Slide 1: Q1 2023 Earnings Presentation
Q1 2023 Earnings Presentation May 9, 2023
Slide 2: Forward-looking statements and Non-GAAP information
Forward-looking statements and Non-GAAP information This presentation contains forward-looking statements with predictions, projections and other statements about future events. These statements are made on the basis of management’s views and assumptions regarding future events and business performa
Slide 3: Q1 2023 Earnings Highlights
Q1 2023 Earnings Highlights • Record Q1 Revenue … And We Still Generated a 1.3X Book-to-Bill • Record Backlog Levels … And We Still Have the Largest Sales Pipeline In History • Strong Gross Margins … And Our Operating Excellence Programs Are Just Starting • Completed Two Strategic Acquisitions YTD i
Slide 4: Q1'23 and TTM Financial Summary
Q1’23 and TTM Financial Summary Q1’23 YoY 5th Consecutive Quarter with TTM YoY Orders $146M (9)% Orders > $100M Orders $512M +19% Q1 Book-to-bill >1.3x Sales $113M +22% Strong Revenue to Start Year Sales $443M +29% Adj. $9.7M +2% Adj. $42.5M +48% EBITDA 8.6% (170)bps Investments in Growth EBITDA 9.6
Slide 5: YTD 2023 Transactions
YTD 2023 Transactions Transcend Solutions Wakefield Acoustics • Closed April 3, 2023 • Closed January 10, 2023 • Adds critical solutions and technology for process • Adds critical solutions and technology for noise separation & filtration in Energy Transition abatement in Industrial Air • Transcend
Slide 6: Balanced Approach to Winning In Diverse Growth Markets
Balanced Approach to Winning In Diverse Growth Markets Select Newly* Legacy Brands Acquired Brands Typical Applications & End Markets • Thermal Oxidation • Dust & Particle Collection Industrial Air • EV Battery (EV) • Automotive • Wood working • Machining/Grinding • Beverage Can • Cement & Building
Slide 7: We Expect 2023 to Continue to Execute Value Creation Model
We Expect 2023 to Continue to Execute Value Creation Model … Top-Line Growth Bottom-Line Growth Targeting: Additive Absorb More ~ 10%+ Organic Get Back Above SG&A Short-term Growth 33% to Higher ~ 2025 6 M&A + Conversion $600M+ Rev Record Deals 15%+ EBITDA Margins Over 18 Improving on Higher Backlog
Slide 8: Financial Performance
Financial Performance ENVIRONMENTAL
Slide 9: Q1'23 P&L Performance
Q1’23 P&L Performance ($MM) Q1’23 YoY Comments Tremendous start (3rd Highest Orders in CECO history) … Tough YoY Orders: $146.1 (9)% comp vs. record Q1’22 … Great TTM > $500M Sales: $112.6 +22% Steady execution from growing, higher margin backlog; TTM = $443 Gross Profit Record 1Q GP$ level … Gross
Slide 10: Strong & Consistent Orders Growth = 2023 Revenue Growth
($MM) Strong & Consistent Orders Growth = 2023 Revenue Growth TTM = Trailing 12 Month Avg = TTM/4 TTM: $270 $280 $296 $322 $347 $361 $430 $458 $467 $527 $512 Avg/Qtr: $68 $70 $74 $80 $87 $90 $107 $114 $117 $132 $128 Vpy: (42)% 14% 22% 42% 39% 17% 75% 33% 10% 67% (9)% Record Qtr. 2nd Best Qtr. 3rd Be
Slide 11: Record Q1 Revenue … Maintaining Solid Sequential Growth
($MM) Record Q1 Revenue … Maintaining Solid Sequential Growth TTM = Trailing 12 Month Avg = TTM/4 TTM: $322 $316 $307 $311 $313 $324 $345 $371 $400 $423 $443 Avg/Qtr: $81 $79 $77 $78 $78 $81 $86 $93 $100 $106 $111 Vpq 3% 7% (2.5)% 10% 1% 17% Flat 14% 3% 7% (2)% Vpy (9)% (7)% (11)% 5% 3% 13% 28% 34%
Slide 12: Backlog Remains at Record Levels
($MM) Backlog* Remains at Record Levels TTM = Trailing 12 Month B2B = Book to Bill $356 • Record Backlog up 14% sequentially, 26% y/y, $312 $283 $289 $278 60%+ to convert in CY2023 $290 • 1Q’23 B2B =1.3x for 2nd straight quarter $203 $210 $219 $214 $211 $161 • TTM Orders = $513 $151 $146 $114 $108 •
Slide 13: Continuing to Drive Strong Profitability
Continuing to Drive Strong Profitability ($MM) Gross Profit & Margins Adjusted EBITDA & Margins Record GP$ Record 1Q $13.0 $14.0 GP$ 50% $40.0 $37.7 $12.0 $34.9 45% $10.5 $9.3 $9.5 $9.2 $9.7 $35.0 $31.7 $32.4 40% $10.0 $30.0 $25.3 $28.5 35% $8.0 $22.7 $26.4 $6.4 11.2% 30% 10.0% 10.3% 10.0% $25.0 $6.
