Seacliff Construction Corp.

Seacliff Construction Corp.

May 12, 2009 17:34 ET

Seacliff Reports First Quarter Results

Revenue and Gross Profit up over same period last year

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 12, 2009) - Seacliff Construction Corp. (TSX:SDC) -

Seacliff Construction Corp. will hold a conference call and webcast to discuss 2009 first quarter financial results and corporate developments on May 13, 2009 at 8:00 am Pacific Time (11:00 am Eastern Time).

To participate, please dial 1-800-766-6630 (toll free) or 416-695-6622 (GTA and international) approximately five minutes before the call. A replay will be available through May 27, 2009 at 1-800-408-3053 (toll free) or 416-695-5800 (GTA and international) passcode: 6140267. In addition, a live and archived webcast, as well as an mp3 download, can be accessed at: or on the company's website at

Seacliff Construction Corp. ("Seacliff" or "the Corporation"), one of the largest and most diversified construction companies in Western Canada, today reported strong financial results for the three months ended March 31, 2009. Copies of the management's discussion and analysis, and the unaudited interim financial statements will be available at and on Seacliff's website at on or before May 13, 2009.

Seacliff conducts its operations through two business units - Dominion Construction (or "Dominion"), a general contractor, and Canem Systems (or "Canem"), which designs, builds, maintains and services electrical and data communication systems.

"We are pleased with our first quarter results," said Bill Crarer, Seacliff's CEO. "Our strong work on hand program kept both Dominion and Canem busy throughout the period, pushing our revenue and gross profit up by 27% and 21% respectively. We also secured $131.1 million in new contracts during the quarter, with the work divided equally between Canem and Dominion. Approximately 58% of the new contracts are from the institutional sector, which is an area of particular focus and strength for Seacliff."


(unaudited) Three months ended
March 31
(Expressed in $ thousands, except per 2009 2008
share amounts) ------------------

Consolidated revenue 124,798 98,475
Gross profit 16,525 13,600
EBITDA(1) 7,050 7,719
EBITDA Margin 5.6% 7.8%
Adjusted net income(1) 4,737 4,951
Net income 2,780 4,951

Adjusted net income per share(1)
Basic ($ per share) 0.23 0.32
Diluted ($ per share) 0.23 0.32
Net income per share
Basic ($ per share) 0.14 0.32
Diluted ($ per share) 0.13 0.32

Dividend payable per share 0.05 -

As at As at
March December
31, 2009 31, 2008
Cash and cash equivalents 106,377 114,164
Total current assets 227,537 231,818
Total assets 244,710 240,971
Total current liabilities 138,824 140,132
Shareholders' equity 103,724 99,753

Working capital(1) 88,713 91,686
Total Work on Hand(1) 639,000 647,000

(1) These items are non-GAAP measures. Refer to Seacliff's MD&A for the
three months ended March 31, 2009.

Reconciliation of adjusted net income to net income

Three months ended
March 31
2009 2008
(Expressed in $ thousands) ------------------

Adjusted net income 4,737 4,951
Non-cash stock compensation expense
(refer to Note 6b in the consolidated interim
financial statements for the three months
ended March 31, 2009) (1,957) -
Net income 2,780 4,951

Q1 2009 Highlights

- Consolidated revenue grew by $26.3 million, or 26.7%, year-over-year during the three months ended March 31, 2009, compared to the same period last year

- First quarter gross profit totaled $16.5 million, up by $2.9 million, or 21.3%, over Q1 2008

- First quarter general and administrative expenses were $9.6 million, up by $3.5 million from Q1 2008 due primarily to public company and growth-related costs

- First quarter EBITDA of $7.1 million was down by $0.6 million, or 7.8%, from the same period last year due to the addition of corporate and public company costs

- Adjusted net income totaled $4.7 million, down by $0.2 million, or 4.0%, from Q1 2008

- Basic adjusted net income per share was $0.23

- As at March 31, 2009, cash and cash equivalents totaled $106.4 million and working capital totaled $88.7 million. As a result, Seacliff remains well positioned to pursue large-scale projects and suitable acquisition targets

- Seacliff secured approximately $131.1 million worth of new work during the first quarter. Of that, $76.3 million is for the institutional sector

- Total Work on Hand was $639 million at March 31, 2009, up from $625 million at March 31, 2008

- On February 2, 2009, Seacliff officially completed its acquisition of Canem West, a leading, independently owned electrical and data communications contractor based in Vancouver, B.C. for $9.5(2) million. By the end of the first quarter, virtually all of the two companies' administrative, marketing and financial programs had been fully integrated, with the physical merge of their two offices anticipated by summer 2009

- During the first quarter, Seacliff's Board of Directors implemented a cash dividend policy reflecting its confidence in the Corporation's financial position and its commitment to returning value to shareholders. Under this policy, Seacliff intends to pay shareholders a quarterly dividend of $0.05 per share

- On March 20, 2009, Seacliff's Board of Directors declared its first dividend (for Q4 2008) of $0.05 per share, payable on April 15, 2009 to shareholders of record on March 31, 2009. Valued at approximately $1.044 million, these dividends will be eligible for Canadian tax purposes

- On May 8, 2009, Seacliff's Board of Directors declared a second dividend (for Q1 2009) of $0.05 per share, payable on June 30, 2009 to shareholders of record on June 15, 2009. Valued at approximately $1.044 million, these dividends will be eligible for Canadian tax purposes

(2) The purchase price comprises cash of $6.5 million, a promissory note of $1.5 million, transaction costs of $0.1 million, and $1.4 million in cash for working capital in excess of the target working capital of $0.5 million.


