
Churchill's board of directors approved By-Law No. 2 on March 15, 2013, and it became effective immediately, subject to confirmation by shareholders at the Meeting. By-Law No. 2 requires advance notice to the Corporation in certain circumstances where nominations to the board of directors of the Corporation are made by shareholders. The purpose of By-Law No. 2 is to provide shareholders, directors and management of Churchill with a clear framework for the nomination of directors.
In the case of an annual meeting of shareholders, notice to the Corporation must be made not less than 30 nor more than 65 days prior to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be held on a date that is less than 50 days after the date on which the first public announcement of the date of the annual meeting was made, notice may be made not later than the close of business on the 10th day following such public announcement.
In the case of a special meeting of shareholders (which is not also an annual meeting), notice to the Corporation must be made not later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting was made.
Majority Voting Policy
On December 12, 2012, the board of directors of the Corporation adopted a new policy which requires that any nominee for director who receives a greater number of votes withheld than for his or her election shall tender his or her resignation to the Chair of the board of directors following the Corporation's annual meeting. This policy only applies to uncontested elections, meaning elections where the number of nominees for director is equal to the number of directors to be elected. The Governance and Nominating Committee and the board of directors shall consider the resignation and whether or not it should be accepted. Resignations shall be expected to be accepted except in situations where extenuating circumstances would warrant the applicable director to continue to serve as a board member. The board of directors shall disclose their election decision, via press release, within 90 days of the applicable annual meeting. If a resignation is accepted, the board of directors may appoint a new director to fill any vacancy created by resignation.
About The Churchill Corporation
The Churchill Corporation provides building construction, commercial and industrial electrical contracting, earthmoving and industrial insulation services to an array of public and private sector clients. Churchill operates office locations throughout British Columbia, Alberta, Saskatchewan, Manitoba and northern Ontario. Churchill common shares and convertible debentures are listed on the Toronto Stock Exchange under the symbols "CUQ" and "CUQ.DB", respectively. www.churchillcorporation.com
Forward Looking Information
This press release contains certain statements that may constitute forward-looking information within the meaning of applicable securities laws. This forward-looking information includes, without limitation, statements pertaining to the Corporation's current and future projects, and in respect to those projects, the anticipated financial results to be derived from those projects and the Corporation's ability to improve financial performance. Often, but not always, forward-looking information can be identified by the use of such words as "may", "will", "expect", "believe", "plan", "intend", "estimate", "outlook", "forecast", "should", "anticipate" and other similar terminology, including statements concerning possible or assumed future results. Forward-looking information is based on management's reasonable assumptions, analysis and estimates in respect of its experience and perception of trends, current economic conditions, government policies and expected developments, as well as other material factors that it considers to be relevant at the time of making such statements.
The forward-looking information in this press release is included solely for the purpose of assisting investors in understanding the Corporation's financial position and the results of its operations as at the date hereof. By its nature, forward-looking information involves known and unknown risks and uncertainties, which give rise to the possibility that management's assumptions, analysis and estimates will be incorrect and that the Corporation's anticipated results will not be achieved. Although the Corporation believes that the statements with respect to forward-looking information are reasonable and current, such statements should not be interpreted as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. Forward-looking information is necessarily subject to a number of factors that may cause actual results to differ materially from those results implied by the expectations suggested by such information. Those factors include, without limitation, the risks and uncertainties described in the Corporation's Annual Information Form filed with the securities regulatory authorities in Canada under the Corporation's profile at www.sedar.com. Readers are encouraged to consider the foregoing risks and other factors carefully when evaluating the forward-looking information and are cautioned not to place undue reliance upon such information when making investment decisions.
The forward-looking information in this press release is current to the date hereof, and is subject to change following such date. While the Corporation may elect to do so, unless required by applicable law, it undertakes no obligation to update this information to reflect new information or circumstances at any particular time.
SOURCE: The Churchill CorporationFor further information:
Chief Executive Officer
The Churchill Corporation
Vice President, Investor Relations
The Churchill Corporation