Market

The Industrial Services segment, consisting of Broda Construction and Churchill Services Group (Laird Electric, Laird Constructors and two industrial insulation companies, Fuller Austin and Northern Industrial), targets western Canadian (British Columbia, Alberta, Saskatchewan and Manitoba) industrial construction and maintenance projects. Drivers of this market include resource prices, labour and materials supply, and industry and government capital spending.

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Competitive Advantages

• Laird Electric and Laird Constructors:
  • Size — Laird Electric is one of the three largest industrial union electrical contractors in the Fort McMurray and Edmonton areas.
  • Broad Service Offering — Provide power-line installation, instrumentation services, mechanical services and electrical construction.
  • Quality and Safety Record — Reputation for completing high-quality work safely, on-time and on-budget.
• Fuller Austin and Northern Industrial Insulation:
  • Size — Western Canada’s largest industrial insulation contracting specialists.
  • Union and Open Shop — Serves the unionized trades market (Fuller Austin) and the open shop market (Northern Industrial).
  • Broad Range of Integrated Services — Thermal and sound insulation, siding, sheet metal, utilidor construction, asbestos abatement and plant maintenance.
  • Quality and Safety Record — Reputation for completing high-quality work safely, on-time and on-budget.
• Broda Construction:
  • Experience — Established in 1957.
  • Business Relationships — Provincial and municipal governments, railroads, mining companies, real estate developers.
  • Size — 400+ unit fleet can move over 5 million cubic meters of material per year.
  • Quality and Safety Record — Reputation for completing high-quality work safely, on-time and on-budget, evidenced by Gold Seal Certification from the Canadian Construction Association.

Innovations

• Laird maximizes earnings per job site by:
  • Gaining early access to new projects by providing the initial power service;
  • Continuing with the electrical installation and, in the case of Laird Constructors, mechanical installation during the construction phase;
  • Following up with ongoing instrumentation and control calibration after project completion; and
  • Performing ongoing maintenance and upgrades on facilities.
• Fuller Austin and Northern Industrial:
  • Leading-edge technology and equipment to conform to any specification or project requirement.
  • All locations maintain full fabrication facilities served by experienced technical professionals.
  • Many systems and programs provide assurance that projects are completed safely and on budget and conform to clients’ needs as well as legislative/regulatory requirements.
• Broda Construction:
  • In-house repair shop — 18,000 square foot state-of-the-art facility ensures quality control of equipment maintenance to drive high reliability and availability.
  • Inventory — Large major components and parts inventory improves service turnarounds.
  • Mobile maintenance — Eight mobile maintenance and repair vehicles support onsite maintenance program.
  • Railroad ballast production — Recognized need of railroads for ballast production in 1976, becoming exclusive supplier for CN and CP railroads in Western Canada.

2010 Milestones

• Laird:
  • Launched new corporate brand.
  • Launched Laird Constructors.
  • Increased customer base in Fort McMurray-area oil sands and in northwest Ontario mining and power generation.
  • Generated record revenue of $134.7 million, an increase of more than 200% from $44.3 million in 2009.
  • EBITDA of $8.0 million compared to $2.8 million in 2009.
  • Best safety record in industry: zero recordable injury incidents.
• Fuller Austin and Northern Industrial:
  • Increased bundled service offerings with Laird.
  • Generated record revenue of $145.6 million, a 99% increase from $73.3 million in 2009.
  • EBITDA of $14.2 million compared to $9.1 million in 2009.
• Broda Construction:
  • Subsidiaries North American Rock and Dirt Inc. and Kam-Crete Ltd. achieved zero lost-time accidents for second year running.
  • Became part of Churchill’s Industrial Services segment with the completion of the Seacliff acquisition on July 13, 2010.
  • Unusually wet seasonal weather caused major deferrals of earthmoving work in Saskatchewan.

2011 Goals

• Laird:
  • Safety — Reduce total incident frequency by 10%.
  • Operations —
    • Add at least three new customers;
    • Promote bundling with other Churchill companies;
    • Broaden geographical and product footprint; and
    • Implement new SAP-based ERP.
  • Financial — Maintain revenue and grow gross margin and earnings.
  • Human Resources — Enhance productivity on all levels.
• Fuller Austin and Northern Industrial:
  • Safety — Target zero recordable incidents and reduce total incident frequency by 10%.
  • Operations —
    • Launch valve cover fabrication in new facility;
    • Grow HVAC organically;
    • Promote bundling with other Churchill companies;
    • Broaden geographical and product footprint; and
    • Implement new SAP-based ERP.
  • Financial — Maintain revenue and grow gross margin and earnings.
  • Human Resources — Enhance succession plan.
• Broda Construction:
  • Safety — Reduce lost time accidents, reportable incident frequency and total incident frequency.
  • Operations —
    • Pursue more long-term (less seasonal) projects; and
    • Win Saskatchewan “election year” projects and 2010 deferred projects.
  • Financial — Increase gross revenue and maintain historically strong EBITDA margins.
  • Human Resources — Build organizational capability to expand beyond Saskatchewan.