CECO ENVIRONMENTAL REPORTS SECOND QUARTER 2022 RESULTS
Record Backlog, Strong Revenue and Net Income Growth, and Update to Full Year Outlook
DALLAS (Aug. 8, 2022) -- 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 second quarter of 2022.
Highlights for the Quarter and Recent Corporate Developments*
- Orders of $113.5 million, up 33 percent; Record Backlog of $289 million
- Revenue of $105.4 million, up 34 percent
- Net income of $4.4 million, up $4.1 million; non-GAAP net income of $6.4 million, up $3.3 million
- Adjusted EBITDA of $10.6 million, up 63 percent
- Company announces senior management transitions
- Company increases full year financial outlook
*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 delivered strong results in the second quarter and are pleased to share that we increased our backlog to new record levels while driving sales growth of more than 30 percent and EBITDA growth of more than 60 percent. We also repurchased more than $4 million of shares in the quarter as we systematically execute our capital allocation strategy that includes both M&A and share repurchases," said CECO Chief Executive Officer, Todd Gleason.
Second quarter operating income was $5.7 million, up 171 percent when compared to $2.1 million in the second quarter 2021. On an adjusted basis, non-GAAP operating income was $8.7 million, up 85 percent when compared to $4.7 million in the second quarter of 2021. Net income was $4.4 million in the quarter, up $4.1 million compared to $0.3 million in the second quarter 2021. Non-GAAP net income was $6.4 million, up $3.3 million compared to $3.1 million in the second quarter 2021. Adjusted EBITDA was $10.6 million, up 63 percent compared to $6.5 million in the second quarter 2021. The Company repurchased $4.3 million shares in the second quarter as part of the previously announced $20 million share repurchase program.
In the second quarter, the Company completed the acquisition of Compass Water Solutions, based in California, USA and Western Air Duct, a company based in the United Kingdom. Combined, the companies generated 2021 full year sales of approximately $15 million and each delivered double-digit EBITDA margins.
"We are extremely pleased with our year-to-date results which have included orders growth of approximately 55 percent, record backlog up more than 35 percent and revenue growth up more than 30 percent through the first half. We have closed multiple strategic acquisitions that add new capabilities and market opportunities to our industrial air and industrial water platforms, and those acquisitions are already performing very well against their operating targets," added Gleason.
Company Increases Full Year 2022 Outlook:
The Company updated full year 2022 guidance to $375 to $400 million in revenue, up approximately 19 percent at the midpoint y ear over year. The Company updated its full year adjusted EBITDA to reflect a range starting at $37 million and the high -end exceeding $40 million, up more than 50 percent at the midpoint year over year.
"Our revised outlook reflects our continued confidence that we expect to deliver outstanding results through the year. We rem ain in excellent position to drive strong double-digit sales and income growth while also maintaining our focus on capital allocation," concluded Gleason.
Senior Management Transitions:
The Company also separately announced today that Matthew Eckl, Chief Financial Officer, and Pamela Turay, Senior Vice President of Human Resources, will leave the Company in August to pursue other opportunities. Effective Aug. 15, 2022, Peter Johansson will join CECO as Chief Financial and Strategy Officer. Additionally, the Company's current General Counsel, Lynn Watkins-Asiyanbi will assume the newly created role of Chief Administrative and Legal Officer, which incorporates legal, human resources and corporate communication functions.
EARNINGS CONFERENCE CALL
A conference call is scheduled for today at 8:30 a.m. ET to discuss the second quarter financial results of 2022. The conference call may be accessed via webcast by going to the Company's website at https://investors.cecoenviro.com/events-webcasts-and-presentations/ or by dialing (888) 346-4547(Toll-Free) within the U.S., 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., or Toll/International +1 (412) 317-0088 and entering access code 6087150.
