CINCINNATI, May 10, 2016 /PRNewswire/ --
Highlights of the First Quarter 2016*
- Revenue of $103.2 million, up
27%
- Gross profit of $31.6 million, up
50%; Gross margin of 30.6%
- Operating income of $5.8 million,
up 95%; Operating margin of 5.6%
- Non-GAAP Operating income of $10.9
million; Non-GAAP Operating margin of 10.6%
- Net income of $3.1 million,
compared to net income of $0.2
million
- Non-GAAP net income of $6.1
million, compared with non-GAAP net income of $5.7 million
- Net income per diluted share of $0.09, compared with net income per diluted share
of $0.01
- Non-GAAP net income per diluted share of $0.18, compared with non-GAAP net income per
diluted share of $0.21
- Bookings of $120.1 million, up
28%
- Backlog of $228.1 million, up
49%
- Adjusted EBITDA of $12.7 million,
up 48%
- Debt repayment of $7.1
million
* All changes are versus the comparable prior-year period.
CECO Environmental Corp. (Nasdaq: CECE), a leading global
environmental, energy and fluid handling technology company, today
reported its financial results for the first quarter of 2016.
"Despite some ongoing macroeconomic challenges continuing into
2016, we recorded bookings of $120
million in the quarter, resulting in backlog of $228 million, both of which are all-time records
for CECO. We also delivered margin expansion, strong free
cash flow and significant debt pay down. I am very pleased we have
now fully completed the integration of our Peerless acquisition in
less than nine months since the closing of the transaction.
We have not only fully achieved the promised operational and
overall business synergies of $15
million more than one year ahead of schedule, but we now
expect to achieve $18 million in
total synergies. As a result, Peerless' adjusted EBITDA was
$5 million for the first quarter of
2016 versus an operating loss in their same quarter last year,"
said CEO Jeff Lang. "In addition,
our continued focus on organic sales, recurring revenue growth, and
working capital initiatives enabled debt repayment and a reduction
in our leverage ratios. Lastly, we are very pleased that our
sequential bookings grew from $100
million in the fourth quarter of 2015 to $120 million in the first quarter of 2016," said
Jeff Lang.
"While we anticipate some macroeconomic shifting in a few
markets and regions for the remainder of the year, we are confident
that the actions we took in 2015 and our diversity of end markets,
geographies and revenue streams provide us with a foundation to
drive profitable growth through various cycles. The direction and
core of our business is fundamentally strong, and we have the right
team in place to deliver earnings growth, margin expansion and
sales improvement into the future," concluded Jeff Lang.
Revenue in the first quarter of 2016 was $103.2 million, up 27% from $81.0 million in the prior-year period. Recent
acquisitions(1) contributed $24.9
million of revenue in the first quarter of 2016.
Operating income was $5.8 million
for the first quarter of 2016 (5.6% margin), compared with
$3.0 million in the prior-year period
(3.7% margin). Operating income on a non-GAAP basis was
$10.9 million for the first quarter
of 2016 (10.6% margin), compared with $7.5
million in the prior-year period (9.3% margin).
Net income was $3.1 million for
the first quarter of 2016, compared with $0.2 million in the prior year period. Net
income on a non-GAAP basis was $6.1
million for the first quarter of 2016, compared with
$5.7 million in the prior-year
period.
Net income per diluted share was $0.09 for the first quarter of 2016, compared
with net income per diluted share of $0.01 in the prior-year period. Non-GAAP net
income per diluted share was $0.18
for the first quarter of 2016, compared with $0.21 for the prior-year period.
Cash and cash equivalents were $33.4
million and bank debt was $170.6
million, as of March 31, 2016,
compared with $34.2 million and
$177.3 million, respectively, as of
December 31, 2015.
BACKLOG AND BOOKINGS
Total backlog at March 31, 2016
was $228.1 million as compared with
$211.2 million on December 31, 2015, and $153.0 million on March
31, 2015.
Bookings were $120.1 million for
the first quarter of 2016, compared with $93.9 million in the prior year, an increase of
28%. Bookings were $100.3
million in the fourth quarter of 2015.
QUARTERLY DIVIDENDS
On May 6, 2016, CECO's Board of
Directors approved a quarterly dividend of $0.066 per share. The dividend will be paid
on June 30, 2016 to all stockholders
of record on close of business on June
18, 2016. CECO initiated a Dividend Reinvestment Plan
("DRIP") in 2012 that provides for the voluntary reinvestment of
dividends by its stockholders.
CONFERENCE CALL
A conference call is scheduled for today at 9:30AM ET to discuss the first quarter 2016
results.
The conference call may be accessed by dialing +1.877.407.3982
(Toll-Free) in the U.S. and Canada
or by dialing +1.201.493.6780 for international calls. A
replay will be available from 12:30
p.m. ET on the day of the call until May 24, 2016 at 11:59 p.m.
