Record Backlog, Strong Revenue and Net Income
Growth, and Update to Full Year Outlook
DALLAS, Aug. 8, 2022
/CNW/ -- CECO Environmental Corp. (Nasdaq:
CECE) ("CECO"), a leading environmentally focused,
diversified industrial company whose solutions protect people, the
environment, and industrial equipment, today reported its financial
results for the second quarter of 2022.
Highlights for the Quarter and Recent Corporate
Developments*
- Orders of $113.5 million, up 33
percent; Record Backlog of $289
million
- Revenue of $105.4 million, up 34
percent
- Net income of $4.4 million, up
$4.1 million; non-GAAP net income of
$6.4 million, up $3.3 million
- Adjusted EBITDA of $10.6 million,
up 63 percent
- Company announces senior management transitions
- Company increases full year financial outlook
*All comparisons are versus the comparable prior year period,
unless otherwise stated.
Reconciliations of GAAP (reported) to non-GAAP measures are in the
attached financial tables.
"We delivered strong results in the second quarter and are
pleased to share that we increased our backlog to new record levels
while driving sales growth of more than 30 percent and EBITDA
growth of more than 60 percent. We also repurchased more than
$4 million of shares in the quarter
as we systematically execute our capital allocation strategy that
includes both M&A and share repurchases," said CECO Chief
Executive Officer, Todd Gleason.
Second quarter operating income was $5.7
million, up 171 percent when compared to $2.1 million in the second quarter 2021. On an
adjusted basis, non-GAAP operating income was $8.7 million, up 85 percent when compared to
$4.7 million in the second quarter of
2021. Net income was $4.4 million in
the quarter, up $4.1 million compared
to $0.3 million in the second quarter
2021. Non-GAAP net income was $6.4
million, up $3.3 million
compared to $3.1 million in the
second quarter 2021. Adjusted EBITDA was $10.6 million, up 63 percent compared to
$6.5 million in the second quarter
2021. The Company repurchased $4.3
million shares in the second quarter as part of the
previously announced $20 million
share repurchase program.
In the second quarter, the Company completed the acquisition of
Compass Water Solutions, based in California, USA and Western Air Duct, a
company based in the United
Kingdom. Combined, the companies generated 2021 full year
sales of approximately $15 million
and each delivered double-digit EBITDA margins.
"We are extremely pleased with our year-to-date results which
have included orders growth of approximately 55 percent, record
backlog up more than 35 percent and revenue growth up more than 30
percent through the first half. We have closed multiple strategic
acquisitions that add new capabilities and market opportunities to
our industrial air and industrial water platforms, and those
acquisitions are already performing very well against their
operating targets," added Gleason.
Company Increases Full Year 2022 Outlook:
The Company updated full year 2022 guidance to $375 to $400
million in revenue, up approximately 19 percent at the
midpoint year over year. The Company updated its full year adjusted
EBITDA to reflect a range starting at $37
million and the high-end exceeding $40 million, up more than 50 percent at the
midpoint year over year.
"Our revised outlook reflects our continued confidence that we
expect to deliver outstanding results through the year. We remain
in excellent position to drive strong double-digit sales and income
growth while also maintaining our focus on capital allocation,"
concluded Gleason.
Senior Management Transitions:
The Company also separately announced today that Matthew Eckl, Chief Financial Officer, and
Pamela Turay, Senior Vice President
of Human Resources, will leave the Company in August to pursue
other opportunities. Effective Aug. 15,
2022, Peter Johansson will
join CECO as Chief Financial and Strategy Officer. Additionally,
the Company's current General Counsel, Lynn
Watkins-Asiyanbi will assume the newly created role of Chief
Administrative and Legal Officer, which incorporates legal, human
resources and corporate communication functions.
EARNINGS CONFERENCE CALL
A conference call is scheduled for today at 8:30 a.m. ET to discuss the second quarter
financial results of 2022. The conference call may be accessed via
webcast by going to the Company's website at
https://investors.cecoenviro.com/events-webcasts-and-presentations/
or by dialing (888) 346-4547 (Toll-Free) within the U.S., or
Toll/International +1(412) 317-5251.
