Ceco Environmental Corp. · NASDAQ:CECO
Ceco Environmental — Q2 2015 Earnings Presentation
26 slides from Ceco Environmental's earnings presentation, Aug 6, 2015
Slide 1: A global industrial technology company focused on environmental, energy, fluid handling industries
A global industrial technology company focused on environmental, energy, fluid handling industries Integrated Clean Air Solutions for Industry 1
Slide 2: Safe Harbor Statement - Non-GAAP Financial Information
Safe Harbor Statement Non-GAAP Financial Information CECO is providing the non-GAAP historical financial measures in this presentation, 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
Slide 3: Safe Harbor Statement - Forward-looking Statements
Safe Harbor Statement Forward-looking Statements Any statements contained in this presentation 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
Slide 4: Safe Harbor Statement - Important Information for Investors and Stockholders
Safe Harbor Statement Important Information for Investors and Stockholders This communication does not constitute an offer to sell or the solicitation of an offer to buy securities or a solicitation of any vote or approval. This communication is not a substitute for the prospectus/proxy statement th
Slide 5: Integrated Clean Air Solutions for Industry
Integrated Clean Air Solutions for Industry 5
Slide 6: 2Q15 Financial Highlights
2Q15 Financial Highlights • Revenue Growth – Revenue of $87 million, up 31% year-over-year – Organic revenue is up 4.5% in 1H15 using constant FX – Organic revenue was flat for Q215 vs last year – 1H15 revenue $168 million vs $123 million in prior year • Bookings / Backlog Trends – 2Q15 bookings of
Slide 7: 2Q15 Quarterly Financial Highlights
2Q15 Quarterly Financial Highlights • Non-GAAP Gross Margin – Gross margin of 31% in Q215 compared with 26% in Q1, primarily attributable to: • Aftermarket mix, higher OE GP, business improvement and project execution • Non-GAAP Operating Margin – Operating margins improved to 14.2% in Q215 vs 9.3%
Slide 8: Business Conditions & Strategic Review
Business Conditions & Strategic Review • Overall end markets are unchanged with the exception of China and we are executing on our Sales Excellence and initiatives • Environmental segment continues to gain momentum; China has slowed • Global refinery activity is strong • Energy segment ; global natu
Slide 9: Announcement of Proposed Acquisition of PMFG, Inc. - Key Transaction Benefits & Strategic Rationale
Announcement of Proposed Acquisition of PMFG, Inc. - Key Transaction Benefits & Strategic Rationale 1. Strong strategic fit, environmental and energy related portfolios 2. Poised to achieve significant sales and $15 million in cost synergies 3. Key step towards becoming the market leader in natural
Slide 10: CECO and PMFG – Technology Leaders in Comprehensive Solutions for the Natural Gas Turbine Power Market
CECO and PMFG – Technology Leaders in Comprehensive Solutions for the Natural Gas Turbine Power Market Aarding Peerless Peerless SCRs is a world Steam Emissions leader in selective Peerless catalytic Mfg. Co. Vent Control reduction emission control Silencer Systems Emission Control Systems systems 6
Slide 11: CECO and PMFG – Technology Leaders in Environmental-Industrial Silencers
CECO and PMFG – Technology Leaders in Environmental-Industrial Silencers Design, Engineering and Manufacturing of Silencers for Full Range of Industrial Applications Integrated Clean Air Solutions for Industry 11
Slide 12: CECO-PMFG Combination Will Provide a Stronger-Larger-More Profitable Asian Region Platform
CECO-PMFG Combination Will Provide a Stronger-Larger- More Profitable Asian Region Platform for the Future Integrated Clean Air Solutions for Industry 12
Slide 13: Integrated Clean Air Solutions for Industry
Integrated Clean Air Solutions for Industry 13
Slide 14: 2Q15 Quarterly Financial Highlights - Revenue
2Q15 Quarterly Financial Highlights ($ in millions) Revenue $86.9 $81.0 $76.1 $66.6 $63.3 2Q14 3Q14 4Q14 1Q15 2Q15 • Record revenue of $87 million, up 31% y/y and 8% sequentially • 1H15 organic growth was up 4.5% and on a constant currency basis, organic revenue was flat for 2Q15 • Gains in revenue