ET. The replay may be accessed by dialing +1.877.870.5176
(Toll-Free) in the U.S. and Canada
or by dialing +1.858.384.5517 for international calls and entering
passcode 13636111.
The live webcast and slides can also be accessed at
http://www.cecoenviro.com/investor-relations.
(1) Acquisitions completed within the past twelve months
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
($ in thousands,
except per share data)
|
|
(unaudited)
March 31,
2016
|
|
|
December 31,
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
33,390
|
|
|
$
|
34,194
|
|
Restricted
cash
|
|
|
5,430
|
|
|
|
5,319
|
|
Accounts receivable,
net
|
|
|
84,828
|
|
|
|
97,778
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
|
|
44,156
|
|
|
|
43,175
|
|
Inventories,
net
|
|
|
30,564
|
|
|
|
32,509
|
|
Prepaid expenses and
other current assets
|
|
|
11,999
|
|
|
|
9,058
|
|
Prepaid income
taxes
|
|
|
3,974
|
|
|
|
4,724
|
|
Assets held for
sale
|
|
|
1,718
|
|
|
|
1,699
|
|
Total current
assets
|
|
|
216,059
|
|
|
|
228,456
|
|
Property, plant and
equipment, net
|
|
|
43,404
|
|
|
|
44,981
|
|
Goodwill
|
|
|
221,717
|
|
|
|
220,163
|
|
Intangible assets –
finite life, net
|
|
|
71,316
|
|
|
|
74,957
|
|
Intangible assets –
indefinite life
|
|
|
26,458
|
|
|
|
26,337
|
|
Deferred charges and
other assets
|
|
|
2,944
|
|
|
|
3,925
|
|
|
|
$
|
581,898
|
|
|
$
|
598,819
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
debt
|
|
$
|
17,714
|
|
|
$
|
19,494
|
|
Accounts payable and
accrued expenses
|
|
|
95,207
|
|
|
|
99,097
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
|
|
28,035
|
|
|
|
28,000
|
|
Income taxes
payable
|
|
|
1,693
|
|
|
|
1,582
|
|
Total current
liabilities
|
|
|
142,649
|
|
|
|
148,173
|
|
Other
liabilities
|
|
|
22,126
|
|
|
|
30,072
|
|
Debt, less current
portion
|
|
|
152,916
|
|
|
|
157,834
|
|
Deferred income tax
liability, net
|
|
|
17,638
|
|
|
|
17,719
|
|
Total
liabilities
|
|
|
335,329
|
|
|
|
353,798
|
|
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, 34,073,856 and 34,055,749
shares issued 2016 and 2015, respectively
|
|
|
341
|
|
|
|
340
|
|
Capital in excess of
par value
|
|
|
243,963
|
|
|
|
243,274
|
|
Accumulated
earnings
|
|
|
6,329
|
|
|
|
5,472
|
|
Accumulated other
comprehensive loss
|
|
|
(9,531)
|
|
|
|
(9,577)
|
|
|
|
|
241,102
|
|
|
|
239,509
|
|
Less treasury stock,
at cost, 137,920 shares in 2016 and 2015
|
|
|
(356)
|
|
|
|
(356)
|
|
Total CECO
shareholders' equity
|
|
|
240,746
|
|
|
|
239,153
|
|
Noncontrolling
interest
|
|
|
5,823
|
|
|
|
5,868
|
|
Total shareholders'
equity
|
|
|
246,569
|
|
|
|
245,021
|
|
|
|
$
|
581,898
|
|
|
$
|
598,819
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
(unaudited)
|
|
|
|
|
THREE MONTHS ENDED
MARCH 31,
|
($ in thousands,
except per share data)
|
|
|
2016
|
|
2015
|
Net sales
|
|
|
$ 103,175
|
|
$ 80,985
|
Cost of
sales
|
|
|
71,589
|
|
60,010
|
Gross
profit
|
|
|
31,586
|
|
20,975
|
Selling and
administrative
|
|
|
20,945
|
|
13,661
|
Acquisition and
integration expenses
|
|
|
37
|
|
331
|
Amortization and earn
out expenses
|
|
|
4,797
|
|
4,004
|
Income from
operations
|
|
|
5,807
|
|
2,979
|
Other income
(expense), net
|
|
|
780
|
|
(1,736)
|
Interest
expense
|
|
|
(2,102)
|
|
(960)
|
Income before income
taxes
|
|
|
4,485
|
|
283
|
Income tax
expense
|
|
|
1,430
|
|
85
|
Net income
|
|
|
$ 3,055
|
|
$ 198
|
Less net loss
attributable to noncontrolling interest
|
|
|
$
(45)
|
|
$
—
|
Net income
attributable to CECO Environmental Corp.
