CINCINNATI, Nov. 7, 2013 /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
third quarter and nine months ended September 30, 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 third quarter of 2013 was $49.8 million, up 50.4% from total revenue of
$33.1 million in the prior-year's
third quarter. Recent acquisitions contributed $16.8 million of revenue in the quarter,
including Met-Pro, which contributed $7.3
million for the period from August 27
to September 30. The Company reported a net loss of
$1.5 million, or $0.07 per diluted share, in the third quarter,
compared with net income of $3.3
million, or $0.19 per diluted
share, for the prior-year's third quarter.
Net loss was $1.5 million in 2013
as compared with net income of $3.3
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 48.5% to $4.9 million.
Net loss per diluted share was $0.07 in 2013 as compared with net income per
diluted share of $0.19 in 2012;
Non-GAAP net income per diluted share, adjusted as noted above,
increased 26.3% to $0.24.
Bookings were $48.0 million in the
third quarter of 2013, compared with $41.8
million in 2012, an increase of 14.8%.
YEAR TO DATE PERFORMANCE
- Net income per diluted share was $0.20 compared with net income per diluted share
of $0.47 in 2012, Non-GAAP net income
per diluted share was $0.72 for the
nine months of 2013.
- Revenue was $128.6 million, up
27.7% from $100.7 million in
2012.
- Operating income was $3.3 million
compared with $12.3 million in 2012,
Non-GAAP operating income was $16.4
million, up 31.2%.
- Bookings were $132.4 million, up
16.8% from $113.4 million in
2012.
- Backlog was $100.4 million, up
68.8% from $59.5 million as of
December 31, 2012.
Revenue for the nine month period ended September 30, 2013 was $128.6 million, up 27.7%, or $27.9 million over the prior year period.
Acquisitions contributed $30.4
million in revenue for the first nine months of 2013.
Net income for the first nine months of 2013 was $3.8 million as compared with $7.8 million for the first nine months of the
prior year. 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 70.0%
to $13.6 million as compared with
$8.0 million for the first nine
months of 2012.
Net income per diluted share was $0.20 in 2013 as compared with $0.47 in 2012; Non-GAAP diluted net income per
share increased 53.2% to $0.72.
BACKLOG AND BOOKINGS
Total backlog at September 30,
2013 was $100.4 million up
from $77.9 million on June 30, 2013, and $67.6
million on September 30, 2012.
Acquisitions contributed approximately $37.1
million to the backlog on a year-over-year basis.
Bookings in the third quarter of 2013 were $48.0 million, up from $41.8 million in the prior-year period.
Bookings were $132.4 million for the
nine months ended September 30, 2013,
compared with $113.4 million in
2012.
MET-PRO ACQUISITION COMPLETED
On August 27, 2013, CECO closed on
the previously announced acquisition of Met-Pro, a transaction
which creates a clear global market leader in air pollution
control, product recovery and fluid handling technology.
"The team is excited to have closed on the acquisition of
Met-Pro and we are making excellent progress on the integration
plan," said Jeff Lang, Chief
Executive Officer of CECO. "Met-Pro not only expands our leverage
to key segments such as the petrochemical, refinery and
industrial manufacturing industries, it also provides us with
access to new markets including the food processing, semiconductor,
municipal and pharmaceutical sectors. We expect to realize at
least $9 million in operating,
manufacturing and SG&A cost reductions over the course of 2014,
a portion which will be realized in the fourth quarter of this
year. We are already ahead of plan in implementing the
consolidation of two manufacturing facilities and integrating
Met-Pro into CECO's streamlined organizational structure.
We are also excited about the combined operational
prospects for revenue growth from implementing our "OneCeco Sales
Initiative", which is focused on increased customer penetration by
leveraging our combined portfolio and comprehensive suite of air
pollution control technologies. We are starting to see results from
this initiative as we have already booked four significant
"OneCeco" orders in the past month alone."
OPERATIONAL SUMMARY
"Business quotation activity in the third quarter was steady.
However, during the quarter, we experienced several project order
delays due to general market slowness," said Jeff Lang, Chief Executive Officer of CECO.
"Notwithstanding, we achieved several important milestones in the
quarter including increased global bookings activity, building
backlog to over $100 million,
significant integration progress, non-GAAP EPS growth, and
expanding our global growth platform. We remain focused on our
business and executing on our operational excellence initiatives,
which we expect to drive additional leverage in our business.
While market conditions have been modest, we are starting to
see some signs of near term improvement. We will continue to focus
on our key initiatives, including capturing merger cost synergies,
implementing the "OneCeco Sales Initiative", expanding our
recurring revenue base, and increasing the combined company's
presence in China."