A replay of the conference call will be available on the
Company's website at http://www.cecoenviro.com for seven days. The
replay may be accessed by dialing (877) 344-7529 (Toll-Free) within
the U.S., or Toll/International +1 (412) 317-0088 and entering
access code 6087150.
ABOUT CECO ENVIRONMENTAL
CECO Environmental is a leading environmentally focused,
diversified industrial company, serving a broad landscape of
industrial air, industrial water and energy transition markets
across the globe through its key business segments: Engineered
Systems and Industrial Process Solutions. Providing innovative
technology and application expertise, CECO helps companies grow
their business with safe, clean, and more efficient solutions that
help protect people, the environment and industrial equipment. In
regions around the world, CECO works to improve air quality,
optimize the energy value chain, and provide custom solutions for
applications including power generation, petrochemical processing,
general industrial, refining, midstream oil and gas, electric
vehicle production, poly silicon fabrication, battery recycling,
beverage can, and water/wastewater treatment along with a wide
range of other applications. CECO is listed on Nasdaq under the
ticker symbol "CECE." Incorporated in 1966, CECO's global
headquarters is in Dallas, Texas.
For more information, please visit www.cecoenviro.com.
Company Contact:
Kimberly Plaskett, Corporate
Communications
(469) 928-1090
kplaskett@onececo.com
Investor Relations Contact:
Steven Hooser or Gary Guyton
Three Part Advisors, LLC
214-872-2710
investor.relations@onececo.com
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(dollars in
thousands, except per share data)
|
|
(unaudited)
June 30, 2022
|
|
|
December 31,
2021
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
34,416
|
|
|
$
|
29,902
|
|
Restricted
cash
|
|
|
1,037
|
|
|
|
2,093
|
|
Accounts receivable,
net
|
|
|
95,318
|
|
|
|
74,991
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
|
|
51,158
|
|
|
|
51,429
|
|
Inventories,
net
|
|
|
23,981
|
|
|
|
17,052
|
|
Prepaid expenses and
other current assets
|
|
|
11,911
|
|
|
|
10,760
|
|
Prepaid income
taxes
|
|
|
893
|
|
|
|
2,784
|
|
Total current
assets
|
|
|
218,714
|
|
|
|
189,011
|
|
Property, plant and
equipment, net
|
|
|
16,357
|
|
|
|
15,948
|
|
Right-of-use assets
from operating leases
|
|
|
12,144
|
|
|
|
10,893
|
|
Goodwill
|
|
|
185,795
|
|
|
|
161,183
|
|
Intangible assets –
finite life, net
|
|
|
35,794
|
|
|
|
25,841
|
|
Intangible assets –
indefinite life
|
|
|
9,494
|
|
|
|
9,629
|
|
Deferred income
taxes
|
|
|
505
|
|
|
|
505
|
|
Deferred charges and
other assets
|
|
|
2,926
|
|
|
|
3,187
|
|
Total
assets
|
|
$
|
481,729
|
|
|
$
|
416,197
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of
debt
|
|
$
|
3,303
|
|
|
$
|
2,203
|
|
Accounts payable and
accrued expenses
|
|
|
101,233
|
|
|
|
84,081
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
|
|
35,896
|
|
|
|
28,908
|
|
Note payable -
current
|
|
|
500
|
|
|
|
—
|
|
Income taxes
payable
|
|
|
3,092
|
|
|
|
1,493
|
|
Total current
liabilities
|
|
|
144,024
|
|
|
|
116,685
|
|
Other
liabilities
|
|
|
15,122
|
|
|
|
14,826
|
|
Debt, less current
portion
|
|
|
92,768
|
|
|
|
61,577
|
|
Deferred income tax
liability, net
|
|
|
9,998
|
|
|
|
8,390
|
|
Operating lease
liabilities
|
|
|
9,356
|
|
|
|
8,762
|
|
Total
liabilities
|
|
|
271,268
|
|
|
|
210,240