As anticipated, a significant portion of the new contracts Seacliff won during the first quarter (approximately 60%) originated from the institutional sector. During the past year, federal and provincial governments have pledged to invest billions of dollars in new spending on public infrastructure programs, based on the twin goals of repairing Canada's aging infrastructure and stimulating a faltering national economy. Accordingly, Seacliff has focused on identifying and winning small, medium and large-scale institutional projects, with that sector now comprising nearly 77% of its total work on hand.

Given the steady stream of government announcements made to date, Seacliff believes that the institutional sector will continue to be a solid source of profitable work for the foreseeable future. However, it is taking some time for the most recently promised funds to be translated into bid-ready projects. Consequently, the Corporation now anticipates that the positive impact of this stimulus will not begin to be reflected in its financial results until late in 2009 and beyond.

While there are some bright spots, market conditions have generally cooled across Western Canada. As a result, both Dominion and Canem are facing increased competition for new projects coming to market, as well as numerous delays in construction starts. This will make it difficult for Seacliff to maintain the strong margins realized in 2008, and may lead to a slowing of its revenue growth.

On a positive note, the weaker market conditions have increased the availability of good talent, enabling Seacliff to continue strengthening its senior management and business development teams. New hires include a Project Director in Whitehorse for Dominion's B.C. division, and two managers at Dominion's civil group in Saskatoon, Saskatchewan.

Current market conditions are also improving acquisition opportunities, as private sector expectations become more closely aligned with market sector realities. With over $106 million cash on hand, and minimal debt on its balance sheet at the end of the first quarter, Seacliff has the resources to execute on its growth strategy. However, it will only make an acquisition if it is accretive to earnings per share within one to three years, and if it strengthens the company's competitive position.

Finally, Seacliff will continue to focus on the consistent application of sound business fundamentals, such as well-managed project execution and the close scrutiny of financing on all projects, while aggressively seeking out the new opportunities that inevitably arise with shifting market conditions.

About Seacliff Construction Corp.

Seacliff is one of the largest and most diversified construction companies in Western Canada. It provides general contracting construction services and electrical contracting services to a wide array of clients in both the public and private sectors. The majority of Seacliff's business is derived from institutional, commercial and light industrial construction projects. It operates primarily in Western Canada, with 15 locations in British Columbia, Alberta, Saskatchewan and Manitoba, as well as one location in Northwestern Ontario. With headquarters in Vancouver, B.C., Seacliff's business is conducted through two business units: Dominion Construction, a general contractor; and Canem Systems, an electrical contractor.

As a general contractor, Dominion offers diversified general contracting, construction management and design-build services in Western Canada primarily to institutional, commercial and light industrial clients. Dominion's services include preconstruction planning and comprehensive project management services. These services include the planning and scheduling of the manpower, equipment, materials and subcontractors required for a project. Dominion subcontracts out the vast majority of trade work on its projects; however, some construction services, including site work, concrete forming and placement, are self-performed.

Canem provides a broad range of services including designing, building, maintaining and servicing electrical and data communication systems for institutional, commercial, light industrial and multi-family residential customers. Canem's electrical contracting services include: designing electrical distribution systems within a building or complex; procuring and installing electrical equipment and materials; on-call service for electrical maintenance and troubleshooting; preventative and scheduled maintenance for critical component installations; budgeting and pre-construction services; and management of regional and national contracts for multi-site installations. Substantially all of Canem's work is self-performed.


Forward-Looking Statements

This press release contains statements concerning Seacliff's services, use of funds, business plan, and objectives. Seacliff's Total Work on Hand, other expectations, plans, goals, objectives, assumptions, information or statements about future events or conditions may constitute forward-looking statements or information under applicable securities legislation. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Assumptions have been made regarding, among other things, the successful implementation of Seacliff's business plan, the availability to Seacliff of qualified personnel, the continuation and completion of the projects forming Seacliff's Total Work on Hand, and general economic, business and market conditions. Although Seacliff believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Seacliff can give no assurance that such expectations will prove to be correct. The forward-looking statements are based on the Corporation's current expectations, estimates and projections, and are subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, among others, Seacliff's ability to be retained for existing and new project work by existing and new clients, Seacliff's ability to retain and hire the qualified personnel required, the delay or cancellation of projects forming Seacliff's Total Work on Hand, general economic, business and market conditions, and other risks as are detailed from time to time in the continuous disclosure filings of Seacliff. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. These forward-looking statements are made as of the date of this press release, and Seacliff assumes no obligation to update or revise them to reflect new events or circumstances, except as required by applicable laws.

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