Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries CECO Environmental Reports Fourth Quarter and Full Year 2023 Results By: CECO Environmental Corp. via GlobeNewswire March 05, 2024 at 07:00 AM EST Reports Q4 and Full Year Earnings with Multiple Financial RecordsCompany Raises Full Year 2024 Guidance DALLAS, March 05, 2024 (GLOBE NEWSWIRE) -- CECO Environmental Corp. (Nasdaq: CECO) ("CECO"), a leading environmentally focused, diversified industrial company whose solutions protect people, the environment, and industrial equipment, today reported its financial results for the fourth quarter and full year results of 2023. Highlights for the Quarter(1) Orders of $128.3 millionBacklog of $370.9 million, up 19 percentRevenue of $153.7 million, up 32 percentNet income of $3.9 million, down 53 percent; non-GAAP net income of $10.1 million, up 36 percentGAAP EPS (diluted) of $0.11; non-GAAP EPS (diluted) of $0.28Adjusted EBITDA of $19.4 million, up 49 percentFree cash flow of $12.2 million, up 36 percent Highlights for the Year(1) Orders of $582.8 million, up 11 percentRevenue of $544.8 million, up 29 percentNet income of $12.9 million, down 26 percent; non-GAAP net income of $26.6 million, up 3 percentGAAP EPS (diluted) of $0.37; non-GAAP EPS (diluted) of $0.75Adjusted EBITDA of $57.7 million, up 37 percentFree cash flow of $36.2 million, up 33 percent (1) 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 continued to deliver successful results during the fourth quarter as our operating model produced record-breaking revenues, gross profits and adjusted EBITDA as well as strong free cash flow. We exit 2023 with a strong backlog and enter 2024 with a significant sales pursuit pipeline,” said CECO Chief Executive Officer, Todd Gleason. “I am pleased our results continue to be driven by balanced contributions from across our portfolio and that our growth continues to be sustained by double-digit organic sales increases, supported by accretive, programmatic M&A execution.” Fourth quarter operating income was $12.7 million, up $4.3 million or 51 percent when compared to $8.4 million in the fourth quarter 2022. On an adjusted basis, non-GAAP operating income was $16.3 million, up $5.3 million or 48 percent when compared to $11.0 million in the fourth quarter of 2022. Net income was $3.9 million in the quarter, compared to $8.3 million in the fourth quarter 2022. Non-GAAP net income was $10.1 million, up $2.7 million compared to $7.4 million in the fourth quarter 2022. Adjusted EBITDA of $19.4 million, reflecting a margin of 12.6 percent, was up 49 percent compared to $13.0 million in the fourth quarter 2022. Free cash flow in the quarter was $12.2 million, up $3.2 million compared to $9.0 million in the fourth quarter of 2022. Full year operating income was $34.6 million, up $12.4 million or 56 percent when compared to $22.2 million in 2022. On an adjusted basis, non-GAAP operating income was $48.1 million, up $13.3 million or 38 percent when compared to $34.8 million in 2022. Net income was $12.9 million in the year, compared to $17.4 million in 2022. Non-GAAP net income was $26.6 million, compared to $25.9 million in 2022. Adjusted EBITDA of $57.7 million, reflecting a margin of 10.6 percent, was up 37 percent compared to $42.2 million in 2022. Free cash flow was $36.2 million, up $9.0 million or 33 percent compared to $27.2 million in 2022. “CECO has continued to mindfully transform our portfolio into a well-positioned leader across industrial air, industrial water and the energy transition. The three acquisitions we completed in 2023 are delivering outstanding results across their strategically focused niche markets. Additionally, our sustained investment to expand our global footprint and capabilities has improved our international sales mix and opened new geographic markets. I am extremely grateful to and proud of our dedicated employees and their commitment to delivering for our customers and partners,” added Gleason. Company Financial Outlook: Raises 2024 Full Year Guidance The Company is raising its 2024 full year revenue guidance to $590 to $610 million, up approximately 10% year over year at the midpoint, and Adjusted EBITDA guidance to $67 to $70 million, up approximately 19% year over year at the midpoint. The updated 2024 full year guidance is compared to the previously communicated outlook of $575 to $600 million in revenue and Adjusted EBITDA of $65 to $70 million. The Company reaffirms its previously communicated 2024 full year guidance of free cash flow of 50% to 70% of Adjusted EBITDA. “We raised our full year 2024 outlook to reflect our expectations given our tremendous backlog, coupled with our commercial and operational excellence programs, which will drive robust organic growth and further operating margin expansion opportunities. Additionally, we enter the year with a healthy balance sheet which provides added optionality to evaluate and execute on the most attractive internal growth programs as well as any potential accretive M&A opportunities to advance our leadership positions in industrial air, industrial water and the energy transition to drive long-term shareholder value,” concluded Gleason. EARNINGS CONFERENCE CALL A conference call is scheduled for today at 8:30 a.m. ET to discuss the fourth quarter and full year 2023 financial results. Please visit the Investor Relations portion of the website (https://investors.cecoenviro.com) to listen to the call via webcast. The conference call may also be accessed by visiting https://edge.media-server.com/mmc/p/7wfof7nx. A replay of the conference call will be available on the Company’s website for a period of one year. The replay may also be accessed by visiting https://edge.media-server.com/mmc/p/7wfof7nx. ABOUT CECO ENVIRONMENTAL CECO Environmental is a leading environmentally focused, diversified industrial company, serving the broad landscape of industrial air, industrial water and energy transition markets globally providing innovative solutions 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. CECO solutions improve air and water quality, optimize emissions management, and increase energy efficiency for highly-engineered applications in power generation, midstream and downstream hydrocarbon processing and transport, electric vehicle production, polysilicon