Record Orders, New Share Repurchase
Authorization, and Acquisition of Compass Water
DALLAS, May 10, 2022
/PRNewswire/ -- CECO Environmental Corp.
(Nasdaq: CECE) ("CECO"), a leading
environmentally focused, diversified industrial company whose
solutions protect people, the environment, and industrial
equipment, today reported its financial results for the first
quarter of 2022.
Highlights for the Quarter and Recent Corporate
Developments*
- Record orders of $160.9 million,
up 75 percent
- Revenue of $92.4 million, up 29
percent
- Net income of $2.8 million, up
133 percent; Non-GAAP net income of $5.0
million, up 61 percent
- Adjusted EBITDA of $9.5 million,
up 48 percent
- $20 million share repurchase
program authorized May 4, 2022
- Compass Water Solutions acquired May 3,
2022, adds to industrial water offerings
*All comparisons are versus the comparable prior year period,
unless otherwise stated;
Reconciliations of GAAP (reported) to non-GAAP measures are in the
attached financial tables.
"We are pleased to report that our first quarter produced record
orders and backlog, as well as strong double-digit growth in sales
and income. Growth was broad-based across our entire
portfolio, and we believe that we are well positioned for strong
continued sales growth throughout the remainder of the year," said
CECO Chief Executive Officer, Todd
Gleason.
First quarter operating income was $5.2
million, up 68 percent when compared to $3.1 million in the first quarter 2021. On
an adjusted basis, non-GAAP operating income was $7.8 million, up 56 percent when compared to
$5.0 million in the first quarter of
2021. Net income was $2.8
million in the quarter, up 133 percent compared to
$1.2 million in the first quarter
2021. Non-GAAP net income was $5.0
million, up 61 percent compared to $3.1 million in the first quarter 2021.
Adjusted EBITDA was $9.5 million, up
48 percent compared to $6.4 million
in the first quarter 2021.
"We believe the strong start to 2022 reflects the hard work our
team has done to better position CECO for sustainable growth and
higher levels of profitability. Additionally, our healthy
balance sheet has enabled us to authorize a $20 million share repurchase program – the
largest in our company's history, while continuing to improve our
portfolio with strategic, accretive acquisitions, such as the
Compass Water Solutions transaction," Mr. Gleason concluded.
Compass Water Solutions Acquisition
On May 3, 2022, CECO acquired Compass Water
Solutions, Inc. ("Compass") for a total purchase price of
$12.5 million with a mix of cash and
debt. Compass is a leading global supplier of membrane-based
industrial water and wastewater treatment systems that help
customers achieve regulatory compliance of water discharge at the
lowest lifecycle cost. With this acquisition, CECO expands
its addressable industrial water technology market by over
$250 million, with an expected CAGR
through 2025 of over 6 percent for industrial oily-water and
seawater reverse osmosis applications. CECO expects the acquisition
to be accretive to total company EBITDA margins, earnings per
share, and free cash flows in 2022.
Full Year 2022 Outlook:
The Company introduces full
year 2022 guidance of $360 to
$380 million in revenue, up
approximately 14 percent at the midpoint year over year. The
Company anticipates $33 to
$38 million of adjusted EBITDA, up
approximately 40 percent at the midpoint year over year.
"We expect to deliver great financial results throughout the
year as our businesses execute focused growth and operating
excellence initiatives. We believe the incremental benefit of
well-executed and accretive acquisitions will add to our 2022
performance and strengthen our portfolio for the future," concluded
Mr. Gleason.
EARNINGS CONFERENCE CALL
A conference call is
scheduled for today at 8:30 a.m. ET
to discuss the first quarter financial results of 2022. The
conference call may be accessed via webcast by going to the
Company's website at http://www.cecoenviro.com/events-calendar or
by dialing (888) 346-4547 (Toll-Free) within the U.S., (855)
669-9657 (Toll-Free) within Canada
or Toll/International +1(412) 317-5251.
A replay of the conference call will be available on the
Company's website at http://www.cecoenviro.com for seven 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 +1
(412) 317-0088 and entering access code 5313915.
ABOUT CECO ENVIRONMENTAL
CECO Environmental is a
global leader in industrial air quality and water treatment,
serving a diversified set of niche markets through an attractive
asset-light business model. 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 systems for applications including power
generation, petrochemical processing, general industrial, refining,
midstream oil & gas, electric vehicle production, poly silicon
fabrication, battery recycling, and wastewater treatment along with
a wide range of other applications. CECO is listed on Nasdaq under
the ticker symbol "CECE". For more information, please visit
www.cecoenviro.com.
