DALLAS, Nov. 4, 2020 /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 third quarter and year-to-date of 2020.
Highlights of the Third Quarter 2020*
- Revenue of $77.4 million,
compared with $85.3 million
- Gross profit of $24.8 million
(32.0% margin), compared with $28.8
million (33.8% margin)
- Operating income of $1.0 million,
compared with $4.1 million
- Non-GAAP operating income of $5.9
million, compared with $7.0
million
- Net loss of $(0.2) million,
compared with net income $1.9
million
- Non-GAAP net income of $3.8
million, compared with $4.2
million
- Adjusted EBITDA of $7.3 million,
compared with $8.4 million
- Net loss per diluted share was $(0.01), compared with net income per diluted
share of $0.05
- Non-GAAP net income per diluted share of $0.11, compared with $0.12
- Bookings of $66.8 million,
compared with $115.7 million
- Backlog of $189.1 million,
compared with $204.6 million as of
June 30, 2020
* All comparisons are versus the comparable
prior-year period, unless otherwise stated
Todd Gleason, CECO's Chief
Executive Officer, commented, "During the third quarter, the CECO
team continued to deliver solid execution for our customers and the
company started to see emerging momentum in various industrial
markets. Additionally, the company maintained its focus on
streamlining costs which partially offset declines in
revenue. Unfortunately, the energy markets remain challenged
as global capital spending continues to be disrupted by the impact
of the COVID-19 pandemic."
Mr. Gleason added, "We expect the markets to remain choppy and
uncertain in the near-term, but we believe we can maintain our
customer-focused execution and cost management to deliver future
solid results. The company is also launching new strategic
growth programs to expand into adjacent markets and more repeatable
revenue streams. Furthermore, the company has kicked-off our
Environmental, Social and Governance (ESG) program which will
highlight the many good and important areas of leadership CECO
drives and is committed to advance across each component."
THIRD QUARTER RESULTS
Revenue in the third quarter of 2020 was $77.4 million, down
9.3% from $85.3 million in the prior-year
period.
Operating income was $1.0 million
for the third quarter of 2020, compared with $4.1 million in the prior-year period. Non-GAAP
operating income was $5.9 million for
the third quarter of 2020 (7.6% margin), compared with $7.0 million in the prior-year period (8.2%
margin).
Net loss was $(0.2) million for
the third quarter of 2020, compared with net income $1.9 million in the prior-year period. Net loss
per diluted share was $(0.01) for the
third quarter 2020, compared with net income per diluted share of
$0.05 in the prior-year period.
Net income on a non-GAAP basis was $3.8
million for the third quarter of 2020, compared with
$4.2 million in the prior-year
period. Non-GAAP net income per diluted share was $0.11 for the third quarter of 2020,
compared with $0.12 for
the prior-year period.
Cash and cash equivalents were $44.5 million and
bank debt was $77.9 million
as of September 30, 2020,
compared with $41.5 million and $79.5 million, respectively, as
of June 30, 2020.
BACKLOG AND BOOKINGS
Total backlog at September 30,
2020 was $189.1 million as
compared with $204.6 million on
June 30, 2020 and $237.8 million on September 30, 2019. Backlog acquired from the
Effox-Mader joint venture was $1.0
million.
Bookings were $66.8 million for
the third quarter of 2020, compared with $115.7 million in the prior-year period. Bookings
were $202.4 million for the first
nine months of 2020, compared with $316.0
million in the prior year period.
YEAR-TO-DATE RESULTS
Revenue in the first nine months of 2020 was $233.1 million, down 7.7% from $252.5 million in the prior-year
period.
Operating income was $9.7 million
for the first nine months of 2020 (4.2% margin), compared with
$11.0 million in the prior-year
period (4.4% margin). Operating income on a non-GAAP basis was
$19.6 million for the first nine
months of 2020 (8.4% margin), compared with $18.6 million in the prior-year period (7.4%
margin).
Net income was $6.4 million for
the first nine months of 2020, compared with $9.3 million in the prior-year period. Net income
per diluted share was $0.18 for the
first nine months of 2020, compared with $0.26 in the prior-year period.
