Ceco Environmental Corp. · NASDAQ:CECO
Ceco Environmental — Q4 2023 Earnings Presentation
26 slides from Ceco Environmental's earnings presentation, Mar 5, 2024
Slide 1: Q4 2023 Earnings Release
Q4 2023 Earnings Release March 5, 2024
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: Q4 and Full Year 2023 Earnings Highlights
Q4 and Full Year 2023 Earnings Highlights $MM Final FY’23 Guidance Results • Record Q4 Revenues, Gross Profit $ and Adjusted EBITDA Orders ✓ 1.1x – 1.2x 1.1X Achieved • Record Backlog in ‘23 … YE of $371 up ~19% YoY • Book-to-Bill of ~ 1.1 for Past 12 Months Revenue ✓ 525 – 550M 545M Upper-End • Sal
Slide 4: Q4 and FY 2023 Financial Summary
Q4 and FY 2023 Financial Summary Q4’23 YoY TTM YoY Orders $128M (15%) FY Book-to-bill ~1.1x Orders $583M 11% Sales $154M 32% FY Organic Sales Up ~22% Sales $545M 29% Adj. $19.4M 49% Normalized* FY Margins Up Adj. $57.7 37% EBITDA 12.6% +139bps ~110 bps YoY EBITDA 10.6% +58bps Adj. EPS FY EPS Growth
Slide 5: CECO Transformation Journey
CECO Transformation Journey 2020 Portfolio Mix 2023 Portfolio Mix Growth Fluid 2020 2023 Solutions $316M Revenue $545M 10% +72% ~30% ~30% $183M Backlog $371M Energy Transition Industrial Water 25% +103% Industrial Air 65% Shareholder Energy Solutions Value ‘24 YTD ~40% 2020 Industrial Air $6.35 Stoc
Slide 6: Committed To Consistent Execution … Accelerating Transformation
Committed To Consistent Execution … Accelerating Transformation • Sustained Financial Performance • High Performance Organization • Portfolio/Biz Mix Optimization • Sustained Double Digit Growth Mindset • Full Operating Model Deployed • Continue Programmatic M&A • EBITDA Margins in Mid-Teens • Furth
Slide 7: Updating Full Year 2024 Guidance
Updating Full Year 2024 Guidance ($MM) Initial FY ‘24 Updated FY ‘24 2024 Commentary • Investments Maintain Growth Order Rate: 1.05 – 1.1X 1.05 – 1.1X • Market Drivers Remain Good: Reshoring, Book to Bill Infrastructure, Energy Transition, Policy $, Other… Raised • Maintaining Double Digit Sales Gro
Slide 8: Financial Performance
Financial Performance ENVIRONMENTAL
Slide 9: Q4'23 P&L and Earnings
($MM) Q4’23 P&L and Earnings ($MM) Q4’23 YoY Comments • Tough compare driven by significant order that didn’t repeat Orders: $128.3 (15%) • Company record TTM $583M Sales: $153.7 32% • Steady execution from growing backlog and benefit of acquisitions Gross Profit • Record GP$ quarter, up 41% YoY on
Slide 10: Orders: Q4'23 Continues Track Record of Double-Digit TTM Growth
($MM) Orders: Q4’23 Continues Track Record of Double-Digit TTM Growth TTM = Trailing 12 Month Avg = TTM/4 Company 2020 – 2023 CAGR 28% Record Comments $583 Broad-based Orders Growth … Robust and Growing Opportunity Pipeline $527 Orders > 100M for 8 consecutive quarters $361 Consistently high order i
Slide 11: Revenue: Q4'23 Extends Trend of Record Quarters
($MM) Revenue: Q4’23 Extends Trend of Record Quarters TTM = Trailing 12 Month Avg = TTM/4 Company 2020 – 2023 CAGR 20% Record Comments 4Q’23 Is Highest Revenue Quarter in Company $545 History … >2X the 1Q’21 “post-Covid bottom” 7 Consecutive Quarters of > 100M in revenue $423 TTM Revenue is Highest
Slide 12: Q4'23 Backlog Remains at Record Levels
($MM) Q4’23 Backlog* Remains at Record Levels TTM = Trailing 12 Month B2B = Book to Bill Company Record $391 $394 $378 $371 Comments $356 $312 • Up 19% YoY, ~70%+ converts to sales in 2024 $283 $289 $278 $290 • 2023 Qtr. Average of 378M up 30% YoY $203 $210 $219 $214 $161 $163 $211 $151 $146 $146 $1
Slide 13: Continuing to Drive Strong Profitability