Company Contact:
Matthew Eckl, Chief Financial
Officer
(888) 990-6670
Investor Relations Contact:
Steven Hooser or Gary Guyton
Three Part Advisors, LLC
214-872-2710
investor.relations@onececo.com
CECO ENVIRONMENTAL CORP. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(dollars in
thousands, except per share data)
|
|
(unaudited)
March 31, 2022
|
|
|
December 31,
2021
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
28,382
|
|
|
$
|
29,902
|
|
Restricted cash
|
|
|
1,918
|
|
|
|
2,093
|
|
Accounts receivable, net
|
|
|
95,440
|
|
|
|
74,991
|
|
Costs and estimated earnings in excess of billings on
uncompleted contracts
|
|
|
49,567
|
|
|
|
51,429
|
|
Inventories, net
|
|
|
22,080
|
|
|
|
17,052
|
|
Prepaid expenses and other current assets
|
|
|
13,323
|
|
|
|
10,760
|
|
Prepaid income taxes
|
|
|
1,128
|
|
|
|
2,784
|
|
Total current assets
|
|
|
211,838
|
|
|
|
189,011
|
|
Property, plant and
equipment, net
|
|
|
16,219
|
|
|
|
15,948
|
|
Right-of-use assets
from operating leases
|
|
|
11,660
|
|
|
|
10,893
|
|
Goodwill
|
|
|
181,599
|
|
|
|
161,183
|
|
Intangible assets –
finite life, net
|
|
|
24,281
|
|
|
|
25,841
|
|
Intangible assets –
indefinite life
|
|
|
9,573
|
|
|
|
9,629
|
|
Deferred income
taxes
|
|
|
505
|
|
|
|
505
|
|
Deferred charges and
other assets
|
|
|
2,718
|
|
|
|
3,187
|
|
Total assets
|
|
$
|
458,393
|
|
|
$
|
416,197
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of debt
|
|
$
|
3,303
|
|
|
$
|
2,203
|
|
Accounts payable and accrued expenses
|
|
|
91,369
|
|
|
|
84,081
|
|
Billings in excess of costs and estimated earnings on
uncompleted contracts
|
|
|
36,308
|
|
|
|
28,908
|
|
Income taxes payable
|
|
|
1,610
|
|
|
|
1,493
|
|
Total current
liabilities
|
|
|
132,590
|
|
|
|
116,685
|
|
Other
liabilities
|
|
|
13,883
|
|
|
|
14,826
|
|
Debt, less current
portion
|
|
|
81,401
|
|
|
|
61,577
|
|
Deferred income tax
liability, net
|
|
|
8,025
|
|
|
|
8,390
|
|
Operating lease
liabilities
|
|
|
9,272
|
|
|
|
8,762
|
|
Total liabilities
|
|
|
245,171
|
|
|
|
210,240
|
|
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,
35,076,119 and
35,028,197 shares issued and outstanding at
March 31, 2022 and
December 31, 2021, respectively
|
|
|
350
|
|
|
|
350
|
|
Capital in excess of par value
|
|
|
253,875
|
|
|
|
252,989
|
|
Accumulated loss
|
|
|
(33,923)
|
|
|
|
(36,715)
|
|
Accumulated other comprehensive loss
|
|
|
(12,601)
|
|
|
|
(12,070)
|
|
Total CECO shareholders'
equity
|
|
|
207,701
|
|
|
|
204,554
|
|
Noncontrolling
interest
|
|
|
5,521
|
|
|
|
1,403
|
|
Total shareholders'
equity
|
|
|
213,222
|
|
|
|
205,957
|
|
Total liabilities and
shareholders' equity
|
|
$
|
458,393
|
|
|
$
|
416,197
|
|
CECO ENVIRONMENTAL CORP. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
|
|
|
|
|
|
Three months ended March 31,
|
|
(dollars in thousands, except per share
data)
|
|
2022
|
|
|
2021
|
|
Net sales
|
|
$
|
92,436
|
|
|
$
|
71,892
|
|
Cost of
sales
|
|
|
66,008
|
|
|
|
47,485
|
|
Gross profit
|
|
|
26,428
|
|
|
|
24,407
|
|
Selling and
administrative expenses
|
|
|
18,652
|
|
|
|
19,454
|
|
Amortization and
earnout expenses
|
|
|
1,452
|
|
|
|
1,791
|
|
Restructuring
expenses
|
|
|
73
|
|
|
|
—
|
|
Acquisition and
integration expenses
|
|
|
1,049
|
|
|
|
108
|
|
Income from operations
|
|
|
5,202
|
|
|
|
3,054
|
|
Other income (expense),
net
|
|
|
(458)
|
|
|
|
(480)
|
|
Interest
expense
|
|
|
(822)
|
|
|
|
(725)
|
|
Income before income taxes
|
|
|
3,922
|
|
|
|
1,849
|
|
Income tax
expense
|
|
|
1,112
|
|
|
|
551
|
|
Net
income
|
|
|
2,810
|
|
|
|
1,298
|
|
Non-controlling
interest
|
|
|
(18)
|
|
|
|
(117)
|
|
Net
income attributable to CECO Environmental Corp.