Net income on a non-GAAP basis was $14.0
million for the first nine months of 2020, compared with
$11.3 million in the prior-year
period. Non-GAAP net income per diluted share was $0.40 for the first nine months
of 2020, compared with $0.32 for the prior-year period.
CONFERENCE CALL
A conference call is scheduled for today at 8:30 a.m. ET to discuss the third quarter 2020
financial results.
The live webcast and slides can also be accessed at
https://investors.cecoenviro.com/events-webcasts-and-presentations.
In addition, 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.
A replay of the conference call will be available on the
Company's website for 7 days. The replay may be accessed by
dialing toll free (877) 344-7529 within North America or Toll/International (412)
317-0088 and entering passcode 10148467.
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
|
|
(dollars in
thousands, except per share data)
|
|
(unaudited)
SEPTEMBER 30,
2020
|
|
|
DECEMBER 31,
2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
44,537
|
|
|
$
|
35,602
|
|
Restricted
cash
|
|
|
1,811
|
|
|
|
1,356
|
|
Accounts receivable,
net
|
|
|
58,274
|
|
|
|
68,434
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
|
|
41,014
|
|
|
|
34,805
|
|
Inventories,
net
|
|
|
18,550
|
|
|
|
20,578
|
|
Prepaid expenses and
other current assets
|
|
|
12,773
|
|
|
|
9,899
|
|
Prepaid income
taxes
|
|
|
6,664
|
|
|
|
8,231
|
|
Assets held for
sale
|
|
|
467
|
|
|
|
593
|
|
Total current
assets
|
|
|
184,090
|
|
|
|
179,498
|
|
Property, plant and
equipment, net
|
|
|
15,774
|
|
|
|
15,274
|
|
Right-of-use assets
from operating leases
|
|
|
12,053
|
|
|
|
13,607
|
|
Goodwill
|
|
|
161,352
|
|
|
|
152,020
|
|
Intangible assets –
finite life, net
|
|
|
31,477
|
|
|
|
31,283
|
|
Intangible assets –
indefinite life
|
|
|
13,694
|
|
|
|
14,291
|
|
Deferred charges and
other assets
|
|
|
3,650
|
|
|
|
2,664
|
|
Total
assets
|
|
$
|
422,090
|
|
|
$
|
408,637
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
debt
|
|
$
|
2,812
|
|
|
$
|
2,500
|
|
Accounts payable and
accrued expenses
|
|
|
82,550
|
|
|
|
78,319
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
|
|
24,673
|
|
|
|
34,369
|
|
Total current
liabilities
|
|
|
110,035
|
|
|
|
115,188
|
|
Other
liabilities
|
|
|
19,720
|
|
|
|
20,372
|
|
Debt, less current
portion
|
|
|
73,626
|
|
|
|
63,001
|
|
Deferred income tax
liability, net
|
|
|
7,268
|
|
|
|
5,943
|
|
Operating lease
liabilities
|
|
|
9,845
|
|
|
|
11,116
|
|
Total
liabilities
|
|
|
220,494
|
|
|
|
215,620
|
|
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, 35,504,757
and
35,275,465 shares issued and outstanding at September 30, 2020
and
December 31, 2019, respectively
|
|
|
355
|
|
|
|
353
|
|
Capital in excess of
par value
|
|
|
254,771
|
|
|
|
253,869
|
|
Accumulated
loss
|
|
|
(39,921)
|
|
|
|
(46,344)
|
|
Accumulated other
comprehensive loss
|
|
|
(14,234)
|
|
|
|
(14,505)
|
|
|
|
|
200,971
|
|
|
|
193,373
|
|
Less treasury stock,
at cost, 137,920 shares at September 30, 2020 and December 31,
2019
|
|
|
(356)
|
|
|
|
(356)
|
|
Total CECO