fabrication, semiconductor and electronics, battery production and recycling, specialty metals and steel production, beverage can, and water/wastewater treatment and a wide range of other industrial end markets. CECO is listed on Nasdaq under the ticker symbol "CECO." Incorporated in 1966, CECO’s global headquarters is in Dallas, Texas. For more information, please visit www.cecoenviro.com. Company Contact:Peter JohanssonChief Financial and Strategy Officer888-990-6670investor.relations@onececo.com Investor Relations Contact: Steven Hooser and Jean Marie YoungThree Part Advisors, LLC214-872-2710investor.relations@onececo.com CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS December 31, (dollars in thousands, except share data) 2023 2022 ASSETS Current assets: Cash and cash equivalents $54,779 $45,522 Restricted cash 669 1,063 Accounts receivable, net of allowances of $6,460 and $4,220 112,733 83,086 Costs and estimated earnings in excess of billings on uncompleted contracts 66,574 71,016 Inventories, net 34,089 26,526 Prepaid expenses and other current assets 11,769 12,174 Prepaid income taxes 824 1,271 Total current assets 281,437 240,658 Property, plant and equipment, net 26,237 20,828 Right-of-use assets from operating leases 16,256 11,373 Goodwill 211,326 183,197 Intangible assets – finite life, net 50,461 35,251 Intangible assets – indefinite life 9,570 9,508 Deferred income taxes 304 829 Deferred charges and other assets 4,700 3,077 Total assets $600,291 $504,721 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of debt $10,488 $3,579 Accounts payable 87,691 73,407 Accrued expenses 44,301 33,791 Billings in excess of costs and estimated earnings on uncompleted contracts 56,899 32,716 Notes payable 2,500 — Income taxes payable 1,227 3,207 Total current liabilities 203,106 146,700 Other liabilities 12,644 15,129 Debt, less current portion 126,795 107,625 Deferred income tax liability, net 8,838 8,666 Operating lease liabilities 11,417 8,453 Total liabilities 362,800 286,573 Commitments and contingencies (See Note 12) Shareholders’ equity: Preferred stock, $.01 par value; 10,000 shares authorized, none issued — — Common stock, $.01 par value; 100,000,000 shares authorized, 34,835,293 and 34,381,668 shares issued and outstanding at December 31, 2023 and 2022, respectively 348 344 Capital in excess of par value 254,956 250,174 Accumulated loss (6,387) (19,298)Accumulated other comprehensive loss (16,274) (17,996)Total CECO shareholders’ equity 232,643 213,224 Noncontrolling interest 4,848 4,924 Total shareholders' equity 237,491 218,148 Total liabilities and shareholders’ equity $600,291 $504,721 CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(unaudited) Three months ended December 31, Year ended December 31, (in thousands, except share and per share data) 2023 2022 2023 2022 Net sales $153,711 $116,402 $544,845 $422,627 Cost of sales 100,526 78,706 373,829 294,402 Gross profit 53,185 37,696 171,016 128,225 Selling and administrative expenses 36,862 26,667 122,944 93,473 Amortization and earnout expenses 2,192 1,870 8,180 6,809 Acquisition and integration expenses 298 721 2,508 4,546 Executive transition expenses 48 — 1,465 1,161 Restructuring expenses (income) 1,133 — 1,350 75 Income from operations 12,652 8,438 34,569 22,161 Other income (expense), net 1,042 4,193 372 6,947 Interest expense (3,918) (1,930) (13,416) (5,419)Income before income taxes 9,776 10,701 21,525 23,689 Income tax expense 5,447 2,139 7,024 5,426 Net income 4,329 8,562 14,501 18,263 Noncontrolling interest (450) (267) (1,590) (846)Net income attributable to CECO Environmental Corp. $3,879 $8,295 $12,911 $17,417 Income per share: Basic $0.11 $0.24 $0.37 $0.50 Diluted $0.11 $0.24 $0.37 $0.50 Weighted average number of common shares outstanding: Basic 34,823,663 34,318,526 34,665,473 34,672,007 Diluted 35,687,092 34,919,398 35,334,090 35,005,159 CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, (dollars in thousands) 2023 2022 Cash flows from operating activities: Net income $14,501 $18,263 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,507 10,614 Unrealized foreign currency (gain) loss (1,041) (1,284)Impairment of intangible assets — — Fair value adjustments to earnout liabilities 296 (229)Earnout payments — (1,007)Loss (gain) on sale of property and equipment 110 10 Amortization of debt discount 427 371 Share based compensation expense 4,533 3,895 Bad debt expense 1,593 1,340 Inventory reserve expense 1,099 140 Deferred income tax (benefit) expense (118) (39)Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (26,851) (6,751)Cost and estimated earnings of billings on uncompleted contracts 5,040 (16,851)Inventories (6,896) (6,023)Prepaid expenses and other current assets 1,196 37 Deferred charges and other assets (1,420) 2,478 Accounts payable 13,852 19,843 Accrued expenses 8,340 2,693 Billings in excess of costs and estimated earnings on uncompleted contracts 21,575 4,405 Income taxes payable (1,976) 1,424 Other liabilities (2,120) (3,680)Net cash provided by operating activities 44,647 29,649 Cash flows from investing activities: Acquisitions of property and equipment (8,384) (3,376)Net proceeds from sale of assets — 19 Cash paid for acquisitions, net of cash acquired (48,102) (44,900)Net cash used in investing activities (56,486) (48,257)Cash flows from financing activities: Borrowings on revolving credit lines 106,600 75,200 Repayments on revolving credit lines (150,600) (35,900)Borrowings of long-term debt 75,000 11,000 Repayments of long-term debt (4,985) (3,120)Repayments of notes payable — (500)Deferred financing fees paid (363) (130)Deferred consideration paid for acquisitions (1,247) — Payments on capital leases and sale-leaseback financing liability (907) (600)Earnout payments (2,123) — Proceeds from employee stock purchase plan and exercise of stock options 1,435 671 Distributions to non-controlling interest (1,666) (1,425)Common stock repurchases — (7,020)Net cash provided by (used in) financing activities 21,144 38,176 Effect of exchange rate changes on cash and cash equivalents (442) (4,978)Net increase (decrease) in cash, cash equivalents and restricted cash 8,863 14,590 Cash, cash equivalents and restricted cash at beginning of year 46,585 31,995 Cash, cash equivalents and restricted cash at end of year $55,448 $46,585 Cash paid (received) during the period for: Interest $12,098 $5,007 Income taxes $9,916 $5,378 CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP MEASURES Three months ended December 31, Year ended December 31, (in millions, except ratios) 2023 2022 2023 2022 Operating income as reported in accordance with GAAP $12.7 $8.4 $34.6 $22.2 Operating margin in accordance with GAAP 8.3% 7.2% 6.4% 5.3%Amortization and earnout expenses 2.2 1.9 8.2 6.8 Acquisition and integration expenses 0.3 0.7 2.5 4.5 Executive transition expenses — — 1.5 1.2 Restructuring expenses 1.1 — 1.3 0.1 Non-GAAP operating income $16.3 $11.0 $48.1 $34.8 Non-GAAP operating margin 10.6% 9.5% 8.8% 8.2% Three months ended December 31, Year ended December 31, (in millions, except share data) 2023 2022 2023 2022 Net income as reported in accordance with GAAP $3.9 $8.3 $12.9 $17.4 Amortization and earnout expenses 2.2 1.9 8.2 6.8 Acquisition and integration expenses 0.3 0.7 2.5 4.5 Executive transition expenses — — 1.5 1.2 Restructuring expenses 1.1 — 1.3 0.1 Foreign currency remeasurement (1.0) (3.8) (1.0) (1.3)Tax benefit (expense) of adjustments 3.6 0.3 1.2 (2.8)Non-GAAP net income $10.1 $7.4 $26.6 $25.9 Depreciation 1.7 1.0 5.1 3.6 Non-cash stock compensation 1.5 1.0 4.5 3.9 Other (income) expense (0.1) (0.4) 0.8 (5.6)Interest expense 3.9 1.9 13.4 5.4 Income tax expense 1.8 1.8 5.7 8.2 Noncontrolling interest 0.5 0.3 1.6 0.8 Adjusted EBITDA $19.4 $13.0 $57.7 $42.2 Earnings per share: Basic $0.11 $0.24 $0.37 $0.50 Diluted $0.11 $0.24 $0.37 $0.50 Adjusted earnings per share: Basic $0.29 $0.22 $0.77 $0.75 Diluted $0.28 $0.21 $0.75 $0.74 Three months ended December 31, Year ended December 31, (in millions) 2023 2022 2023 2022 Net cash provided by operating activities $15.1 $10.0 $44.6 $29.6 Earnout payments (within operating activities) — — — 1.0 Acquisitions of property and equipment (2.9) (1.0) (8.4) (3.4)Free cash flow $12.2 $9.0 $36.2 $27.2 NOTE REGARDING NON-GAAP FINANCIAL MEASURES CECO is providing certain non-GAAP historical financial measures as presented above as we believe 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 accordance with GAAP. Non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, non-GAAP earnings per basic and diluted share, adjusted EBITDA and free cash flow, 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, foreign currency remeasurement 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 better 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, adjusted EBITDA and free cash flow 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, non-GAAP earnings per basic and diluted share, adjusted EBITDA and free cash flow stated in the tables above are reconciled to the most directly comparable GAAP financial measures. Non-GAAP measures presented on a forward-looking basis were not reconciled to the comparable GAAP financial measures because the reconciliation could not be performed without unreasonable efforts. The GAAP measures are not accessible on a forward-looking basis because we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include 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, foreign currency remeasurement and other nonrecurring or infrequent items and the associated tax benefit of these items. The unavailable information could have a significant impact on our GAAP financial results. 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. 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, 2023 and may be included in subsequently filed Quarterly Reports on Form 10-Q, 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 as a result of on-going or worsening supply chain challenges; 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, and rising energy costs; inflationary pressures relating to rising raw material costs and the cost of labor; 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; our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; 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; and the unpredictability and severity of catastrophic events, including cyber security threats, acts of terrorism or outbreak of war or hostilities or public health crises, 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. 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. Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
CECO Environmental Reports Fourth Quarter and Full Year 2023 Results By: CECO Environmental Corp. via GlobeNewswire March 05, 2024 at 07:00 AM EST Reports Q4 and Full Year Earnings with Multiple Financial RecordsCompany Raises Full Year 2024 Guidance DALLAS, March 05, 2024 (GLOBE NEWSWIRE) -- CECO Environmental Corp. (Nasdaq: CECO) ("CECO"), a leading environmentally focused, diversified industrial company whose solutions protect people, the environment, and industrial equipment, today reported its financial results for the fourth quarter and full year results of 2023. Highlights for the Quarter(1) Orders of $128.3 millionBacklog of $370.9 million, up 19 percentRevenue of $153.7 million, up 32 percentNet income of $3.9 million, down 53 percent; non-GAAP net income of $10.1 million, up 36 percentGAAP EPS (diluted) of $0.11; non-GAAP EPS (diluted) of $0.28Adjusted EBITDA of $19.4 million, up 49 percentFree cash flow of $12.2 million, up 36 percent Highlights for the Year(1) Orders of $582.8 million, up 11 percentRevenue of $544.8 million, up 29 percentNet income of $12.9 million, down 26 percent; non-GAAP net income of $26.6 million, up 3 percentGAAP EPS (diluted) of $0.37; non-GAAP EPS (diluted) of $0.75Adjusted EBITDA of $57.7 million, up 37 percentFree cash flow of $36.2 million, up 33 percent (1) 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 continued to deliver successful results during the fourth quarter as our operating model produced record-breaking revenues, gross profits and adjusted EBITDA as well as strong free cash flow. We exit 2023 with a strong backlog and enter 2024 with a significant sales pursuit pipeline,” said CECO Chief Executive Officer, Todd Gleason. “I am pleased our results continue to be driven by balanced contributions from across our portfolio and that our growth continues to be sustained by double-digit organic sales increases, supported by accretive, programmatic M&A execution.” Fourth quarter operating income was $12.7 million, up $4.3 million or 51 percent when compared to $8.4 million in the fourth quarter 2022. On an adjusted basis, non-GAAP operating income was $16.3 million, up $5.3 million or 48 percent when compared to $11.0 million in the fourth quarter of 2022. Net income was $3.9 million in the quarter, compared to $8.3 million in the fourth quarter 2022. Non-GAAP net income was $10.1 million, up $2.7 million compared to $7.4 million in the fourth quarter 2022. Adjusted EBITDA of $19.4 million, reflecting a margin of 12.6 percent, was up 49 percent compared to $13.0 million in the fourth quarter 2022. Free cash flow in the quarter was $12.2 million, up $3.2 million compared to $9.0 million in the fourth quarter of 2022. Full year operating income was $34.6 million, up $12.4 million or 56 percent when compared to $22.2 million in 2022. On an adjusted basis, non-GAAP operating income was $48.1 million, up $13.3 million or 38 percent when compared to $34.8 million in 2022. Net income was $12.9 million in the year, compared to $17.4 million in 2022. Non-GAAP net income was $26.6 million, compared to $25.9 million in 2022. Adjusted EBITDA of $57.7 million, reflecting a margin of 10.6 percent, was up 37 percent compared to $42.2 million in 2022. Free cash flow was $36.2 million, up $9.0 million or 33 percent compared to $27.2 million in 2022. “CECO has continued to mindfully transform our portfolio into a well-positioned leader across industrial air, industrial water and the energy transition. The three acquisitions we completed in 2023 are delivering outstanding results across their strategically focused niche markets. Additionally, our sustained investment to expand our global footprint and capabilities has improved our international sales mix and opened new geographic markets. I am extremely grateful to and proud of our dedicated employees and their commitment to delivering for our customers and partners,” added Gleason. Company Financial Outlook: Raises 2024 Full Year Guidance The Company is raising its 2024 full year revenue guidance to $590 to $610 million, up approximately 10% year over year at the midpoint, and Adjusted EBITDA guidance to $67 to $70 million, up approximately 19% year over year at the midpoint. The updated 2024 full year guidance is compared to the previously communicated outlook of $575 to $600 million in revenue and Adjusted EBITDA of $65 to $70 million. The Company reaffirms its previously communicated 2024 full year guidance of free cash flow of 50% to 70% of Adjusted EBITDA. “We raised our full year 2024 outlook to reflect our expectations given our tremendous backlog, coupled with our commercial and operational excellence programs, which will drive robust organic growth and further operating margin expansion opportunities. Additionally, we enter the year with a healthy balance sheet which provides added optionality to evaluate and execute on the most attractive internal growth programs as well as any potential accretive M&A opportunities to advance our leadership positions in industrial air, industrial water and the energy transition to drive long-term shareholder value,” concluded Gleason. EARNINGS CONFERENCE CALL A conference call is scheduled for today at 8:30 a.m. ET to discuss the fourth quarter and full year 2023 financial results. Please visit the Investor Relations portion of the website (https://investors.cecoenviro.com) to listen to the call via webcast. The conference call may also be accessed by visiting https://edge.media-server.com/mmc/p/7wfof7nx. A replay of the conference call will be available on the Company’s website for a period of one year. The replay may also be accessed by visiting https://edge.media-server.com/mmc/p/7wfof7nx. ABOUT CECO ENVIRONMENTAL CECO Environmental is a leading environmentally focused, diversified industrial company, serving the broad landscape of industrial air, industrial water and energy transition markets globally providing innovative solutions 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. CECO solutions improve air and water quality, optimize emissions management, and increase energy efficiency for highly-engineered applications in power generation, midstream and downstream hydrocarbon processing and transport, electric vehicle production, polysilicon fabrication, semiconductor and electronics, battery production and recycling, specialty metals and steel production, beverage can, and water/wastewater treatment and a wide range of other industrial end markets. CECO is listed on Nasdaq under the ticker symbol "CECO." Incorporated in 1966, CECO’s global headquarters is in Dallas, Texas. For more information, please visit www.cecoenviro.com. Company Contact:Peter JohanssonChief Financial and Strategy Officer888-990-6670investor.relations@onececo.com Investor Relations Contact: Steven Hooser and Jean Marie YoungThree Part Advisors, LLC214-872-2710investor.relations@onececo.com CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS December 31, (dollars in thousands, except share data) 2023 2022 ASSETS Current assets: Cash and cash equivalents $54,779 $45,522 Restricted cash 669 1,063 Accounts receivable, net of allowances of $6,460 and $4,220 112,733 83,086 Costs and estimated earnings in excess of billings on uncompleted contracts 66,574 71,016 Inventories, net 34,089 26,526 Prepaid expenses and other current assets 11,769 12,174 Prepaid income taxes 824 1,271 Total current assets 281,437 240,658 Property, plant and equipment, net 26,237 20,828 Right-of-use assets from operating leases 16,256 11,373 Goodwill 211,326 183,197 Intangible assets – finite life, net 50,461 35,251 Intangible assets – indefinite life 9,570 9,508 Deferred income taxes 304 829 Deferred charges and other assets 4,700 3,077 Total assets $600,291 $504,721 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of debt $10,488 $3,579 Accounts payable 87,691 73,407 Accrued expenses 44,301 33,791 Billings in excess of costs and estimated earnings on uncompleted contracts 56,899 32,716 Notes payable 2,500 — Income taxes payable 1,227 3,207 Total current liabilities 203,106 146,700 Other liabilities 12,644 15,129 Debt, less current portion 126,795 107,625 Deferred income tax liability, net 8,838 8,666 Operating lease liabilities 11,417 8,453 Total liabilities 362,800 286,573 Commitments and contingencies (See