Ceco Environmental Corp. · NASDAQ:CECO
Ceco Environmental — Q3 2023 Earnings Presentation
23 slides from Ceco Environmental's earnings presentation, Nov 7, 2023
Slide 1: Q3 2023 Earnings Presentation
Q3 2023 Earnings Presentation November 7, 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: Q3'2023 Highlights
Q3’2023 Highlights Record Results For Any Quarter In Company History … Well Positioned For Future Growth … • Record Revenues • Q3 Ending Backlog of $394 Up ~40% Y/Y • Record Backlog Levels + Record YTD Orders • Book-to-Bill of ~ 1.2 Over Past Twelve Months • Record Gross Profit $ • Sales Pursuit Pip
Slide 4: Q3'23 and TTM Financial Summary
Q3’23 and TTM Financial Summary … All Key Metrics Trending Higher Q3’23 YoY TTM YoY Orders $145M 43% Q3 Book-to-bill ~1.0x Orders $605M 30% Sales $149M 38% Q3 Organic Sales Up ~31% Sales $508M 27% Adj. $15.1M 64% Adj. $51.2M 33% EBITDA 10.1% +156bps YoY Margins Up EBITDA 10.1% +47bps Adj. EPS EPS Gr
Slide 5: Balanced Portfolio and Approach to Winning In Diverse Growth Markets
Balanced Portfolio and Approach to Winning In Diverse Growth Markets Legacy Brands Acquired Brands* Typical Applications & End Markets • Thermal Oxidation • Dust & Particle Collection Industrial Air o EV Battery o Wood working o Automotive o Machining/Grinding o Beverage Can o Cement & Building Mate
Slide 6: Raising FY 2023 and Initiating FY 2024 Guidance
($MM) Raising FY 2023 and Initiating FY 2024 Guidance 2023 Commentary 2023 2024 2024 Commentary • Record Orders YTD • Investments Maintain Growth 1.1 – 1.2X Orders: 1.05 – 1.1X • 3rd Consecutive Year B2B > 1.1 • Market Drivers Remain Good: • Balanced Across Platforms Book to Bill - Reshoring, Infras
Slide 7: Financial Performance
Financial Performance ENVIRONMENTAL
Slide 8: Q3'23 P&L and Earnings
($MM) Q3’23 P&L and Earnings ($MM) Q3’23 YoY Comments Orders: $145.3 43% Strong orders for a 3rd quarter (generally soft) … Great TTM > $605 Sales: $149.4 38% Steady execution from growing backlog and benefit of acquisitions Gross Profit Record GP$ quarter up 33% YoY driven by higher volume. 28.9% (
Slide 9: Q3'23 Continues Track Record of Double-Digit Orders Growth
($MM) Q3’23 Continues Track Record of Double-Digit Orders Growth TTM = Trailing 12 Month Avg = TTM/4 TTM: $270 $280 $296 $322 $347 $361 $430 $458 $467 $527 $512 $562 $605 Avg/Qtr: $68 $70 $74 $80 $87 $90 $107 $114 $117 $132 $128 $141 $151 Vpy: (42)% 13% 21% 43% 39% 18% 75% 33% 10% 66% (9)% 43% 42% C
Slide 10: Q3'23 Extends Trend of Record Revenue Delivery Quarters
($MM) Q3’23 Extends Trend of Record Revenue Delivery Quarters TTM = Trailing 12 Month Avg = TTM/4 TTM: $322 $316 $307 $311 $313 $324 $345 $371 $400 $423 $443 $467 $508 Avg/Qtr: $81 $79 $77 $78 $78 $81 $86 $93 $100 $106 $111 $117 $127 Vpq 3% 7% (2.5)% 10% 1% 17% Flat 14% 3% 7% (2)% 15% 15% Vpy (9)% (
Slide 11: Q3'23 Backlog Remains at Record Levels
($MM) Q3’23 Backlog* Remains at Record Levels TTM = Trailing 12 Month B2B = Book to Bill Company Record $391 $394 • Record Backlog +42% YoY, ~30%+ to convert in CY2023 $356 $312 • 3Q’23 B2B ~1.0x … Maintains Momentum $283 $289 $278 $290 • TTM Orders = $605 $203 $210 $219 $214 $161 $163 $211 $151 $14
Slide 12: Continuing to Drive Strong Profitability
Continuing to Drive Strong Profitability ($MM) Gross Profit Adjusted EBITDA Almost a Company Record Record 2nd Highest $15.1 $16.0 $43.1 50% $39.8 $13.6 $14.0 $13.0 $40.0 $37.7 45% $34.9 $10.5 $12.0 $35.0 40% $31.7 $32.4 $9.3 $9.5 $9.2 $9.7 $10.0 $25.3 $28.5 35% $30.0 $6.4 $22.7 $26.4 $8.0 30% $25.0
