DALLAS, May 10, 2018 /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 of 2018.
Highlights of the First Quarter 2018*
- Revenue of $74.1 million,
compared with $92.7 million
- Gross profit of $25.6 million
(34.5% margin), compared with $32.0
million (34.5% margin)
- Operating income of $12.2
million, compared with $1.4
million
- Non-GAAP operating income of $4.0
million, compared with $10.2
million
- Net income was $5.8 million,
compared with break even
- Non-GAAP net income of $1.7
million, compared with $7.0
million
- Net income per diluted share was $0.17, compared with break even
- Non-GAAP net income per diluted share of $0.05, compared with $0.20
- Adjusted EBITDA of $5.6 million,
compared with $11.7 million
- Bookings of $95.0 million,
compared with $84.0
million
- Backlog of $182.1 million,
compared with $168.9 as of
December 31, 2017
- Repaid $30.5 million in bank
debt
* All comparisons are versus the comparable prior-year period
unless otherwise stated.
CECO's Chief Executive Officer Dennis
Sadlowski commented, "In the first quarter of 2018, we took
several positive steps in executing our strategy, including the
successful sale of two non-core assets and the repayment of
approximately 25% of our outstanding debt which will provide
significant financial flexibility to invest in our future
growth. We are also very pleased to have delivered a second
successive quarter of increasing bookings along with a strong book
to bill ratio on solid new orders coming from our growth platforms.
Revenue was down reflecting the reduced activity and backlog from
soft end markets in 2017. Aided by the benefit of our Q4
restructuring and solid gross margins, operating income and EBITDA
margins expanded modestly from Q4."
Mr. Sadlowski added, "Our 4-3-3 operating strategy is helping
build positive momentum across the business. In 2018, we are
investing in targeted growth opportunities and major account
relationships with key industrials around the world. We will
continue to focus on driving preference for our leading brands by
strengthening sales and marketing tools, providing essential
resources and training, and optimizing operations to ensure the
company is best-positioned to maximize our market opportunities in
all segments. Our management team is energized and
determined to drive organic growth."
Revenue in the first quarter of 2018 was $74.1 million, down 20.0% from $92.7 million in the prior-year period.
Operating income was $12.2 million
for the first quarter of 2018 (16.5% margin), compared with
$1.4 million in the prior-year period
(1.5% margin). Operating income on a non-GAAP basis was
$4.0 million for the first quarter of
2018 (5.4% margin), compared with $10.2
million in the prior-year period (11.0% margin).
Net income was $5.8 million for
the first quarter of 2018, compared with break even in the
prior-year period. Net income on a non-GAAP basis was
$1.7 million for the first quarter of
2018, compared with $7.0 million in
the prior-year period.
Net income per diluted share was $0.17 for the first quarter of 2018, compared
with net income per diluted share of break even in the prior-year
period. Non-GAAP net income per diluted share was $0.05 for the first quarter of 2018, compared
with $0.20 for the prior-year
period.
Cash and cash equivalents were $33.1
million and bank debt was $87.2
million, as of March 31, 2018,
compared with $29.9 million and
$117.7 million, respectively, as of
December 31, 2017.
BACKLOG AND BOOKINGS
Total backlog at March 31, 2018 was $182.1
million as compared with $168.9
million on December 31, 2017,
and $184.2 million on March 31, 2017.
Bookings were $95.0 million for
the first quarter of 2018, compared with $84.0 million in the prior-year period and
$91.4 million in the fourth quarter
of 2017.
CONFERENCE CALL
A conference call is scheduled for
today at 7:30 a.m. CT to discuss the
first quarter 2018 financial results. The conference call may be
accessed by dialing (877) 870-4263 (Toll Free) within North America, Canada (855) 669-9657
(Toll Free) or Toll/International (412) 317-0790. A replay of
the conference call will be available on the Company's website for
14 days. The replay may be accessed by dialing (877) 344-7529
(Toll-Free) within North America or Toll/International
(412) 317-0088 and entering passcode 10119907.
The live webcast and slides can also be accessed at
https://investors.cecoenviro.com/events-webcasts-and-presentations.