Continuing to Drive Strong Profitability ($MM) Gross Profit Adjusted EBITDA Company Company Record Record $19.4 $15.1 $16.0 $43.1 $53.2 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% $25.0
Slide 14: Cash Position and Liquidity Supports Capital Deployment Plan
Cash Position and Liquidity Supports Capital Deployment Plan ($MM) Cash Position and Liquidity Leverage and Investment Capacity 5/ Cash 12.31.22 $46.6 Gross Debt 12.31.22 $104.9 Sources Borrowings Cash from Operations $44.6 On revolver $106.6 Net Borrowings $26.0 On term loan $75.0 Total $70.6 Other
Slide 15: Disciplined Capital Allocation Driving Value Creation
Disciplined Capital Allocation Driving Value Creation Acquisitions Completed 1H’23 ~$30M Acquisition Completed Q3’23 ~$22M • Mid-Q3 Close • Q1 Close • US-based • UK-based • Annualized Revenues ~$28M+ • Annualized Revenues ~$20M+ • Complement to DS21 and Compass • Bolt-on to Thermal Acoustics Platfor
Slide 16: Looking Forward: 2024 and Beyond
Looking Forward: 2024 and Beyond 16
Slide 17: 2024 Tailwinds Continue to Outpace Headwinds
2024 Tailwinds Continue to Outpace Headwinds Tailwinds CECO Headwinds Environmental • Recent Acquisitions • Project Delays Continue • Improving Macro Environment • Lower Inflation Reducing Pricing Leverage • Record YE Backlog to Start 2024 • Continued High Interest Rates • Strong Opportunity Pipelin
Slide 18: Updating Full Year 2024 Guidance
Updating Full Year 2024 Guidance ($MM) Initial FY ‘24 Updated FY ‘24 2024 Commentary • Investments Maintain Growth Order Rate: 1.05 – 1.1X 1.05 – 1.1X • Market Drivers Remain Good: Mfg. Reshoring, Book to Bill Infrastructure, Energy Transition, Policy $, Other… Raised • Maintaining Double Digit Sale
Slide 19: Longer-Term Outlook Combines Steady Topline and Bottomline Growth
Longer-Term Outlook Combines Steady Topline and Bottomline Growth $MM Reference: Mid-to-Longer “Historic Range” Point of Departure Term Targets $700M+ Rev + 150 basis Points Volume + 150 basis Points Conversion Ops Excellence + G&A Leverage + 150 basis Points + 20%+ Conversion Gross Margin + Lean De
Slide 20: Final Wrap-up
Final Wrap-up CECO 0 ENVIRONMENTAL
Slide 21: Q4 2023 Earnings Summary
Q4 2023 Earnings Summary • Tremendous progress on our strategy and execution • Outstanding Performance – operationally and financially ‒ Record Orders, Revenue, Gross Profit$ and Adj. EBITDA$ ‒ Q4 Adjusted EPS growth of 33% ‒ Book to Bill ~1.1x ‒ Record Year-end Backlog • Completed 3 strategic M&A t
Slide 22: Appendix
Appendix Supplemental Materials and Non-GAAP Reconciliation Tables 22
Slide 23: Revenue Excluding Acquisitions
Revenue Excluding Acquisitions (dollars in millions) Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual 2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 Revenue as report in accordance with GAAP $ 92.4 $ 105.4 $ 108.4 $ 116.4 $ 422.6 $ 112.6 $ 129.2 $ 149.4 $ 153.7 $ 544.9 Less revenue attributable to acquisiti
Slide 24: 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 2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 Operating Income as reported in accordance with GAAP $ 5.2 $ 5.7 $ 2.8 $ 8.4 $ 22.2 $ 5.5 $ 8.6 $ 7.9 $ 12.7 $ 34.7 Operating Margin in accordance with G
Slide 25: 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. 25
Slide 26: Adjusted Free Cash Flow
Adjusted Free Cash Flow (dollars in millions) Q1 Q2 Q3 Q4 Annual Q1 Q2 Q3 Q4 Annual 2022 2022 2022 2022 2022 2023 2023 2023 2023 2023 Net Cash provided by (used in) operating activities $ (0.2) $ 18.9 $ 1.0 $ 10.0 $ 29.6 $ (12.0) $ 11.4 $ 30.1 $ 15.2 $ 44.6 Add: Earn-outs classified as operating - 1