Seacliff Construction Corp.

Seacliff Construction Corp.

November 12, 2008 16:05 ET

Seacliff Reports Strong Third Quarter 2008 Results

Revenue, Gross Profit, and EBITDA Increase Over 2007

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 12, 2008) - Seacliff Construction Corp.(TSX:SDC) -

Seacliff Construction Corp. will hold a conference call and webcast to discuss 2008 third quarter and nine-month financial results, and corporate developments on November 13, 2008 at 8:00 am Pacific Time (11:00 am Eastern Time).

To participate, please dial 1-866-507-1212 (toll free) or 416-695-6130 (GTA and international) approximately five minutes before the call. A replay will be available through November 26, 2008 at 1-800-408-3053 (toll free) or 416-695-5800 (GTA and international) passcode: 3274344 In addition, a live and archived webcast 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 financial results for the three and nine months ended September 30, 2008. Copies of management's discussion and analysis, and the unaudited interim financial statements will be available at and on the company's website at on or about November 13, 2008.

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.

"Seacliff continued to capitalize on active western Canadian construction markets during the third quarter," said Bill Crarer, Seacliff's CEO. "The institutional sector, in particular, was a key driver, accounting for 48% of our total revenues. Due to the steady activity, together with more focused project execution, a significant reduction in cost overruns compared to prior periods and favorable timing issues, our year-to-date revenue is up by 18%, our gross profit increased by 33% and our adjusted net income grew by 57% over the first nine months of last year."


(unaudited) Three months ended Nine months ended
September 30 September 30
($000's except per share amounts) 2008 2007 2008 2007

Consolidated revenue $ 142,555 $ 120,296 $ 364,977 $ 308,840
Gross profit 19,013 12,911 46,614 34,944
EBITDA(1) 10,992 6,895 25,641 17,301
EBITDA Margin 7.7% 5.7% 7.0% 5.6%
Adjusted net income (1) 7,434 4,365 17,328 11,013
Net income 5,353 4,365 13,857 11,013

Adjusted net income per share (1)
Basic 0.35 0.28 0.93 0.72
Diluted 0.34 0.28 0.90 0.72
Net income per share
Basic 0.26 0.28 0.74 0.72
Diluted 0.25 0.28 0.72 0.72

As at As at
Sept 30, Dec 31,
2008 2007

Cash and cash equivalents $ 98,729 $ 51,361
Total current assets 227,966 150,142
Total assets 235,019 157,136
Total current liabilities 138,419 135,807
Shareholders' equity 95,715 20,582

Working capital (1) 89,547 14,335
Total Work on Hand (1) 704,283 617,468

(1) These items are non-GAAP measures. Refer to Seacliff's MD&A for the
period ended September 30, 2008.

Reconciliation of adjusted net income to net income

Three months Nine months
ended September 30 ended September 30
2008 2007 2008 2007
Adjusted net income $ 7,434 $ 4,365 $ 17,328 $ 11,013
Non-cash stock compensation
expense (refer to Note 7b
in the consolidated interim
financial statements for the
nine months ended September 30,
2008) (2,081) (3,471)
Net income $ 5,353 $ 4,365 $ 13,857 $ 11,013

Third Quarter and Nine Month 2008 Highlights

- Consolidated revenue grew by $22.3 million, or 18.5%, in the third quarter of 2008 and by $56.1 million, or 18.2%, in the first nine months of 2008 compared to the same periods in 2007

- Gross profit increased by $6.1 million, or 47.3%, in the third quarter and by $11.7 million, or 33.5%, in the first nine months

- Third quarter EBITDA increased by $4.1 million, or 59.4.%, to $11.0 million, and grew by $8.3 million, or 48%, to $25.6 million for the first nine months

- Adjusted net income grew by $3.0 million, or 68%, in the third quarter and by $6.3 million, or 57.3%, in the first nine months. Basic adjusted net income per share was $0.35 for the quarter and $0.93 for the first nine months

- As at September 30, 2008, cash and cash equivalents totaled $98.7 million and working capital totaled $89.5 million. As a result, Seacliff is well positioned to pursue large-scale projects and suitable acquisition targets

- Total Work on Hand grew to $704 million at quarter end, up from $618 million at December 31, 2007

- Seacliff secured approximately $174.0 million worth of new work during the third quarter, of which $114 million comprised institutional projects

- On September 11, 2008, Seacliff announced the commencement of a normal course issuer bid. Through this bid, Seacliff may acquire up to 5%, or 1,097,324, of its common shares for cancellation. As at November 10, it had acquired 1,071,670 common shares


Seacliff's outlook is guardedly optimistic. With Total Work on Hand of $704 million, a well experienced senior management team, and broad diversification across two business lines, five provinces and nearly 8,000 customer contracts each year, Seacliff's risk profile is comparatively low. In addition, the multi-family residential sector, where the market slowdown has been most dramatic, represents only 8% of the company's current workload.

"As our focus is on the institutional and commercial construction sectors, we believe Seacliff is well positioned to weather an economic downturn," said Bill Crarer. "Provincial governments in Western Canada, where we operate, have been running surpluses for many years, and have actively committed to addressing a well-documented infrastructure deficit. In addition, with $98.7 million cash and no debt, Seacliff's balance sheet is exceptionally strong. As a result, we have the ability to take on more and larger projects, as well as the resources to act on emerging acquisition opportunities."

Crarer also said that Seacliff has been preparing for a market downturn for more than two years and has already implemented a number of risk mitigation strategies. These include preserving the company's strong cash position, maintaining its debt-free status, closely managing its accounts receivable, and aggressively pursuing and protecting recurring revenue streams, such the ongoing upgrade and adjustment work Canem provides to its clients.

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, with a majority of its business derived from institutional, commercial and light industrial construction projects. Seacliff is headquartered in Vancouver, B.C. and operates 15 locations in British Columbia, Alberta, Saskatchewan and Manitoba, as well as one location in Northwestern Ontario. 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, including the planning and scheduling of the manpower, equipment, materials and subcontractors required for a project.

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 preconstruction services; and management of regional and national contracts for multi-site installations.


Completion of Initial Public Offering

On April 24, 2008, Seacliff completed an IPO, issuing 7,692,408 common shares at a price of $13.00 each, for total proceeds of approximately $100 million, and net proceeds after issue expenses of approximately $94 million. Subsequent to that, the company commenced trading on the Toronto Stock Exchange under the ticker symbol "SDC". The offering was primarily an indirect secondary offering by Seacliff's principal shareholders, in that Seacliff used approximately $47 million of the net proceeds of the offering as partial consideration to acquire, indirectly, Dominion and Canem (the company's two operating divisions) from the principal shareholders. Seacliff intends to use the remainder of the net proceeds of the IPO, approximately $45 million, for general working capital purposes and acquisitions.

Seacliff filed a final prospectus in relation to the offering on April 21, 2008, a copy of which is available under Seacliff's profile on SEDAR (

Forward-Looking Statements

This press release contains statements concerning Seacliff's services, uses 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 Seacliff'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 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.

Contact Information