The Churchill Corporation Reports Record First Quarter Financial Results

(TSX: CUQ)

    
    First Quarter Financial Results
    -------------------------------

    -   Record net earnings from continuing operations of $7.1 million ($0.40
        per share), compared to $5.8 million ($0.33 per share) in the prior
        year
    -   Q1 2010 EBITDA from continuing operations of $11.7 million compared
        to $9.3 million in Q1 2009
    -   During the first quarter of 2010, Churchill secured $182.7 million of
        new contract awards and performed $176.5 million of contract revenue
        for a book-to-bill ratio of 1.0x
    -   Work-in-hand increased 50% year-over-year to $790.0 million
    -   Backlog remained at $1.3 billion
    -   Cash and cash equivalents of $158.1 million ($8.97 per share)

    Highlights and Significant Items
    --------------------------------

    -   Joined pre-qualified ISL Health P3 consortium to bid on the Surrey
        Memorial Hospital
    -   Awarded Penticton Aquatic Centre Expansion for $17.8 million
    -   Awarded $10.0 million Energy and Utilities Board building renovation
    -   Awarded electrical turnaround, commissioning and start-up at Shell
        Scotford
    -   Awarded Kearl Lake Temporary Power Project by Fluor Canada
    -   Closed the sale of Triton Bonnyville land and buildings for $2.2
        million
    -   Insulation Holdings accumulated over 2.1 million hours of work
        without a recordable lost time incident over a time frame of
        September 2007 through March 2010
    

CALGARY, May 11 /CNW/ - The Churchill Corporation announced today its results for the first quarter ending March 31, 2010.

For the first quarter of 2010, contract revenue was $176.5 million compared to $129.1 million for the comparable quarter of 2009. This increase is a result of greater activity within all of our business segments, however most significantly, our buildings division experienced a 37% revenue increase and electrical contracting grew 55% on a year-over-year basis. Q1 2010 EBITDA from continuing operations was $11.7 million as compared to $9.3 million in Q1 2009. For the first quarter of 2010 net earnings from continuing operations were $7.1 million ($0.40 per share) compared to $5.8 million ($0.33 per share) in Q1 2009.

CONSOLIDATED FINANCIAL HIGHLIGHTS

    
    -------------------------------------------------------------------------
                                            Three months ended
                                                 March 31,
                          ---------------------------------------------------
    ($ millions, except                                       $            %
     per share amounts)          2010         2009       Change       Change
    -------------------------------------------------------------------------
    Contract revenue           $176.5       $129.1         47.4          37%
    Contract income              23.0         18.6          4.4          24%
    EBITDA(1) from continuing
     operations                  11.7          9.3          2.4          26%
    Earnings from continuing
     operations before income
     tax                         10.3          8.1          2.2          27%
    Net earnings from
     continuing operations        7.1          5.8          1.3          22%
    EPS from continuing
     operations - basic         $0.40        $0.33         0.07          21%
    Net earnings and
     comprehensive income         7.2          4.6          2.6          57%
    EPS - basic                 $0.41        $0.26         0.15          58%
    Work-in-hand(2)             790.0        528.4        261.6          50%
    Backlog(3)               $1,314.4     $1,327.5        (13.1)         -1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1)(2)(3) Refer to the "Terminology" section for further details.
    

"I am pleased with our record first quarter results for 2010; particularly the year-over-year increase in revenue and net earnings from continuing operations," said Jim Houck, President and Chief Executive Officer, The Churchill Corporation. "We are experiencing an upswing in volumes due to improved economic conditions in the oil sands and increasing activity levels on various building sites. We believe that the return of industrial spending, combined with our strong execution within the electrical and insulation disciplines can contribute to even stronger results in the future."

OVERALL PERFORMANCE

For the first quarter of 2010 consolidated contract revenue was $176.5 million, compared to $129.1 million in the same period in 2009. Revenue increased due to higher levels of contracting activity within all three operating segments on a year-over-year basis.

Contract income increased from $18.6 million in the first quarter of 2009 to $23.0 million in Q1 2010 as greater revenue volume in all of our business segments offset lower contract income margin percentages.

