DALLAS, May 8, 2019 /PRNewswire/ -- CECO Environmental
Corp. (Nasdaq: CECE), a leading global air quality and
fluid handling company serving the energy, industrial and other
niche markets, today reported its financial results for the first
quarter 2019.
Highlights of the First Quarter 2019*
- Revenue of $86.0 million,
compared with $74.1 million
- Revenue of $86.0 million,
compared with organic revenue of $67.6
million, up 27.2%
- Gross profit of $28.4 million
(33.0% margin), compared with $25.6
million (34.5% margin)
- Operating income of $4.9 million,
compared with $12.2 million
- Non-GAAP operating income of $7.2
million, compared with $4.0
million
- Net income was $1.9 million,
compared with $5.8 million
- Non-GAAP net income of $4.1
million, compared with $1.7
million
- Net income per diluted share was $0.05, compared with $0.17
- Non-GAAP net income per diluted share of $0.12, compared with $0.05
- Adjusted EBITDA of $8.5 million,
compared with $5.6 million
- Bookings of $97.3 million,
compared with $95.0 million
- Organic bookings of $97.3
million, compared with $90.3
million
- Backlog of $193.8 million,
compared with $182.1 million as of
December 31, 2018
* All comparisons are versus the comparable prior-year
period, which include results from divestitures, unless otherwise
stated.
CECO's Chief Executive Officer Dennis
Sadlowski commented, "I am very pleased that the significant
momentum we built throughout 2018 has carried over to the first
quarter of this year. We generated revenue of $86 million which was an impressive 27% growth
year-over-year on the strength of our increasing backlog and the
continued focus on new orders. We also saw gross margins improve
sequentially as the markets increasingly recognize the value that
CECO offers."
Mr. Sadlowski added, "Driven by the need for clean air and
carbon reduction, the long-term prospects for CECO Environmental
continue to improve. Our fast start out of the gate in 2019
is another step towards meeting our aggressive three-year financial
targets. Strong orders of $97
million, up 30% sequentially and 8% year-over-year, along
with an improving sales pipeline, gives us strong optimism for
sustained growth in 2019 as we continue to capitalize on our
significant competitive position and win market
share."
FIRST QUARTER RESULTS
Revenue in the first quarter of 2019 was $86.0 million, up 16.0%
from $74.1 million in the prior-year period.
Excluding revenue of $6.5 million
attributable to the businesses divested in 2018, organic revenues
increased 27.2%.
Operating Income was $4.9 million
for the first quarter of 2019, compared with $12.2 million in the prior-year period. Non-GAAP
operating income was $7.2 million for
the first quarter of 2019 (8.4% margin), compared with $4.0 million in the prior-year period (5.4%
margin).
Net income was $1.9 million for
the first quarter of 2019, compared with $5.8 million in the prior-year period. Net income
on a non-GAAP basis was $4.1 million
for the first quarter of 2019, compared with $1.7 million in the prior-year period.
Net income per diluted share was
$0.05
for the first quarter of
2019, compared with $0.17 in the
prior-year period. Non-GAAP net income per diluted share
was $0.12 for the first
quarter of 2019, compared with $0.05 for
the prior-year period.
Cash and cash equivalents were $28.2 million and
bank debt was $76.1 million
as of March 31, 2019,
compared with $43.7 million and $76.1 million, respectively, as
of December 31, 2018.
BACKLOG AND BOOKINGS
Total backlog at March 31, 2019
was $193.8 million as compared with
$182.1 million as of both
December 31, 2018 and March 31, 2018, respectively. In the first
quarter of 2018, $8.8 million of
backlog was attributable to the divested businesses. Adjusted for
divestitures, backlog increased $20.5
million from first quarter 2018 to first quarter 2019.
Bookings were $97.3 million for
the first quarter of 2019, compared with $95.0 million in the prior-year period and
$74.5 million in the fourth quarter
of 2018. Excluding bookings of $4.7
million attributable to the businesses divested in 2018,
2019 organic bookings increased $7.0
million, or 7.7%.
CONFERENCE CALL
A conference call is scheduled for today at 8:30 a.m. ET to discuss the first quarter 2019
financial results. The conference call may also be accessed
by dialing (888) 346-4547 (Toll-Free) within the U.S., (855)
669-9657 (Toll-Free) within Canada
or Toll/International (412) 317-5251.
The live webcast and slides can also be accessed at
https://investors.cecoenviro.com/events-webcasts-and-presentations
A replay of the conference call will be available on the
Company's website for 7 days. The replay may be accessed by
dialing (877) 344-7529 (Toll-Free) within the U.S., (855) 669-9658
(Toll-Free) within Canada, or
Toll/International (412) 317-0088 and entering access code
10130867.
ABOUT CECO ENVIRONMENTAL
CECO Environmental is a global leader in air quality and fluid
handling serving the energy, industrial and other niche markets.
