Ceco Environmental Corp. · NASDAQ:CECO
Ceco Environmental — Q2 2023 Earnings Presentation
21 slides from Ceco Environmental's earnings presentation, Aug 8, 2023
Slide 1: Q2 2023 Earnings Presentation
Q2 2023 Earnings Presentation August 8, 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: Q2 2023 Earnings Highlights
Q2 2023 Earnings Highlights • Record Results: Highest Orders, Revenue, Gross Profit $ and Backlog in Company History • Steady Transformation: Completed One Strategic Acquisition in Q2 (Transcend) … Two Acquisitions YTD • Future Growth: Book-to-Bill Over 1.25 for 3rd Consecutive Quarter • Organic Gro
Slide 4: Q2'23 and TTM Financial Summary … All Key Metrics Trending Higher
Q2’23 and TTM Financial Summary … All Key Metrics Trending Higher Q2’23 YoY 6th Consecutive Quarter with TTM YoY Orders $163M 43% Orders > $100M Orders $562M +23% Q2 Book-to-bill >1.25x Sales $129M +23% Continued Strong Sales Sales $467M +26% Conversion Adj. $13.7M +29% Adj. $45.4M +37% EBITDA 10.6%
Slide 5: Balanced Approach to Winning In Diverse Growth Markets
Balanced Approach to Winning In Diverse Growth Markets Legacy Brands Acquired Brands* Typical Applications & End Markets • Thermal Oxidation • Dust & Particle Collection Industrial Air • EV Battery (EV) • Automotive • Wood working • Machining/Grinding • Beverage Can • Cement & Building Materials • W
Slide 6: Financial Performance
Financial Performance ENVIRONMENTAL
Slide 7: Q2'23 P&L Performance
($MM) Q2’23 P&L Performance ($MM) Q2’23 YoY Comments Orders: $162.9 43.4% Highest Orders in CECO history … Great TTM > $560 Sales: $129.2 +22.6% Steady execution from growing backlog and benefit of acquisitions Gross Profit Record GP$ level … Gross Margins improving year-over-year … 30.8% +80bps Mar
Slide 8: Consistent Double Digit Orders Growth = 2023++ Revenue Growth
($MM) Consistent Double Digit Orders Growth = 2023++ Revenue Growth TTM = Trailing 12 Month Avg = TTM/4 TTM: $270 $280 $296 $322 $347 $361 $430 $458 $467 $527 $512 $562 Avg/Qtr: $68 $70 $74 $80 $87 $90 $107 $114 $117 $132 $128 $141 Vpy: (42)% 13% 21% 43% 39% 18% 75% 33% 10% 66% (9)% 43% Company 2nd
Slide 9: Record Revenue in 2Q … Maintaining Solid Sequential Growth
($MM) Record Revenue in 2Q … Maintaining Solid Sequential Growth TTM = Trailing 12 Month Avg = TTM/4 TTM: $322 $316 $307 $311 $313 $324 $345 $371 $400 $423 $443 $467 Avg/Qtr: $81 $79 $77 $78 $78 $81 $86 $93 $100 $106 $111 $117 Vpq 3% 7% (2.5)% 10% 1% 17% Flat 14% 3% 7% (2)% 15% Vpy (9)% (7)% (11)% 5
Slide 10: Backlog Remains at Record Levels
($MM) Backlog* Remains at Record Levels TTM = Trailing 12 Month B2B = Book to Bill Company Record $391 $356 • Record Backlog up ~10% sequentially, +35% $312 (>$100) y/y, ~60%+ to convert in CY2023 $283 $289 $278 $290 • 2Q’23 B2B >1.25x for 3rd straight quarter $203 $210 $219 $214 $161 $163 $211 $151
Slide 11: Continuing to Drive Strong Profitability
Continuing to Drive Strong Profitability ($MM) Gross Profit & Margins Adjusted EBITDA & Margins Company Record Record 2Q $$ $16.0 2nd Highest 50% $39.8 $13.0 $13.7 $14.0 $40.0 $37.7 45% $34.9 $10.5 $12.0 40% $35.0 $31.7 $32.4 $9.3 $9.5 $9.2 $9.7 $10.0 $30.0 $25.3 $28.5 35% $6.4 $22.7 $26.4 30% 10.0%
Slide 12: Balanced Capital Allocation Driving Value Creation
Balanced Capital Allocation Driving Value Creation Acquisitions Completed in 2023 ~$30M Share Repurchase: FY’22 + 2H’21 ~$12M • Announced $20M, 3-Yr. Authorization in May ’22 • Jan-23 Close • UK-based • Repurchased ~ 3% of Shares in 2022 (Avg. Price $6.80) • Annualized Revenues ~$15M+ • Bolt-on to T
Slide 13: Cash Position and Liquidity Supports Capital Deployment Plan
Cash Position and Liquidity Supports Capital Deployment Plan ($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 $(0.6) On revolver $65.3 Net Borrowings $30.2 On term loan $- Total $29.6 Other $1.2
Slide 14: Looking Forward & Summary
Looking Forward & Summary CECO a ENVIRONMENTAL
Slide 15: Raising Full Year 2023 Earnings Outlook
Raising Full Year 2023 Earnings Outlook ($MM) Revenue Adjusted EBITDA Free Cash Flow Full Year Outlook $500 – $525 $50 – $55 50% to 70% of Up ~21% YoY* Up ~25% YoY* EBITDA Previous Outlook: $485+ $50+ Macro Tailwinds > Headwinds for CECO Advancing Operational Excellence ✓ Reshoring / Renewing Indust
Slide 16: 2Q'23: In Conclusion
2Q’23 Earnings Presentation: In Conclusion 2Q Summary: • Great Growth: Record Orders and Revenue … And We Still Generated a 1.25X+ Book-to-Bill • Positioned to Sustain Double-digit Topline Growth: Record Backlog Levels and Additive M&A • Improving Margins: Our Operating Excellence Programs Are Just
Slide 17: Appendix
Appendix Supplemental Materials and Non-GAAP Reconciliation Tables 17
Slide 18: Revenue Excluding Acquisitions
Revenue Excluding Acquisitions (dollars in millions) Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 YTD 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 2023 2023 2023 TTM Revenue as report in accordance with GAAP $ 71.9 $ 78.7 $ 80.0 $ 93.6 $ 324.1 $ 92.4 $ 105.4 $ 108.4 $ 116.4 $ 422.6 $ 112.6 $ 129
Slide 19: 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 time periods. 19
Slide 20: 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 time periods. 20
Slide 21: Adjusted Free Cash Flow
Adjusted Free Cash Flow (dollars in millions) Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 YTD 2021 2021 2021 2021 2021 2022 2022 2022 2022 2022 2023 2023 2023 TTM Net Cash provided by (used in) operating activities $ 9.9 $ (5.8) $ 6.1 $ 3.1 $ 13.3 $ (0.2) $ 18.9 $ 1.0 $ 10.0 $ 29.6 $ (12.0) $ 11.4 $