Note 12) Shareholders’ equity: Preferred stock, $.01 par value; 10,000 shares authorized, none issued — — Common stock, $.01 par value; 100,000,000 shares authorized, 34,835,293 and 34,381,668 shares issued and outstanding at December 31, 2023 and 2022, respectively 348 344 Capital in excess of par value 254,956 250,174 Accumulated loss (6,387) (19,298)Accumulated other comprehensive loss (16,274) (17,996)Total CECO shareholders’ equity 232,643 213,224 Noncontrolling interest 4,848 4,924 Total shareholders' equity 237,491 218,148 Total liabilities and shareholders’ equity $600,291 $504,721 CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(unaudited) Three months ended December 31, Year ended December 31, (in thousands, except share and per share data) 2023 2022 2023 2022 Net sales $153,711 $116,402 $544,845 $422,627 Cost of sales 100,526 78,706 373,829 294,402 Gross profit 53,185 37,696 171,016 128,225 Selling and administrative expenses 36,862 26,667 122,944 93,473 Amortization and earnout expenses 2,192 1,870 8,180 6,809 Acquisition and integration expenses 298 721 2,508 4,546 Executive transition expenses 48 — 1,465 1,161 Restructuring expenses (income) 1,133 — 1,350 75 Income from operations 12,652 8,438 34,569 22,161 Other income (expense), net 1,042 4,193 372 6,947 Interest expense (3,918) (1,930) (13,416) (5,419)Income before income taxes 9,776 10,701 21,525 23,689 Income tax expense 5,447 2,139 7,024 5,426 Net income 4,329 8,562 14,501 18,263 Noncontrolling interest (450) (267) (1,590) (846)Net income attributable to CECO Environmental Corp. $3,879 $8,295 $12,911 $17,417 Income per share: Basic $0.11 $0.24 $0.37 $0.50 Diluted $0.11 $0.24 $0.37 $0.50 Weighted average number of common shares outstanding: Basic 34,823,663 34,318,526 34,665,473 34,672,007 Diluted 35,687,092 34,919,398 35,334,090 35,005,159 CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, (dollars in thousands) 2023 2022 Cash flows from operating activities: Net income $14,501 $18,263 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,507 10,614 Unrealized foreign currency (gain) loss (1,041) (1,284)Impairment of intangible assets — — Fair value adjustments to earnout liabilities 296 (229)Earnout payments — (1,007)Loss (gain) on sale of property and equipment 110 10 Amortization of debt discount 427 371 Share based compensation expense 4,533 3,895 Bad debt expense 1,593 1,340 Inventory reserve expense 1,099 140 Deferred income tax (benefit) expense (118) (39)Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (26,851) (6,751)Cost and estimated earnings of billings on uncompleted contracts 5,040 (16,851)Inventories (6,896) (6,023)Prepaid expenses and other current assets 1,196 37 Deferred charges and other assets (1,420) 2,478 Accounts payable 13,852 19,843 Accrued expenses 8,340 2,693 Billings in excess of costs and estimated earnings on uncompleted contracts 21,575 4,405 Income taxes payable (1,976) 1,424 Other liabilities (2,120) (3,680)Net cash provided by operating activities 44,647 29,649 Cash flows from investing activities: Acquisitions of property and equipment (8,384) (3,376)Net proceeds from sale of assets — 19 Cash paid for acquisitions, net of cash acquired (48,102) (44,900)Net cash used in investing activities (56,486) (48,257)Cash flows from financing activities: Borrowings on revolving credit lines 106,600 75,200 Repayments on revolving credit lines (150,600) (35,900)Borrowings of long-term debt 75,000 11,000 Repayments of long-term debt (4,985) (3,120)Repayments of notes payable — (500)Deferred financing fees paid (363) (130)Deferred consideration paid for acquisitions (1,247) — Payments on capital leases and sale-leaseback financing liability (907) (600)Earnout payments (2,123) — Proceeds from employee stock purchase plan and exercise of stock options 1,435 671 Distributions to non-controlling interest (1,666) (1,425)Common stock repurchases — (7,020)Net cash provided by (used in) financing activities 21,144 38,176 Effect of exchange rate changes on cash and cash equivalents (442) (4,978)Net increase (decrease) in cash, cash equivalents and restricted cash 8,863 14,590 Cash, cash equivalents and restricted cash at beginning of year 46,585 31,995 Cash, cash equivalents and restricted cash at end of year $55,448 $46,585 Cash paid (received) during the period for: Interest $12,098 $5,007 Income taxes $9,916 $5,378 CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP MEASURES Three months ended December 31, Year ended December 31, (in millions, except ratios) 2023 2022 2023 2022 Operating income as reported in accordance with GAAP $12.7 $8.4 $34.6 $22.2 Operating margin in accordance with GAAP 8.3% 7.2% 6.4% 5.3%Amortization and earnout expenses 2.2 1.9 8.2 6.8 Acquisition and integration expenses 0.3 0.7 2.5 4.5 Executive transition expenses — — 1.5 1.2 Restructuring expenses 1.1 — 1.3 0.1 Non-GAAP operating income $16.3 $11.0 $48.1 $34.8 Non-GAAP operating margin 10.6% 9.5% 8.8% 8.2% Three months ended December 31, Year ended December 31, (in millions, except share data) 2023 2022 2023 2022 Net income as reported in accordance with GAAP $3.9 $8.3 $12.9 $17.4 Amortization and earnout expenses 2.2 1.9 8.2 6.8 Acquisition and integration expenses 0.3 0.7 2.5 4.5 Executive transition expenses — — 1.5 1.2 Restructuring expenses 1.1 — 1.3 0.1 Foreign currency remeasurement (1.0) (3.8) (1.0) (1.3)Tax benefit (expense) of adjustments 3.6 0.3 1.2 (2.8)Non-GAAP net income $10.1 $7.4 $26.6 $25.9 Depreciation 1.7 1.0 5.1 3.6 Non-cash stock compensation 1.5 1.0 4.5 3.9 Other (income) expense (0.1) (0.4) 0.8 (5.6)Interest expense 3.9 1.9 13.4 5.4 Income tax expense 1.8 1.8 5.7 8.2 Noncontrolling interest 0.5 0.3 1.6 0.8 Adjusted EBITDA $19.4 $13.0 $57.7 $42.2 Earnings per share: Basic $0.11 $0.24 $0.37 $0.50 Diluted $0.11 $0.24 $0.37 $0.50 Adjusted earnings per share: Basic $0.29 $0.22 $0.77 $0.75 Diluted $0.28 $0.21 $0.75 $0.74 Three months ended December 31, Year ended December 31, (in millions) 2023 2022 2023 2022 Net cash provided by operating activities $15.1 $10.0 $44.6 $29.6 Earnout payments (within operating activities) — — — 1.0 Acquisitions of property and equipment (2.9) (1.0) (8.4) (3.4)Free cash flow $12.2 $9.0 $36.2 $27.2 NOTE REGARDING NON-GAAP FINANCIAL MEASURES CECO is providing certain non-GAAP historical financial measures as