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Preferred stock, $.01
par value; 10,000 shares authorized, none issued
|
|
—
|
|
|
—
|
|
Common stock, $.01 par
value; 100,000,000 shares authorized, 34,534,180 and
35,028,197 shares issued and outstanding at June 30, 2022 and
December 31, 2021, respectively
|
|
|
345
|
|
|
|
350
|
|
Capital in excess of
par value
|
|
|
250,262
|
|
|
|
252,989
|
|
Accumulated
loss
|
|
|
(29,538)
|
|
|
|
(36,715)
|
|
Accumulated other
comprehensive loss
|
|
|
(15,567)
|
|
|
|
(12,070)
|
|
Total CECO
shareholders' equity
|
|
|
205,502
|
|
|
|
204,554
|
|
Non-controlling
interest
|
|
|
4,959
|
|
|
|
1,403
|
|
Total shareholders'
equity
|
|
|
210,461
|
|
|
|
205,957
|
|
Total liabilities and
shareholders' equity
|
|
$
|
481,729
|
|
|
$
|
416,197
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(unaudited)
|
|
|
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
(dollars in
thousands, except per share data)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net sales
|
|
$
|
105,375
|
|
|
$
|
78,680
|
|
|
$
|
197,811
|
|
|
$
|
150,572
|
|
Cost of
sales
|
|
|
73,700
|
|
|
|
53,426
|
|
|
|
139,708
|
|
|
|
100,910
|
|
Gross
profit
|
|
|
31,675
|
|
|
|
25,254
|
|
|
|
58,103
|
|
|
|
49,662
|
|
Selling and
administrative expenses
|
|
|
22,988
|
|
|
|
20,510
|
|
|
|
41,640
|
|
|
|
39,965
|
|
Amortization and
earnout expenses
|
|
|
1,450
|
|
|
|
2,282
|
|
|
|
2,900
|
|
|
|
4,072
|
|
Restructuring
expenses
|
|
|
—
|
|
|
|
280
|
|
|
|
73
|
|
|
|
280
|
|
Acquisition and
integration expenses
|
|
|
1,491
|
|
|
|
37
|
|
|
|
2,540
|
|
|
|
146
|
|
Income from
operations
|
|
|
5,746
|
|
|
|
2,145
|
|
|
|
10,950
|
|
|
|
5,199
|
|
Other income (expense),
net
|
|
|
1,936
|
|
|
|
(860)
|
|
|
|
1,478
|
|
|
|
(1,339)
|
|
Interest
expense
|
|
|
(1,098)
|
|
|
|
(704)
|
|
|
|
(1,920)
|
|
|
|
(1,430)
|
|
Income before income
taxes
|
|
|
6,584
|
|
|
|
581
|
|
|
|
10,508
|
|
|
|
2,430
|
|
Income tax
expense
|
|
|
1,860
|
|
|
|
199
|
|
|
|
2,972
|
|
|
|
750
|
|
Net income
|
|
|
4,724
|
|
|
|
382
|
|
|
|
7,536
|
|
|
|
1,680
|
|
Non-controlling
interest
|
|
|
339
|
|
|
|
89
|
|
|
|
356
|
|
|
|
206
|
|
Net income
attributable to CECO Environmental Corp.
|
|
$
|
4,385
|
|
|
$
|
293
|
|
|
$
|
7,180
|
|
|
$
|
1,474
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.13
|
|
|
$
|
0.01
|
|
|
$
|
0.21
|
|
|
$
|
0.04
|
|
Diluted
|
|
$
|
0.13
|
|
|
$
|
0.01
|
|
|
$
|
0.20
|
|
|
$
|
0.04
|
|
Weighted average number
of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
34,873,238
|
|
|
|
35,491,725
|
|
|
|
34,961,645
|
|
|
|
35,444,477
|
|
Diluted
|
|
|
35,041,152
|
|
|
|
35,819,269
|
|
|
|
35,119,685
|
|
|
|
35,797,001
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP TO NON-GAAP MEASURES
|
|
|
|
Three months
ended June 30,
|
|
|
Six months
ended June 30,
|
|
(dollars in
millions)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Operating income as
reported in accordance with GAAP
|
|
$
|
5.7
|
|
|
$
|
2.1
|
|
|
$
|
11.0
|
|
|
$
|
5.2
|
|
Operating margin in
accordance with GAAP
|
|
|
5.4
|
%
|
|
|
2.7
|
%
|
|
|
5.6
|
%
|
|
|
3.5
|
%
|
Amortization and
earnout expenses
|
|
|
1.5
|
|
|
|
2.3
|
|
|
|
2.9
|
|
|
|
4.1
|
|
Restructuring
expenses
|
|
|
—
|
|
|
|
0.3
|
|
|
|
0.1
|
|
|
|
0.3
|
|
Acquisition and
integration expenses
|
|
|
1.5
|
|
|
|
—
|
|
|
|
2.5
|
|
|
|
0.1
|
|
Non-GAAP operating
income
|
|
$
|
8.7
|
|
|
$
|
4.7
|
|
|
$
|
16.5
|
|
|
$
|
9.7
|
|
Non-GAAP operating
margin
|
|
|
8.3
|
%
|
|
|