Slide 13: Disciplined Capital Allocation Driving Value Creation
Disciplined Capital Allocation Driving Value Creation Acquisitions Completed 1H’23 ~$30M Acquisition Completed Q3’23 ~$24M • Mid-Q3 Close • Q1 Close • US-based • UK-based • Annualized Revenues ~$26M+ • Annualized Revenues ~$15M+ • Complement to DS21 and Compass • Bolt-on to Thermal Acoustics Platfor
Slide 14: Cash Position and Liquidity Supports Capital Deployment Plan
Cash Position and Liquidity Supports Capital Deployment Plan ($MM) Cash Position and Liquidity Leverage and Investment Capacity5/ Cash 12.31.22 $46.6 Gross Debt 12.31.22 $104.9 Sources Borrowings Cash from Operations $(29.5) On revolver $94.2 Net Borrowings $28.5 On term loan $- Total $58.0 Other $1
Slide 15: Looking Forward & Summary
Looking Forward & Summary CECO s ENVIRONMENTAL
Slide 16: Maintaining Our Focus on Sustainable Double-Digit Growth
Double Digit Growth Mindset: Maintaining & Investing in Strong Growth Fundamentals • Solutions and Applications Tightly Aligned to Secular, Global Growth Drivers ‒ Reshoring Industrial Production … High-tech (Semiconductor and Electronics), Low-tech (Aluminum, Specialty Metals) ‒ Infrastructure ‒ Cl
Slide 17: Reiterating The Outlook
($MM) Reiterating The Outlook … 2023 Commentary 2023 2024 2024 Commentary • Record Orders YTD Orders: • Investments Maintain Growth • 3rd Consecutive Year B2B > 1.1 1.1 – 1.2X 1.05 – 1.1X • Market Drivers Remain Good: • Balanced Across Platforms Book to Bill - Reshoring, Infrastructure … Raised • 2n
Slide 18: In Conclusion … Team CECO: Great Job and Thank You
In Conclusion … Earnings Summary Steadily Transforming CECO Q3’23 Summary: ✓ Advancing Leadership in Industrial Air … Building • Continued Growth: Highest Revenue, Gross Profit, Leadership in Industrial Water … Maintaining Leadership Backlog and Free Cash Flow $s in Company History in Energy Transit
Slide 19: Appendix
Appendix Supplemental Materials and Non-GAAP Reconciliation Tables 19
Slide 20: Revenue Excluding Acquisitions
Revenue Excluding Acquisitions (dollars in millions) Annual Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Annual 2020 2021 2022 2022 2022 2022 2022 2023 2023 2023 2023 TTM Revenue as report in accordance with GAAP $ 316.0 $ 324.1 $ 92.4 $ 105.4 $ 108.4 $ 116.4 $ 422.6 $ 112.6 $ 129.2 $ 149.4 $ 391.2 $ 507.6 Le
Slide 21: Non-GAAP Operating Income and Margin
Non-GAAP Operating Income and Margin (dollars in millions) Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 YTD 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 2023 2023 2023 2023 TTM Operating Income as reported in accordance with GAAP $ 3.1 $ 2.1 $ (0.6) $ 5.3 $ 9.9 $ 5.2 $ 5.7 $ 2.8 $ 8.4 $ 22.2
Slide 22: Non-GAAP Net Income, Adjusted EBITDA, and Margin
Non-GAAP Net Income, Adjusted EBITDA, and Margin (dollars in millions) Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 YTD 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 2023 2023 2023 2023 TTM Net Income as reported in accordance with GAAP $ 1.2 $ 0.3 $ (1.2) $ 1.2 $ 1.4 $ 2.8 $ 4.4 $ 1.9 $ 8.3 $
Slide 23: Adjusted Free Cash Flow
Adjusted Free Cash Flow (dollars in millions) Annual Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Annual 2020 2021 2022 2022 2022 2022 2022 2023 2023 2023 2023 TTM Net Cash provided by (used in) operating activities $ 4.4 $ 13.3 $ (0.2) $ 18.9 $ 1.0 $ 10.0 $ 29.6 $ (12.0) $ 11.4 $ 30.1 $ 29.5 $ 39.5 Add: Earn