Indirect and administrative expenses amounted to $11.5 million in the quarter, compared to $9.5 million in the comparable period of 2009. This year-over-year increase was primarily due to increased corporate overhead expenses associated with implementation of incentive based compensation programs more closely aligned with shareholder interests, professional fees and stock based compensation.

Earnings before interest, taxes, depreciation and amortization from continuing operations in the quarter was $11.7 million, compared to $9.3 million in Q1 2009. Earnings from continuing operations before income tax increased to $10.3 million compared to $8.1 million reported in Q1 2009. Greater pre-tax earnings from our buildings segment ($3.1 million) were partially offset by lower pre-tax earnings from the insulation contracting segment ($0.4 million) and increased expenses within the corporate and other segment ($0.7 million). The Corporation's consolidated net earnings from continuing operations for the three months ended March 31, 2010 were $7.1 million compared to net earnings of $5.8 million in Q1 2009.

New contract awards of $182.7 million were added to work-in-hand in the current quarter compared to $92.2 million in Q1 2009. Work-in-hand at March 31, 2010, was $790.0 million, compared to $528.4 million at March 31, 2009. On a segmented basis, year-over-year work-in-hand increased $195.5 million in the buildings segment, increased $15.5 million in the insulation contracting segment and increased $50.6 million in the electrical contracting segment.

Churchill's total backlog, including work-in-hand, at March 31, 2010 was essentially unchanged at $1.3 billion compared to the prior year. Year-over-year backlog in our buildings segment decreased by $70.9 million, the insulation contracting segment backlog increased by $1.7 million and the industrial electrical contracting backlog increased by $56.0 million. The Corporation's backlog consists of work-in-hand of $790.0 million, active backlog of $424.4 million and delayed backlog of $100.0 million.

Discontinued Operations

The following tables reflect the net assets held for sale and our net earnings (loss) from discontinued operations for the period ending March 31, 2010.

    
    Balance Sheets
    -------------------------------------------------------------------------
                                                       March 31, December 31,
                                                           2010         2009
    -------------------------------------------------------------------------
    Property and equipment                          $     2,279  $     2,691
    Future income tax assets                                553        2,087
    -------------------------------------------------------------------------
    Net assets held for sale                        $     2,832  $     4,778
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Statements of Earnings
    -------------------------------------------------------------------------
                                                 Three months ended March 31,
    -------------------------------------------------------------------------
                                                           2010         2009
    -------------------------------------------------------------------------
    Revenue                                         $         -  $    12,347
    Contract income                                           -          119
    Net earnings (loss) from discontinued
     operations                                     $       161  $    (1,159)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

RESULTS OF OPERATIONS

Buildings

For the period ending March 31, 2010, Stuart Olson's revenue was $134.2 million, compared to $97.8 million in the prior year. This increase in revenue was a result of higher levels of activity from all branches, particularly Northern Alberta.

Contract income in the first quarter of 2010 increased 34% to $17.8 million, from $13.3 million for the same period in 2009. The Q1 2010 contract income margin percentage was 13.2% compared to 13.5% in 2009. This continuing strong margin percentage reflects the strength of the margins in the backlog and effective project execution.

Earnings before tax from the buildings segment were $11.6 million in Q1 2010, compared to $8.4 million in Q1 2009. This 38% improvement in pre-tax earnings was a result of strong project execution particularly in Northern and Southern Alberta branches.

Stuart Olson completed 2009 with $688.0 million of work-in-hand and a backlog of $1.3 billion. Stuart Olson secured $88.8 million of new work during Q1 2010 and executed $134.2 million of work, ending the quarter with $642.6 million of work-in-hand, of which $394.3 million is expected to be executed in 2010. As at March 31, 2010, Stuart Olson's total backlog was $1.2 billion.

Stuart Olson has joined the pre-qualified ISL Health team which will submit a bid in August - September 2010 to construct the Surrey Memorial Hospital P3 project. Stuart Olson is a one-third partner on the design-build component and Churchill is a 20% partner on the concession team. Stuart Olson is also tracking several other Public-Private Partnership (P3) initiatives.