6.0
|
%
|
|
|
8.3
|
%
|
|
|
6.4
|
%
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six months
ended June 30,
|
|
(dollars in
millions)
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
Net income as reported
in accordance with GAAP
|
|
$
|
4.4
|
|
|
$
|
0.3
|
|
|
$
|
7.2
|
|
|
$
|
1.5
|
|
Amortization and
earnout expenses
|
|
|
1.5
|
|
|
|
2.3
|
|
|
|
2.9
|
|
|
|
4.1
|
|
Restructuring
expenses
|
|
|
—
|
|
|
|
0.3
|
|
|
|
0.1
|
|
|
|
0.3
|
|
Acquisition and
integration expenses
|
|
|
1.5
|
|
|
|
—
|
|
|
|
2.5
|
|
|
|
0.1
|
|
Foreign currency
remeasurement
|
|
|
(0.3)
|
|
|
|
1.1
|
|
|
|
—
|
|
|
|
1.7
|
|
Tax benefit expense of
adjustments
|
|
|
(0.7)
|
|
|
|
(0.9)
|
|
|
|
(1.4)
|
|
|
|
(1.5)
|
|
Non-GAAP net
income
|
|
$
|
6.4
|
|
|
$
|
3.1
|
|
|
$
|
11.3
|
|
|
$
|
6.2
|
|
Depreciation
|
|
|
0.9
|
|
|
|
0.8
|
|
|
|
1.8
|
|
|
|
1.6
|
|
Non-cash stock
compensation
|
|
|
0.9
|
|
|
|
0.9
|
|
|
|
1.8
|
|
|
|
1.6
|
|
Other (income)
expense
|
|
|
(1.6)
|
|
|
|
(0.2)
|
|
|
|
(1.5)
|
|
|
|
(0.4)
|
|
Interest
expense
|
|
|
1.1
|
|
|
|
0.7
|
|
|
|
1.9
|
|
|
|
1.4
|
|
Income tax
expense
|
|
|
2.6
|
|
|
|
1.1
|
|
|
|
4.4
|
|
|
|
2.3
|
|
Noncontrolling
interest
|
|
|
0.3
|
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
0.2
|
|
Adjusted
EBITDA
|
|
$
|
10.6
|
|
|
$
|
6.5
|
|
|
$
|
20.1
|
|
|
$
|
12.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.13
|
|
|
$
|
0.01
|
|
|
$
|
0.21
|
|
|
$
|
0.04
|
|
Diluted
|
|
$
|
0.13
|
|
|
$
|
0.01
|
|
|
$
|
0.20
|
|
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.18
|
|
|
$
|
0.09
|
|
|
$
|
0.32
|
|
|
$
|
0.17
|
|
Diluted
|
|
$
|
0.18
|
|
|
$
|
0.09
|
|
|
$
|
0.32
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE REGARDING NON-GAAP FINANCIAL
MEASURES
CECO is providing certain non-GAAP historical financial measures
as presented above as we believe that these figures are helpful in
allowing individuals to better assess the ongoing nature of CECO's
core operations. A "non-GAAP financial measure" is a numerical
measure of a company's historical financial performance that
excludes amounts that are included in the most directly comparable
measure calculated and presented in accordance with GAAP.
Non-GAAP operating income, non-GAAP net income, non-GAAP
operating margin, non-GAAP earnings per basic and diluted share and
adjusted EBITDA, as we present them in the financial data included
in this press release, have been adjusted to exclude the effects of
amortization expenses for acquisition related intangible assets,
contingent retention and earnout expenses, restructuring expenses
primarily relating to severance and legal expenses, acquisition and
integration expenses which include retention, legal, accounting,
banking, and other expenses, foreign currency remeasurement and
other nonrecurring or infrequent items and the associated tax
benefit of these items. Management believes that these items are
not necessarily indicative of the Company's ongoing operations and
their exclusion provides individuals with additional information to
compare the Company's results over multiple periods. Management
utilizes this information to evaluate its ongoing financial
performance. Our financial statements may continue to be affected
by items similar to those excluded in the non-GAAP adjustments
described above, and exclusion of these items from our non-GAAP
financial measures should not be construed as an inference that all
such costs are unusual or infrequent.
