CECO Environmental Reports Fourth Quarter and Full Year 2013 Results

CINCINNATI, March 6, 2014 /PRNewswire/ -- CECO Environmental Corp. (NasdaqGM: CECE), a leading global environmental technology company focused on critical solutions in the product recovery, air pollution control, fluid handling and filtration industries, today reported its financial results for the fourth quarter and full year ended December 31, 2013. Results include the operations of Met-Pro Corporation ("Met-Pro") from the date of its acquisition on August 27, 2013.

Total revenue in the fourth quarter of 2013 was $68.7 million, up 100.2% from total revenue of $34.3 million in the prior-year's fourth quarter. Recent acquisitions contributed $34.3 million of revenue in the quarter, including Met-Pro, which contributed $23.3 million for the period from October 1 to December 31.

Net income was $2.8 million in the fourth quarter of 2013 as compared with net income of $3.1 million in the fourth quarter of 2012. Excluding acquisition and integration expenses, amortization and earn-out expenses, inventory and plant, property and equipment valuation adjustments attributable to the Met-Pro acquisition and legal reserves, non-GAAP net income increased 112.5% to $6.8 million.  Net income per diluted share was $0.11 in the fourth quarter of 2013 as compared with net income per diluted share of $0.18 in the fourth quarter of 2012; Non-GAAP net income per diluted share, adjusted as noted above, increased 44.4% to $0.26 from $0.18 in the prior year period.

Bookings were $66.8 million in the fourth quarter of 2013, compared with $26.3 million in the fourth quarter of 2012, an increase of 154%.

Cash and cash equivalents were $22.7 million and bank debt was $88.9 million as of December 31, 2013 compared to $23.0 and no bank debt as of December 31, 2012. The increase in debt was attributable to the Met-Pro Acquisition.

FINANCIAL HIGHLIGHTS FOR FULL YEAR 2013

Revenue in 2013 was $197.3 million, up 46.1% from $135.1 million in 2012.  Acquisitions contributed $68.1 million in revenue in 2013.

Net income in 2013 was $6.6 million as compared with $10.9 million in 2012. Excluding acquisition and integration expenses, amortization and earn-out expenses, inventory and plant, property and equipment valuation adjustments attributable to the Met-Pro acquisition and legal reserves, non-GAAP net income increased 83.8% to $20.4 million.

Net income per diluted share was $0.32 in 2013 as compared with $0.65 in 2012; Non-GAAP diluted net income per share increased 50.7% to $0.98.

BACKLOG AND BOOKINGS

Total backlog at December 31, 2013 was $98.5 million as compared with $100.4 million on September 30, 2013, and $59.5 million on December 31, 2012. Acquisitions contributed approximately $37.1 million to the backlog on a year-over-year basis.

Bookings in the fourth quarter of 2013 were $66.8 million, up from $26.3 million in the prior-year period. Bookings were $199.2 million in 2013, compared with $139.7 million in 2012.

QUARTERLY DIVIDEND

On March 5, 2014, CECO's Board of Directors approved a quarterly dividend of $0.05 per share. The dividend will be paid on March 31, 2014 to all shareholders of record at the close of business on March 19, 2013. CECO initiated a Dividend Reinvestment Plan ("DRIP") in 2012 that provides for the voluntary reinvestment of dividends by its stockholders.

OPERATIONAL SUMMARY

"We are pleased with CECO's overall results both for the fourth quarter and for  2013 as we completed and integrated the acquisitions of Met-Pro, Aarding and Adwest and continued to execute on our core objectives, including profitable growth and improving margins," said Jeff Lang, Chief Executive Officer of CECO. "We achieved several important milestones in the quarter including increased global bookings activity, strong backlog growth, significant integration progress, non-GAAP EPS growth, and expanding our global growth platform. The integration of Met-Pro has been quite successful with targeted cost synergies already achieved, the divestiture of a small non-core business completed and non-core real estate divestitures well underway. Revenue synergies also continue to advance. We remain focused on our business and executing on our sales and operational excellence initiatives, which we expect to drive both additional top line growth and increased operating cash flow generation."

