DALLAS, Aug. 5, 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 second quarter and first six months of 2020.
Highlights of the Second Quarter 2020*
- Revenue of $75.2 million,
compared with $81.2 million
- Gross profit of $25.8 million
(34.3% margin), compared with $26.8
million (33.0% margin)
- Operating income of $4.4 million,
compared with $2.0 million
- Non-GAAP operating income of $7.4
million, compared with $4.4
million
- Net income of $3.3 million,
compared with $5.5 million
- Non-GAAP net income of $5.1
million, compared with $3.0
million
- Net income per diluted share was $0.09, compared with $0.15
- Non-GAAP net income per diluted share of $0.14, compared with $0.08
- Adjusted EBITDA of $8.2 million,
compared with $6.0 million
- Bookings of $60.0 million,
compared with $103.0 million
- Backlog of $204.6 million,
compared with $208.9 million as of
March 31, 2020
* All comparisons are versus the comparable
prior-year period, unless otherwise stated
Todd Gleason, CECO's Chief
Executive Officer, commented, "During the second quarter, the CECO
team delivered focused execution and solid customer service while
adjusting for the disruptions associated with the wide-spread
COVID-19 pandemic. The Company enacted proactive measures to reduce
costs in anticipation of the market declines, which maintained
strong profitability and margin rates while streamlining operations
for future quarters. Additionally, we executed the EIS acquisition,
which advances our industrial solutions portfolio and positions us
for growth in the European industrial
markets."
Mr. Gleason added, "As I come to the end of my first month with
the Company, I have enjoyed connecting with our talented team
members, and immersing myself in how we will collectively create
more value – for our customers, employees, and shareholders. I am
excited to be on the CECO team and look forward to driving new
growth and sustainable business processes as we build upon our
strong foundation."
SECOND QUARTER RESULTS
Revenue in the second quarter of 2020 was $75.2 million, down
7.4% from $81.2 million in the prior-year
period.
Operating income was $4.4 million
for the second quarter of 2020, compared with $2.0 million in the prior-year period. Non-GAAP
operating income was $7.4 million for
the second quarter of 2020 (9.8% margin), compared with
$4.4 million in the prior-year period
(5.4% margin).
Net income was $3.3 million for
the second quarter of 2020, compared with $5.5 million in the prior-year period. Net income
on a non-GAAP basis was $5.1 million
for the second quarter of 2020, compared with $3.0 million in the prior-year period.
Net income per diluted share was
$0.09
for the second quarter of
2020, compared with $0.15 in the prior-year period.
Non-GAAP net income per diluted share was $0.14 for the second quarter of 2020,
compared with $0.08 for
the prior-year period.
Cash and cash equivalents were $41.5 million and
bank debt was $79.5 million
as of June 30, 2020,
compared with $35.6 million and $67.3 million, respectively, as
of December 31, 2019. In the quarter, the Company
repaid the entirety of the $40.0 million
dollar cash drawdown from its credit revolver which was
announced in April as a proactive measure.
BACKLOG AND BOOKINGS
Total backlog at June 30, 2020 was
$204.6 million as compared with
$208.9 million on March 31, 2020 and $208.8
million on June 30, 2019.
Backlog acquired from the EIS acquisition was $8.8 million.
Bookings were $60.0 million for
the second quarter of 2020, compared with $103.0 million in the prior-year period. Bookings
were $135.7 million for the first six
months of 2020, compared with $200.3
million in the prior year period.
YEAR-TO-DATE RESULTS
Revenue in the first six months of 2020 was $155.7 million, down 6.9% from $167.2 million in the prior-year
period.
Operating income was $8.6 million
for the first six months of 2020 (5.5% margin), compared with
$6.9 million in the prior-year period
(4.1% margin). Operating income on a non-GAAP basis was
$13.7 million for the first six
months of 2020 (8.8% margin), compared with $11.5 million in the prior-year period (6.9%
margin).
Net income was $6.7 million for
the first six months of 2020, compared with $7.4 million in the prior-year period. Net
income on a non-GAAP basis was $10.4
million for the first six months of 2020, compared with
$7.0 million in the prior-year
period.
Net income per diluted share was $0.19 for the first six months of
2020, compared with $0.21 in the prior-year period. Non-GAAP net income per diluted share was
$0.29 for the first six months
of 2020, compared with $0.20 for the prior-year period.
CONFERENCE CALL
A conference call is scheduled for today at 8:30 a.m. ET to discuss the second quarter 2020
financial results. 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.
The live webcast and slides can also be accessed at
https://investors.cecoenviro.com/events-webcasts-and-presentations
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 10146531.
