CINCINNATI, March 6, 2014 /PRNewswire/ -- CECO
Environmental Corp. (NasdaqGM: CECE), a leading global
environmental technology company focused on critical solutions in
the product recovery, air pollution control, fluid handling and
filtration industries, today reported its financial results for the
fourth quarter and full year ended December
31, 2013. Results include the operations of Met-Pro
Corporation ("Met-Pro") from the date of its acquisition on
August 27, 2013.
Total revenue in the fourth quarter of 2013 was $68.7 million, up 100.2% from total revenue of
$34.3 million in the prior-year's
fourth quarter. Recent acquisitions contributed $34.3 million of revenue in the quarter,
including Met-Pro, which contributed $23.3
million for the period from October 1
to December 31.
Net income was $2.8 million in the
fourth quarter of 2013 as compared with net income of $3.1 million in the fourth quarter of 2012.
Excluding acquisition and integration expenses, amortization and
earn-out expenses, inventory and plant, property and equipment
valuation adjustments attributable to the Met-Pro acquisition and
legal reserves, non-GAAP net income increased 112.5% to
$6.8 million. Net income per
diluted share was $0.11 in the fourth
quarter of 2013 as compared with net income per diluted share of
$0.18 in the fourth quarter of 2012;
Non-GAAP net income per diluted share, adjusted as noted above,
increased 44.4% to $0.26 from
$0.18 in the prior year period.
Bookings were $66.8 million in the
fourth quarter of 2013, compared with $26.3
million in the fourth quarter of 2012, an increase of
154%.
Cash and cash equivalents were $22.7
million and bank debt was $88.9
million as of December 31,
2013 compared to $23.0 and no
bank debt as of December 31, 2012.
The increase in debt was attributable to the Met-Pro
Acquisition.
FINANCIAL HIGHLIGHTS FOR FULL YEAR 2013
Revenue in 2013 was $197.3
million, up 46.1% from $135.1
million in 2012. Acquisitions contributed $68.1 million in revenue in 2013.
Net income in 2013 was $6.6
million as compared with $10.9
million in 2012. Excluding acquisition and integration
expenses, amortization and earn-out expenses, inventory and plant,
property and equipment valuation adjustments attributable to the
Met-Pro acquisition and legal reserves, non-GAAP net income
increased 83.8% to $20.4 million.
Net income per diluted share was $0.32 in 2013 as compared with $0.65 in 2012; Non-GAAP diluted net income per
share increased 50.7% to $0.98.
BACKLOG AND BOOKINGS
Total backlog at December 31, 2013
was $98.5 million as compared with
$100.4 million on September 30, 2013, and $59.5 million on December
31, 2012. Acquisitions contributed approximately
$37.1 million to the backlog on a
year-over-year basis.
Bookings in the fourth quarter of 2013 were $66.8 million, up from $26.3 million in the prior-year period. Bookings
were $199.2 million in 2013, compared
with $139.7 million in 2012.
QUARTERLY DIVIDEND
On March 5, 2014, CECO's Board of
Directors approved a quarterly dividend of $0.05 per share. The dividend will be paid on
March 31, 2014 to all shareholders of
record at the close of business on March 19,
2013. CECO initiated a Dividend Reinvestment Plan ("DRIP")
in 2012 that provides for the voluntary reinvestment of dividends
by its stockholders.
OPERATIONAL SUMMARY
"We are pleased with CECO's overall results both for the fourth
quarter and for 2013 as we completed and integrated the
acquisitions of Met-Pro, Aarding and Adwest and continued to
execute on our core objectives, including profitable growth and
improving margins," said Jeff Lang,
Chief Executive Officer of CECO. "We achieved several important
milestones in the quarter including increased global bookings
activity, strong backlog growth, significant integration progress,
non-GAAP EPS growth, and expanding our global growth platform. The
integration of Met-Pro has been quite successful with targeted cost
synergies already achieved, the divestiture of a small non-core
business completed and non-core real estate divestitures well
underway. Revenue synergies also continue to advance. We remain
focused on our business and executing on our sales and operational
excellence initiatives, which we expect to drive both additional
top line growth and increased operating cash flow generation."
