Ceco Environmental Corp. · NASDAQ:CECO
Ceco Environmental — Q4 2015 Earnings Presentation
27 slides from Ceco Environmental's earnings presentation, Mar 23, 2016
Slide 1: A global industrial technology company focused on environmental, energy, fluid handling
A global industrial technology company focused on environmental, energy, fluid handling industries C *This presentation has been revised as described in “Item 7, Results of Operations” of the Form 10K furnished to the SEC on March 23, 2016. Integrated Clean Air Solutions for Industry 1
Slide 2: Notes to Investors: Forward-Looking Statements and Non-GAAP Information
NOTES TO INVESTORS Forward-Looking Statements and Non-GAAP Information 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 state
Slide 3: A global industrial technology company focused on environmental, energy, fluid handling
A global industrial technology company focused on environmental, energy, fluid handling industries C Integrated Clean Air Solutions for Industry 3
Slide 4: 4Q15 Highlights
4Q15 Highlights • Despite macroeconomic challenges, delivered solid 4Q & full-year results – Driven by strategic focus on margin, recurring revenue and sales excellence C – Aided by diversity of end-markets, geographies and revenue streams • Record revenue of $101.3M, up 33% y/y – Organic revenue, c
Slide 5: 2015 Operational Highlights
2015 Operational Highlights • Delivered record results: Revenue, Bookings, Adjusted EBITDA, Non-GAAP Operating Income, Gross Profit & Non-GAAP EPS C • Achieved $367M Revenue, $43M Non-GAAP Operating Income and $48M Adjusted EBITDA • Continued strategic focus on recurring revenue growth to drive high
Slide 6: Business Conditions & Strategic Review
Business Conditions & Strategic Review • Environmental Segment – Lighter demand for industrial engineered equipment causes project delays and slowness in C activity and bookings – Global refinery and petrochemical activity remain solid – Lower expectations for China; Flat near-term opportunity yet s
Slide 7: Executing on Peerless Integration & Operational Efficiencies
Executing on Peerless Integration & Operational Efficiencies • Peerless integration ahead of plan and almost complete C • As of March 2016, achieved $15M of annual cost synergies; Accomplished in 6 months vs. 18-24 months as previously communicated – Corporate overhead (IT, public company fees, etc.
Slide 8: Peerless Exceeding Expectations
Peerless Exceeding Expectations • Delivered strong 4Q15 performance, exceeding margin expectations – Revenue $28.3M C – Bookings $32.0M – Non-GAAP Operating Income $3.1M – Adjusted EBITDA $3.3M – Gross Margin 35.3% – Non-GAAP Operating Margin 11% • Performance on track with CECO operating metrics •
Slide 9: Recurring Revenue Strategy
Recurring Revenue Strategy Dedicated AM 300K Installed Units= Employees $5BN Base C Expanded Offering Technician Footprint PorDolio Weekly Metrics Lifecycle Sales Team Review ConnecQvity Focus • Relationships: Leverage $5BN installed base to develop deeper relationships with end user customers • Infl
Slide 10: Recurring Revenue Journey
Recurring Revenue Journey 2016E Recurring Revenue Mix by Segments Fluid Hand/Filt Energy C ~20% ~25% 2018 2016 Enviro ~55% 30% of Total Low Double Digit Revenue Recurring 2015 Recurring Revenue • Lead With Growth Services 25% of Total • Enhanced Service • Improved Installed Revenue Recurring Offerin
Slide 11: 2016 Strategic Priorities
2016 Strategic Priorities Continued Focus Continue to Sharp Focus on on Organic Innovate and Debt Reduction, Revenue Growth & Deliver Working Capital & C Higher Margin Differentiation and Free Cash Flow Aftermarket Value to Conversion Opportunities Customers Solid Opera,ng Pla0orm to Drive Future Gr
Slide 12: Sharp Focus on Debt Reduction
Sharp Focus on Debt Reduction • 4Q15 Net Debt to TTM Adjusted EBITDA = 3x Leverage Ratio C • Core focus – Growth and EBITDA generation – Working capital improvement – Debt repayment – Asset light continuation • Paid off $37M of debt in 2015, including $20M in 4Q15, exclusive of new borrowings • Exit
Slide 13: A global industrial technology company focused on environmental, energy, fluid handling
A global industrial technology company focused on environmental, energy, fluid handling industries C Integrated Clean Air Solutions for Industry 13
Slide 14: Growth in Revenue, OI & Adjusted EBITDA