presented above as we believe 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 accordance with GAAP. Non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, non-GAAP earnings per basic and diluted share, adjusted EBITDA and free cash flow, 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, foreign currency remeasurement 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 better 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, adjusted EBITDA and free cash flow 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, non-GAAP earnings per basic and diluted share, adjusted EBITDA and free cash flow stated in the tables above are reconciled to the most directly comparable GAAP financial measures. Non-GAAP measures presented on a forward-looking basis were not reconciled to the comparable GAAP financial measures because the reconciliation could not be performed without unreasonable efforts. The GAAP measures are not accessible on a forward-looking basis because we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include 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, foreign currency remeasurement and other nonrecurring or infrequent items and the associated tax benefit of these items. The unavailable information could have a significant impact on our GAAP financial results. 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. 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, 2023 and may be included in subsequently filed Quarterly Reports on Form 10-Q, 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 as a result of on-going or worsening supply chain challenges; 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, and rising energy costs; inflationary pressures relating to rising raw material costs and the cost of labor; 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; our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; 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; and the unpredictability and severity of catastrophic events, including cyber security threats, acts of terrorism or outbreak of war or hostilities or public health crises, 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. 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.
Reports Q4 and Full Year Earnings with Multiple Financial RecordsCompany Raises Full Year 2024 Guidance DALLAS, March 05, 2024 (GLOBE NEWSWIRE) -- CECO Environmental Corp. (Nasdaq: CECO) ("CECO"), a leading environmentally focused, diversified industrial company whose solutions protect people, the environment, and industrial equipment, today reported its financial results for the fourth quarter and full year results of 2023. Highlights for the Quarter(1) Orders of $128.3 millionBacklog of $370.9 million, up 19 percentRevenue of $153.7 million, up 32 percentNet income of $3.9 million, down 53 percent; non-GAAP net income of $10.1 million, up 36 percentGAAP EPS (diluted) of $0.11; non-GAAP EPS (diluted) of $0.28Adjusted EBITDA of $19.4 million, up 49 percentFree cash flow of $12.2 million, up 36 percent Highlights for the Year(1) Orders of $582.8 million, up 11 percentRevenue of $544.8 million, up 29 percentNet income of $12.9 million, down 26 percent; non-GAAP net income of $26.6 million, up 3 percentGAAP EPS (diluted) of $0.37; non-GAAP EPS (diluted) of $0.75Adjusted EBITDA of $57.7 million, up 37 percentFree cash flow of $36.2 million, up 33 percent (1) 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 continued to deliver successful results during the fourth quarter as our operating model produced record-breaking revenues, gross profits and adjusted EBITDA as well as strong free cash flow. We exit 2023 with a strong backlog and enter 2024 with a significant sales pursuit pipeline,” said CECO Chief Executive Officer, Todd Gleason. “I am pleased our results continue to be driven by balanced contributions from across our portfolio and that our growth continues to be sustained by double-digit organic sales increases, supported by accretive, programmatic M&A execution.” Fourth quarter operating income was $12.7 million, up $4.3 million or 51 percent when compared to $8.4 million in the fourth quarter 2022. On an adjusted basis, non-GAAP operating income was $16.3 million, up $5.3 million or 48 percent when compared to $11.0 million in the fourth quarter of 2022. Net income was $3.9 million in the quarter, compared to $8.3 million in the fourth quarter 2022. Non-GAAP net income was $10.1 million, up $2.7 million compared to $7.4 million in the fourth quarter 2022. Adjusted EBITDA of $19.4 million, reflecting a margin of 12.6 percent, was up 49 percent compared to $13.0 million in the fourth quarter 2022. Free cash flow in the quarter was $12.2 million, up $3.2 million compared to $9.0 million in the fourth quarter of 2022. Full year operating income was $34.6 million, up $12.4 million or 56 percent when compared to $22.2 million in 2022. On an adjusted basis, non-GAAP operating income was $48.1 million, up $13.3 million or 38 percent when compared to $34.8 million in 2022. Net income was $12.9 million in the year, compared to $17.4 million in 2022. Non-GAAP net income was $26.6 million, compared to $25.9 million in 2022. Adjusted EBITDA of $57.7 million, reflecting a margin of 10.6 percent, was up 37 percent compared to $42.2 million in 2022. Free cash flow was $36.2 million, up $9.0 million or 33 percent compared to $27.2 million in 2022. “CECO has continued to mindfully transform our portfolio into a well-positioned leader across industrial air, industrial water and the energy transition. The three acquisitions we completed in 2023 are delivering outstanding results across their strategically focused niche markets. Additionally, our sustained investment to expand our global footprint and capabilities has improved our international sales mix and opened new geographic markets. I am extremely grateful to and proud of our dedicated employees and their commitment to delivering for our customers and partners,” added Gleason. Company Financial Outlook: Raises 2024 Full Year Guidance The Company is raising its 2024 full year revenue guidance to $590 to $610 million, up approximately 10% year over year at the midpoint, and Adjusted EBITDA guidance to $67 to $70 million, up approximately 19% year over year at the midpoint. The updated 2024 full year