ABOUT CECO ENVIRONMENTAL
CECO Environmental is a leading environmentally focused, diversified industrial company, serving a broad landscape of industrial air, industrial water and energy transition markets across the globe through its key business segments: Engineered Systems and Industrial Process Solutions. Providing innovative technology and application expertise, CECO helps companies grow their business with safe, clean, and more efficient solutions that help protect people, the environment and industrial equipment. In regions around the world, CECO works to improve air quality, optimize the energy value chain, and provide custom solutions for applications including power generation, petrochemical processing, general industrial, refining, midstream oil and 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." Incorporated in 1966, CECO's global headquarters is in Dallas, Texas. For more information, please visit www.cecoenviro.com.
Company Contact:
Kimberly Plaskett, Corporate Communications
- 928-1090kplaskett@onececo.com
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
(unaudited) | |||||||||||
(dollars in thousands, except per share data) | June 30, 2022 | December 31, 2021 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 34,416 | $ | 29,902 | |||||||
Restricted cash | 1,037 | 2,093 | |||||||||
Accounts receivable, net | 95,318 | 74,991 | |||||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | 51,158 | 51,429 | |||||||||
Inventories, net | 23,981 | 17,052 | |||||||||
Prepaid expenses and other current assets | 11,911 | 10,760 | |||||||||
Prepaid income taxes | 893 | 2,784 | |||||||||
Total current assets | 218,714 | 189,011 | |||||||||
Property, plant and equipment, net | 16,357 | 15,948 | |||||||||
Right-of-use assets from operating leases | 12,144 | 10,893 | |||||||||
Goodwill | 185,795 | 161,183 | |||||||||
Intangible assets - finite life, net | 35,794 | 25,841 | |||||||||
Intangible assets - indefinite life | 9,494 | 9,629 | |||||||||
Deferred income taxes | 505 | 505 | |||||||||
Deferred charges and other assets | 2,926 | 3,187 | |||||||||
Total assets | $ | 481,729 | $ | 416,197 | |||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Current portion of debt | $ | 3,303 | $ | 2,203 | |||||||
Accounts payable and accrued expenses | 101,233 | 84,081 | |||||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 35,896 | 28,908 | |||||||||
Note payable - current | 500 | - | |||||||||
Income taxes payable | 3,092 | 1,493 | |||||||||
Total current liabilities | 144,024 | 116,685 | |||||||||
Other liabilities | 15,122 | 14,826 | |||||||||
Debt, less current portion | 92,768 | 61,577 | |||||||||
Deferred income tax liability, net | 9,998 | 8,390 | |||||||||
Operating lease liabilities | 9,356 | 8,762 | |||||||||
Total liabilities | 271,268 | 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, 34,534,180 and | |||||||||||
35,028,197 shares issued and outstanding at June 30, 2022 and | |||||||||||
December 31, 2021, respectively | 345 | 350 | |||||||||
Capital in excess of par value | 250,262 | 252,989 | |||||||||
Accumulated loss | (29,538) | (36,715) | |||||||||
Accumulated other comprehensive loss | (15,567) | (12,070) | |||||||||
Total CECO shareholders' equity | 205,502 | 204,554 | |||||||||
Non-controlling interest | 4,959 | 1,403 | |||||||||
Total shareholders' equity | 210,461 | 205,957 | |||||||||
Total liabilities and shareholders' equity | $ | 481,729 | $ | 416,197 | |||||||
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(dollars in thousands, except per share data) | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Net sales | $ | 105,375 | $ | 78,680 | $ | 197,811 | $ | 150,572 | ||||||||