Slide 15: 2Q15 Quarterly Financial Highlights - Backlog and Bookings
2Q15 Quarterly Financial Highlights ($ in millions) Backlog Bookings $153.0 $140.1 $140.3 $93.9 $74.6 $69.9 $106.2 $63.7 $96.0 $57.7 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q15 • Organic bookings are up 4.5% 1H and flat in Q2, following a very strong 1Q15 • Solid 2Q15 backlog of $140.3 million
Slide 16: 2Q15 Financial Highlights - Margins
2Q15 Financial Highlights Non-‐GAAP Gross Margin Non-‐GAAP OperaEng Margin 33.6% 14.9% 32.3% 14.2% 29.8% 30.7% 12.9% 26.2% 10.9% 9.3% 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q15 • Gross margin increased to 30.7% in Q2 due to mix changes, operational excellence, and aftermarket • Operating ma
Slide 17: 2Q15 Quarterly Financial Highlights - Adjusted EBITDA and EPS
2Q15 Quarterly Financial Highlights ($ in millions) Adjusted EBITDA Non-‐GAAP EPS $13.5 $0.32 $11.0 $0.25 $0.25 $9.4 $0.22 $8.9 $8.6 $0.21 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q15 Note: See supplemental slide for adjusted EBITDA reconciliation and important disclosures regarding CECO’s use
Slide 18: Environmental Segment
Environmental Segment 2nd Quarter Results ($ in millions) Revenue Bookings $40.3 $41.7 $41.8 $51.2 $32.9 $27.7 $33.3 $31.0 $26.4 $24.6 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q15 • Revenue of $41.8 million was up 27% y/y • Bookings of $31.0 million in 2Q15, up 17.4% y/y • Aftermarket continues
Slide 19: Energy Segment
Energy Segment 2nd Quarter Results ($ in millions) Revenue Bookings $28.4 $27.3 $26.5 $25.0 $24.3 $20.2 $18.0 $16.8 $14.8 $14.6 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q15 • Revenue of $27.3 million was up 62.5% y/y • Revenue is up 12% sequentially • Aftermarket and retrofit opportunities cont
Slide 20: Fluid Handling & Filtration Segment
Fluid Handling & Filtration Segment 2nd Quarter Results ($ in millions) Revenue Bookings $18.6 $17.6 $17.7 $16.7 $16.7 $16.6 $15.9 $16.2 $15.8 $15.2 2Q14 3Q14 4Q14 1Q15 2Q15 2Q14 3Q14 4Q14 1Q15 2Q15 • Organic revenue of $17.7 million, up 16.4% sequentially, 6.0% y/y • Organic bookings of $18.6 milli
Slide 21: Balance Sheet
Balance Sheet ($ in millions) Selected Balance Sheet InformaEon 12/31/2011 12/31/2012 12/31/2013 12/31/2014 6/30/2015 Cash & Equivalents $ 12.7 $ 23.0 $ 22.7 $ 19.4 $ 17.1 Total Assets $ 79.3 $ 94.1 $348.5 $414.4 $416.7 Total Bank Debt $ 0.0 $ 0.0 $ 89.1 $112.4 $111.7 Shareholders Equity $ 43.0 $ 62
Slide 22: Supplemental
Supplemental Integrated Clean Air Solutions for Industry 22
Slide 23: Non-GAAP Gross Margin
Non-GAAP Gross Margin ($ in millions) Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 YTD TTM 2013 2014 2014 2014 2014 2014 2015 2015 2015 2015 Gross profit as reported in accordance with GAAP $61.6 $19.7 $21.4 $21.1 $22.6 $84.8 $21.0 $26.6 $47.6 $91.3 Gross profit margin in accordance with GAAP 31.2% 34.4% 32.1% 33.
Slide 24: Non-GAAP Operating Margin
Non-GAAP Operating Margin ($ in millions) Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 YTD TTM 2013 2014 2014 2014 2014 2014 2015 2015 2015 2015 OperaEng income as reported in accordance with GAAP $7.0 $5.5 $7.2 $5.2 $3.8 $21.7 $3.0 $4.5 $7.5 $16.5 OperaEng margin in accordance with GAAP 3.5% 9.6% 10.8% 8.2% 5.0
Slide 25: Non-GAAP NI & EBITDA
Non-GAAP NI & EBITDA ($ in millions) Annual Annual Annual Annual Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 YTD TTM 2009 2010 2011 2012 2013 2014 2014 2014 2014 2014 2015 2015 2015 2015 Net income as reported in accordance with GAAP $(15.0) $2.1 $8.3 $10.9 $6.6 $3.0 $4.5 $3.7 $1.9 $13.1 $0.2 $2.1 $2.3 $7.9 Inv
Slide 26: GAAP to Non-GAAP Adjusted EBITDA Reconciliation
GAAP to Non-GAAP Adjusted EBITDA Reconciliation (Twelve Months ended 12/31/2014) ($ in Millions) CECO Pro-‐forma CECO PMFG Pro-‐forma Reported (Recent Standalone CECO AcquisiEons) Combined GAAP Revenues $263.2 $64.7 $327.9 $158.1 $ 486.0 GAAP Gross profit $84.8 $13.6 $98.4 $45.7 $144.1 SG&A as repo