Jeff Lang also commented,
"Overall business conditions in our sector in the fourth quarter
improved modestly from the prior quarter. We expect things will
continue to improve throughout 2014 and that the pollution control
market will outpace overall GDP. Our 'One-CECO' sales initiative is
beginning to pay dividends and we continue to build out our
business platform in China. I am proud of what we
accomplished in 2013, but even more excited about where we can take
the company in 2014 and beyond as we continue to create increasing
shareholder value on the back of our strengthened
platform."
Jeff Lang, Chief Executive
Officer, and Neal Murphy, Chief
Financial Officer, will discuss the company's fourth quarter and
full Year 2013 results during a conference call scheduled for
Thursday, March 6, 2014 at
8:30 a.m. EST (7:30 a.m. Central Time).
The North American toll-free number for the call is (855)
626-8629. International callers should dial (954) 320-7630. The
conference code for the call is 4839240. A webcast of the live call
can be either accessed at CECO's website at http://cecoenviro.com,
or directly accessed at
http://us.meeting-stream.com/cecoenvironmentalcorp_030614.
For those unable to listen to the live call, a taped replay will
be available from 11:30 a.m. EST on
March 7 until 11:59 p.m. EDT on March
21. To access the replay, call (855) 859-2056 (North
American callers) or (404) 537-3406 (international callers) and use
conference code 4839240.
ABOUT CECO ENVIRONMENTAL
CECO Environmental is a leading global environmental technology
company focused on critical solutions in the product recovery, air
pollution control, fluid handling and filtration segments.
Through its well-known brands, CECO provides a wide spectrum of
products and services including dampers & diverters, cyclonic
technology, thermal oxidizers, filtration systems, scrubbers, fluid
handling equipment and plant engineered services and engineered
design build fabrication. These products play a vital role in
helping companies achieve exacting production standards, meeting
increasing plant needs and stringent emissions control regulations
around the globe. CECO globally serves the broadest range of
markets and industries including power, municipalities, chemical,
industrial manufacturing, refining, petrochemical, metals, minerals
& mining, hospitals and universities. CECO is focused on
building long-term shareholder value by bringing its unique
technology, portfolio and operational excellence to strategic key
growth markets around the world, while maintaining the highest
standards of employee development, project execution and safety
leadership. CECO is listed on NASDAQ under the ticker symbol "CECE"
and is a member company of the Russell 2000 Index. For more
information on CECO Environmental, please visit the company's
website at http://www.cecoenviro.com.
Contact:
Corporate
Information
Jeff Lang,
Chief Executive Officer
Neal
Murphy, Chief Financial
Officer
1-800-333-5475
or
Investor Relations:
Shawn
Severson
The Blueshirt Group
Phone: (415) 489-2198
Email: Shawn@blueshirtgroup.com
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(dollars in
thousands, except per share data)
|
DECEMBER 31,
2013
|
|
DECEMBER 31,
2012
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
22,661
|
|
$
22,994
|
Accounts receivable,
net
|
44,364
|
|
29,499
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
11,110
|
|
5,747
|
Inventories,
net
|
25,376
|
|
3,898
|
Prepaid expenses and
other current assets
|
6,651
|
|
1,943
|
Prepaid income
taxes
|
3,527
|
|
240
|
Assets held for
sale
|
10,438
|
|
—
|
Total current
assets
|
124,127
|
|
64,321
|
Property, plant and
equipment, net
|
22,310
|
|
4,885
|
Goodwill
|
132,220
|
|
19,548
|
Intangible
assets-finite life, net
|
46,813
|
|
1,283
|
Intangible
assets-indefinite life
|
18,419
|
|
3,526
|
Deferred income
taxes
|
66
|
|
—
|
Deferred charges and
other assets
|
4,581
|
|
541
|
|
$
348,536
|
|
$
94,104
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
debt
|
$
9,922
|
|
$
—
|
Accounts payable and
accrued expenses
|
34,356
|
|
15,093
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