Providing innovative technology and application expertise, CECO
helps companies grow their business with safe, clean and more
efficient solutions that help protect our shared environment. In
regions around the world, CECO works to improve air quality,
optimize the energy value chain and provide custom engineered
solutions for applications including oil and gas, power generation,
water and wastewater, battery production, poly silicon fabrication,
chemical and petrochemical processing along with a range of others.
CECO is listed on Nasdaq under the ticker symbol "CECE". For more
information, please visit www.cecoenviro.com.
Contact:
Matthew Eckl, Chief Financial
Officer
(888) 990-6670
investor.relations@onececo.com
CECO LinkedIn
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands, except per share data)
|
|
(unaudited)
MARCH 31,
2019
|
|
|
DECEMBER 31,
2018
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
28,167
|
|
|
$
|
43,676
|
|
Restricted
cash
|
|
|
738
|
|
|
|
762
|
|
Accounts receivable,
net
|
|
|
72,963
|
|
|
|
53,225
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
|
|
31,701
|
|
|
|
29,694
|
|
Inventories,
net
|
|
|
19,780
|
|
|
|
20,817
|
|
Prepaid expenses and
other current assets
|
|
|
10,439
|
|
|
|
10,117
|
|
Prepaid income
taxes
|
|
|
—
|
|
|
|
1,388
|
|
Assets held for
sale
|
|
|
1,170
|
|
|
|
1,186
|
|
Total current
assets
|
|
|
164,958
|
|
|
|
160,865
|
|
Property, plant and
equipment, net
|
|
|
11,650
|
|
|
|
22,200
|
|
Right-of-use assets
from operating leases
|
|
|
13,260
|
|
|
|
—
|
|
Goodwill
|
|
|
152,066
|
|
|
|
152,156
|
|
Intangible assets –
finite life, net
|
|
|
37,633
|
|
|
|
35,959
|
|
Intangible assets –
indefinite life
|
|
|
14,314
|
|
|
|
18,258
|
|
Deferred charges and
other assets
|
|
|
2,788
|
|
|
|
3,144
|
|
Total
assets
|
|
$
|
396,669
|
|
|
$
|
392,582
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
debt
|
|
$
|
—
|
|
|
$
|
—
|
|
Accounts payable and
accrued expenses
|
|
|
79,201
|
|
|
|
80,229
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
|
|
23,596
|
|
|
|
20,144
|
|
Note
payable
|
|
|
—
|
|
|
|
1,700
|
|
Income taxes
payable
|
|
|
1,137
|
|
|
|
1,813
|
|
Total current
liabilities
|
|
|
103,934
|
|
|
|
103,886
|
|
Other
liabilities
|
|
|
22,572
|
|
|
|
26,925
|
|
Debt, less current
portion
|
|
|
74,725
|
|
|
|
74,456
|
|
Deferred income tax
liability, net
|
|
|
7,226
|
|
|
|
8,755
|
|
Operating lease
liabilities
|
|
|
10,822
|
|
|
|
—
|
|
Total
liabilities
|
|
|
219,279
|
|
|
|
214,022
|
|
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, 34,979,895 and
34,953,825 shares issued and outstanding
at March 31, 2019 and December 31, 2018, respectively
|
|
|
349
|
|
|
|
349
|
|
Capital in excess of
par value
|
|
|
252,199
|
|
|
|
251,409
|
|
Accumulated
loss
|
|
|
(62,165)
|
|
|
|
(59,427)
|
|
Accumulated other
comprehensive loss
|
|
|
(12,637)
|
|
|
|
(13,415)
|
|
|
|
|
177,746
|
|
|
|
178,916
|
|
Less treasury stock,
at cost, 137,920 shares at March 31, 2019 and December 31,
2018
|
|
|
(356)
|
|
|
|
(356)
|
|
Total shareholders'
equity
|
|
|
177,390
|
|
|
|
178,560
|
|
Total liabilities and
shareholders' equity
|
|
$
|
396,669
|
|
|
$
|
392,582
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(unaudited)
|
|
|
|
THREE MONTHS ENDED
MARCH 31,
|
|
(dollars in
thousands, except per share data)
|
|
2019
|
|
|
2018
|
|
Net sales
|
|
$
|
86,011
|
|
|
$
|
74,139
|
|
Cost of
sales
|
|
|
57,579
|
|
|
|
48,578
|
|
Gross
profit
|
|
|
28,432
|
|
|
|
25,561
|
|
Selling and
administrative expenses
|
|
|
21,312
|
|
|
|
21,573
|
|
Amortization and
earnout expenses
|
|
|
2,160
|
|
|
|
2,903
|
|
Loss (gain) on
divestitures, net of selling costs
|
|
|
70
|
|
|
|
(11,177)
|
|
Restructuring
expenses
|
|
|
—
|
|
|
|
112
|
|
Income from
operations
|
|
|
4,890
|
|
|
|
12,150
|
|
Other expense,
net
|
|
|
(640)
|
|
|
|
(356)
|
|
Interest
expense
|
|
|
(1,544)
|
|
|
|
(1,920)
|
|
Income before income
taxes
|
|
|
2,706
|
|
|
|
9,874
|
|
Income tax
expense
|
|
|
842
|
|
|
|
4,111
|
|
Net income
|
|
$
|
1,864
|
|
|
$
|
5,763
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.05
|
|
|
$
|
0.17
|
|
Diluted
