CINCINNATI, Nov. 6, 2014 /PRNewswire/ -- CECO
Environmental Corp. (NasdaqGM: CECE), a leading global
environmental technology company focused on critical solutions in
the air pollution control, energy and fluid handling and filtration
industries, today reported its financial results for the third
quarter of 2014.
Revenue in the third quarter of 2014 was $63.3 million, up 27.1% from revenue of
$49.8 million in the prior-year's
third quarter. On a pro forma basis organic growth was slightly
down year-over-year.
Revenue in the first nine months of 2014 was $187.1 million, up 45.5% from revenue of
$128.6 million in the prior-year
period.
Net income was $3.7 million in the
third quarter of 2014 as compared with a net loss of $1.5 million in the third quarter of 2013.
Excluding acquisition and integration expenses, amortization and
earn out expenses, and plant, property and equipment valuation and
inventory valuation adjustments attributable to the Met-Pro and
Aarding acquisitions, legal reserves and foreign currency
remeasurement, and the related tax impact of such items, non-GAAP
net income increased 46.9% to $7.2
million from $4.9 million in
the prior-year period.
Net income was $11.2 million in
the first nine months of 2014, up 194.7% as compared with net
income of $3.8 million in the prior
year period. Excluding acquisition and integration expenses,
amortization and earn-out expenses, and plant, property and
equipment and inventory valuation adjustments attributable to the
Met-Pro and Aarding acquisitions, legal reserves and foreign
currency remeasurement, and the related tax impact of such items,
non-GAAP net income increased 38.2% to $18.8
million from $13.6 million in
the prior-year period.
Cash and cash equivalents were $18.0
million and bank debt was $84.3
million as of September 30,
2014 compared with $22.7
million and $89.1 million,
respectively, as of December 31,
2013. During the nine months ended September 30, 2014, the Company repaid
$12.0 million of debt, sold non-core
assets for net proceeds of $7.1
million and borrowed $7.0
million for recent acquisitions.
Non-GAAP EBITDA in the third quarter of 2014 was $9.5 million, up 48.4% from non-GAAP EBITDA of
$6.4 million in the prior year's
third quarter.
BACKLOG AND BOOKINGS
Total backlog at September 30,
2014 was $106.2 million, as
compared with $98.5 million on
December 31, 2013.
Bookings were $191.2 million in
the first nine months of 2014, compared with $132.4 million in the first nine months of 2013,
an increase of 44.4%.
QUARTERLY DIVIDEND
On November 6, 2014, CECO's Board
of Directors approved a quarterly dividend of $0.06 per share. The dividend will be paid on
December 30, 2014 to all shareholders
of record at the close of business on December 19, 2014. CECO initiated a Dividend
Reinvestment Plan ("DRIP") in 2012 that provides for the voluntary
reinvestment of dividends by its stockholders.
OPERATIONAL SUMMARY
"Overall business conditions in the quarter remained mixed as
solid performance in our Energy and Fluid Handling and Filtration
segments was offset with lower than expected results in our Air
Pollution Control (APC) business," said Jeff Lang, Chief Executive Officer of CECO. "We
continue to invest heavily in our sales excellence initiatives and
expect to see better organic growth across all of our business
segments as we move into the balance of 2014 and 2015. We did
however, experience strong consolidated backlog growth, which
increased $10 million from the prior
quarter to $106.2 million and
bookings in our APC business have been quite strong since the start
of the fourth quarter. We were also able to close on a number of
key strategic acquisitions, when combined, are expected to generate
significant annual revenue and EBITDA which we will discuss on our
scheduled conference call."
Jeff Lang also commented, "Our
operational excellence initiatives continue to have a positive
impact on our business and although our operating profit margin
decreased sequentially due to lower revenue and a one-time tax
consulting expense of $0.4 million,
we remain on track to achieve our full year operating margin target
of 14.5% to 15% with additional upside as we go into 2015. We
remain focused on building a world class company and creating
long-term shareholder value with a balanced approach to growth and
a culture focused on operational excellence."
Jeff Lang, Chief Executive
Officer, and Ed Prajzner, Chief
Financial Officer, will discuss the Company's third quarter results
during a conference call scheduled for Thursday, November 6, 2014 at 8:30 a.m. EST (7:30 a.m.
Central Time). Supplemental information will be
available at CECO's website at
http://www.cecoenviro.com/uploads/CECO_3Q14_Conference_Call.pdf
prior to the conference call.
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 27718515. A webcast of the live
call can be either accessed at CECO's website at
http://www.cecoenviro.com, or directly accessed at
http://us.meeting-stream.com/cecoenvironmentalcorp_110614.