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)
JUNE 30,
2020
|
|
|
DECEMBER 31,
2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
41,513
|
|
|
$
|
35,602
|
|
Restricted
cash
|
|
|
1,625
|
|
|
|
1,356
|
|
Accounts receivable,
net
|
|
|
60,814
|
|
|
|
68,434
|
|
Costs and estimated
earnings in excess of billings on uncompleted contracts
|
|
|
38,178
|
|
|
|
34,805
|
|
Inventories,
net
|
|
|
18,897
|
|
|
|
20,578
|
|
Prepaid expenses and
other current assets
|
|
|
11,917
|
|
|
|
9,899
|
|
Prepaid income
taxes
|
|
|
6,548
|
|
|
|
8,231
|
|
Assets held for
sale
|
|
|
604
|
|
|
|
593
|
|
Total current
assets
|
|
|
180,096
|
|
|
|
179,498
|
|
Property, plant and
equipment, net
|
|
|
16,064
|
|
|
|
15,274
|
|
Right-of-use assets
from operating leases
|
|
|
12,707
|
|
|
|
13,607
|
|
Goodwill
|
|
|
159,107
|
|
|
|
152,020
|
|
Intangible assets –
finite life, net
|
|
|
32,636
|
|
|
|
31,283
|
|
Intangible assets –
indefinite life
|
|
|
14,328
|
|
|
|
14,291
|
|
Deferred charges and
other assets
|
|
|
3,454
|
|
|
|
2,664
|
|
Total
assets
|
|
$
|
418,392
|
|
|
$
|
408,637
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Current portion of
debt
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
Accounts payable and
accrued expenses
|
|
|
75,567
|
|
|
|
78,319
|
|
Billings in excess of
costs and estimated earnings on uncompleted contracts
|
|
|
28,032
|
|
|
|
34,369
|
|
Total current
liabilities
|
|
|
106,099
|
|
|
|
115,188
|
|
Other
liabilities
|
|
|
19,526
|
|
|
|
20,372
|
|
Debt, less current
portion
|
|
|
75,460
|
|
|
|
63,001
|
|
Deferred income tax
liability, net
|
|
|
7,704
|
|
|
|
5,943
|
|
Operating lease
liabilities
|
|
|
10,561
|
|
|
|
11,116
|
|
Total
liabilities
|
|
|
219,350
|
|
|
|
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,
35,493,617 and 34,275,465 shares
issued and outstanding at June 30, 2020
and December 31, 2019,
respectively
|
|
|
355
|
|
|
|
353
|
|
Capital in excess of
par value
|
|
|
254,323
|
|
|
|
253,869
|
|
Accumulated
loss
|
|
|
(39,682)
|
|
|
|
(46,344)
|
|
Accumulated other
comprehensive loss
|
|
|
(15,598)
|
|
|
|
(14,505)
|
|
|
|
|
199,398
|
|
|
|
193,373
|
|
Less treasury stock,
at cost, 137,920 shares at June 30, 2020 and December 31,
2019
|
|
|
(356)
|
|
|
|
(356)
|
|
Total shareholders'
equity
|
|
|
199,042
|
|
|
|
193,017
|
|
Total liabilities and
shareholders' equity
|
|
$
|
418,392
|
|
|
$
|
408,637
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net sales
|
|
$
|
75,170
|
|
|
$
|
81,179
|
|
|
$
|
155,656
|
|
|
$
|
167,190
|
|
Cost of
sales
|
|
|
49,354
|
|
|
|
54,333
|
|
|
|
101,561
|
|
|
|
111,911
|
|
Gross
profit
|
|
|
25,816
|
|
|
|
26,846
|
|
|
|
54,095
|
|
|
|
55,279
|
|
Selling and
administrative expenses
|
|
|
18,407
|
|
|
|
22,426
|
|
|
|
40,383
|
|
|
|
43,740
|
|
Amortization
expenses
|
|
|
1,785
|
|
|
|
2,153
|
|
|
|
3,498
|
|
|
|
4,313
|
|
Restructuring
expenses
|
|
|
530
|
|
|
|
249
|
|
|
|
882
|
|
|
|
249
|
|
Acquisition and
integration expenses
|
|
|
699
|
|
|
|
—
|
|
|
|
699
|
|
|
|
—
|
|
Loss on divestitures,
net of selling costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
70
|
|
Income from
operations
|
|
|
4,395
|
|
|
|
2,018
|
|
|
|
8,633
|
|
|
|
6,907
|
|
Other income
(expense), net
|
|
|
371
|
|
|
|
808
|
|
|
|
1,347
|
|
|
|
168
|
|
Interest
expense
|
|
|
(944)
|
|
|
|
(1,460)
|
|
|
|
(1,967)
|
|
|
|
(3,004)
|
|
Income before income
taxes
|
|
|
3,822
|
|
|
|
1,366
|
|
|
|
8,013
|
|
|
|
4,071
|
|
Income tax expense
(benefit)
|
|
|
564
|
|
|
|
(4,149)
|
|
|
|
1,343
|
|
|
|
(3,308)
|
|
Net income
|
|
$
|
3,258
|
|
|
$
|
5,515
|
|
|
$
|
6,670
|
|
|
$
|
7,379
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.09
|
|
|
$
|
0.16
|
|
|
$
|
0.19
|
|
|
$
|
0.21
|
|
Diluted
|
|
$
|
0.09
|
|
|
$
|
0.15
|
|
|
$
|
0.19
|
|
|
$
|
0.21