Jeff Lang also commented, "As we
move forward with the integration of Met-Pro, we will be
simplifying and streamlining our business along three key strategic
segments – Power Generation, Air Pollution Control, & Fluid
Handling-Filtration. We will be reporting our operations
along these lines in fiscal 2014 as we believe it better represents
our combined business and operational strategy."
CECO is providing the non-GAAP historical financial measures in
this release as the Company believes that these figures are helpful
in allowing investors 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.
Jeff Lang, Chief Executive
Officer, and Neal Murphy, Chief
Financial Officer, will discuss the Company's Third Quarter and
Nine Months 2013 results during a conference call scheduled for
Thursday, November 7, 2013 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 92101004.
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_110713.
For those unable to listen to the live call, a taped replay will
be available from 11:30 a.m. EST on
November 7 until 11:59 p.m. EST on November 21. To access
the replay, call (855) 859-2056 (North American callers) or (404)
537-3406 (international callers) and use conference code
92101004. You may also access the replay at our website at
http://cecoenviro.com under Investor Information for at least 30
days following the call.
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 liquid 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)
|
SEPTEMBER 30,
2013
|
DECEMBER 31,
2012
|
|
|
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
13,586
|
$
22,994
|
Accounts receivable,
net
|
41,164
|
29,499
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
16,892
|
5,747
|
Inventories,
net
|
26,259
|
3,898
|
Prepaid expenses and
other current assets
|
6,752
|
1,943
|
Prepaid income
taxes
|
9,118
|
240
|
Assets held for
sale
|
8,723
|
—
|
|
|
|
Total current
assets
|
122,494
|
64,321
|
Property, plant and
equipment, net
|
22,381
|
4,885
|
Goodwill
|
133,551
|
19,548
|
Intangible
assets-finite life, net
|
49,102
|
1,283
|
Intangible
assets-indefinite life
|
18,208
|
3,526
|
Deferred income
taxes
|
2,889
|
—
|
Deferred charges and
other assets
|
5,011
|
541
|
|
|
|
|
$
353,636
|
$
94,104
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
Current portion of
debt
|
$
8,518
|
$
—
|
Accounts payable and
accrued expenses
|
30,320
|
15,093
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
15,751
|
11,368
|
Income taxes
payable
|
—
|
1,079
|
|
|
|
Total current
liabilities
|
54,589
|
27,540
|
Other
liabilities
|
12,629
|
4,442
|
Debt, less current
portion
|
83,103
|
—
|
Deferred income tax
liability, net
|
34,892
|
128
|
|
|
|
Total
liabilities
|
185,213
|
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, 25,717,045 and
17,096,543 shares issued in 2013 and 2012, respectively
|
257
|
171
|
Capital in excess of
par value
|
159,774
|
54,800
|
Accumulated
earnings
|
10,426
|
9,691
|
Accumulated other
comprehensive loss
|
(1,678 )
|
(2,312 )
|
|
|
|
|
168,779
|
62,350
|
Less treasury stock,
at cost, 137,920 shares in 2013 and 2012
|
(356 )
|
(356 )
|
|
|
|
Total shareholders'
equity
|
168,423
|
61,994
|
|
|
|
|
$
353,636
|
$
94,104
|
|
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
THREE MONTHS
ENDED
|
NINE MONTHS
ENDED
|
|
SEPTEMBER
30,
|
SEPTEMBER
30,
|
(dollars in
thousands, except per share data)
|
2013
|
2012
|
2013
|
2012
|
Net sales
|
$
49,796
|
$
33,102
|
$
128,590
|
$
100,720
|
Cost of
sales
|
35,242
|
22,574
|
88,555
|
69,461
|
|
|
|
|
|
Gross
profit
|
14,554
|
10,528
|
40,035
|
31,259
|
Selling and
administrative
|
9,346
|
6,197
|
24,038
|
18,724
|
Acquisition and
integration expenses
|
4,047
|
—
|
6,618
|
—
|
Amortization and earn
out expenses
|
2,017
|
80
|
3,590
|
252
|
Legal
reserves
|
2,500
|
—
|
2,500
|
—
|
|
|
|
|
|
(Loss) income from
operations
|
(3,356 )
|
4,251
|
3,289
|
12,283
|
Other income
(expense), net
|
92
|
(69 )
|
164
|
(133 )
|
Interest expense
(including related party interest of $0
and $60,
and $0 and $178, respectively)
|
(456 )
|
(291 )
|
(707 )
|
(828 )
|
|
|
|
|
|
(Loss) income before
income taxes
|
(3,720 )
|
3,891
|
2,746
|
11,322
|
Income tax (benefit)
expense
|
(2,259 )
|
623
|
(1,044 )
|
3,524
|
|
|
|
|
|
Net (loss)
income
|
$
(1,461 )
|
$
3,268
|
$
3,790
|
$
7,798
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per
share:
|
|
|
|
|
Basic
|
$
(0.07 )
|
$
0.22
|
$
0.21
|
$
0.53
|
|
|
|
|
|
Diluted
|
$
(0.07 )
|
$
0.19
|
$
0.20
|
$
0.47
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares
outstanding:
|
|
|
|
|
Basic
|
19,965,010
|
14,630,264
|
18,275,085
|
14,591,325
|
Diluted
|
19,965,010
|
17,258,552
|
18,881,927
|
17,199,337
|
|
The notes to the
condensed consolidated financial statements are an integral part of
the above statements.
