PR Newswire | May 6, 2021 07:01AM EDT

05/06 06:00 CDT

CECO Environmental Reports First Quarter 2021 ResultsStrong Start to 2021 Achieving Significant Growth in Bookings and Backlog DALLAS, May 6, 2021

DALLAS, May 6, 2021 /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 first quarter of 2021.

Highlights of the First Quarter 2021*

* Revenue of $71.9 million, compared with $80.5 million * Gross profit of $24.4 million (33.9% margin), compared with 28.3 million (35.2% margin) * Operating income of $3.1 million, compared with $4.2 million * Non-GAAP operating income of $5.0 million, compared with $6.3 million * Net income was $1.2 million, compared with $3.4 million * Non-GAAP net income of $3.1 million, compared with $5.3 million * Adjusted EBITDA of $6.4 million, compared with $7.4 million * Earnings per diluted share was $0.03, compared with $0.10 * Non-GAAP earnings per diluted share of $0.09, compared with $0.15 * Bookings of $92.1 million, compared with $75.7 million * Backlog of $203.1 million, compared with $183.1 million as of December 31, 2020 * Cash provided by operating activities of $9.9 million, compared with $7.0 million * Cash and cash equivalents were $40.9 million, compared with $36.0 million as of December 31, 2020 * Bank Debt of $70.6 million, compared with $74.0 million as of December 31, 2020

*All comparisons are versus the comparable prior-year period, unless otherwise stated

Todd Gleason, CECO's Chief Executive Officer, commented, "We are off to a great start and I am very pleased with our first quarter performance. Our strong, double-digit growth in bookings and tremendous free cash flow generation reflect our focused execution and our leadership position in improving end-markets. We continue to execute for our customers while prudently managing our cost structure, which has yielded very good margins despite year-over-year decline in revenues."

Mr. Gleason added, "We expect to turn the corner on topline growth in the coming periods given our booking's growth over the past few quarters. Additionally, we are excited to articulate our long-term growth strategy in mid-2021 - which will build on our position as an environmental solutions leader in diversified industrial markets."

CONFERENCE CALL

A conference call is scheduled for today at 8:30 a.m. ET to discuss the first quarter 2021 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 (877) 344-7529 (Toll-Free) within the U.S., (855) 669-9658 (Toll-Free) within Canada, or Toll/International (412) 317-0088 and entering access code 10155011.

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 industries including power generation, wastewater treatment, poly silicon fabrication, petrochemical processing, electric vehicle production, battery recycling, general industrial, refining, and a wide range of other industries. 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) 990-6670investor.relations@onececo.com

CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data) (unaudited) DECEMBER 31, 2020 MARCH 31, 2021

ASSETS

Current assets:

Cash and cash equivalents $ 40,864 $ 35,992

Restricted cash 2,386 1,819

Accounts receivable, net 66,468 63,046

Costs and estimated earnings in excess of 41,173 45,498billings on uncompleted contracts

Inventories, net 16,398 17,343

Prepaid expenses and other current assets 11,369 11,530

Prepaid income taxes 2,838 7,790

Assets held for sale - 467

Total current assets 181,496 183,485

Property, plant and equipment, net 16,175 16,228

Right-of-use assets from operating leases 10,729 11,376

Goodwill 161,652 161,820

Intangible assets - finite life, net 31,021 29,637

Intangible assets - indefinite life 9,720 12,937

Deferred charges and other assets 2,864 3,831

Total assets $ 413,657 $ 419,314

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current portion of debt $ 3,437 $ 3,125

Accounts payable and accrued expenses 85,518 84,997

Billings in excess of costs and estimated 17,107 20,691earnings on uncompleted contracts

Income taxes payable - 543

Total current liabilities 106,062 109,356

Other liabilities 20,183 20,576

Debt, less current portion 65,955 69,491

Deferred income tax liability, net 6,964 6,970

Operating lease liabilities 8,842 9,310

Total liabilities 208,006 215,703

Commitments and contingencies

Shareholders' equity:

Preferred stock, $.01 par value; 10,000 - -shares authorized, none issued

Common stock, $.01 par value; 100,000,000shares authorized, 35,567,511 and 35,504,757 356 355shares issued and outstanding at March 31,2021 and December 31, 2020, respectively

Capital in excess of par value 255,982 255,296

Accumulated loss (36,960) (38,141)

Accumulated other comprehensive loss (14,441) (14,496)

204,937 203,014

Less treasury stock, at cost, 137,920 shares (356) (356)at March 31, 2021 and December 31, 2020

Total shareholders' equity 204,581 202,658

Noncontrolling interest 1,070 953

Total shareholders equity 205,651 203,611

Total liabilities and shareholders' equity $ 413,657 $ 419,314

CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

THREE MONTHS ENDED MARCH 31,

(dollars in thousands, except per share data) 2021 2020

Net sales $ 71,892 $ 80,486

Cost of sales 47,485 52,207

Gross profit 24,407 28,279

Selling and administrative expenses 19,454 21,953

Amortization and earnout expenses 1,791 1,713

Restructuring expenses - 374

Acquisition and integration expenses 108 -

Income from operations 3,054 4,239

Other (expense) income, net (480) 975

Interest expense (725) (1,023)

Income before income taxes 1,849 4,191

Income tax expense 551 779

Net income 1,298 3,412

Noncontrolling interest 117 -

Net income attributable to CECO Environmental $ 1,181 $ 3,412Corp.

Earnings per share:

Basic $ 0.03 $ 0.10

Diluted $ 0.03 $ 0.10

Weighted average number of common sharesoutstanding:

Basic 35,396,705 35,155,377

Diluted 35,774,208 35,394,865

CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

THREE MONTHS ENDED MARCH 31,

(dollars in millions) 2021 2020

Operating income as reported in accordance with $ 3.1 $ 4.2GAAP

Operating margin in accordance with GAAP 4.3 % 5.2 %

Amortization and earnout expenses 1.8 1.7

Restructuring expenses - 0.4

Acquisition and integration expenses 0.1 -

Non-GAAP operating income $ 5.0 $ 6.3

Non-GAAP operating margin 7.0 % 7.8 %

THREE MONTHS ENDED MARCH 31,

(dollars in millions) 2021 2020

Net income as reported in accordance with GAAP $ 1.2 $ 3.4

Amortization and earnout expenses 1.8 1.7

Restructuring expenses - 0.4

Acquisition and integration expenses 0.1 -

Foreign currency remeasurement 0.6 0.5

Tax benefit of adjustments (0.6) (0.7)

Non-GAAP net income $ 3.1 $ 5.3

Depreciation 0.8 0.5

Non-cash stock compensation 0.7 0.6

Other income (0.1) (1.5)

Interest expense 0.7 1.0

Income tax expense 1.2 1.5

Adjusted EBITDA $ 6.4 $ 7.4

Earnings per share:

Basic $ 0.03 $ 0.10

Diluted $ 0.03 $ 0.10

Non-GAAP earnings per share:

Basic $ 0.09 $ 0.15

Diluted $ 0.09 $ 0.15

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 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 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 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 earnings 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 earnings 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, 2020 and include, but are not limited to: the sensitivity of our business to 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 revenue; 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; 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.