CINCINNATI, May 10, 2017 /PRNewswire/ -- Highlights of the
First Quarter 2017*
- Revenue of $92.7 million,
compared with $103.2 million
- Gross profit of $31.9 million
(34.5% margin), compared with $31.6
million (30.6% margin)
- Operating income of $1.4 million
compared with $5.8 million
- Non-GAAP operating income of $10.0
million compared with $10.9
million
- Net income was break even, compared with $3.1 million
- Non-GAAP net income of $6.8
million, compared with $6.1
million
- Net income per diluted share was break even, compared with
$0.09
- Non-GAAP net income per diluted share of $0.20, compared with $0.18
- Adjusted EBITDA of $11.5 million,
compared with $12.7 million
- Bookings of $84.0
million
- Backlog of $184.2 million
- Debt repayment of $4.0
million
* All comparisons are versus the comparable prior-year
period.
CECO Environmental Corp. (Nasdaq: CECE), a leading global
energy, environmental, and industrial technology company, today
reported its financial results for the first quarter of 2017.
CECO's Interim Chief Executive Officer Dennis Sadlowski commented, "After three months
as Interim CEO, I remain very excited to be leading CECO during
this transformative next stage of its development. The last
five years have proven that CECO is very strong operationally, and
is adept at generating solid margins and cash flow. Now, as we
maintain our core operating strength, we will also need to build
our organic growth engine through a re-orientation to an outside-in
focus on customers and markets, along with a strategic refresh that
is already well underway. Our management team is
energized with these new initiatives as well as our core focus on
serving global customer markets that are attractive in the
long-term – natural gas power, midstream natural gas pipelines,
petroleum and petrochemical refineries, and diversified industrial
markets."
Mr. Sadlowski continued, "While the challenging macroeconomic
environment continues in 2017, I am confident that CECO's diversity
of technologies, end markets and multiple geographies provide the
foundation for a strong future. I am encouraged by our sequential
growth in bookings compared to the fourth quarter of 2016, which
improved in all three of our segments. My meetings with customers,
coupled with customer research that we have conducted over the last
few months, have confirmed that the direction and focus of our
business is fundamentally sound. With our renewed focus on
customers and end markets, we will enable growth at a faster rate.
Our long-term potential is very exciting."
Revenue in the first quarter of 2017 was $92.7 million, down 10.2% from $103.2 million in the prior-year period.
Operating income was $1.4 million
for the first quarter of 2017 (1.5% margin), compared with
$5.8 million in the prior-year period
(5.6% margin). Operating income on a non-GAAP basis was
$10.0 million for the first quarter
of 2017 (10.8% margin), compared with $10.9
million in the prior-year period (10.6% margin).
Net income was break even for the first quarter of 2017,
compared with $3.1 million in the
prior-year period. Net income on a non-GAAP basis was
$6.8 million for the first quarter of
2017, compared with $6.1 million in
the prior-year period.
Net income per diluted share was break even for the first
quarter of 2017, compared with net income per diluted share of
$0.09 in the prior-year period.
Non-GAAP net income per diluted share was $0.20 for the first quarter of 2017, compared
with $0.18 for the prior-year
period.
Cash and cash equivalents were $45.0
million and bank debt was $122.3
million, as of March 31, 2017,
compared with $45.8 million and
$126.4 million, respectively, as of
December 31, 2016.
BACKLOG AND BOOKINGS
Total backlog at March 31, 2017 was $184.2
million as compared with $197.0
million on December 31, 2016,
and $228.1 million on March 31, 2016.
Bookings were $84.0 million for
the first quarter of 2017, compared with $120.1 million in the prior-year period and
$77.7 million in the fourth quarter
of 2016.
QUARTERLY DIVIDENDS
On May 8,
2017, CECO's Board of Directors approved a quarterly
dividend of $0.075 per share.
The dividend will be paid on June 30,
2017 to all stockholders of record on close of business on
June 16, 2017. CECO initiated a
Dividend Reinvestment Plan ("DRIP") in 2012 that provides for the
voluntary reinvestment of dividends by its stockholders.
CONFERENCE CALL
A conference call is scheduled for
today at 8:30 a.m. ET to discuss the
first quarter 2017 results. The conference call may be accessed by
dialing +1.877.407.3982 (Toll-Free) in the U.S. and Canada or by dialing +1.201.493.6780 for
international calls. A replay will be available from
1:30 p.m. ET on May 10, 2017 until May 24,
2017 at 11:59 p.m. ET. The
replay may be accessed by dialing +1.844.512.2921 (Toll-Free) in
the U.S. and Canada or by dialing
+1.412.317.6671 for international calls and entering passcode
13661005.
The live webcast and slides can also be accessed at
www.cecoenviro.com/Events-Calendar.