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
20, 2014. To access the replay, call (855) 859-2056 (North
American callers) or (404) 537-3406 (international callers) and use
conference code 27718515.
ABOUT CECO ENVIRONMENTAL
CECO Environmental is a leading global environmental technology
company focused on critical solutions in the air pollution control
(APC), energy and fluid handling and filtration industries. 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 a broad 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 its website at
http://www.cecoenviro.com.
Contact:
Corporate
Information
Jeffrey Lang,
Chief Executive Officer
Edward
Prajzner, 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)
|
(unaudited)
SEPTEMBER
30,
2014
|
DECEMBER 31,
2013
|
|
|
|
ASSETS
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$
18,039
|
$
22,661
|
Accounts receivable,
net
|
47,639
|
44,364
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
13,999
|
11,110
|
Inventories,
net
|
26,541
|
25,376
|
Prepaid expenses and
other current assets
|
6,594
|
6,651
|
Prepaid income
taxes
|
8,471
|
3,527
|
Assets held for
sale
|
4,210
|
11,083
|
Total current
assets
|
125,493
|
124,772
|
Property, plant and
equipment, net
|
18,173
|
21,665
|
Goodwill
|
144,267
|
132,220
|
Intangible
assets-finite life, net
|
40,399
|
46,813
|
Intangible
assets-indefinite life
|
18,169
|
18,419
|
Deferred charges and
other assets
|
4,051
|
4,647
|
|
$
350,552
|
$
348,536
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
Current portion of
debt
|
$
8,236
|
$
9,922
|
Accounts payable and
accrued expenses
|
33,565
|
34,356
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
12,812
|
13,486
|
Income taxes
payable
|
1,131
|
1,569
|
Total current
liabilities
|
55,744
|
59,333
|
Other
liabilities
|
11,180
|
10,302
|
Debt, less current
portion
|
76,074
|
79,160
|
Deferred income tax
liability, net
|
29,690
|
29,335
|
Total
liabilities
|
172,688
|
178,130
|
|
|
|
|
|
|
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, 25,865,569 and 25,724,519
shares issued in 2014 and 2013, respectively
|
259
|
257
|
Capital in excess of
par value
|
161,360
|
159,566
|
Accumulated
earnings
|
18,754
|
11,911
|
Accumulated other
comprehensive loss
|
(2,153)
|
(972 )
|
|
178,220
|
170,762
|
Less treasury stock,
at cost, 137,920 shares in 2014 and 2013
|
(356 )
|
(356 )
|
Total shareholders'
equity
|
177,864
|
170,406
|
|
$
350,552
|
$
348,536
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
|
(unaudited)
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
NINE MONTHS
ENDED
|
|
SEPTEMBER
30,
|
SEPTEMBER
30,
|
(dollars in
thousands, except per share data)
|
2014
|
2013
|
2014
|
2013
|
Net sales
|
$
63,300
|
$
49,796
|
$
187,111
|
$
128,590
|
Cost of
sales
|
42,242
|
35,242
|
124,875
|
88,555
|
|
|
|
|
|
Gross
profit
|
21,058
|
14,554
|
62,236
|
40,035
|
Selling and
administrative
|
13,038
|
9,346
|
36,402
|
24,038
|
Acquisition and
integration expenses
|
81
|
4,047
|
321
|
6,618
|
Amortization and earn
out expenses
|
2,394
|
2,017
|
7,288
|
3,590
|
Legal
reserves
|
300
|
2,500
|
300
|
2,500
|
|
|
|
|
|
Income from
operations
|
5,245
|
(3,356)
|
17,925
|
3,289
|
Other (expense)
income, net
|
(1,459)
|
92
|
(1,686)
|
164
|
Interest
expense
|
(767)
|
(456)
|
(2,255)
|
(707)
|
|
|
|
|
|
Income (loss) before
income taxes
|
3,019
|
(3,720)
|
13,984
|
2,746
|
Income tax expense
(benefit)
|
(684)
|
(2,259)
|
2,767
|
(1,044)
|
|
|
|
|
|
Net income
(loss)
|
$
3,703
|
$
(1,461)
|
$
11,217
|
$
3,790
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
Basic
|
$
0.14
|
$
(0.07)
|
$
0.44
|
$
0.21
|
|
|
|
|
|
Diluted
|
$
0.14
|
$
(0.07)
|
$
0.43
|
$
0.20
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