Growth in Revenue, OI & Adjusted EBITDA ($ in millions) Revenue Non-GAAP Opera,ng Income & Adjusted EBITDA (1) Adjusted EBITDA $48.4 $367.4 C $38.7 $42.8 _ $263.2 $28.5 $34.0 $197.3 $18.6 $25.8 $14.4 $139.2 $135.1 $16.7 $12.4 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 (1) See supplemental sli
Slide 15: 4Q15 Financial Highlights: Revenue
4Q15 Financial Highlights ($ in millions) Revenue $101.3 $98.2 C $86.9 $81.0 $76.1 4Q14 1Q15 2Q15 3Q15 4Q15 4Q15 Results • Record revenue of $101.3M, up 33% y/y • Organic revenue down 2.4% y/y, constant currency, due to softness in Asia and weaker demand for industrial engineered equipment FY 2015 R
Slide 16: 4Q15 Financial Highlights: Backlog and Bookings
4Q15 Financial Highlights ($ in millions) Backlog Bookings $212.3 $211.2 C $153.0 $140.1 $140.3 4Q14 1Q15 2Q15 3Q15 4Q15 4Q15 Results • Solid backlog of $211.2M, up 51% y/y • Bookings of $100.3M, up 57% y/y • Organic bookings down 7.5% y/y due to weaker market conditions FY 2015 Results • Bookings o
Slide 17: 4Q15 Financial Highlights: Margins
4Q15 Financial Highlights Non-GAAP Gross Margin Non-GAAP Opera,ng Margin C 31.6% 14.2% 29.8% 30.7% 31.0% 13.2% 26.2% 10.0% 9.3% 10.0% 4Q14 1Q15 2Q15 3Q15 4Q15 4Q14 1Q15 2Q15 3Q15 4Q15 4Q15 Results • Non-GAAP gross margin of 31.0%, up 120 bps y/y, driven by price management and increased aftermarket
Slide 18: 4Q15 Financial Highlights: Adjusted EBITDA and Operating Income
4Q15 Financial Highlights ($ in millions) Adjusted EBITDA Non-GAAP Opera,ng Income $13.5 $14.1 $13.0 $12.3 $12.2 C $10.1 $8.9 $8.6 $7.6 $7.5 4Q14 1Q15 2Q15 3Q15 4Q15 4Q14 1Q15 2Q15 3Q15 4Q15 Note: See supplemental slide for adjusted EBITDA reconciliation and important disclosures regarding CECO’s us
Slide 19: Environmental Segment
Environmental Segment 4th Quarter Results ($ in millions) Revenue Bookings $41.7 $41.8 C $40.3 $40.6 $34.2 4Q14 1Q15 2Q15 3Q15 4Q15 4Q15 Results • Revenue of $34.2M, down 15% y/y • Organic revenue down 7% y/y • Bookings of $30.3M, down 9% y/y • Organic bookings down 19% FY 2015 Results • Revenue of
Slide 20: Energy Segment
Energy Segment 4th Quarter Results ($ in millions) Revenue Bookings $55.3 $50.5 C $40.0 $27.3 $26.5 $24.3 $25.0 $20.2 $21.6 $14.6 4Q14 1Q15 2Q15 3Q15 4Q15 4Q14 1Q15 2Q15 3Q15 4Q15 4Q15 Results • Revenue of $50.5M, up 150% y/y, primarily due to Peerless acquisition • Organic revenue down 4% y/y • Boo
Slide 21: Fluid Handling & Filtration Segment
Fluid Handling & Filtration Segment 4th Quarter Results ($ in millions) Revenue Bookings C 4Q15 Results • Organic revenue of $17.5M, up 10% y/y • Organic bookings of $14.8M, down 6% y/y FY 2015 Results • Organic revenue of $67.6M, up 3% from 2015 • Organic bookings of $67M, up 4.5% y/y • Margin expa
Slide 22: Balance Sheet
Balance Sheet ($ in millions) Selected Balance Sheet Informa,on 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 Cash & Equivalents $ 12.7 $ 23.0 $ 22.7 $ 18.2 $ 34.2 C Total Assets $ 79.3 $ 94.1 $348.5 $412.1 $598.8 Total Bank Debt $ 0.0 $ 0.0 $ 89.1 $111.9 $177.3 Shareholders’Equity $ 43.0 $
Slide 23: Supplementary Non-GAAP Materials
C Supplementary Non-GAAP Materials Integrated Clean Air Solutions for Industry 23
Slide 24: Notes to Investors: Non-GAAP Financial Information
NOTES TO INVESTORS Non-GAAP Financial Information CECO is providing non-GAAP historical financial measures as the Company believes 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
Slide 25: Non-GAAP Gross Margin
Non-GAAP Gross Margin ($ in millions) Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual 2013 2014 2014 2014 2014 2014 2015 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 $30.8 $30.8 $109.2 Gross profit margin in accordance with GAAP 31.2
Slide 26: Non-GAAP Operating Margin
Non-GAAP Operating Margin ($ in millions) Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual 2013 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 Opera,ng income as reported in accordance with GAAP $7.0 $5.5 $7.2 $5.2 $3.8 $21.7 $3.0 $4.5 $(2.2) $(0.3) $4.9 OperaAng margin in accordance with GAAP 3.5% 9
Slide 27: Non-GAAP Net Income & EBITDA
Non-GAAP Net Income & EBITDA ($ in millions) Annual Annual Annual Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual 2011 2012 2013 2014 2014 2014 2014 2014 2015 2015 2015 2015 2015 Net income as reported in accordance with GAAP $8.3 $10.9 $6.6 $3.0 $4.5 $3.7 $1.9 $13.1 $0.2 $2.1 $(4.8) $(3.1) $(5.6) Inventory v