Cost of sales | 73,700 | 53,426 | 139,708 | 100,910 | ||||||||||||
Gross profit | 31,675 | 25,254 | 58,103 | 49,662 | ||||||||||||
Selling and administrative expenses | 22,988 | 20,510 | 41,640 | 39,965 | ||||||||||||
Amortization and earnout expenses | 1,450 | 2,282 | 2,900 | 4,072 | ||||||||||||
Restructuring expenses | - | 280 | 73 | 280 | ||||||||||||
Acquisition and integration expenses | 1,491 | 37 | 2,540 | 146 | ||||||||||||
Income from operations | 5,746 | 2,145 | 10,950 | 5,199 | ||||||||||||
Other income (expense), net | 1,936 | (860) | 1,478 | (1,339) | ||||||||||||
Interest expense | (1,098) | (704) | (1,920) | (1,430) | ||||||||||||
Income before income taxes | 6,584 | 581 | 10,508 | 2,430 | ||||||||||||
Income tax expense | 1,860 | 199 | 2,972 | 750 | ||||||||||||
Net income | 4,724 | 382 | 7,536 | 1,680 | ||||||||||||
Non-controlling interest | 339 | 89 | 356 | 206 | ||||||||||||
Net income attributable to CECO Environmental Corp. | $ | 4,385 | $ | 293 | $ | 7,180 | $ | 1,474 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.13 | $ | 0.01 | $ | 0.21 | $ | 0.04 | ||||||||
Diluted | $ | 0.13 | $ | 0.01 | $ | 0.20 | $ | 0.04 | ||||||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic | 34,873,238 | 35,491,725 | 34,961,645 | 35,444,477 | ||||||||||||
Diluted | 35,041,152 | 35,819,269 | 35,119,685 | 35,797,001 |
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(dollars in millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||
Operating income as reported in accordance with GAAP | $ | 5.7 | $ | 2.1 | $ | 11.0 | $ | 5.2 | |||||||
Operating margin in accordance with GAAP | 5.4% | 2.7% | 5.6% | 3.5% | |||||||||||
Amortization and earnout expenses | 1.5 | 2.3 | 2.9 | 4.1 | |||||||||||
Restructuring expenses | - | 0.3 | 0.1 | 0.3 | |||||||||||
Acquisition and integration expenses | 1.5 | - | 2.5 | 0.1 | |||||||||||
Non-GAAP operating income | $ | 8.7 | $ | 4.7 | $ | 16.5 | $ | 9.7 | |||||||
Non-GAAP operating margin | 8.3% | 6.0% | 8.3% | 6.4% | |||||||||||
Three Months Ended June 30, | Six months ended June 30, | ||||||||||||||
(dollars in millions) | 2022 | 2021 | 2022 | 2021 |
Net income as reported in accordance with GAAP | $ | |
Amortization and earnout expenses | ||
Restructuring expenses | ||
Acquisition and integration expenses | ||
Foreign currency remeasurement | ||
Tax benefit expense of adjustments | ||
Non-GAAP net income | $ | |
Depreciation | ||
Non-cash stock compensation | ||
Other (income) expense | ||
Interest expense | ||
Income tax expense | ||
Noncontrolling interest | ||
Adjusted EBITDA | $ | |
Earnings per share: | ||
Basic | $ | |
Diluted | $ | |
Non-GAAP net income per share: | ||
Basic | $ | |
Diluted | $ |
4.4 | $ | 0.3 | $ | 7.2 | $ | 1.5 | |||||||
1.5 | 2.3 | 2.9 | 4.1 | ||||||||||
- | 0.3 | 0.1 | 0.3 | ||||||||||
1.5 | - | 2.5 | 0.1 | ||||||||||
(0.3) | 1.1 | - | 1.7 | ||||||||||
(0.7) | (0.9) | (1.4) | (1.5) | ||||||||||
6.4 | $ | 3.1 | $ | 11.3 | $ | 6.2 | |||||||
0.9 | 0.8 | 1.8 | 1.6 | ||||||||||
0.9 | 0.9 | 1.8 | 1.6 | ||||||||||
(1.6) | (0.2) | (1.5) | (0.4) | ||||||||||
1.1 | 0.7 | 1.9 | 1.4 | ||||||||||
2.6 | 1.1 | 4.4 | 2.3 | ||||||||||
0.3 | 0.1 | 0.4 | 0.2 | ||||||||||
10.6 | $ | 6.5 | $ | 20.1 | $ | 12.9 | |||||||
0.13 | $ | 0.01 | $ | 0.21 | $ | 0.04 | |||||||
0.13 | $ | 0.01 | $ | 0.20 | $ | 0.04 | |||||||
0.18 | $ | 0.09 | $ | 0.32 | $ | 0.17 | |||||||
0.18 | $ | 0.09 | $ | 0.32 | $ | 0.17 |
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CECO Environmental Corporation published this content on 08 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 August 2022 12:04:03 UTC.