guidance is compared to the previously communicated outlook of $575 to $600 million in revenue and Adjusted EBITDA of $65 to $70 million. The Company reaffirms its previously communicated 2024 full year guidance of free cash flow of 50% to 70% of Adjusted EBITDA. “We raised our full year 2024 outlook to reflect our expectations given our tremendous backlog, coupled with our commercial and operational excellence programs, which will drive robust organic growth and further operating margin expansion opportunities. Additionally, we enter the year with a healthy balance sheet which provides added optionality to evaluate and execute on the most attractive internal growth programs as well as any potential accretive M&A opportunities to advance our leadership positions in industrial air, industrial water and the energy transition to drive long-term shareholder value,” concluded Gleason. EARNINGS CONFERENCE CALL A conference call is scheduled for today at 8:30 a.m. ET to discuss the fourth quarter and full year 2023 financial results. Please visit the Investor Relations portion of the website (https://investors.cecoenviro.com) to listen to the call via webcast. The conference call may also be accessed by visiting https://edge.media-server.com/mmc/p/7wfof7nx. A replay of the conference call will be available on the Company’s website for a period of one year. The replay may also be accessed by visiting https://edge.media-server.com/mmc/p/7wfof7nx. ABOUT CECO ENVIRONMENTAL CECO Environmental is a leading environmentally focused, diversified industrial company, serving the broad landscape of industrial air, industrial water and energy transition markets globally providing innovative solutions 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. CECO solutions improve air and water quality, optimize emissions management, and increase energy efficiency for highly-engineered applications in power generation, midstream and downstream hydrocarbon processing and transport, electric vehicle production, polysilicon fabrication, semiconductor and electronics, battery production and recycling, specialty metals and steel production, beverage can, and water/wastewater treatment and a wide range of other industrial end markets. CECO is listed on Nasdaq under the ticker symbol "CECO." Incorporated in 1966, CECO’s global headquarters is in Dallas, Texas. For more information, please visit www.cecoenviro.com. Company Contact:Peter JohanssonChief Financial and Strategy Officer888-990-6670investor.relations@onececo.com Investor Relations Contact: Steven Hooser and Jean Marie YoungThree Part Advisors, LLC214-872-2710investor.relations@onececo.com CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS December 31, (dollars in thousands, except share data) 2023 2022 ASSETS Current assets: Cash and cash equivalents $54,779 $45,522 Restricted cash 669 1,063 Accounts receivable, net of allowances of $6,460 and $4,220 112,733 83,086 Costs and estimated earnings in excess of billings on uncompleted contracts 66,574 71,016 Inventories, net 34,089 26,526 Prepaid expenses and other current assets 11,769 12,174 Prepaid income taxes 824 1,271 Total current assets 281,437 240,658 Property, plant and equipment, net 26,237 20,828 Right-of-use assets from operating leases 16,256 11,373 Goodwill 211,326 183,197 Intangible assets – finite life, net 50,461 35,251 Intangible assets – indefinite life 9,570 9,508 Deferred income taxes 304 829 Deferred charges and other assets 4,700 3,077 Total assets $600,291 $504,721 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of debt $10,488 $3,579 Accounts payable 87,691 73,407 Accrued expenses 44,301 33,791 Billings in excess of costs and estimated earnings on uncompleted contracts 56,899 32,716 Notes payable 2,500 — Income taxes payable 1,227 3,207 Total current liabilities 203,106 146,700 Other liabilities 12,644 15,129 Debt, less current portion 126,795 107,625 Deferred income tax liability, net 8,838 8,666 Operating lease liabilities 11,417 8,453 Total liabilities 362,800 286,573 Commitments and contingencies (See Note 12) Shareholders’ equity: Preferred stock, $.01 par value; 10,000 shares authorized, none issued — — Common stock, $.01 par value; 100,000,000 shares authorized, 34,835,293 and 34,381,668 shares issued and outstanding at December 31, 2023 and 2022, respectively 348 344 Capital in excess of par value 254,956 250,174 Accumulated loss (6,387) (19,298)Accumulated other comprehensive loss (16,274) (17,996)Total CECO shareholders’ equity 232,643 213,224 Noncontrolling interest 4,848 4,924 Total shareholders' equity 237,491 218,148 Total liabilities and shareholders’ equity $600,291 $504,721 CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME(unaudited) Three months ended December 31, Year ended December 31, (in thousands, except share and per share data) 2023 2022 2023 2022 Net sales $153,711 $116,402 $544,845 $422,627 Cost of sales 100,526 78,706 373,829 294,402 Gross profit 53,185 37,696 171,016 128,225 Selling and administrative expenses 36,862 26,667 122,944 93,473 Amortization and earnout expenses 2,192 1,870 8,180 6,809 Acquisition and integration expenses 298 721 2,508 4,546 Executive transition expenses 48 — 1,465 1,161 Restructuring expenses (income) 1,133 — 1,350 75 Income from operations 12,652 8,438 34,569 22,161 Other income (expense), net 1,042 4,193 372 6,947 Interest expense (3,918) (1,930) (13,416) (5,419)Income before income taxes 9,776 10,701 21,525 23,689 Income tax expense 5,447 2,139 7,024 5,426 Net income 4,329 8,562 14,501 18,263 Noncontrolling interest (450) (267) (1,590) (846)Net income attributable to CECO Environmental Corp. $3,879 $8,295 $12,911 $17,417 Income per share: Basic $0.11 $0.24 $0.37 $0.50 Diluted $0.11 $0.24 $0.37 $0.50 Weighted average number of common shares outstanding: Basic 34,823,663 34,318,526 34,665,473 34,672,007 Diluted 35,687,092 34,919,398 35,334,090 35,005,159 CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31, (dollars in thousands) 2023 2022 Cash flows from operating activities: Net income $14,501 $18,263 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 12,507 10,614 Unrealized foreign currency (gain) loss (1,041) (1,284)Impairment of intangible assets — — Fair value adjustments to earnout liabilities 296 (229)Earnout payments — (1,007)Loss (gain) on sale