|
|
$
|
2,792
|
|
|
$
|
1,181
|
|
Earnings per
share:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.08
|
|
|
$
|
0.03
|
|
Diluted
|
|
$
|
0.08
|
|
|
$
|
0.03
|
|
Weighted average number
of common shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
|
35,051,034
|
|
|
|
35,396,705
|
|
Diluted
|
|
|
35,199,201
|
|
|
|
35,774,208
|
|
CECO ENVIRONMENTAL CORP. AND
SUBSIDIARIES
RECONCILIATION OF
GAAP TO NON-GAAP MEASURES
|
|
|
|
Three months ended
March 31,
|
|
(dollars in
millions)
|
|
2022
|
|
|
2021
|
|
Operating income as
reported in accordance with GAAP
|
|
$
|
5.2
|
|
|
$
|
3.1
|
|
Operating margin in accordance with GAAP
|
|
|
5.6
|
%
|
|
|
4.3
|
%
|
Amortization and
earnout expenses
|
|
|
1.5
|
|
|
|
1.8
|
|
Restructuring
expenses
|
|
|
0.1
|
|
|
|
—
|
|
Acquisition and
integration expenses
|
|
|
1.0
|
|
|
|
0.1
|
|
Non-GAAP operating income
|
|
$
|
7.8
|
|
|
$
|
5.0
|
|
Non-GAAP operating margin
|
|
|
8.4
|
%
|
|
|
7.0
|
%
|
|
|
|
|
Three months ended
March 31,
|
|
(dollars in
millions)
|
|
2022
|
|
|
2021
|
|
Net income as reported
in accordance with GAAP
|
|
$
|
2.8
|
|
|
$
|
1.2
|
|
Amortization and earnout expenses
|
|
|
1.5
|
|
|
|
1.8
|
|
Restructuring expenses
|
|
|
0.1
|
|
|
|
—
|
|
Acquisition and integration expenses
|
|
|
1.0
|
|
|
|
0.1
|
|
Foreign currency remeasurement
|
|
|
0.3
|
|
|
|
0.6
|
|
Tax
benefit of adjustments
|
|
|
(0.7)
|
|
|
|
(0.6)
|
|
Non-GAAP net
income
|
|
$
|
5.0
|
|
|
$
|
3.1
|
|
Depreciation
|
|
|
0.8
|
|
|
|
0.8
|
|
Non-cash stock compensation
|
|
|
0.9
|
|
|
|
0.7
|
|
Other (income) expense
|
|
|
0.2
|
|
|
|
(0.1)
|
|
Interest expense
|
|
|
0.8
|
|
|
|
0.7
|
|
Income tax expense
|
|
|
1.8
|
|
|
|
1.2
|
|
Adjusted EBITDA
|
|
$
|
9.5
|
|
|
$
|
6.4
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.08
|
|
|
$
|
0.03
|
|
Diluted
|
|
$
|
0.08
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
Non-GAAP net income per
share:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.14
|
|
|
$
|
0.09
|
|
Diluted
|
|
$
|
0.14
|
|
|
$
|
0.09
|
|
NOTE REGARDING NON-GAAP FINANCIAL
MEASURES
CECO is providing certain non-GAAP historical financial measures
as presented above as we believe 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 accordance with
GAAP.
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
amortization expenses for acquisition related intangible assets,
contingent retention and earnout expenses, restructuring expenses
primarily relating to severance and legal expenses, acquisition and
integration expenses which include retention, legal, accounting,
banking, and other expenses, foreign currency remeasurement and
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 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 within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
both as amended, 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, 2021,
and include, but are not limited to: the sensitivity of our
business to 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
revenue; 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 as a result of on-going or worsening supply chain
challenges; 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
strategic transactions and our ability to repay or refinance it or
incur additional debt in the future; the impact of federal, state
or local government regulations; our ability to repurchase shares
of our common stock and the amounts and timing of repurchases, if
any; economic and political conditions generally; our ability to
successfully realize the expected benefits of our restructuring
program; our ability to successfully integrate acquired businesses
and realize the synergies from strategic transactions; and
unpredictability and severity of catastrophic events, including
cyber security threats, acts of terrorism or outbreak of war or
hostilities or public health crises, such as uncertainties
regarding the extent and duration of impacts of matters associated
with the novel coronavirus ("COVID-19"), as well as management's
response to any of the aforementioned factors. 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.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/ceco-environmental-reports-first-quarter-2022-results-301543300.html
SOURCE CECO Environmental Corp.