Basic
|
25,691,884
|
19,965,010
|
25,647,561
|
18,275,085
|
Diluted
|
26,129,427
|
19,965,010
|
26,105,415
|
18,881,927
|
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)
|
2014
|
2013
|
2014
|
2013
|
Gross profit as
reported in accordance with GAAP
|
$
21.1
|
$
14.6
|
$
62.2
|
$
40.0
|
Gross profit margin
in accordance with GAAP
|
33.3 %
|
29.3 %
|
33.3 %
|
31.1 %
|
Inventory valuation
adjustment
|
-
|
0.4
|
-
|
0.4
|
Plant, property and
equipment valuation adjustment
|
0.2
|
0.1
|
0.5
|
0.1
|
|
|
|
|
|
Non-GAAP gross
margin
|
$
21.3
|
$
15.1
|
$
62.7
|
$
40.5
|
Non-GAAP Gross
profit margin
|
33.6 %
|
30.1 %
|
33.6 %
|
31.5 %
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
(dollars in
millions)
|
2014
|
2013
|
2014
|
2013
|
Operating income
(loss) as reported in accordance with GAAP
|
$
5.2
|
$
(3.4)
|
$
17.9
|
$
3.3
|
Operating margin in
accordance with GAAP
|
8.3 %
|
(6.8) %
|
9.6 %
|
2.6 %
|
Inventory valuation
adjustment
|
-
|
0.4
|
-
|
0.4
|
Plant, property and
equipment valuation adjustment
|
0.2
|
0.1
|
0.5
|
0.1
|
Acquisition and
integration expenses
|
0.1
|
4.0
|
0.3
|
6.6
|
Amortization and earn
out expenses
|
2.4
|
2.0
|
7.3
|
3.6
|
Legal
reserves
|
0.3
|
2.5
|
0.3
|
2.5
|
|
|
|
|
|
Non-GAAP operating
income
|
$
8.2
|
$
5.6
|
$
26.3
|
$
16.4
|
Non-GAAP Operating
margin
|
12.9 %
|
11.4 %
|
14.1 %
|
12.8 %
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
(dollars in
millions)
|
2014
|
2013
|
2014
|
2013
|
Net income as
reported in accordance with GAAP
|
$
3.7
|
$
(1.5)
|
$
11.2
|
$
3.8
|
Inventory valuation
adjustment
|
-
|
0.4
|
-
|
0.4
|
Plant, property and
equipment valuation adjustment
|
0.2
|
0.1
|
0.5
|
0.1
|
Acquisition and
integration expenses
|
0.1
|
4.0
|
0.3
|
6.6
|
Amortization and
contingent acquisition expenses
|
2.4
|
2.0
|
7.3
|
3.5
|
Legal
reserves
|
0.3
|
2.5
|
0.3
|
2.5
|
Foreign currency
remeasurement
|
1.7
|
-
|
1.9
|
-
|
Tax benefit of
expenses
|
(1.2 )
|
(2.6)
|
(2.7 )
|
(3.3)
|
|
|
|
|
|
Non-GAAP net
income
|
$
7.2
|
$
4.9
|
$
18.8
|
$
13.6
|
Depreciation
|
0.8
|
0.3
|
2.3
|
1.1
|
Non-cash stock compensation
|
0.5
|
0.3
|
1.2
|
0.6
|
Other (income)/expense
|
(0.2)
|
0.1
|
(0.2)
|
(0.1)
|
Interest expense
|
0.8
|
0.5
|
2.3
|
0.7
|
Income tax expense
|
0.4
|
0.3
|
5.4
|
2.2
|
|
|
|
|
|
Non-GAAP
EBITDA
|
$
9.5
|
$
6.4
|
$
29.8
|
$
18.1
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
Basic
|
$
0.14
|
$
(0.07)
|
$
0.44
|
$
0.21
|
|
|
|
|
|
Diluted
|
$
0.14
|
$
(0.07)
|
$
0.43
|
$
0.20
|
|
|
|
|
|
Non-GAAP earnings per
share:
|
|
|
|
|
Basic
|
$
0.28
|
$
0.24
|
$
0.72
|
$
0.74
|
|
|
|
|
|
Diluted
|
$
0.28
|
$
0.24
|
$
0.72
|
$
0.72
|
|
|
|
|
|
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 adjusted EBITDA, non-GAAP gross profit margin,
non-GAAP operating margin, and non-GAAP earnings per basic and
diluted share, 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 expense activities,
amortization and contingent earnout expenses, legal reserves and
the impact of foreign currency remeasurement, 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. Additionally, 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 adjusted EBITDA, 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 adjusted
EBITDA, non-GAAP gross profit margin, non-GAAP operating margin,
and non-GAAP earnings per basic and diluted share 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 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, 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 Met-Pro 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 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 information, whether as a result of new
information, future events or otherwise.
SOURCE CECO Environmental Corp.