13,486
|
|
11,368
|
Income taxes
payable
|
1,569
|
|
1,079
|
Total current
liabilities
|
59,333
|
|
27,540
|
Other
liabilities
|
10,474
|
|
4,442
|
Debt, less current
portion
|
78,988
|
|
—
|
Deferred income tax
liability, net
|
29,335
|
|
128
|
Total
liabilities
|
178,130
|
|
32,110
|
|
|
|
|
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, 25,724,519 and 17,096,543
shares issued in 2013 and 2012, respectively
|
257
|
|
171
|
Capital in excess of
par value
|
159,566
|
|
54,800
|
Accumulated
earnings
|
11,911
|
|
9,691
|
Accumulated other
comprehensive loss
|
(972)
|
|
(2,312)
|
|
170,762
|
|
62,350
|
Less treasury stock,
at cost, 137,920 shares in 2013 and 2012
|
(356)
|
|
(356)
|
Total shareholders'
equity
|
170,406
|
|
61,994
|
|
$
348,536
|
|
$
94,104
|
|
|
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
TWELVE MONTHS
ENDED
|
|
DECEMBER
31,
|
|
DECEMBER
31,
|
(dollars in
thousands, except per share data)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Net sales
|
$
68,727
|
|
$
34,332
|
|
$
197,317
|
|
$
135,052
|
Cost of
sales
|
47,207
|
|
23,148
|
|
135,762
|
|
92,609
|
Gross
profit
|
21,520
|
|
11,184
|
|
61,555
|
|
42,443
|
Selling and
administrative
|
13,060
|
|
6,705
|
|
37,098
|
|
25,429
|
Acquisition and
integration expenses
|
606
|
|
—
|
|
7,224
|
|
—
|
Amortization and earn
out expenses
|
3,171
|
|
79
|
|
6,761
|
|
331
|
Legal
reserves
|
1,000
|
|
—
|
|
3,500
|
|
—
|
Income from
operations
|
3,683
|
|
4,400
|
|
6,972
|
|
16,683
|
Other income
(expense), net
|
818
|
|
(19 )
|
|
982
|
|
(152 )
|
Interest expense
(including related party interest of $0 and $39, and $0 and $217,
respectively)
|
(792)
|
|
(340 )
|
|
(1,499 )
|
|
(1,168 )
|
Income before income
taxes
|
3,709
|
|
4,041
|
|
6,455
|
|
15,363
|
Income tax (benefit)
expense
|
942
|
|
989
|
|
(102)
|
|
4,513
|
Net income
|
$
2,767
|
|
$
3,052
|
|
$
6,557
|
|
$
10,850
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.11
|
|
$
0.20
|
|
$
0.33
|
|
$
0.73
|
Diluted
|
$
0.11
|
|
$
0.18
|
|
$
0.32
|
|
$
0.65
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
25,582,686
|
|
15,473,944
|
|
20,116,991
|
|
14,813,186
|
Diluted
|
26,101,523
|
|
17,363,121
|
|
20,719,951
|
|
17,246,058
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP TO NON-GAAP MEASURES
|
|
|
Three Months Ended
December 31,
|
|
Twelve
Months Ended
December 31,
|
(dollars in
millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Gross profit as
reported in accordance with GAAP
|
$
21.5
|
|
$
11.2
|
|
$
61.6
|
|
$
42.4
|
Gross profit
margin in accordance with GAAP
|
31.3
%
|
|
32.6
%
|
|
31.2
%
|
|
31.4%
|
Inventory valuation
adjustment
|
0.7
|
|
—
|
|
1.1
|
|
—
|
Plant, property and
equipment valuation adjustment
|
0.1
|
|
—
|
|
0.2
|
|
—
|
Non-GAAP gross
margin
|
$
22.3
|
|
$
11.2
|
|
$
62.9
|
|
$
42.4
|
Gross profit
margin
|
32.4%
|
|
32.6
%
|
|
31.9%
|
|
31.4
%
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve
Months Ended
December 31,
|
(dollars in
millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Operating income as
reported in accordance with GAAP
|
$
3.7
|
|
$
4.4
|
|
$
7.0
|
|
$
16.7
|
Operating margin
in accordance with GAAP
|
5.4
%
|
|
12.8
%
|
|
3.5
%
|
|
12.4
%
|
Inventory valuation
adjustment
|
0.7
|
|
—
|
|
1.1
|
|
—
|
Plant, property and
equipment valuation adjustment
|
0.1
|
|
—
|
|
0.2
|
|
—
|
Acquisition and
integration expenses
|
0.6
|
|
—
|
|
7.2
|
|
—
|
Amortization and
contingent acquisition expenses
|
3.3
|
|
0.1
|
|
6.8
|
|
0.3
|
Legal
reserves
|
1.0
|
|
—
|
|
3.5
|
|
—
|
Non-GAAP operating
income
|
$
9.4
|
|
$
4.5
|
|
$
25.8
|
|
$
17.0
|
Operating
margin
|
13.6
%
|
|
12.8%
|
|
13.1
%
|
|
12.6
%
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
December 31,
|
|
Twelve
Months Ended
December 31,
|
(dollars in
millions)
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Net income as
reported in accordance with GAAP
|
$
2.8
|
|
$
3.1
|
|
$
6.6
|
|
$
10.9
|
Inventory valuation
adjustment
|
0.7
|
|
—
|
|
1.1
|
|
—
|
Plant, property and
equipment valuation adjustment
|
0.1
|
|
—
|
|
0.2
|
|
—
|
Acquisition and
integration expenses
|
0.6
|
|
—
|
|
7.2
|
|
—
|
Amortization and