Stuart Olson has identified additional construction opportunities in Manitoba and is investigating the feasibility of setting up an office in Winnipeg, Manitoba. The company 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 Insulation Contracting

Revenue for the three months ended March 31, 2010, increased 21% to $21.1 million, compared to $17.5 million for the same period of 2009. The revenue increase was the result of strong activity levels on construction and maintenance turnaround projects.

Contract income in the current quarter increased to $3.4 million from $3.3 million for the comparable period in 2009. Contract income margins were lower at 15.6% in Q1 2010 versus 19.1% in Q1 2009, as a result of competitive market conditions and project mix.

Earnings before tax decreased to $1.8 million during the period ending March 31, 2010, compared to earnings before tax of $2.1 million in the first quarter of 2009. The reduction in earnings before tax is a result of a $0.4 million year-over-year increase in general and administrative expenses.

Industrial Insulation Contracting ended 2009 with work-in-hand of $65.3 million and a backlog of $69.0 million. During Q1 2010, IHI secured new awards totalling $27.0 million and executed $21.6 million of contractual work, including $0.5 million of intercompany revenue. The insulation segment ended the quarter with $70.7 million of work-in-hand, of which $7.6 million is expected to carry over into 2011 and beyond. At March 31, 2010, IHI's backlog amounted to $70.7 million compared to $69.0 million at the end of March 2009.

Several industrial projects have been announced and some smaller capital projects have been tendered in Alberta and Regina. However, several competitors are without work which continues to put downward pressure on margins. However, with IHI's work-in-hand and backlog at high levels, we believe 2010 will be a very successful year for the insulation companies.

Industrial Electrical Contracting

For the three months ended March 31, 2010, Laird's revenue was $21.2 million compared to $13.7 million reported in Q1 2009. This increase in revenue was primarily due to greater activity levels associated with several oil sands projects in the Fort McMurray area and significant additional projects in Edmonton. Management believes that activity levels are likely to remain higher on a year-over-year comparison basis for the remainder of 2010.

Contract income was $1.9 million in Q1 2010 compared to $2.0 million during the prior year. This decrease was due to lower margin levels. The contract income margin percentage was lower at 9.0% during the first quarter of 2010 compared to 14.3% in Q1 2009. The decrease was mainly due to the realization of close out margin on a major project in Q1 2009, a more competitive bidding environment for new work and expenditures required to mobilize for current and forecasted increasing levels of activity as a result of new projects secured.

Laird reported earnings before tax of $0.5 million for the period, which was the same amount earned in Q1 2009. The company was able to offset the impact of lower margins in the period with greater revenues and control of its indirect and administrative expenses.

Laird ended 2009 with work-in-hand of $31.0 million and a backlog of $46.8 million. New contract awards of $66.9 million were secured in the first quarter and $21.2 million of contracts were executed. Laird concluded the first quarter with $76.7 million of work-in-hand and $82.1 million of backlog, of which $62.8 million is expected to be executed during the remainder of 2010.

As the economy and particularly oil sands capital expenditure plans stabilize and increase, Laird's outlook will continue to improve. Laird is focused on geographic and customer diversification, as demonstrated by the major new contract awards secured in the Edmonton area during the first quarter of 2010.

Corporate and Other

In the first quarter of 2010, the Corporate and Other segment incurred a loss before tax of $3.6 million compared to a loss before tax of $2.9 million in Q1 2009. The $0.7 million increase was attributable to indirect and administrative expenses associated primarily with compensation expenses, increased resources within the corporate centre and professional fees to support corporate initiatives.

CAPITAL RESOURCES AND LIQUIDITY

Cash and cash equivalents at March 31, 2010, totalled $158.1 million, which compares with $184.4 million at the conclusion of 2009. Included in the cash and cash equivalents balance is $16.3 million which is held as security for the payment of direct costs related to specific construction projects in British Columbia, compared to $17.0 million at December 31, 2009.

Cash flow used in operating activities during Q1 2010 was $25.4 million, compared to $0.7 million of cash provided from operations during the first quarter of 2009. The change in cash flow is primarily due to working capital investments to support growth in the industrial electrical segment.

Investing activities resulted in a use of cash of $2.8 million during the first quarter of 2010, which compares with cash used of $0.8 million in Q1 2009. Cash was invested in the acquisition of construction equipment for long term projects under contract ($1.3 million) and the SAP implementation ($1.5 million) which is expected to be ready for use in late 2010.