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 ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
(dollars in
thousands, except per share data)
|
|
MARCH 31,
2018
|
|
|
DECEMBER 31,
2017
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
33,089
|
|
|
$
|
29,902
|
|
Restricted
cash
|
|
|
933
|
|
|
|
591
|
|
Accounts receivable,
net
|
|
|
63,796
|
|
|
|
67,990
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
|
|
36,214
|
|
|
|
33,947
|
|
Inventories,
net
|
|
|
22,083
|
|
|
|
20,969
|
|
Prepaid expenses and
other current assets
|
|
|
13,748
|
|
|
|
10,760
|
|
Prepaid income
taxes
|
|
|
243
|
|
|
|
1,930
|
|
Assets held for
sale
|
|
|
7,736
|
|
|
|
7,853
|
|
Total current
assets
|
|
|
177,842
|
|
|
|
173,942
|
|
Property, plant and
equipment, net
|
|
|
23,042
|
|
|
|
23,400
|
|
Goodwill
|
|
|
152,780
|
|
|
|
166,951
|
|
Intangible assets –
finite life, net
|
|
|
45,288
|
|
|
|
49,956
|
|
Intangible assets –
indefinite life
|
|
|
18,412
|
|
|
|
19,691
|
|
Deferred charges and
other assets
|
|
|
4,755
|
|
|
|
4,609
|
|
Total
assets
|
|
$
|
422,119
|
|
|
$
|
438,549
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
debt
|
|
$
|
—
|
|
|
$
|
11,296
|
|
Accounts payable and
accrued expenses
|
|
|
77,367
|
|
|
|
70,786
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
|
|
18,215
|
|
|
|
20,469
|
|
Note
payable
|
|
|
5,300
|
|
|
|
5,300
|
|
Income taxes
payable
|
|
|
3,073
|
|
|
|
—
|
|
Total current
liabilities
|
|
|
103,955
|
|
|
|
107,851
|
|
Other
liabilities
|
|
|
30,103
|
|
|
|
30,382
|
|
Debt, less current
portion
|
|
|
84,704
|
|
|
|
103,537
|
|
Deferred income tax
liability, net
|
|
|
8,784
|
|
|
|
10,210
|
|
Total
liabilities
|
|
|
227,546
|
|
|
|
251,980
|
|
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, 34,740,933 and
34,707,924 shares issued and outstanding
at March 31, 2018 and December 31, 2017, respectively
|
|
|
347
|
|
|
|
347
|
|
Capital in excess of
par value
|
|
|
248,860
|
|
|
|
248,170
|
|
Accumulated
loss
|
|
|
(46,495)
|
|
|
|
(52,673)
|
|
Accumulated other
comprehensive loss
|
|
|
(7,783)
|
|
|
|
(8,919)
|
|
|
|
|
194,929
|
|
|
|
186,925
|
|
Less treasury stock,
at cost, 137,920 shares at March 31, 2018 and December 31,
2017
|
|
|
(356)
|
|
|
|
(356)
|
|
Total shareholders'
equity
|
|
|
194,573
|
|
|
|
186,569
|
|
Total liabilities and
shareholders' equity
|
|
$
|
422,119
|
|
|
$
|
438,549
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(unaudited)
|
|
|
|
THREE MONTHS ENDED
MARCH 31,
|
|
(dollars in
thousands, except per share data)
|
|
2018
|
|
|
2017
|
|
Net sales
|
|
$
|
74,139
|
|
|
$
|
92,651
|
|
Cost of
sales
|
|
|
48,578
|
|
|
|
60,722
|
|
Gross
profit
|
|
|
25,561
|
|
|
|
31,929
|
|
Selling and
administrative expenses
|
|
|
21,573
|
|
|
|
23,256
|
|
Amortization and
earnout expenses
|
|
|
2,903
|
|
|
|
7,323
|
|
Gain on divestitures,
net of selling costs
|
|
|
(11,177)
|
|
|
|
—
|
|
Restructuring
expenses
|
|
|
112
|
|
|
|
—
|
|
Income from
operations
|
|
|
12,150
|
|
|
|
1,350
|
|
Other expense,
net
|
|
|
(356)
|
|
|
|
(109)
|
|
Interest
expense
|
|
|
(1,920)
|
|
|
|
(1,711)
|
|
Income (loss) before
income taxes
|
|
|
9,874
|
|
|
|
(470)
|
|
Income tax expense
(benefit)
|
|
|
4,111
|
|
|
|
(508)
|
|
Net income
|
|
$
|
5,763
|
|
|
$
|
38
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.17
|
|
|
$
|
0.00
|
|
Diluted
|
|
$
|
0.17
|
|
|
$
|
0.00
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
34,592,803
|
|
|
|