contingent acquisition expenses
|
3.3
|
|
0.1
|
|
6.8
|
|
0.3
|
Legal
reserves
|
1.0
|
|
—
|
|
3.5
|
|
—
|
Tax benefit of
expenses
|
(1.7 )
|
|
(0.1)
|
|
(5.0 )
|
|
(0.1)
|
Non-GAAP net
income
|
$
6.8
|
|
$
3.1
|
|
$
20.4
|
|
$
11.1
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.11
|
|
$
0.20
|
|
$
0.33
|
|
$
0.73
|
|
|
|
|
|
|
|
|
Diluted
|
$
0.11
|
|
$
0.18
|
|
$
0.32
|
|
$
0.65
|
Non-GAAP earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.26
|
|
$
0.20
|
|
$
1.01
|
|
$
0.73
|
|
|
|
|
|
|
|
|
Diluted
|
$
0.26
|
|
$
0.18
|
|
$
0.98
|
|
$
0.65
|
|
|
|
|
|
|
|
|
NOTE REGARDING NON-GAAP FINANCIAL
MEASURES
CECO is providing the non-GAAP historical financial measures
presented above as the Company believes 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 the GAAP statement
of operations.
Non-GAAP gross margin, non-GAAP operating income, non-GAAP net
income, non-GAAP gross profit margin, non-GAAP operating margin,
and non-GAAP earnings per basic and diluted share, as we present
them in the financial data included in this press release, have
been adjusted to exclude the effects of expenses related to
acquisition and integration expense activities including retention,
legal, accounting, banking, amortization and contingent earnout
expenses, legal reserves and the associated tax benefit of these
charges. 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 gross margin, non-GAAP operating income, non-GAAP net
income, non-GAAP gross profit margin, non-GAAP operating margin,
and non-GAAP earnings per basic and diluted shares 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.
In accordance with the requirements of Regulation G issued by
the Securities and Exchange Commission, non-GAAP gross margin,
non-GAAP operating income, non-GAAP net income, non-GAAP gross
profit margin, non-GAAP operating margin, and non-GAAP earnings per
basic and diluted share stated in the tables above present the most
directly comparable GAAP financial measure and reconcile 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 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. Words such as "estimate,"
"believe," "anticipate," "expect," "intend," "plan," "target,"
"project," "should," "may," "will" and similar expressions are
intended to identify forward-looking statements. Forward-looking
statements (including oral representations) 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. These risks and uncertainties include,
but are not limited to: our ability to successfully integrate
Met-Pro's operations and realize the synergies from the
acquisition, as well as a number of factors related to our business
including 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
contract revenue; fluctuations in operating results from period to
period due to seasonality of the business; 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; changes in or
developments with respect to any litigation or investigation; the
potential for fluctuations in prices for manufactured components
and raw materials; the substantial amount of debt in connection
with the acquisition and CECO's ability to repay or refinance it or
incur additional debt in the future; the impact of federal, state
or local government regulations; economic and political conditions
generally; and the effect of competition in the air pollution
control and industrial ventilation industry. These and other risks
and uncertainties are discussed in more detail in CECO's filings
with the Securities and Exchange Commission, including our reports
on Form 10-K and Form 10-Q. 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. All
forward-looking statements attributable to CECO or persons acting
on behalf of CECO are expressly qualified in their entirety by the
cautionary statements and risk factors contained in this press
release and CECO's respective filings with the Securities and
Exchange Commission. 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, CECO undertakes no obligation
to update or review any forward-looking information, whether as a
result of new information, future events or otherwise.
SOURCE CECO Environmental Corp.