|
|
|
$ 3,100
|
|
$ 198
|
Earnings per
share:
|
|
|
|
|
|
Basic
|
|
|
$ 0.09
|
|
$
0.01
|
Diluted
|
|
|
$ 0.09
|
|
$
0.01
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
Basic
|
|
|
33,928,052
|
|
26,271,316
|
Diluted
|
|
|
34,116,534
|
|
26,660,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
|
RECONCILIATION OF
GAAP TO NON-GAAP MEASURES
|
|
|
|
|
Three Months Ended March
31,
|
(dollars in
millions)
|
2016
|
|
2015
|
Gross profit as
reported in accordance with GAAP
|
$
31.6
|
|
$
21.0
|
Gross profit margin
in accordance with GAAP
|
30.6%
|
|
25.9%
|
Inventory valuation
adjustment
|
0.1
|
|
--
|
Plant, property and
equipment valuation adjustment
|
0.2
|
|
0.2
|
|
|
|
|
Non-GAAP gross
margin
|
$
31.9
|
|
$
21.2
|
Non-GAAP gross
profit margin
|
30.9%
|
|
26.2%
|
|
|
|
|
|
Three Months Ended March
31,
|
(dollars in
millions)
|
2016
|
|
2015
|
Operating income as
reported in accordance with GAAP
|
$
5.8
|
|
$
3.0
|
Operating margin in
accordance with GAAP
|
5.6%
|
|
3.7%
|
Inventory valuation
adjustment
|
0.1
|
|
--
|
Plant, property and
equipment valuation adjustment
|
0.2
|
|
0.2
|
Acquisition and
integration expenses
|
--
|
|
0.3
|
Amortization and
earn-out expenses
|
4.8
|
|
4.0
|
|
|
|
|
Non-GAAP operating
income
|
$
10.9
|
|
$
7.5
|
Non-GAAP operating
margin.
|
10.6%
|
|
9.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March
31,
|
(dollars in
millions)
|
2016
|
|
2015
|
Net income as
reported in accordance with GAAP
|
$
3.1
|
|
$
0.2
|
Inventory valuation
adjustment
|
0.1
|
|
--
|
Plant, property and
equipment valuation adjustment
|
0.2
|
|
0.2
|
Acquisition and
integration expenses
|
--
|
|
0.3
|
Amortization and
earn-out expenses
|
4.8
|
|
4.0
|
Foreign currency
remeasurement
|
(0.9)
|
|
2.7
|
Tax benefit of
expenses
|
(1.2)
|
|
(1.7)
|
|
|
|
|
Non-GAAP net
income
|
$
6.1
|
|
$
5.7
|
Depreciation
|
1.2
|
|
0.7
|
Non-cash stock compensation
|
0.6
|
|
0.4
|
Other (income) expense
|
0.1
|
|
(1.0)
|
Interest expense
|
2.1
|
|
1.0
|
Income tax expense
|
2.6
|
|
1.8
|
|
|
|
|
Adjusted
EBITDA
|
$
12.7
|
|
$
8.6
|
|
|
|
|
Earnings per
share:
|
|
|
|
Basic
|
$
0.09
|
|
$
0.01
|
|
|
|
|
Diluted
|
$
0.09
|
|
$
0.01
|
Non-GAAP net income
per share:
|
|
|
|
Basic
|
$
0.18
|
|
$
0.22
|
|
|
|
|
Diluted
|
$
0.18
|
|
$
0.21
|
ABOUT CECO ENVIRONMENTAL
CECO is a diversified global provider of leading engineered
technologies to the environmental, energy, and fluid handling and
filtration industrial segments, targeting specific niche-focused
end markets through an attractive asset-light business model,
strategically balanced across the world. CECO targets its over $5
billion+ of installed-base, specifically to expand and grow a
higher recurring revenue of aftermarket products and services.
CECO's brands, technologies and solutions have been evolving for
well over 50 years to become leading-class technologies in specific
niche global end markets, including natural gas turbine power,
refinery & petrochemical engineered cyclones and mid-stream
energy pipeline gas transmission. CECO is listed on NASDAQ under
the ticker symbol "CECE". For more information, please visit
http://www.cecoenviro.com/.
Contacts:
Ed Prajzner, Chief Financial
Officer & Secretary
800.333.5475
eprajzer@cecoenviro.com
Tracy Krumme, Vice President of
Investor Relations
513.458.2610
tkrumme@cecoenviro.com
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 gross profit margin, 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 property, plant equipment valuation adjustments,
acquisition and integration expense activities including retention,
legal, accounting, banking, amortization and contingent earnout
expenses, foreign currency re-measurement, intangible asset
impairment, legal reserves and the associated tax benefit of these
charges. 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 gross margin, non-GAAP operating income, non-GAAP net
income, non-GAAP gross profit margin, non-GAAP operating margin,
non-GAAP earnings per basic and diluted shares 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.
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 gross
profit margin, 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. 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,
including PMFG, 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 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
incurred in connection with our recent 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-2016-results-300265673.html
SOURCE CECO Environmental Corp.