34,215,519
|
|
Diluted
|
|
|
34,641,390
|
|
|
|
34,563,139
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP TO NON-GAAP MEASURES
|
|
|
|
Three Months Ended March 31,
|
|
(dollars in
millions)
|
|
2018
|
|
|
2017
|
|
Operating income as
reported in accordance with GAAP
|
|
$
|
12.2
|
|
|
$
|
1.4
|
|
Operating margin in
accordance with GAAP
|
|
|
16.5
|
%
|
|
|
1.5
|
%
|
Legacy design
repairs
|
|
|
—
|
|
|
|
0.2
|
|
Plant, property and
equipment valuation adjustment
|
|
|
—
|
|
|
|
0.2
|
|
Amortization and
earnout expenses
|
|
|
2.9
|
|
|
|
7.3
|
|
Gain on divestitures,
net of selling costs
|
|
|
(11.2)
|
|
|
|
—
|
|
Restructuring
expenses
|
|
|
0.1
|
|
|
|
—
|
|
Executive transition
expenses
|
|
|
—
|
|
|
|
0.9
|
|
Facility exit
expenses
|
|
|
—
|
|
|
|
0.2
|
|
Non-GAAP operating
income
|
|
$
|
4.0
|
|
|
$
|
10.2
|
|
Non-GAAP operating
margin
|
|
|
5.4
|
%
|
|
|
11.0
|
%
|
|
|
|
|
Three Months Ended
March 31,
|
(dollars in
millions)
|
|
2018
|
|
|
2017
|
Net income as
reported in accordance with GAAP
|
|
$
|
5.8
|
|
|
$
|
—
|
Legacy design
repairs
|
|
|
—
|
|
|
|
0.2
|
Plant, property and
equipment valuation adjustment
|
|
|
—
|
|
|
|
0.2
|
Amortization and
earnout expenses, net
|
|
|
2.9
|
|
|
|
7.3
|
Gain on divestiture,
net of selling costs
|
|
|
(11.2)
|
|
|
|
—
|
Restructuring
expense
|
|
|
0.1
|
|
|
|
—
|
Executive transition
expenses
|
|
|
—
|
|
|
|
0.9
|
Facility exit
expenses
|
|
|
—
|
|
|
|
0.2
|
Foreign currency
remeasurement
|
|
|
(0.2)
|
|
|
|
(0.3)
|
Tax expense (benefit)
of adjustments
|
|
|
4.3
|
|
|
|
(1.5)
|
Non-GAAP net
income
|
|
$
|
1.7
|
|
|
$
|
7.0
|
Depreciation
|
|
|
1.0
|
|
|
|
1.1
|
Non-cash stock
compensation (excluding executive transition costs)
|
|
|
0.6
|
|
|
|
0.5
|
Other
expense
|
|
|
0.6
|
|
|
|
0.4
|
Interest
expense
|
|
|
1.9
|
|
|
|
1.7
|
Income tax (benefit)
expense
|
|
|
(0.2)
|
|
|
|
1.0
|
Adjusted
EBITDA
|
|
$
|
5.6
|
|
|
$
|
11.7
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.17
|
|
|
$
|
0.00
|
Diluted
|
|
$
|
0.17
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.05
|
|
|
$
|
0.20
|
Diluted
|
|
$
|
0.05
|
|
|
$
|
0.20
|
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
transactions related to gain on divestitures, net of selling costs,
legacy design repairs, property, plant and equipment valuation
adjustments, acquisition and integration expense activities
including retention, legal, accounting, banking, amortization and
contingent earn-out expenses, foreign currency re-measurement,
executive transition expenses, facility exit expenses,
restructuring expense, 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 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, 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, 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, 2017 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 CECO's service areas;
dependence on fixed price contracts and the risks associated
therewith, including actual costs exceeding estimates; fluctuations
in operating results from period to period due to cyclicality or
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; 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; 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 Industrial Solutions segment, Energy
Solutions segment and Fluid Handling Solutions segment industries.
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 SEC, 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.