Seacliff Construction Corp.

Seacliff Construction Corp.

August 11, 2009 16:05 ET

Seacliff Reports Strong Second Quarter Results and Confirms Quarterly Dividend

Revenue, Gross Profit, EBITDA and Net Income Up Over Same Period Last Year

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 11, 2009) -

Seacliff Construction Corp. (TSX:SDC) will hold a conference call and webcast to discuss 2009 second quarter financial results and corporate developments on August 12, 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 August 26, 2009 at 1-800-408-3053 (toll free) or 416-695-5800 (GTA and international) passcode: 1011664 In addition, a live and archived webcast, as well as an mp3 download, can be accessed at: or on Seacliff'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 and six months ended June 30, 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 August 12, 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 second quarter and year-to-date results," said Bill Crarer, Seacliff's CEO. "A significant carry-forward of complex, higher-margin contracts from 2008, together with improvements in project management, contributed to a strong performance, pushing our second quarter revenue and gross profit up by 22% and 38% respectively. We also secured $118.1 million in new contracts during the quarter. Approximately 43% of the new contracts are from the institutional sector, which is an area of particular focus and strength for Seacliff."


(unaudited) Three months ended Six months ended
June 30 June 30
(Expressed in $ 2009 2008 2009 2008
thousands, except per
share amounts)

Consolidated revenue 152,705 125,232 277,503 223,707
Gross profit 19,429 14,099 35,954 27,699
EBITDA(1) 9,853 6,991 16,907 14,710
EBITDA Margin 6.5% 5.6% 6.1% 6.6%
Adjusted net income(1) 6,367 4,943 11,108 9,894
Net income 4,410 3,553 7,194 8,504

Adjusted net income per
Basic ($ per share) 0.31 0.25 0.55 0.56
Diluted ($ per share) 0.31 0.24 0.53 0.55
Net income per share
Basic ($ per share) 0.22 0.18 0.35 0.48
Diluted ($ per share) 0.21 0.17 0.34 0.47

Dividend payable
per share 0.05 - 0.05 -

As at As at
June 30, December 31,
2009 2008
Cash and cash equivalents 89,482 114,164
Total current assets 231,283 231,818
Marketable securities 12,555 -
Total assets 261,369 240,971
Total current liabilities 149,703 140,132
Shareholders' equity 109,659 99,753

Working capital(1) 81,580 91,686
Total Work on Hand(1) 596,000 647,000

(1) These items are non-GAAP measures. Refer to Seacliff's MD&A for the
three months ended June 30, 2009.

Reconciliation of adjusted net income to net income

Three months Six months
ended ended
June 30 June 30
2009 2008 2009 2008

Adjusted net income 6,367 4,943 11,108 9,894

Non-cash stock compensation
expense resulting from the IPO
corporate reorganization. Refer to
Note 8b in the consolidated interim
financial statements for the
six months ended June 30, 2009. (1,957) (1,390) (3,914) (1,390)

Net income 4,410 3,553 7,194 8,504

Second Quarter and First Half 2009 Highlights

- Consolidated revenue grew by $27.5 million, or 21.9%, in the second quarter and by $53.8 million, or 24.0%, in the first half

- Gross profit increased by $5.3 million, or 37.8%, in the second quarter and by $8.3 million, or 29.8%, in the first half

- Second quarter EBITDA increased by $2.9 million, or 40.9%, to $9.9 million, and grew by $2.2 million, or 14.9%, to $16.9 million for the first half

- Adjusted net income grew by $1.4 million, or 28.8%, in the second quarter and by $1.2 million, or 12.2%, in the first half. Basic adjusted net income per share was $0.31 for the quarter and $0.55 for the first half

- As at June 30, 2009, cash and cash equivalents totaled $89.5 million and working capital totaled $81.6 million. In addition, the Corporation held $12.6 million in government debentures and other guaranteed investments. As a result, Seacliff remains well positioned to pursue large-scale projects and suitable acquisition targets

- Seacliff secured approximately $118.1 million worth of new work during the second quarter. Of that, $51.0 million is for the institutional sector