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
RECONCILIATION OF
GAAP TO NON-GAAP MEASURES
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
(dollars in
millions)
|
2013
|
2012
|
2013
|
2012
|
Gross profit as
reported in accordance with GAAP
|
$
14.6
|
$
10.5
|
$
40.0
|
$
31.2
|
Gross profit
margin in accordance with GAAP
|
29.3
%
|
31.7
%
|
31.1
%
|
31.0
%
|
Inventory valuation
adjustment
|
0.4
|
—
|
0.4
|
—
|
Plant, property and
equipment valuation
adjustment
|
0.1
|
—
|
0.1
|
—
|
|
|
|
|
|
Non-GAAP gross
margin
|
$
15.1
|
$
10.5
|
$
40.5
|
$
31.2
|
Gross profit
margin
|
30.1
%
|
31.7
%
|
31.5
%
|
31.0
%
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
(dollars in
millions)
|
2013
|
2012
|
2013
|
2012
|
Operating income as
reported in accordance with
GAAP
|
$
(3.4)
|
$
4.3
|
$
3.3
|
$
12.3
|
Operating margin
in accordance with GAAP
|
(6.8)
%
|
12.8
%
|
2.6
%
|
12.2
%
|
Inventory valuation
adjustment
|
0.4
|
—
|
0.4
|
—
|
Plant, property and
equipment valuation
adjustment
|
0.1
|
—
|
0.1
|
—
|
Acquisition and
integration expenses
|
4.0
|
—
|
6.6
|
—
|
Amortization and
contingent acquisition
expenses
|
2.0
|
—
|
3.5
|
0.2
|
Legal
reserves
|
2.5
|
—
|
2.5
|
—
|
|
|
|
|
|
Non-GAAP operating
income
|
$
5.6
|
$
4.3
|
$
16.4
|
$
12.5
|
Operating
margin
|
11.4
%
|
12.8
%
|
12.8
%
|
12.4
%
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
(dollars in
millions)
|
2013
|
2012
|
2013
|
2012
|
Net income as
reported in accordance with GAAP
|
$
(1.5)
|
$
3.3
|
$
3.8
|
$
7.8
|
Inventory valuation
adjustment
|
0.4
|
—
|
0.4
|
—
|
Plant, property and
equipment valuation
adjustment
|
0.1
|
—
|
0.1
|
—
|
Acquisition and
integration expenses
|
4.0
|
—
|
6.6
|
—
|
Amortization and
contingent acquisition
expenses
|
2.0
|
—
|
3.5
|
0.2
|
Legal
reserves
|
2.5
|
—
|
2.5
|
—
|
Tax benefit of
expenses
|
(2.6 )
|
—
|
(3.3 )
|
—
|
|
|
|
|
|
Non-GAAP net
income
|
$
4.9
|
$
3.3
|
$
13.6
|
$
8.0
|
|
|
|
|
|
(Loss) earnings per
share:
|
|
|
|
|
Basic
|
$
(0.07 )
|
$
0.22
|
$
0.21
|
$
0.53
|
|
|
|
|
|
Diluted
|
$
(0.07 )
|
$
0.19
|
$
0.20
|
$
0.47
|
Non-GAAP earnings per
share:
|
|
|
|
|
Basic
|
$
0.24
|
$
0.22
|
$
0.74
|
$
0.53
|
|
|
|
|
|
Diluted
|
$
0.24
|
$
0.19
|
$
0.72
|
$
0.47
|
|
|
|
|
|
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 shares, 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 expenses activities including
retention, legal, accounting, and banking, amortization and earn
out 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 shares stated in the tables above present the
most directly comparable GAAP financial measure and reconcile to
the comparable GAAP 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 their 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 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.