ABOUT CECO ENVIRONMENTAL
CECO is a diversified global provider of leading engineered
technologies to the energy, environmental, and fluid handling and
filtration industrial segments, targeting specific niche-focused
end markets through an attractive asset-light business model. We
provide a wide spectrum of products and services including dampers
& diverters, cyclonic technology, thermal oxidizers, separation
and filtration systems, selective catalytic reduction ("SCR") and
selective non-catalytic reduction ("SNCR") systems, scrubbers,
dampers and silencers, exhaust systems, fluid handling equipment
and plant engineered services and design build fabrication. CECO's
products play a vital role in helping companies achieve exacting
production standards, meeting increasing plant needs and stringent
emissions control regulations around the globe. The company serves
a broad range of markets and industries, including power,
municipalities, chemical, industrial manufacturing, mid-stream
pipeline natural gas transmission, refining, petrochemical, metals,
minerals & mining companies, as well as hospitals and
universities. CECO targets its $5 billion+ of installed base,
specifically to expand and grow a higher recurring revenue of
aftermarket products and services. CECO is listed on Nasdaq under
the ticker symbol "CECE." For more information, please visit
www.cecoenviro.com.
Contact:
Edward Prajzner, Executive Vice
President Corporate Development
800.333.5475
investor.relations@onececo.com
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
(dollars in
thousands, except per share data)
|
|
(unaudited)
MARCH 31,
2017
|
|
|
DECEMBER
31,
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
44,999
|
|
|
$
|
45,824
|
|
Restricted
cash
|
|
|
1,272
|
|
|
|
1,498
|
|
Accounts receivable,
net
|
|
|
76,726
|
|
|
|
83,062
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
|
|
33,447
|
|
|
|
38,123
|
|
Inventories,
net
|
|
|
21,498
|
|
|
|
21,487
|
|
Prepaid expenses and
other current assets
|
|
|
12,282
|
|
|
|
13,560
|
|
Prepaid income
taxes
|
|
|
2,709
|
|
|
|
1,590
|
|
Assets held for
sale
|
|
|
7,826
|
|
|
|
7,834
|
|
Total current
assets
|
|
|
200,759
|
|
|
|
212,978
|
|
Property, plant and
equipment, net
|
|
|
26,452
|
|
|
|
27,270
|
|
Goodwill
|
|
|
170,293
|
|
|
|
170,153
|
|
Intangible
assets-finite life, net
|
|
|
57,906
|
|
|
|
60,728
|
|
Intangible
assets-indefinite life
|
|
|
22,085
|
|
|
|
22,042
|
|
Deferred charges and
other assets
|
|
|
4,809
|
|
|
|
5,463
|
|
|
|
$
|
482,304
|
|
|
$
|
498,634
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
debt
|
|
$
|
8,852
|
|
|
$
|
8,827
|
|
Accounts payable and
accrued expenses
|
|
|
81,796
|
|
|
|
95,610
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
|
|
34,211
|
|
|
|
35,085
|
|
Note
payable
|
|
|
5,300
|
|
|
|
5,300
|
|
Income taxes
payable
|
|
|
1,793
|
|
|
|
1,536
|
|
Total current
liabilities
|
|
|
131,952
|
|
|
|
146,358
|
|
Other
liabilities
|
|
|
37,526
|
|
|
|
34,864
|
|
Debt, less current
portion
|
|
|
110,565
|
|
|
|
114,366
|
|
Deferred income tax
liability, net
|
|
|
12,899
|
|
|
|
12,964
|
|
Total
liabilities
|
|
|
292,942
|
|
|
|
308,552
|
|
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, 34,599,179
and 34,300,209 shares
issued at March 31, 2017 and December 31, 2016,
respectively
|
|
|
346
|
|
|
|
343
|
|
Capital in excess of
par value
|
|
|
246,259
|
|
|
|
244,878
|
|
Accumulated
loss
|
|
|
(44,394)
|
|
|
|
(41,741)
|
|
Accumulated other
comprehensive loss
|
|
|
(12,493)
|
|
|
|
(13,042)
|
|
|
|
|
189,718
|
|
|
|
190,438
|
|
Less treasury stock,
at cost, 137,920 shares at March 31, 2017 and December 31,
2016
|
|
|
(356)
|
|
|
|
(356)
|
|
Total shareholders'
equity
|
|
|
189,362
|
|
|
|
190,082
|
|
|
|
$
|
482,304
|
|
|
$
|
498,634
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (unaudited)
|
|
|
|
THREE MONTHS
ENDED
MARCH 31,
|
|
(dollars in
thousands, except per share data)
|
|
2017
|
|
|
2016
|
|
Net sales
|
|
$
|
92,651
|
|
|
$
|
103,175
|
|
Cost of
sales
|
|
|
60,722
|
|
|
|
71,589
|
|
Gross
profit
|
|
|
31,929
|
|
|
|
31,586
|
|
Selling and
administrative expenses
|
|
|
23,256
|
|
|
|
20,945
|
|
Acquisition and
integration expenses
|
|
|
—
|
|
|
|
37
|
|
Amortization and
earn-out expenses
|
|
|
7,323
|
|
|
|
4,797
|
|
Income from
operations
|
|
|
1,350
|
|
|
|
5,807
|
|
Other (expense)
income, net
|
|
|
(109)
|
|
|
|
780
|
|
Interest
expense
|
|
|
(1,711)
|
|
|
|
(2,102)
|
|
(Loss) income before
income taxes
|
|
|
(470)
|
|
|
|
4,485
|
|
Income tax (benefit)
expense
|
|
|
(508)
|
|
|
|
1,430
|
|
Net income
|
|
$
|
38
|
|
|
$
|
3,055
|
|
Less net loss
attributable to noncontrolling interest
|
|
$
|
—
|
|
|
$
|
(45)
|
|
Net income
attributable to CECO Environmental Corp.