shareholders' equity
|
|
|
200,615
|
|
|
|
193,017
|
|
Noncontrolling
interest
|
|
|
981
|
|
|
|
—
|
|
Total shareholders'
equity
|
|
|
201,596
|
|
|
|
193,017
|
|
Total liabilities and
shareholders' equity
|
|
$
|
422,090
|
|
|
$
|
408,637
|
|
CECO ENVIRONMENTAL
CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
(dollars in
thousands, except per share data)
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net sales
|
|
$
|
77,425
|
|
|
$
|
85,266
|
|
|
$
|
233,081
|
|
|
$
|
252,456
|
|
Cost of
sales
|
|
|
52,615
|
|
|
|
56,489
|
|
|
|
154,176
|
|
|
|
168,400
|
|
Gross
profit
|
|
|
24,810
|
|
|
|
28,777
|
|
|
|
78,905
|
|
|
|
84,056
|
|
Selling and
administrative expenses
|
|
|
18,989
|
|
|
|
21,823
|
|
|
|
59,374
|
|
|
|
65,573
|
|
Amortization and
earnout expenses
|
|
|
2,050
|
|
|
|
2,166
|
|
|
|
5,546
|
|
|
|
6,480
|
|
Restructuring
expenses
|
|
|
871
|
|
|
|
729
|
|
|
|
1,753
|
|
|
|
968
|
|
Acquisition and
integration expenses
|
|
|
368
|
|
|
|
—
|
|
|
|
1,067
|
|
|
|
—
|
|
Executive transition
expenses
|
|
|
1,514
|
|
|
|
—
|
|
|
|
1,514
|
|
|
|
—
|
|
Loss on divestitures,
net of selling costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
70
|
|
Income from
operations
|
|
|
1,018
|
|
|
|
4,059
|
|
|
|
9,651
|
|
|
|
10,965
|
|
Other (expense)
income, net
|
|
|
(290)
|
|
|
|
(73)
|
|
|
|
1,057
|
|
|
|
95
|
|
Interest
expense
|
|
|
(772)
|
|
|
|
(1,316)
|
|
|
|
(2,739)
|
|
|
|
(4,319)
|
|
(Loss) income before
income taxes
|
|
|
(44)
|
|
|
|
2,670
|
|
|
|
7,969
|
|
|
|
6,741
|
|
Income tax expense
(benefit)
|
|
|
206
|
|
|
|
739
|
|
|
|
1,549
|
|
|
|
(2,569)
|
|
Net (loss)
income
|
|
$
|
(250)
|
|
|
$
|
1,931
|
|
|
$
|
6,420
|
|
|
$
|
9,310
|
|
Noncontrolling
interest
|
|
|
11
|
|
|
|
—
|
|
|
|
11
|
|
|
|
—
|
|
Net (loss) income
attributable to CECO Environmental Corp.
|
|
$
|
(239)
|
|
|
$
|
1,931
|
|
|
$
|
6,431
|
|
|
$
|
9,310
|
|
(Loss) earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01)
|
|
|
$
|
0.06
|
|
|
$
|
0.18
|
|
|
$
|
0.27
|
|
Diluted
|
|
$
|
(0.01)
|
|
|
$
|
0.05
|
|
|
$
|
0.18
|
|
|
$
|
0.26
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
35,358,913
|
|
|
|
35,070,449
|
|
|
|
35,263,688
|
|
|
|
34,944,056
|
|
Diluted
|
|
|
35,358,913
|
|
|
|
35,624,590
|
|
|
|
35,471,551
|
|
|
|
35,522,568
|
|
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)
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Operating income as
reported in accordance with GAAP
|
|
$
|
1.0
|
|
|
$
|
4.1
|
|
|
$
|
9.7
|
|
|
$
|
11.0
|
|
Operating margin in
accordance with GAAP
|
|
|
1.3
|
%
|
|
|
4.8
|
%
|
|
|
4.2
|
%
|
|
|
4.4
|
%
|
Amortization and
earnout expenses
|
|
|
2.1
|
|
|
|
2.2
|
|
|
|
5.5
|
|
|
|
6.5
|
|
Restructuring
expenses
|
|
|
0.9
|
|
|
|
0.7
|
|
|
|
1.8
|
|
|
|
1.0
|
|
Acquisition and
integration expenses
|
|
|
0.4
|
|
|
|
—
|
|
|
|
1.1
|
|
|
|
—
|
|
Executive transition
expenses
|
|
|
1.5
|
|
|
|
—
|
|
|
|
1.5
|
|
|
|
—
|
|
Loss on divestitures,
net of selling costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.1
|
|
Non-GAAP operating
income
|
|
$
|
5.9
|
|
|
$
|
7.0
|
|
|
$
|
19.6
|
|
|
$
|