During the first quarter of 2010, cash used in financing activities amounted to $0.2 million, compared to cash used in financing of $6.4 million in Q1 2009. Net repayments of long-term debt in Q1 2010 amounted to $0.2 million, compared to net repayments of $5.6 million in Q1 2009. The Corporation expended $1.0 million to repurchase shares under its normal course issuer bid during the prior year period and stock options exercised by directors and officers of the Corporation contributed $0.2 million to the cash generated from financing in Q1 2009.

As at March 31, 2010, Churchill had working capital of $115.5 million, compared to its working capital position of $107.3 million at December 31, 2009.

Information on Churchill's capital expenditures for 2010 are described in the Corporation's 2009 MD&A dated March 11, 2010. There have been no material changes to Churchill's capital expenditure and related financing agreements from what was disclosed at that time.

Management believes that the Corporation has the capital resources and liquidity necessary to meet its commitments, support its operations, finance capital expenditures and support 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 believes that it has access to further debt and/or equity capital.

The Corporation remains a partner in three joint ventures. In each instance the Corporation has provided a joint and several guarantee, increasing the maximum potential exposure to the full value of the work remaining under the contract. P3 infrastructure projects may expose the Corporation to financial penalties and/or liquidated damages for project delays. P3 projects require security in the form of letters of credit to support the Corporation's obligations.

Shareholders' equity was $149.3 million at March 31, 2010, as compared to $141.5 million at December 31, 2009. Retained earnings increased from $116.3 million at December 31, 2009 to $123.5 million in Q1 2010, reflecting the addition of $7.2 million of net earnings and $0.5 million increase in contributed surplus due to the issuance of stock-based compensation.

Share Data

The Corporation has an Employee Share Purchase Plan (the "ESPP") available to all full-time employees. At March 31, 2010, the ESPP held 636,097 common shares for employees. Under the ESPP, common shares are acquired in the open market.

As at May 10, 2010, the Corporation had 17,619,259 common shares issued and outstanding and 1,367,659 options convertible into common shares upon exercise (December 31, 2009 - 17,619,259 common shares and 1,213,243 options).

Stock-based Compensation

Stock-based compensation is a non-cash expense driven in part by the number, fair value and vesting rights of options granted. The stock-based compensation expense totalled $0.5 million during Q1 2010 and $0.5 million for the comparable period in 2009.

Other Compensation Expenses

During the quarter ended March 31, 2010, the Corporation granted 9,415 DSU's to directors as part of their annual remuneration. In addition, directors and employees voluntarily elected to purchase 13,525 DSUs deferring compensation related to retainers, meetings fees, salary or cash bonus as applicable. These DSU grants and elections resulted in $0.2 million (Q1 2009 - nil) of stock-based compensation expense. The DSU's are structured under the current plan to be settled in cash, upon ceasing service with the Corporation.

During the quarter, the Corporation recorded compensation expenses of $0.3 million compared to $0.03 million in 2009 for performance share units ("PSUs") granted to employees. The PSUs are structured under the current plan to be settled in cash, at the time of vesting.

OUTLOOK

With the resurgence in commodity prices, and numerous project restarts and sanctioning announcements (e.g. Kearl, Firebag, Sunrise, Surmont, Jackfish 2, Christina Lake Phase 2), the outlook has brightened considerably for our industrial operations. In addition several major planned turnarounds should provide opportunities for additional work. The significant backlogs at Laird Electric and Insulation Holdings should result in significant revenue increases year-over-year. The challenge will be to mitigate the margin compression to deliver the earnings in 2010 and 2011.

In the non-residential building sector, we continue to see infrastructure projects which we are tracking as well as private sector opportunities. The provincial governments in Western Canada have demonstrated that they are focused on addressing infrastructure needs. These governments have recently completed their fiscal budget cycle and infrastructure departments are moving forward with their capital spending programs. Based on activity levels within the design community we expect that the second half of 2010 will see a number of new projects come to market. If this activity level were to continue into 2011, along with more robust industrial activity, we would expect margins on new work secured to start improving.