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
35,275,729
|
|
|
|
34,923,587
|
|
|
|
35,215,553
|
|
|
|
34,879,811
|
|
Diluted
|
|
|
35,410,182
|
|
|
|
35,582,727
|
|
|
|
35,402,524
|
|
|
|
35,471,628
|
|
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)
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Operating income as
reported in accordance with GAAP
|
|
$
|
4.4
|
|
|
$
|
2.0
|
|
|
$
|
8.6
|
|
|
$
|
6.9
|
|
Operating margin in
accordance with GAAP
|
|
|
5.9
|
%
|
|
|
2.5
|
%
|
|
|
5.5
|
%
|
|
|
4.1
|
%
|
Amortization
expenses
|
|
|
1.8
|
|
|
|
2.2
|
|
|
|
3.5
|
|
|
|
4.3
|
|
Restructuring
expenses
|
|
|
0.5
|
|
|
|
0.2
|
|
|
|
0.9
|
|
|
|
0.2
|
|
Acquisition and
integration expenses
|
|
|
0.7
|
|
|
|
—
|
|
|
|
0.7
|
|
|
|
—
|
|
Loss on divestitures,
net of selling costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.1
|
|
Non-GAAP operating
income
|
|
$
|
7.4
|
|
|
$
|
4.4
|
|
|
$
|
13.7
|
|
|
$
|
11.5
|
|
Non-GAAP operating
margin
|
|
|
9.8
|
%
|
|
|
5.4
|
%
|
|
|
8.8
|
%
|
|
|
6.9
|
%
|
|
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended
June 30,
|
|
(dollars in
millions)
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net income as
reported in accordance with GAAP
|
|
$
|
3.3
|
|
|
$
|
5.5
|
|
|
$
|
6.7
|
|
|
$
|
7.4
|
|
Amortization
expenses
|
|
|
1.8
|
|
|
|
2.2
|
|
|
|
3.5
|
|
|
|
4.3
|
|
Restructuring
expenses
|
|
|
0.5
|
|
|
|
0.2
|
|
|
|
0.9
|
|
|
|
0.2
|
|
Acquisition and
integration expenses
|
|
|
0.7
|
|
|
|
—
|
|
|
|
0.7
|
|
|
|
—
|
|
Deferred financing fee
adjustment
|
|
|
—
|
|
|
|
0.4
|
|
|
|
—
|
|
|
|
0.4
|
|
Loss on divestitures,
net of selling costs
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
0.1
|
|
Foreign currency
remeasurement
|
|
|
(0.6)
|
|
|
|
(0.3)
|
|
|
|
(0.1)
|
|
|
|
0.3
|
|
Tax benefit of
adjustments
|
|
|
(0.6)
|
|
|
|
(0.6)
|
|
|
|
(1.3)
|
|
|
|
(1.3)
|
|
Zhongli tax
benefit
|
|
|
—
|
|
|
|
(4.4)
|
|
|
|
—
|
|
|
|
(4.4)
|
|
Non-GAAP net
income
|
|
$
|
5.1
|
|
|
$
|
3.0
|
|
|
$
|
10.4
|
|
|
$
|
7.0
|
|
Depreciation
|
|
|
0.6
|
|
|
|
0.6
|
|
|
|
1.1
|
|
|
|
1.2
|
|
Non-cash stock
compensation
|
|
|
0.2
|
|
|
|
1.0
|
|
|
|
0.8
|
|
|
|
1.8
|
|
Other expense
(income)
|
|
|
0.2
|
|
|
|
(0.5)
|
|
|
|
(1.2)
|
|
|
|
(0.5)
|
|
Interest
expense
|
|
|
0.9
|
|
|
|
1.1
|
|
|
|
2.0
|
|
|
|
2.6
|
|
Income tax
expense
|
|
|
1.2
|
|
|
|
0.8
|
|
|
|
2.6
|
|
|
|
2.4
|
|
Adjusted
EBITDA
|
|
$
|
8.2
|
|
|
$
|
6.0
|
|
|
$
|
15.7
|
|
|
$
|
14.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.09
|
|
|
$
|
0.16
|
|
|
$
|
0.19
|
|
|
$
|
0.21
|
|
Diluted
|
|
$
|
0.09
|
|
|
$
|
0.15
|
|
|
$
|
0.19
|
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.14
|
|
|
$
|
0.09
|
|
|
$
|
0.29
|
|
|
$
|
0.20
|
|
Diluted
|
|
$
|
0.14
|
|
|
$
|
0.08
|
|
|
$
|
0.29
|
|
|
$
|
0.20
|
|
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, restructuring expenses primarily relating to severance and
legal expenses, acquisition and integration expenses which include
retention, legal, accounting, banking, and other 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 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. 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 quarter ended March 31,
2020 and of this Quarterly Report on Form 10-Q for the
quarter ended June 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
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; our ability to successfully realize the expected
benefits of our restructuring program; our ability to successfully
integrate acquired businesses and realize the synergies from
acquisitions; 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.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/ceco-environmental-corp-reports-second-quarter-and-year-to-date-2020-results-301106225.html
SOURCE CECO Environmental Corp.