Ceco Environmental Corp. · NASDAQ:CECO
Ceco Environmental — Q2 2021 Earnings Presentation
24 slides from Ceco Environmental's earnings presentation, Aug 3, 2021
Slide 1: Q2'21 Earnings Release
Q2’21 Earnings Release August 3, 2021
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: Strong Orders Growth Supports Continued Growth
Q2: Strong Orders Growth Supports Continued Growth ($MM) Q2’21 YoY % Seq % Comments • Orders: ~ $86 +43% (7)% Strong bookings expected to continue • Sales: ~ $79 +5% +9% Growing backlog Growing Sales Book-to-Bill ~ 1.1X … Backlog Above $210M … Pipeline > $2B • Gross Margin: 32.1% (220)bp (190)bp Q2
Slide 4: Orders Growth Year-to-Date and Backlog Growth
Key Take Away From 1H 2021: ($MM) Order’s Growth Year-to-Date Backlog Growth + Up 30% YTD $210 +15% + Balanced Across $183 Most Platforms + Ability to Maintain Price & Margins 2020 Year End End of 1H 2021 4
Slide 5: Completed our reorganization into market-focused, leadership platforms
Completed our reorganization into market-focused, leadership platforms Platform Solutions Segments ($MM) Industrial Air Filtration Industrial Ventilation • Particulate Filtration 21% • Duct Fabrication Industrial & Process • Scrubbers • Installation Solutions • Chemical Abatement 46% • Thermal Abate
Slide 6: Q2'21 Financials
CECO ENVIRONMENTAL Q2’21 Financials
Slide 7: Orders & Revenue grew YoY
Orders & Revenue grew YoY … balanced with Industrial Air leading the way Orders Revenue ($MM) $92.1 $85.5 $82.9 11.0 $75.2 $77.4 $78.7 $77.2 10.6 7.9 $71.9 $66.8 9.4 9.0 10.0 8.6 9.3 $60.0 24.7 19.0 8.2 16.7 18.7 7.6 22.9 34.8 25.3 20.6 13.0 20.6 56.3 56.1 45.7 49.1 49.7 39.4 38.0 40.1 42.1 43.4 Q2'
Slide 8: Orders Information by end markets served
Orders Information by end markets served End Markets Served Segments Orders YoY Seq. Q2: $35 +171% +41% Industrial Air 1H’21: $60 +64% +37% Investment = Results Industrial & Process TTM: $103 +34% Solutions Q2: $11 +39% (4)% $108 | 34% Fluid Handling 1H’21: $22 +19% +29% Solid Growth TTM: $38 +7% Q2
Slide 9: Strong bookings generates positive book/bill ratio
Strong bookings generates positive book/bill ratio ($MM) $250.0 $204.6 $210.0 $203.1 $189.1 $200.0 $183.1 • 1.09x Book/Bill ratio… 2nd consecutive quarter of backlog growth $150.0 • TTM Book to Bill Ratio at 1.03x…YTD ‘21 = 1.18x $82.9 $92.1 $85.5 $100.0 $75.2 $77.4 $78.7 • Backlog up 3% sequentiall
Slide 10: Profitability metrics to expand as volume increases in 2nd half
Profitability metrics to expand as volume increases in 2nd half ($MM) Non-GAAP Gross Profit Non-GAAP Operating Income Adjusted EBITDA $28.0 60% $25.8 $26.2 $26.0 $24.8 $25.3 $24.4 20.0% $24.0 50% $14.0 18.0% $12.0 20.0% $22.0 $12.0 16.0% $9.8 18.0% $10.0 40% 14.0% 16.0% $20.0 $10.0 $8.2 $8.6 14.0% $
Slide 11: Strong Orders an indicator of 2nd half and '22 growth
Strong Orders an indicator of 2nd half and '22 growth... Q2 EBITDA & EPS in-line with expectations ($MM) • $85.5 of Orders +43% Y/Y, down (7%) Sequentially… Energy markets remain slow • Revenue +5% Y/Y and 9% sequentially… driven by Industrial & Fluid volume • Gross margin rates down Y/Y and sequent
Slide 12: FCF decline in Q2 on timing of collections and project milestones
FCF decline in Q2 on timing of collections and project milestones ($MM) Trade Working Capital (a) Free Cash Flow conversion (b) % of $- $44 $41 $57 $51 $59 TTM EBITDA: 51% 46% 2% 13% 12% 19.0% 18.0% 16.5% 20.0 13.4% 15.0 12.8% 7.9% 8.9% 7.8% 10.0 3.1% 5.1% 5.0 $9.4 %- Adjusted FCF: $6.1 - 10.4% 10.2
Slide 13: Continue to pay down debt
Continue to pay down debt… Balance sheet in healthy position ($MM) Debt Paydown Balance sheet $194 $175 $125 $115 $76 $74 $71 $69 $67 Peerless Acquisition • Consistent debt paydown of $(2) in Q2… ~$45 of capacity under credit facility • Cash on hand is split 22% North America and 78% International 1
Slide 14: Looking Forward
CECO ENVIRONMENTAL Looking Forward
Slide 15: In Great Position to Execute Strategy
In Great Position to Execute Strategy … Will Leverage These 3 Things: Solid Foundation Re-organized CECO business structure Navigated major Covid impacts Streamlined costs, systems & processes Market-focused businesses Backlog at approximately pre-Covid levels Less SG&A & complexity … Sustainable
Slide 16: Leverage foundation, momentum and optionality to execute plan
Leverage foundation, momentum and optionality to execute plan • Shareholder returns > peer group • Programmatic M&A … accretive results • Organic and Inorganic investments will produce • Invest in focused organic initiatives o Targeting industrial air & environmental solutions • Focused M&A to trans
Slide 17: An Environmentally-focused, Diversified Industrial Leader
An Environmentally-focused, Diversified Industrial Leader 2X or Larger (Sales) ~ 30% Energy, But Less Cyclical (Long-Cycle Projects) $325M (Sales) Industrial Air & 40%+ Environmental Solutions (Mid-Cycle) Energy Centric • Focused investments in less cyclical platform(s) (Long-Cycle Projects) ~ 55% •
Slide 18: Questions?
In Summary … • Thank you Team CECO … Commitment to our customers and health & safety! • Strong 1H 2021 … Rebuilding our Backlog critical … Platform organization focused on growth • Stock buyback program is expected to repurchase ~ 2 percent of common stock in 2021 • $2B sales pipeline maintains conf
Slide 19: Supplemental Materials
Supplemental Materials Other Information And Non-GAAP Reconciliation 19
Slide 20: Revenue excluding Acquisitions & Divestitures
Revenue excluding Acquisitions & Divestitures 20
Slide 21: Non-GAAP Gross Profit and Margin
Non-GAAP Gross Profit and Margin 21
Slide 22: Non-GAAP Operating Income and Margin
Non-GAAP Operating Income and Margin 22
Slide 23: Non-GAAP Net Income, Adjusted EBITDA and Margin
Non-GAAP Net Income, Adjusted EBITDA and Margin 23
Slide 24: Adjusted Free Cash Flow
Adjusted Free Cash Flow Net Cash provided by operating activities |Add: earn-outs classified as operating Capital Expenditures Annual 2019 ai 2020 az 2020 a3 2020 a4 2020 Annual 2020 ai 2021 $ 220 $ 10.2 $ 70 $ (49) $ 70 $ (4.7) $ 44 $ 99 $ 64 $ 29 $ - $ - $ - - - = = - $ (3.1) $ (5.6) $ (1.0) $ (1.