Our end-markets and customers are operating in one of the strongest global economies providing support to our organic growth initiatives and our financial position is strong enabling us to pursue a growth-oriented strategic plan, through corporate development. Over the last year and a half, we have built the organizational capability to execute on these transactions. While we still have much work ahead of us, we are up to the task and have the right team to achieve our goals.

CONSOLIDATED STATEMENTS OF EARNINGS, COMPREHENSIVE INCOME AND RETAINED EARNINGS

    
    (unaudited, $ thousands, except share and per       Three months ended
     share amounts)                                           March 31
    ------------------------------------------------------------ ------------
                                                           2010         2009
    ------------------------------------------------------------ ------------

      Contract revenue                              $   176,520  $   129,103
      Contract costs                                    153,563      110,545
    ------------------------------------------------------------ ------------
      Contract income                                    22,957       18,558

      Interest income                                       117          250
      Sundry income (loss)                                   90           (1)
      Indirect and administrative expenses              (11,500)      (9,485)
      Depreciation and amortization                      (1,318)      (1,136)
      Interest expense                                      (45)         (80)
    ------------------------------------------------------------ ------------
    Earnings before income taxes                         10,301        8,106
    ------------------------------------------------------------ ------------
    Income tax (expense) recovery
      Current income tax                                 (6,648)     (11,939)
      Future income tax                                   3,434        9,596
    ------------------------------------------------------------ ------------
                                                         (3,214)      (2,343)
    ------------------------------------------------------------ ------------
    Net earnings from continuing operations and
     comprehensive income                                 7,087        5,763
    Net earnings (loss) from discontinued operations        161       (1,159)
    ------------------------------------------------------------ ------------
    Net earnings and comprehensive income                 7,248        4,604

    Retained earnings, beginning of period              116,279       83,132
      Adjustment arising from shares purchased under
       a normal course issuer bid                             -       (1,412)
    ------------------------------------------------------------ ------------
    Retained earnings, end of period                $   123,527  $    86,324
    ------------------------------------------------------------ ------------
    ------------------------------------------------------------ ------------


    Net earnings (loss) per common share:
      Basic from continuing operations              $      0.40  $      0.33
      Basic from discontinued operations            $      0.01  $     (0.07)
    ------------------------------------------------------------ ------------
      Basic net earnings per share                  $      0.41  $      0.26
    ------------------------------------------------------------ ------------
    ------------------------------------------------------------ ------------

      Diluted from continuing operations            $      0.38  $      0.32
      Diluted from discontinued operations          $      0.01  $     (0.06)
    ------------------------------------------------------------ ------------
      Diluted net earnings per share                $      0.39  $      0.26
    ------------------------------------------------------------ ------------
    ------------------------------------------------------------ ------------

    Weighted average common shares:

      Basic                                          17,619,259   17,680,588
    ------------------------------------------------------------ ------------
      Diluted                                        18,370,848   17,881,016
    ------------------------------------------------------------ ------------
    ------------------------------------------------------------ ------------
    

CONSOLIDATED BALANCE SHEETS

    
    (unaudited, $ thousands)
    ------------------------------------------------------------ ------------
                                                       March 31, December 31,
                                                           2010         2009
    ------------------------------------------------------------ ------------
    ASSETS
    Current Assets
      Cash and cash equivalents                     $   158,053  $   184,402
      Accounts receivable                               161,434      116,592
      Inventories and prepaid expenses                    1,385          949
      Costs in excess of billings                        12,112       19,013
      Income taxes recoverable                                -           56
      Future income tax assets                           11,292        7,813
      Current portion of long-term receivable             1,500        1,500
    ------------------------------------------------------------ ------------
                                                        345,776      330,325

    Restricted cash                                       3,094        2,642
    Long-term receivable                                  1,500        1,500
    Future income tax assets                                361          399
    Property and equipment                               17,059       17,063
    Assets held-for-sale                                  2,832        4,778
    Goodwill and intangible assets                       12,271       10,710
    ------------------------------------------------------------ ------------
                                                    $   382,893  $   367,417
    ------------------------------------------------------------ ------------
    ------------------------------------------------------------ ------------
    LIABILITIES
    Current Liabilities
      Accounts payable and accrued liabilities      $   140,269  $   138,976
      Contract advances and unearned income              86,466       71,897
      Income taxes payable                                3,114       11,528
      Current portion of long-term debt                     461          559
    ------------------------------------------------------------ ------------
                                                        230,310      222,960

