Broadens Industrial Water Capabilities and Expands CECO's
Short-Cycle Mix
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 announced it has acquired Compass
Water Solutions, Inc. ("Compass") 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. The transaction adds to
CECO's growing industrial water technologies, which is anchored by
its Peerless-Skimovex® brand.
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Compass generated approximately $11
million of revenue in 2021 with double-digit EBITDA
margins. The total purchase price was $12.5 million and funded by a mix of cash and
debt. Approximately 70 percent was paid at closing with the
balance to be paid over a two-year period. CECO expects the
acquisition to be accretive to total company EBITDA margins,
earnings per share, and free cash flows in 2022.
With this acquisition, CECO expands its addressable industrial
water technology market by over $250
million, with expected growth rates over six percent CAGR
through 2025 for industrial oily-water and seawater reverse osmosis
applications. CECO expects the Compass acquisition to unlock
greater value by leveraging CECO's international sales resources,
existing US Navy expertise, and global engineering and production
footprint. In addition to market growth rates, the expected
stricter water discharge regulations coupled with hard-to-attain
international certifications are expected to drive higher
sales. Compass' installed base of over 8,000 systems
worldwide has created a robust aftermarket parts and services
business that represents approximately 40 percent of current
revenues. Finally, with an average order size of less than
$250,000, Compass increases CECO's
short-cycle business mix to approximately $100 million, or 30 percent, of total company
2021 revenue.
"Compass adds critical engineered solutions, and an experienced
leadership team, to our growing industrial water capabilities, and
we are excited to welcome them to the CECO organization," said
Todd Gleason, CEO of CECO
Environmental. "CECO has completed three industrial water
acquisitions in 2022 and each share our common mission to protect
people, the environment, and industrial equipment. We expect
that these businesses, when coupled with our global footprint and
leading brands, will continue to drive strong revenue and income
growth in this strategic market," added Mr. Gleason.
ABOUT COMPASS WATER SOLUTIONS
Compass Water Solutions®
("Compass") is a world-wide leader in the engineering,
manufacturing, sales, and service of membrane-based water and
wastewater treatment systems. Compass helps customers achieve
environmental compliance of water discharge ("assurance against a
spill") at the lowest lifecycle cost using high-capacity oil-water
separators, slop-water separators, reverse osmosis water-makers,
water filtration, and purification technology. The company is
widely recognized for its brand name, international certifications,
global installed base, and nearly 50 years of application expertise
serving multiple industries. The company is headquartered in
Tustin, California, and operates
an ISO 9001 certified assembly plant. For more information, please
visit www.compasswater.com
ABOUT CECO ENVIRONMENTAL
CECO is a global leader in
industrial air quality and fluid handling serving a broad landscape
of 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 Systems for applications including
power generation, petrochemical processing, general industrial,
refining, midstream oil & gas, electric vehicle production,
poly silicon fabrication, battery recycling, beverage can, and
water/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.
ADVISORS
The McLean Group served as financial advisor
and O'Melveny provided legal counsel to Compass. BDO
USA LLP and Dykema Gossett PLLC
served as advisors on CECO's behalf.
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 and
include but are not limited to statements about CECO's expectations
regarding the integration of Compass into CECO; the benefits of the
acquisition of Compass, and the expectations regarding the
transaction's impact on CECO's strategic growth plan. 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 surrounding the acquisition of Compass that
could cause actual results to differ materially include risks
regarding the achievement of the anticipated benefits of the
acquisition, 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; the ability to expand operations in both new
and existing markets; 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"); and the
effect of competition in the air quality and fluid handling
industries. Additional risks and uncertainties 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. 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.
Company Contact:
Matthew Eckl, Chief Financial
Officer
(888) 990-6670
Investor Relations Contact:
Steven Hooser, Three Part Advisors,
LLC
214-872-2710 | investor.relations@onececo.com
News Media:
Kimberly Plaskett, Corporate
Communications Director
CECO-Communications@onececo.com
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SOURCE CECO Environmental Corp.