CECE CECO Environmental Corporation

CINCINNATI, Aug. 7, 2014 /PRNewswire/ -- CECO Environmental Corp. (NasdaqGM: CECE), a leading global environmental technology company focused on critical solutions in the air pollution control, energy and fluid handling and filtration industries, today reported its financial results for the second quarter of 2014. Results include the operations of Aarding Thermal Acoustics ("Aarding") from the date of its acquisition on February 28, 2013 and Met-Pro Corporation ("Met-Pro") from the date of its acquisition on August 27, 2013.

Revenue in the second quarter of 2014 was $66.6 million, up 50.0% from revenue of $44.4 million in the prior-year's second quarter. Met-Pro contributed $23.1 million of revenue in the quarter.

Revenue in the first six months of 2014 was $123.8 million, up 57.1% from revenue of $78.8 million in the prior-year period. Met-Pro contributed $42.3 million of revenue in the first six months of 2014.

Net income was $4.5 million in the second quarter of 2014 as compared with net income of $3.0 million in the second quarter of 2013. Excluding acquisition and integration expenses, amortization and earn out expenses, and plant, property and equipment valuation adjustments attributable to the Met-Pro and Aarding acquisitions, non-GAAP net income increased 18.2% to $6.5 million from $5.5 million in the prior-year period.

Net income was $7.5 million in the first six months of 2014, up 41.5% as compared with net income of $5.3 million in the prior year period. Excluding acquisition and integration expenses, amortization and earn-out expenses, and plant, property and equipment valuation adjustments attributable to the Met-Pro and Aarding acquisitions, non-GAAP net income increased 31.0% to $11.4 million from $8.7 million in the prior-year period.

Cash and cash equivalents were $17.8 million and bank debt was $79.2 million as of June 30, 2014 compared with $22.7 million and $89.1 million, respectively, as of December 31, 2013.  During the six months ended June 30, 2014, the Company repaid $10.1 million of debt and sold non-core assets for net proceeds of $7.1 million.

Non-GAAP EBITDA in the second quarter of 2014 was $11.0 million, up 61.8% from non-GAAP EBITDA of $6.8 million in the prior year's second quarter.

BACKLOG AND BOOKINGS

Total backlog at June 30, 2014 was $96.0 million as compared with $98.5 million on December 31, 2013, and $104.9 million on March 31, 2014.

Bookings were $121.3 million in the first six months of 2014, compared with $84.1 million in the first six months of 2013, an increase of 44.2%. 

Year-to-date bookings through July 31, 2014 were in excess of $150 million as the Company achieved significant bookings of over $30 million in the month of July 2014.

QUARTERLY DIVIDEND

On August 7, 2014, CECO's Board of Directors approved a quarterly dividend of $0.06 per share. The dividend will be paid on September 30, 2014 to all shareholders of record at the close of business on September 16, 2014. CECO initiated a Dividend Reinvestment Plan ("DRIP") in 2012 that provides for the voluntary reinvestment of dividends by its stockholders.

OPERATIONAL SUMMARY

"CECO achieved record non-GAAP operating margins of almost 15% in the second quarter of 2014, which was driven by our continued focus on high margin business, recurring revenues, growth in China, operational excellence and our asset light manufacturing model." said Jeff Lang, Chief Executive Officer of CECO. "Revenues increased over 16% on a sequential basis from Q1 2014. Since the beginning of July, we have seen a significant increase in organic bookings flow with over $30 million of new bookings in the month, which we expect will drive more organic revenue growth in the second half of 2014." 

Jeff Lang also commented, "Our continued focus on our "OneCECO" sales initiative is strengthening our organic growth drivers and complements our acquisition strategy.  Our efforts in China are also progressing as planned, with strong bookings from many new projects in the region during the quarter. We have made solid progress across a number of our initiatives in the first half of 2014 and we are excited about our prospects in the second half of 2014 and beyond, as we continue to leverage our growing installed base, recurring revenue focus and our strengthened platform. Our focus remains on creating long-term shareholder value with a balanced growth strategy and intense focus on profitability through operational excellence."

Jeff Lang, Chief Executive Officer, and Ed Prajzner, Chief Financial Officer, will discuss the Company's first quarter results during a conference call scheduled for Thursday, August 7, 2014 at 8:30 a.m. EDT (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 60426991. A webcast of the live call can be either accessed at CECO's website at http://www.cecoenviro.com, or directly accessed at https://engage.vevent.com/rt/cecoenvironmentalao~080714

For those unable to listen to the live call, a taped replay will be available from 11:30 a.m. EDT on August 8 until 11:59 p.m. EDT on August 21, 2014. To access the replay, call (855) 859-2056 (North American callers) or (404) 537-3406 (international callers) and use conference code 60426991.

ABOUT CECO ENVIRONMENTAL

CECO Environmental is a leading global environmental technology company focused on critical solutions in the air pollution control (APC), energy and fluid handling and filtration industries. 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 a broad 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 website at http://www.cecoenviro.com. 

Contact:
Corporate Information
Jeffrey Lang, Chief Executive Officer
Edward Prajzner, Chief Financial Officer
1-800-333-5475

or

Investor Relations:
Shawn Severson
The Blueshirt Group
Phone:  (415) 489-2198
Email:  Shawn@blueshirtgroup.com  

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, 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, 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.  Additionally, 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 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 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, 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 Met-Pro 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.