of property and equipment 110 10 Amortization of debt discount 427 371 Share based compensation expense 4,533 3,895 Bad debt expense 1,593 1,340 Inventory reserve expense 1,099 140 Deferred income tax (benefit) expense (118) (39)Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (26,851) (6,751)Cost and estimated earnings of billings on uncompleted contracts 5,040 (16,851)Inventories (6,896) (6,023)Prepaid expenses and other current assets 1,196 37 Deferred charges and other assets (1,420) 2,478 Accounts payable 13,852 19,843 Accrued expenses 8,340 2,693 Billings in excess of costs and estimated earnings on uncompleted contracts 21,575 4,405 Income taxes payable (1,976) 1,424 Other liabilities (2,120) (3,680)Net cash provided by operating activities 44,647 29,649 Cash flows from investing activities: Acquisitions of property and equipment (8,384) (3,376)Net proceeds from sale of assets — 19 Cash paid for acquisitions, net of cash acquired (48,102) (44,900)Net cash used in investing activities (56,486) (48,257)Cash flows from financing activities: Borrowings on revolving credit lines 106,600 75,200 Repayments on revolving credit lines (150,600) (35,900)Borrowings of long-term debt 75,000 11,000 Repayments of long-term debt (4,985) (3,120)Repayments of notes payable — (500)Deferred financing fees paid (363) (130)Deferred consideration paid for acquisitions (1,247) — Payments on capital leases and sale-leaseback financing liability (907) (600)Earnout payments (2,123) — Proceeds from employee stock purchase plan and exercise of stock options 1,435 671 Distributions to non-controlling interest (1,666) (1,425)Common stock repurchases — (7,020)Net cash provided by (used in) financing activities 21,144 38,176 Effect of exchange rate changes on cash and cash equivalents (442) (4,978)Net increase (decrease) in cash, cash equivalents and restricted cash 8,863 14,590 Cash, cash equivalents and restricted cash at beginning of year 46,585 31,995 Cash, cash equivalents and restricted cash at end of year $55,448 $46,585 Cash paid (received) during the period for: Interest $12,098 $5,007 Income taxes $9,916 $5,378 CECO ENVIRONMENTAL CORP. AND SUBSIDIARIESRECONCILIATION OF GAAP TO NON-GAAP MEASURES Three months ended December 31, Year ended December 31, (in millions, except ratios) 2023 2022 2023 2022 Operating income as reported in accordance with GAAP $12.7 $8.4 $34.6 $22.2 Operating margin in accordance with GAAP 8.3% 7.2% 6.4% 5.3%Amortization and earnout expenses 2.2 1.9 8.2 6.8 Acquisition and integration expenses 0.3 0.7 2.5 4.5 Executive transition expenses — — 1.5 1.2 Restructuring expenses 1.1 — 1.3 0.1 Non-GAAP operating income $16.3 $11.0 $48.1 $34.8 Non-GAAP operating margin 10.6% 9.5% 8.8% 8.2% Three months ended December 31, Year ended December 31, (in millions, except share data) 2023 2022 2023 2022 Net income as reported in accordance with GAAP $3.9 $8.3 $12.9 $17.4 Amortization and earnout expenses 2.2 1.9 8.2 6.8 Acquisition and integration expenses 0.3 0.7 2.5 4.5 Executive transition expenses — — 1.5 1.2 Restructuring expenses 1.1 — 1.3 0.1 Foreign currency remeasurement (1.0) (3.8) (1.0) (1.3)Tax benefit (expense) of adjustments 3.6 0.3 1.2 (2.8)Non-GAAP net income $10.1 $7.4 $26.6 $25.9 Depreciation 1.7 1.0 5.1 3.6 Non-cash stock compensation 1.5 1.0 4.5 3.9 Other (income) expense (0.1) (0.4) 0.8 (5.6)Interest expense 3.9 1.9 13.4 5.4 Income tax expense 1.8 1.8 5.7 8.2 Noncontrolling interest 0.5 0.3 1.6 0.8 Adjusted EBITDA $19.4 $13.0 $57.7 $42.2 Earnings per share: Basic $0.11 $0.24 $0.37 $0.50 Diluted $0.11 $0.24 $0.37 $0.50 Adjusted earnings per share: Basic $0.29 $0.22 $0.77 $0.75 Diluted $0.28 $0.21 $0.75 $0.74 Three months ended December 31, Year ended December 31, (in millions) 2023 2022 2023 2022 Net cash provided by operating activities $15.1 $10.0 $44.6 $29.6 Earnout payments (within operating activities) — — — 1.0 Acquisitions of property and equipment (2.9) (1.0) (8.4) (3.4)Free cash flow $12.2 $9.0 $36.2 $27.2 NOTE REGARDING NON-GAAP FINANCIAL MEASURES CECO is providing certain non-GAAP historical financial measures as presented above as we believe 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 accordance with GAAP. Non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, non-GAAP earnings per basic and diluted share, adjusted EBITDA and free cash flow, 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, foreign currency remeasurement 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 better 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, adjusted EBITDA and free cash flow 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, non-GAAP earnings per basic and diluted share, adjusted EBITDA and free cash flow stated in the tables above are reconciled to the most directly comparable GAAP financial measures. Non-GAAP measures presented on a forward-looking basis were not reconciled to the comparable GAAP financial measures because the reconciliation could not be performed without unreasonable efforts. The GAAP measures are not accessible on a forward-looking basis because we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include 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, foreign currency remeasurement and other nonrecurring or infrequent items and the associated tax benefit of these items. The unavailable information could have a significant impact on our GAAP financial results. 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. 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, 2023 and may be included in subsequently filed Quarterly Reports on Form 10-Q, 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 as a result of on-going or worsening supply chain challenges; 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, and rising energy costs; inflationary pressures relating to rising raw material costs and the cost of labor; 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; our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; 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; and the unpredictability and severity of catastrophic events, including cyber security threats, acts of terrorism or outbreak of war or hostilities or public health crises, 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. 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.