18.6
|
|
Non-GAAP operating
margin
|
|
|
7.6
|
%
|
|
|
8.2
|
%
|
|
|
8.4
|
%
|
|
|
7.4
|
%
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
(dollars in
millions)
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net (loss) income as
reported in accordance with GAAP
|
|
$
|
(0.2)
|
|
|
$
|
1.9
|
|
|
$
|
6.4
|
|
|
$
|
9.3
|
|
Amortization and
earnout expenses
|
|
|
2.1
|
|
|
|
2.2
|
|
|
|
5.5
|
|
|
|
6.5
|
|
Restructuring
expenses
|
|
|
0.9
|
|
|
|
0.7
|
|
|
|
1.8
|
|
|
|
1.0
|
|
Acquisition and
integration expenses
|
|
|
0.4
|
|
|
|
—
|
|
|
|
1.1
|
|
|
|
—
|
|
Executive transition
expenses
|
|
|
1.5
|
|
|
|
—
|
|
|
|
1.5
|
|
|
|
—
|
|
Deferred financing fee
adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.4
|
|
Loss on divestitures,
net of selling costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.1
|
|
Foreign currency
remeasurement
|
|
|
0.4
|
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
0.5
|
|
Tax benefit of
adjustments
|
|
|
(1.3)
|
|
|
|
(0.8)
|
|
|
|
(2.6)
|
|
|
|
(2.1)
|
|
Zhongli tax
benefit
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(4.4)
|
|
Non-GAAP net
income
|
|
$
|
3.8
|
|
|
$
|
4.2
|
|
|
$
|
14.0
|
|
|
$
|
11.3
|
|
Depreciation
|
|
|
0.6
|
|
|
|
0.5
|
|
|
|
1.8
|
|
|
|
1.7
|
|
Non-cash stock
compensation
|
|
|
0.7
|
|
|
|
1.0
|
|
|
|
1.5
|
|
|
|
2.8
|
|
Other
income
|
|
|
(0.1)
|
|
|
|
(0.1)
|
|
|
|
(1.4)
|
|
|
|
(0.6)
|
|
Interest
expense
|
|
|
0.8
|
|
|
|
1.3
|
|
|
|
2.7
|
|
|
|
3.9
|
|
Income tax
expense
|
|
|
1.5
|
|
|
|
1.5
|
|
|
|
4.1
|
|
|
|
3.7
|
|
Adjusted
EBITDA
|
|
$
|
7.3
|
|
|
$
|
8.4
|
|
|
$
|
22.7
|
|
|
$
|
22.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01)
|
|
|
$
|
0.06
|
|
|
$
|
0.18
|
|
|
$
|
0.27
|
|
Diluted
|
|
$
|
(0.01)
|
|
|
$
|
0.05
|
|
|
$
|
0.18
|
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.11
|
|
|
$
|
0.12
|
|
|
$
|
0.40
|
|
|
$
|
0.32
|
|
Diluted
|
|
$
|
0.11
|
|
|
$
|
0.12
|
|
|
$
|
0.40
|
|
|
$
|
0.32
|
|
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 net income 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, executive
transition expenses, loss on divestitures, net of selling costs
necessary to complete the divestiture such as legal, accounting and
compliance, 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 net income 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 and non-GAAP net
income 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 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, 2019 and
"Part II – Item 1.A. Risk Factors" of the Quarterly Report on Form
10-Q for the quarters ended March 31
and June 30, 2020 and of the
Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and include, but are not
limited to: the sensitivity of our business to 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; 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 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; 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; 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.
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SOURCE CECO Environmental Corp.