|
|
$
|
38
|
|
|
$
|
3,100
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.00
|
|
|
$
|
0.09
|
|
Diluted
|
|
$
|
0.00
|
|
|
$
|
0.09
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
34,215,519
|
|
|
|
33,928,052
|
|
Diluted
|
|
|
34,563,139
|
|
|
|
34,116,534
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
|
|
|
|
Three Months Ended March 31,
|
|
(dollars in
millions)
|
|
2017
|
|
|
2016
|
|
Operating income as
reported in accordance with GAAP
|
|
$
|
1.4
|
|
|
$
|
5.8
|
|
Operating margin in
accordance with GAAP
|
|
|
1.5
|
%
|
|
|
5.6
|
%
|
Inventory valuation
adjustment
|
|
|
—
|
|
|
|
0.1
|
|
Plant, property and
equipment valuation adjustment
|
|
|
0.2
|
|
|
|
0.2
|
|
Amortization and
earn-out expenses
|
|
|
7.3
|
|
|
|
4.8
|
|
Executive transition
expenses
|
|
|
0.9
|
|
|
|
—
|
|
Facility exit
expenses
|
|
|
0.2
|
|
|
|
—
|
|
Non-GAAP operating
income
|
|
$
|
10.0
|
|
|
$
|
10.9
|
|
Non-GAAP operating
margin
|
|
|
10.8
|
%
|
|
|
10.6
|
%
|
|
|
Three Months Ended March 31,
|
|
(dollars in
millions)
|
|
2017
|
|
|
2016
|
|
Net income as
reported in accordance with GAAP
|
|
$
|
—
|
|
|
$
|
3.1
|
|
Inventory valuation
adjustment
|
|
|
—
|
|
|
|
0.1
|
|
Plant, property and
equipment valuation adjustment
|
|
|
0.2
|
|
|
|
0.2
|
|
Amortization and
earn-out expenses
|
|
|
7.3
|
|
|
|
4.8
|
|
Executive transition
expenses
|
|
|
0.9
|
|
|
|
—
|
|
Facility exit
expenses
|
|
|
0.2
|
|
|
|
—
|
|
Foreign currency
remeasurement
|
|
|
(0.3)
|
|
|
|
(0.9)
|
|
Tax benefit of
adjustments
|
|
|
(1.5)
|
|
|
|
(1.2)
|
|
Non-GAAP net
income
|
|
$
|
6.8
|
|
|
$
|
6.1
|
|
Depreciation
|
|
|
1.1
|
|
|
|
1.2
|
|
Non-cash stock
compensation (excluding executive transition expenses)
|
|
|
0.5
|
|
|
|
0.6
|
|
Other (income) /
expense
|
|
|
0.4
|
|
|
|
0.1
|
|
Interest
expense
|
|
|
1.7
|
|
|
|
2.1
|
|
Income tax (benefit)
expense
|
|
|
1.0
|
|
|
|
2.6
|
|
Adjusted
EBITDA
|
|
$
|
11.5
|
|
|
$
|
12.7
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.00
|
|
|
$
|
0.09
|
|
Diluted
|
|
$
|
0.00
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.20
|
|
|
$
|
0.18
|
|
Diluted
|
|
$
|
0.20
|
|
|
$
|
0.18
|
|
NOTE REGARDING NON-GAAP FINANCIAL MEASURES
CECO is providing certain non-GAAP historical financial measures
as 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 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
expenses related to inventory valuation adjustments, property,
plant equipment valuation adjustments, acquisition and integration
expense activities including retention, legal, accounting, banking,
amortization and contingent earn-out expenses, foreign currency
re-measurement, intangible asset impairment, legal reserves,
executive transition expenses, facility exit expenses, 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,
adjusted EBITDA, adjusted EBITDA margin, free cash flow and
adjusted net free cash flow 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 titles 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, adjusted EBITDA, adjusted EBITDA
margin, free cash flow and adjusted net free cash flow stated in
the tables above present the most directly comparable GAAP
financial measure and reconcile to the most directly comparable
GAAP financial measures. Free cash flow and adjusted net free
cash flow have limitations due to the fact that they do not
represent the residual cash flow available for discretionary
expenditures since they do not take into account debt service
requirements or other non-discretionary expenditures that are not
deducted from these 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
acquired businesses and realize the synergies from acquisitions, 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 cyclicality 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 incurred in connection
with our acquisitions and our 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 environmental,
energy and fluid handling and filtration industries. 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
statements, whether as a result of new information, future events
or otherwise.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/ceco-environmental-corp-reports-first-quarter-2017-results-improved-gross-margin-and-sequential-bookings-increase-300454766.html
SOURCE CECO Environmental Corp.