- Total Work on Hand was $596 million at quarter end, compared to $617 million at December 31, 2008. Approximately $444 million, or 75%, of the total is for the institutional sector

- On August 7, 2009, Seacliff's Board of Directors declared a dividend (for Q2 2009) of $0.05 per share, payable on September 30, 2009 to shareholders of record on September 15, 2009. Valued at approximately $1.044 million, these dividends will be "eligible dividends" for Canadian tax purposes


Seacliff's outlook remains cautiously optimistic. Recent pronouncements from the Bank of Canada and others, indicating that the worst of the recession is over are encouraging. While market conditions across Western Canada have cooled significantly compared to the first half of 2008, Seacliff continued to win new work throughout the second quarter, ultimately signing contracts worth $118.1 million. This brings the Corporation's total Work on Hand (WOH) to $595.8 million, down slightly from $639.8 million at the end of March 2009. Approximately $444 million, or 75%, of the total is for the institutional sector, which continues to be Seacliff's primary area of focus.

The minor decrease in WOH relates specifically to a drop in the number of projects the Corporation currently has scheduled to begin in 2010. Accordingly, it will not adversely impact a projected busy schedule for the balance of 2009. Recent awards comprise a relatively high number of smaller, shorter-term contracts, which will positively impact Seacliff's 2009 revenue and EBITDA.

Looking ahead, management is optimistic that Seacliff's WOH will return to (or surpass) historic levels, as the Corporation is actively pursuing more than $1.5 billion of new project opportunities. This is up significantly from the same time last year, due in large measure to an accelerated marketing drive, as well as an increase in the number of institutional projects coming to market.

Within the past year, both the federal and provincial governments have pledged to invest billions of dollars in new public infrastructure programs, with a two-fold focus on repairing Canada's aging infrastructure and stimulating the national and provincial economies. However, while these commitments are coming to fruition, many of the projects Seacliff is targeting have extremely long lead times. Consequently, management believes the positive impact of this stimulus will not begin to be reflected in the Corporation's financial results until well into 2010.

In recent months, both Dominion and Canem have reported a substantial rise in the number of competitors bidding on new projects, which has resulted in significantly reduced margins on small to mid-size projects. To help offset this, Seacliff has maintained its strategic focus on projects that are larger in scale and/or technically more complex. This gives the Corporation a distinct competitive advantage, as relatively few contracting companies have the capital, the people or the expertise required to take on these larger projects. Strong, long-term working relationships and a well-established reputation for delivering high-quality work on time and on budget provide an additional edge in the prequalification process, as due diligence quickly eliminates lesser players from contention.

The identification and pursuit of suitable acquisition prospects remains a top priority for Seacliff. With nearly $90 million cash on hand and $12.5 million in marketable securities at the end of the second quarter, and minimal debt on its balance sheet, the Corporation has the resources to execute on its growth strategy.

Given current market conditions, Seacliff will consider acquiring other construction-related businesses in addition to those within its current sphere of operation. These would be businesses of similar skill set with identifiable cost-saving synergies, particularly those that enable Seacliff to capitalize on the recent increase in Canadian infrastructure spending.

To assist in the execution of this strategy, the Corporation has engaged a third party to seek out potential acquisition targets. In the short term, this party has been instructed to focus on electrical, general and civil contractors within Seacliff's existing geographic regions, and for the longer term to seek opportunities in Central and Eastern Canada.

Seacliff will also continue to focus on managing risk and leveraging its well-established strengths. At Dominion, this means continuing to increase the company's penetration of the institutional sector, while strengthening its presence on government-sponsored civil sector projects. To facilitate this drive, Seacliff has added and redeployed resources in anticipation of an increased proposal flow through the balance of 2009 and into 2010.

At Canem, the strategic focus will remain on the institutional infrastructure and commercial markets. Specifically, the company will continue to target large, complex electrical projects that include a data component, while maintaining an aggressive pursuit of recurring revenue activities within its service and special projects departments. Investment in Canem's internal systems and software is ongoing, with a number of productivity enhancement projects well underway.

In summary, Seacliff will maintain its focus on stringent project execution, productivity control and quality workmanship, while aggressively seeking out the new opportunities that inevitably surface in a shifting market.

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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