    Long-term deferred warranty claims                    3,094        2,642
    Long-term debt                                          152          229
    Future income tax liabilities                            86           79
    ------------------------------------------------------------ ------------
                                                        233,642      225,910

    SHAREHOLDERS' EQUITY
    Share capital                                        16,732       16,732
    Contributed surplus                                   8,992        8,496
    Retained earnings                                   123,527      116,279
    ------------------------------------------------------------ ------------
                                                        149,251      141,507

    ------------------------------------------------------------ ------------
                                                    $   382,893  $   367,417
    ------------------------------------------------------------ ------------
    ------------------------------------------------------------ ------------
    

CONSOLIDATED STATEMENTS OF CASH FLOW

    
                                                        Three months ended
    (unaudited, $ thousands)                                  March 31
    ------------------------------------------------------------ ------------
                                                           2010         2009
    ------------------------------------------------------------ ------------
    OPERATING ACTIVITIES
    Net earnings from continuing operations and
     comprehensive income                           $     7,087  $     5,763
      Depreciation and amortization                       1,318        1,136
      Gain on disposal of equipment                         (30)          (9)
      Stock-based compensation                              496          480
      Future income taxes                                (3,434)      (9,596)
    ------------------------------------------------------------ ------------
                                                          5,437       (2,226)
    Change in non-cash balances relating to
     operations                                         (30,873)       2,949
    ------------------------------------------------------------ ------------

                                                        (25,436)         723
    ------------------------------------------------------------ ------------
    INVESTING ACTIVITIES
    Proceeds on disposal of equipment                        38           24
    Additions to intangible assets                       (1,561)           -
    Additions to property and equipment                  (1,322)        (860)
    ------------------------------------------------------------ ------------
                                                         (2,845)        (836)
    ------------------------------------------------------------ ------------
    FINANCING ACTIVITIES
    Repayment of long-term debt                            (175)      (5,550)
    Share purchase under a normal course issuer bid           -         (970)
    Issuance of common shares                                 -          158
    ------------------------------------------------------------ ------------
                                                           (175)      (6,362)
    ------------------------------------------------------------ ------------

    Cash used in continuing operations                  (28,456)      (6,475)
    Cash provided by discontinued operations              2,107        3,823
    ------------------------------------------------------------ ------------
    Decrease in cash and cash equivalents during
     the period                                     $   (26,349) $    (2,652)
    Cash and cash equivalents, beginning of period      184,402      100,768
    ------------------------------------------------------------ ------------
    Cash and cash equivalents, end of period        $   158,053  $    98,116
    ------------------------------------------------------------ ------------
    ------------------------------------------------------------ ------------

    SUPPLEMENTAL CASH FLOW INFORMATION
    ------------------------------------------------------------ ------------
    Cash received (paid) during the period for:
      Interest                                      $        76  $       181
      Income taxes                                  $   (15,006) $    (5,972)
    ------------------------------------------------------------ ------------
    

SELECTED FINANCIAL STATEMENT DISCLOSURE

    
    Three months ended            Industrial Industrial  Corporate
     March 31, 2010    Buildings  Insulation  Electric   and Other     Total
    -------------------------------------------------------------------------

    Revenues            $134,222   $ 21,094   $ 21,204   $      -   $176,520
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA from
     continuing
     operations           12,299      1,907        815     (3,357)    11,664
    Depreciation and
     amortization            701        131        319        167      1,318
    Interest expense           1          -          1         43         45
    -------------------------------------------------------------------------
    Earnings (loss)
     before tax         $ 11,597   $  1,776   $    495   $ (3,567)  $ 10,301
                                                                    ---------
    Income taxes                                                      (3,214)
                                                                    ---------
                                                                    ---------
    Net earnings from
     continuing
     operations                                                     $  7,087
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill and
     intangible
     assets             $      -   $      -   $  7,315   $  4,956   $ 12,271
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total assets        $239,625   $ 27,299   $ 24,910   $ 91,059   $382,893
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Capital
     expenditures       $    650   $    515   $    157   $      -   $  1,322
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Three months ended            Industrial Industrial  Corporate
     March 31, 2009    Buildings  Insulation  Electric   and Other     Total
    -------------------------------------------------------------------------