Jeff Lang also commented, "Overall business conditions in our sector in the fourth quarter improved modestly from the prior quarter. We expect things will continue to improve throughout 2014 and that the pollution control market will outpace overall GDP. Our 'One-CECO' sales initiative is beginning to pay dividends and we continue to build out our business platform in China.  I am proud of what we accomplished in 2013, but even more excited about where we can take the company in 2014 and beyond as we continue to create increasing  shareholder value on the back of our strengthened platform."

Jeff Lang, Chief Executive Officer, and Neal Murphy, Chief Financial Officer, will discuss the company's fourth quarter and full Year 2013 results during a conference call scheduled for Thursday, March 6, 2014 at 8:30 a.m. EST (7:30 a.m. Central Time).

The North American toll-free number for the call is (855) 626-8629. International callers should dial (954) 320-7630. The conference code for the call is 4839240. A webcast of the live call can be either accessed at CECO's website at http://cecoenviro.com, or directly accessed at http://us.meeting-stream.com/cecoenvironmentalcorp_030614.

For those unable to listen to the live call, a taped replay will be available from 11:30 a.m. EST on March 7 until 11:59 p.m. EDT on March 21. To access the replay, call (855) 859-2056 (North American callers) or (404) 537-3406 (international callers) and use conference code 4839240.

ABOUT CECO ENVIRONMENTAL

CECO Environmental is a leading global environmental technology company focused on critical solutions in the product recovery, air pollution control, fluid handling and  filtration segments. Through its well-known brands, CECO provides a wide spectrum of products and services including dampers & diverters, cyclonic technology, thermal oxidizers, filtration systems, scrubbers, fluid handling equipment and plant engineered services and engineered design build fabrication. These products play a vital role in helping companies achieve exacting production standards, meeting increasing plant needs and stringent emissions control regulations around the globe. CECO globally serves the broadest range of markets and industries including power, municipalities, chemical, industrial manufacturing, refining, petrochemical, metals, minerals & mining, hospitals and universities. CECO is focused on building long-term shareholder value by bringing its unique technology, portfolio and operational excellence to strategic key growth markets around the world, while maintaining the highest standards of employee development, project execution and safety leadership. CECO is listed on NASDAQ under the ticker symbol "CECE" and is a member company of the Russell 2000 Index. For more information on CECO Environmental, please visit the company's website at http://www.cecoenviro.com. 

Contact:
Corporate Information
Jeff Lang, Chief Executive Officer
Neal Murphy, Chief Financial Officer
1-800-333-5475

or

Investor Relations:
Shawn Severson
The Blueshirt Group
Phone:  (415) 489-2198
Email:  Shawn@blueshirtgroup.com

NOTE REGARDING NON-GAAP FINANCIAL MEASURES

CECO is providing the non-GAAP historical financial measures 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 gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP gross profit margin, non-GAAP operating margin, and non-GAAP earnings per basic and diluted share, as we present them in the financial data included in this press release, have been adjusted to exclude the effects of expenses related to acquisition and integration expense activities including retention, legal, accounting, banking, amortization and contingent earnout expenses, legal reserves and the associated tax benefit of these charges. 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 gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP gross profit margin, non-GAAP operating margin, and non-GAAP earnings per basic and diluted shares 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.

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP gross profit margin, non-GAAP operating margin, and non-GAAP earnings per basic and diluted share 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. Words such as "estimate," "believe," "anticipate," "expect," "intend," "plan," "target," "project," "should," "may," "will" and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) 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. These risks and uncertainties include, but are not limited to: our ability to successfully integrate Met-Pro's operations and realize the synergies from the acquisition, 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; dependence on fixed price contracts and the risks associated therewith, including actual costs exceeding estimates and method of accounting for contract revenue; fluctuations in operating results from period to period due to seasonality of the business; 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; changes in or developments with respect to any litigation or investigation; the potential for fluctuations in prices for manufactured components and raw materials; the substantial amount of debt in connection with the acquisition and CECO's 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; and the effect of competition in the air pollution control and industrial ventilation industry. These and other risks and uncertainties are discussed in more detail in CECO's filings with the Securities and Exchange Commission, including our reports on Form 10-K and Form 10-Q. 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. All forward-looking statements attributable to CECO or persons acting on behalf of CECO are expressly qualified in their entirety by the cautionary statements and risk factors contained in this press release and CECO's respective filings with the Securities and Exchange Commission. 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, CECO undertakes no obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

SOURCE CECO Environmental Corp.