Non-GAAP operating income, non-GAAP net income, non-GAAP
operating margin, non-GAAP earnings per basic and diluted share and
adjusted EBITDA are not calculated in accordance with GAAP, and
should be considered supplemental to, and not as a substitute for,
or superior to, financial measures calculated in accordance with
GAAP. Non-GAAP financial measures have limitations in that they do
not reflect all of the costs associated with the operations of our
business as determined in accordance with GAAP. As a result, you
should not consider these measures in isolation or as a substitute
for analysis of CECO's results as reported under GAAP.
Additionally, CECO cautions investors that non-GAAP financial
measures used by the Company may not be comparable to similarly
titled measures of other companies.
In accordance with the requirements of Regulation G issued by
the Securities and Exchange Commission, non-GAAP operating income,
non-GAAP net income, non-GAAP operating margin, non-GAAP earnings
per basic and diluted share and adjusted EBITDA stated in the
tables above are reconciled to the most directly comparable GAAP
financial measures.
SAFE HARBOR
Any statements contained in this Press Release, other than
statements of historical fact, including statements about
management's beliefs and expectations, are forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
both as amended, and should be evaluated as such. These statements
are made on the basis of management's views and assumptions
regarding future events and business performance. We use words such
as "believe," "expect," "anticipate," "intends," "estimate,"
"forecast," "project," "will," "plan," "should" and similar
expressions to identify forward-looking statements. Forward-looking
statements involve risks and uncertainties that may cause actual
results to differ materially from any future results, performance
or achievements expressed or implied by such statements. Potential
risks and uncertainties, among others, that could cause actual
results to differ materially are discussed under "Part I – Item 1A.
Risk Factors" of the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2021,
and include, but are not limited to: the sensitivity of our
business to economic and financial market conditions generally and
economic conditions in CECO's service areas; dependence on fixed
price contracts and the risks associated therewith, including
actual costs exceeding estimates and method of accounting for
revenue; the effect of growth on CECO's infrastructure, resources,
and existing sales; the ability to expand operations in both new
and existing markets; the potential for contract delay or
cancellation as a result of on-going or worsening supply chain
challenges; liabilities arising from faulty services or products
that could result in significant professional or product liability,
warranty, or other claims; changes in or developments with respect
to any litigation or investigation; failure to meet timely
completion or performance standards that could result in higher
cost and reduced profits or, in some cases, losses on projects; the
potential for fluctuations in prices for manufactured components
and raw materials, including as a result of tariffs and surcharges;
the substantial amount of debt incurred in connection with our
strategic transactions and our ability to repay or refinance it or
incur additional debt in the future; the impact of federal, state
or local government regulations; our ability to repurchase shares
of our common stock and the amounts and timing of repurchases, if
any; economic and political conditions generally; our ability to
successfully realize the expected benefits of our restructuring
program; our ability to successfully integrate acquired businesses
and realize the synergies from strategic transactions; and
unpredictability and severity of catastrophic events, including
cyber security threats, acts of terrorism or outbreak of war or
hostilities or public health crises, such as uncertainties
regarding the extent and duration of impacts of matters associated
with the novel coronavirus ("COVID-19"), as well as management's
response to any of the aforementioned factors. Many of these risks
are beyond management's ability to control or predict. Should one
or more of these risks or uncertainties materialize, or should the
assumptions prove incorrect, actual results may vary in material
aspects from those currently anticipated. Investors are cautioned
not to place undue reliance on such forward-looking statements as
they speak only to our views as of the date the statement is made.
Furthermore, forward-looking statements speak only as of the date
they are made. Except as required under the federal securities laws
or the rules and regulations of the Securities and Exchange
Commission, we undertake no obligation to update or review any
forward-looking statements, whether as a result of new information,
future events or otherwise.
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SOURCE CECO Environmental Corp.