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Churchill Corp. expects better-than-expected outlook

CALGARY — Alberta construction firm The Churchill Corporation said the bottom-line impact of a major acquisition earlier this year will likely be much better than originally expected.

CALGARY — Alberta construction firm The Churchill Corporation said the bottom-line impact of a major acquisition earlier this year will likely be much better than originally expected.

When Churchill (TSX:CUQ) announced its takeover of Seacliff Construction Corp. in May, it was expecting synergies of between $5 million and $7 million.

That amount was based on “direct line-of-sight cost savings,” chief executive officer Jim Houck told analysts on a conference call Wednesday. For example, the combined firm only needs one head office now, and several activities at the corporate level overlap.

But on top of that, Houck said there will likely be an opportunity to bolster revenues as a result of the $390-million deal.

“It’s one of the things we’re in the process of quantifying and putting down on tables,” he said.

However, Houck said he would be “personally disappointed” if by 2011 and 2012 “we weren’t significantly in excess of $10 million.”

The Seacliff acquisition vastly grows Churchill’s presence in Western Canada.

Churchill’s Stuart Olson Construction Ltd., and Seacliff’s Dominion Construction Inc., now operate under one management team.

Churchill’s Laird Electric Inc. and Insulation Holdings Inc. (IHI) and for Seacliff’s Canem Systems Ltd. and Broda Group are continuing as separate business divisions within Churchill.

Churchill reported late Tuesday that its net earnings from continuing operations rose to $9 million or 51 cents a share for the second quarter ended June 30.

That compared with earnings of $8 million or 45 cents a share for the same period in 2009, the Calgary company said Wednesday.

Contract revenue jumped to $223.1 million from $136.7 million for the comparable 2009 quarter.

Looking ahead, Houck said growth prospects for the company are bright.

“Improved economic conditions in the oilsands are translating into increasing maintenance and construction activity levels on various project sites,” he said in an earlier statement.

“Additionally, there are several institutional projects which are pending award which could materially impact our backlog over the next several months. Beyond these pending project awards, we also see numerous other projects in the pipeline,” he said.

Churchill provides building construction, commercial and industrial electrical contracting, heavy construction and industrial insulation services to an array of public and private sector clients across British Columbia, Alberta, Saskatchewan and Manitoba.

Churchill shares rose a dime to $19.40 on the Toronto Stock Exchange in Wednesday afternoon trading.