|
|
$
|
0.05
|
|
|
$
|
0.17
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
34,835,550
|
|
|
|
34,592,803
|
|
Diluted
|
|
|
35,360,042
|
|
|
|
34,641,390
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP TO NON-GAAP MEASURES
|
|
|
|
For the three months ended March 31,
|
|
(dollars in
millions)
|
|
2019
|
|
|
2018
|
|
Revenue as reported
in accordance with GAAP
|
|
$
|
86.0
|
|
|
$
|
74.1
|
|
Less revenue
attributable to divestitures
|
|
|
—
|
|
|
|
(6.5))
|
|
Organic
revenue
|
|
$
|
86.0
|
|
|
$
|
67.6
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(dollars in
millions)
|
|
2019
|
|
|
2018
|
|
Operating income as
reported in accordance with GAAP
|
|
$
|
4.9
|
|
|
$
|
12.2
|
|
Operating margin in
accordance with GAAP
|
|
|
5.7
|
%
|
|
|
16.5
|
%
|
Amortization and
earnout expenses
|
|
|
2.2
|
|
|
|
2.9
|
|
Loss (gain) on
divestitures, net of selling costs
|
|
|
0.1
|
|
|
|
(11.2)
|
|
Restructuring
expenses
|
|
|
—
|
|
|
|
0.1
|
|
Non-GAAP operating
income
|
|
$
|
7.2
|
|
|
$
|
4.0
|
|
Non-GAAP operating
margin
|
|
|
8.4
|
%
|
|
|
5.4
|
%
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
(dollars in
millions)
|
|
2019
|
|
|
2018
|
|
Net income as
reported in accordance with GAAP
|
|
$
|
1.9
|
|
|
$
|
5.8
|
|
Amortization and
earnout expenses, net
|
|
|
2.2
|
|
|
|
2.9
|
|
Gain on divestiture,
net of selling costs
|
|
|
0.1
|
|
|
|
(11.2)
|
|
Restructuring
expense
|
|
|
—
|
|
|
|
0.1
|
|
Foreign currency
remeasurement
|
|
|
0.6
|
|
|
|
(0.2)
|
|
Tax (benefit) expense
of adjustments
|
|
|
(0.7)
|
|
|
|
4.3
|
|
Non-GAAP net
income
|
|
$
|
4.1
|
|
|
$
|
1.7
|
|
Depreciation
|
|
|
0.6
|
|
|
|
1.0
|
|
Non-cash stock
compensation
|
|
|
0.8
|
|
|
|
0.6
|
|
Other
expense
|
|
|
—
|
|
|
|
0.6
|
|
Interest
expense
|
|
|
1.5
|
|
|
|
1.9
|
|
Income tax expense
(benefit)
|
|
|
1.5
|
|
|
|
(0.2)
|
|
Adjusted
EBITDA
|
|
$
|
8.5
|
|
|
$
|
5.6
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.05
|
|
|
$
|
0.17
|
|
Diluted
|
|
$
|
0.05
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.12
|
|
|
$
|
0.05
|
|
Diluted
|
|
$
|
0.12
|
|
|
$
|
0.05
|
|
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. CECO is providing organic revenue for
comparability purposes given the impact of divestitures. 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
transactions related to loss on divestitures, net of selling costs,
acquisition and integration expense activities including retention,
legal, accounting, banking, amortization and contingent earn-out
expenses, foreign currency re-measurement, other nonrecurring or
infrequent items and the associated tax benefit of these items.
Organic revenue, as we present them in the financial data included
in this press release, excludes revenue attributable to divested
businesses. 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.
Organic revenue, 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, organic revenue, 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 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. 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, 2018
and include, but are not limited to: our ability to successfully
realize the expected benefits of our restructuring program; 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 our service areas;
dependence on fixed price contracts and the risks associated
therewith, including actual costs exceeding estimates and method of
accounting for revenue; fluctuations in operating results from
period to period due to cyclicality or seasonality of the business;
the effect of growth on our infrastructure, resources, and existing
sales; the ability to expand operations in both new and existing
markets; the potential for contract delay or cancellation;
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
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; our ability to successfully complete the divestitures of
non-core assets and the effect of competition in the industries
served by our Energy Solutions segment, Industrial Solutions
segment and Fluid Handling Solutions segment. 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.