    Revenues            $ 97,813   $ 17,510   $ 13,720   $     60   $129,103
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    EBITDA from
     continuing
     operations            8,953      2,193        813     (2,637)     9,322
    Depreciation and
     amortization            565         75        267        229      1,136
    Interest expense          11          1         13         55         80
    -------------------------------------------------------------------------
    Earnings (loss)
     before tax         $  8,377   $  2,117   $    533   $ (2,921)  $  8,106
                                                                    ---------
    Income taxes                                                      (2,343)
                                                                    ---------
                                                                    ---------
    Net earnings from
     continuing
     operations                                                     $  5,763
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Goodwill and
     intangible assets  $      -   $      -   $  7,315   $      -   $  7,315
    -------------------------------------------------------------------------
    Total assets        $208,283   $ 21,955   $ 33,174   $ 75,952   $339,364
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Capital
     expenditures       $    470   $     36   $    270   $    131   $    907
    -------------------------------------------------------------------------
    

About The Churchill Corporation:

The Churchill Corporation provides building construction, industrial insulation and electrical contracting services throughout Western Canada. Churchill common shares are listed on the Toronto Stock Exchange under the symbol "CUQ".

TERMINOLOGY

Throughout this first quarter press release, 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, 2010
    ($ millions)

       Work-in-hand    Active Backlog    Delayed Backlog    Total Backlog
    ------------------------------------------------------------------------
          $790.0           $424.4             $100.0           $1,314.4
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------


    As at March 31, 2009
    ($ millions)

       Work-in-hand    Active Backlog    Delayed Backlog    Total Backlog
    ------------------------------------------------------------------------
          $528.4           $676.9             $122.2           $1,327.5
    ------------------------------------------------------------------------
    ------------------------------------------------------------------------
    

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)                                           2010         2009
    -------------------------------------------------------------------------

    Current assets                                       $345.8       $330.3
    Less:
      Current liabilities                                 230.3        223.0

    -------------------------------------------------------------------------

    Working Capital                                      $115.5       $107.3
    -------------------------------------------------------------------------
    

EBITDA is a common financial measure widely used by investors to facilitate an "enterprise level" valuation of an entity. The Corporation follows the standardized definition of EBITDA. Standardized EBITDA represents an indication of the Corporation's capacity to generate income from operations before taking into account management's financing decisions and costs of consuming tangible and intangible capital assets, which vary according to their vintage, technological currency, and management's estimate of their useful life. Accordingly, standardized EBITDA comprises revenues less operating cost before interest expense, capital asset amortization and impairment charges, and income taxes. This measure as reported by the Corporation may not be comparable to similar measures presented by other reporting issuers. The following is a reconciliation of net earnings to EBITDA from continuing operations for each of the periods presented in this MD&A in accordance with GAAP.

    
    -------------------------------------------------------------------------
                                                          Three months ended
    ($ millions)                                                    March 31
                                                         -------------------
                                                           2010         2009
    -------------------------------------------------------------------------

    Net Earnings from continuing operations                $7.1         $5.8
    Add:
      Income Taxes                                          3.2          2.3
      Depreciation & Amortization                           1.3          1.1
      Interest expense                                      0.0          0.1
    -------------------------------------------------------------------------

    EBITDA from continuing operations(1)                  $11.7         $9.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) These totals reconcile to Note 15 of the Notes to the Unaudited
        Interim Financial Statements
    

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.

%SEDAR: 00003704E

For further information: For further information: James C. Houck, B.Sc., MBA, President & Chief Executive Officer, The Churchill Corporation, (403) 685-7777, www.churchillcorporation.com; or Andrew Apedoe, Vice President Investor Relations & Secretary, The Churchill Corporation, (403) 685-7775, Email: inquiries@churchill-cuq.com, www.churchillcorporation.com


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