Slide 14: Balanced Capital Allocation Driving Value Creation
Balanced Capital Allocation Driving Value Creation Acquisitions in 2023 ~$25M Share Repurchase: FY’22 + 2H’21 ~$12M • Announced $20M, 3-Yr. Authorization in May ’22 • Q1 Close … Annualized Revenues ~$10M • Repurchased ~ 3% of Shares in 2022 (Avg. Price $6.80) • Thermal Acoustics platform • Adds Stan
Slide 15: Cash Position and Liquidity Supports Capital Deployment Plan
Cash Position and Liquidity Supports Capital Deployment Plan ($MM) Cash Position and Liquidity Leverage and Investment Capacity Cash 12.31.22 $46.6 Gross Debt 12.31.22 $104.9 Sources Borrowings Cash from Operations $(12.0) On revolver $54.8 Net Borrowings $34.0 On term loan $- Total $22.0 Other $2.1
Slide 16: Looking Forward & Summary
Looking Forward & Summary CECO ‘s ENVIRONMENTAL
Slide 17: Raising Full Year 2023 Earnings Outlook
Raising Full Year 2023 Earnings Outlook ($MM) Revenue Adjusted EBITDA Free Cash Flow Full Year Outlook $485+ $50+ 50% to 70% of Up ~15% YoY Up ~18% YoY* EBITDA Previous Outlook: $460 – $485 $45 – $50 Macro Tailwinds > Headwinds for CECO Advancing Operational Excellence ✓ Reshoring / Renewing Industr
Slide 18: 1Q'23: In Conclusion
1Q’23 Earnings Presentation: In Conclusion Q1 2023: • Great Growth: Record Q1 Revenue … And We Still Generated an ~ 1.3X Book-to-Bill • Positioned to Sustain Growth: Large Book-to-Bill Enabled Record Backlog Levels • Improving Margins: Strong Gross Margins … And Our Operating Excellence Programs Are
Slide 19: Appendix
Appendix Supplemental Materials and Non-GAAP Reconciliation Tables 19
Slide 20: Revenue Excluding Acquisitions
Revenue Excluding Acquisitions NOTE: Amounts are computed independently each quarter. Accordingly, the sum of each quarter’s amounts may not equal the total amounts for the respective year. 20
Slide 21: Non-GAAP Operating Income and Margin
Non-GAAP Operating Income and Margin NOTE: Amounts are computed independently each quarter. Accordingly, the sum of each quarter’s amounts may not equal the total amounts for the respective year. 21
Slide 22: Non-GAAP Net Income, Adjusted EBITDA, and Margin
Non-GAAP Net Income, Adjusted EBITDA, and Margin NOTE: Amounts are computed independently each quarter. Accordingly, the sum of each quarter’s amounts may not equal the total amounts for the respective year. 22
Slide 23: Adjusted Free Cash Flow
Adjusted Free Cash Flow NOTE: Amounts are computed independently each quarter. Accordingly, the sum of each quarter’s amounts may not equal the total amounts for the respective year. 23