* Q1 EPS C$0.26 vs C$0.25
* Revenue down 23 percent to C$141.5 mln
* Backlog drops to C$1.36 bln from C$1.43 bln
* Shares drop 7.5 percent to C$10.13 (Adds analyst comments, detail, updates stock)
By Susan Taylor
OTTAWA, May 7 (Reuters) - Churchill Corp CUQ.TO reported a slight gain in first-quarter profit on Thursday, but revenue fell short of expectations and the construction company's stock tumbled 7.5 percent.
The Edmonton-Alberta based-company, which has cut staff and costs at subsidiaries relying on oil sands projects, said its outlook remains positive for 2009, despite a drop in its backlog.
Churchill shares were down 82 Canadian cents to C$10.13 on the Toronto Stock Exchange late in the session. The stock has shed about 55 percent of its value in the last 12 months.
Investors should not punish the stock for a single quarter's performance, said Genuity Capital Markets analyst Maxim Sytchev, because the timing of project payments is unpredictable and it will take time for federal infrastructure stimulus spending to reach its financial results.
"It is very lumpy because it's huge projects. If you're late by a quarter or two, obviously it affects the level of profitability and revenues," Sytchev said in an interview.
"Despite the low revenues, they were able to beat on EBITDA and EPS, so obviously the margin profile on whatever they're working off right now is actually very strong."
Churchill, whose profit margin jumped to 13.2 percent from 9.7 percent, said it earned C$4.6 million ($3.96 million), or 26 Canadian cents a share, compared with C$4.5 million, or 25 Canadian cents a share a share, in the same period last year.
Analysts had expected earnings of 21 Canadian cents a share and revenue of C$178 million, on average, according to Reuters Estimates.
Revenue fell 23 percent to C$141.5 million on project delays and declining industrial contract work, and its backlog fell to C$1.36 billion from C$1.43 billion.
The company said industrial construction and maintenance revenue is expected to "soften" with margins coming under pressure on project deferrals and cancellations.
Churchill, which has cut 35 percent of the staff at its Triton Construction unit and shut a facility, said it will continue reducing costs. The Triton restructuring is expected to improve Triton's bottom line by C$2 million annually.
The company also said private sector, non-residential construction was improving thanks to lower costs and interest rates.
"I think the most encouraging and surprising comment that the company provided was the fact that they see a pick up in interest of commercial players to do some projects," Sytchev said.
Churchill has five subsidiary companies that provide commercial and industrial construction, industrial insulation and electrical work and maintenance services in Western Canada.
$1=$1.17 Canadian Reporting by Susan Taylor, editing by Rob Wilson