8-K
false000000319700000031972022-11-072022-11-07

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 7, 2022

 

CECO ENVIRONMENTAL CORP.

(Exact Name of registrant as specified in its charter)

 

 

Delaware

 

000-7099

 

13-2566064

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

14651 North Dallas Parkway

Suite 500

Dallas, TX

 

75254

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (214) 357-6181

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

CECO

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


Item 2.02. Results of Operations and Financial Condition.

On November 7, 2022, CECO Environmental Corp. (the “Company”) issued a press release announcing its financial results for the three and nine months ended September 30, 2022. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference.

The information in this Item 2.02, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
Number

 

Exhibit Title

 

 

99.1

 

104

 

 

 

 

 

Press Release, CECO Environmental Reports Third Quarter 2022 Results

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 

 


Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

Date: November 7, 2022

 

 

 

CECO Environmental Corp.

 

 

 

 

 

 

 

 

By:

 

/s/ Paul M. Gohr

 

 

 

 

 

 

Paul M. Gohr

 

 

 

 

 

 

Chief Accounting Officer

 


EX-99.1

https://cdn.kscope.io/a31bc2bb904134780074c8835e8969fa-img161054807_0.jpg
 

CECO ENVIRONMENTAL REPORTS THIRD QUARTER 2022 RESULTS

Strong Orders, Revenue and Income Growth; Updates to 2022 Outlook and Introduces 2023 Outlook

DALLAS (Nov. 7, 2022) -- CECO Environmental Corp. (Nasdaq: CECO) ("CECO"), a leading environmentally focused, diversified industrial company whose solutions protect people, the environment, and industrial equipment, today reported its financial results for the third quarter of 2022.

Highlights for the Quarter(1)

Orders of $101.7 million, up 10 percent; Backlog of $277.7 million, up 27 percent
Revenue of $108.4 million, up 36 percent
Net income of $1.9 million, up $3.1 million; non-GAAP net income of $7.1 million, up $6.6 million
Adjusted EBITDA of $9.2 million, up 156 percent
Company increases full year financial outlook; Company introduces full year 2023 financial outlook


(1) All comparisons are versus the comparable prior year period, unless otherwise stated.

Reconciliations of GAAP (reported) to non-GAAP measures are in the attached financial tables.

 

“We continue to deliver excellent results, highlighted by our third consecutive quarter with orders over $100 million and another quarter of very strong sales and income growth. In the quarter we also strengthened our industrial water position with the acquisition of South Korea-based DS21, and we repurchased more than $2 million of shares,” said CECO Chief Executive Officer, Todd Gleason.

Third quarter operating income was $2.8 million, up $3.4 million when compared to an operating loss of $0.6 million in the third quarter 2021. On an adjusted basis, non-GAAP operating income was $7.3 million, up $5.5 million when compared to $1.8 million in the third quarter of 2021. Net income was $1.9 million in the quarter, up $3.1 million compared to a net loss of $1.2 million in the third quarter 2021. Non-GAAP net income was $7.1 million, up $6.6 million compared to $0.5 million in the third quarter 2021. Adjusted EBITDA was $9.2 million, up 156 percent compared to $3.6 million in the third quarter 2021. The Company repurchased $2.2 million of shares in the third quarter as part of the previously announced $20 million share repurchase program.

“Our year-to-date results have been fantastic with orders growth of approximately 39 percent, backlog up 27 percent and revenue growth up more than 33 percent through three quarters. We expect that our near record backlog of approximately $278 million, coupled with the four strategic acquisitions we have completed in 2022, will support continued top-line and bottom-line growth and advanced leadership positions in our focus markets,” added Gleason.


Company Financial Outlook: Increases Full Year 2022 and Introduces Full Year 2023

The Company updated its expected full year 2022 guidance to reflect revenue to exceed $410 million, up over 25 percent year over year and its expected full year 2022 adjusted EBITDA to exceed $39 million, up more than 50 percent year over year.

 

The Company introduces its expected full year 2023 guidance of $450 to $475 million in revenue, up approximately 13 percent at the midpoint year over year and its expected full year adjusted EBITDA of between $45 and $48 million, up approximately 19 percent at the midpoint year over year.

 

“We are in excellent position to maintain double digit top-line and bottom-line growth as we exit 2022 and enter 2023. We expect our ongoing investments in growth and operational excellence programs, coupled with our programmatic M&A, will continue to transform CECO and yield sustainable results and shareholder value,” concluded Gleason.

 

 


EARNINGS CONFERENCE CALL


A conference call is scheduled for today at 8:30 a.m. ET to discuss the third quarter 2022 financial results. Please visit the Investor Relations portion of the website (www.cecoenviro.com) to listen to the call via webcast. The conference call may also be accessed by dialing 888-346-4547 (Toll-Free) within the U.S., or +1-412-317-5251 (Toll-Required) outside the U.S.
 

A replay of the conference call will be available on the Company’s website for a period of one year. The replay may also be accessed by dialing 877-344-7529 (Toll-Free) within the U.S., or +1-412-317-0088 (Toll-Required) outside the U.S. and entering access code 9288150.
 


ABOUT CECO ENVIRONMENTAL

CECO Environmental is a leading environmentally focused, diversified industrial company, serving the broad landscape of industrial air, industrial water and energy transition markets globally providing innovative solutions and application expertise. CECO helps companies grow their business with safe, clean, and more efficient solutions that help protect people, the environment and industrial equipment. CECO solutions improve air and water quality, optimize emissions management, and increase energy efficiency for highly-engineered applications in power generation, midstream and downstream hydrocarbon processing and transport, electric vehicle production, polysilicon fabrication, semiconductor and electronics, battery production and recycling, specialty metals and steel production, beverage can, and water/wastewater treatment and a wide range of other industrial end markets. CECO is listed on Nasdaq under the ticker symbol "CECO." Incorporated in 1966, CECO’s global headquarters is in Dallas, Texas. For more information, please visit www.cecoenviro.com.

Company Contact:

Peter Johansson

Chief Financial and Strategy Officer
888-990-6670

investor.relations@onececo.com

Investor Relations Contact:

Steven Hooser or Gary Guyton

Three Part Advisors, LLC

214-872-2710

investor.relations@onececo.com

 

# # #

 

 

 

 

 


CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

(in thousands, except share data)

 

(unaudited)
September 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,188

 

 

$

29,902

 

Restricted cash

 

 

1,026

 

 

 

2,093

 

Accounts receivable, net

 

 

89,959

 

 

 

74,991

 

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

56,775

 

 

 

51,429

 

Inventories, net

 

 

24,740

 

 

 

17,052

 

Prepaid expenses and other current assets

 

 

14,140

 

 

 

10,760

 

Prepaid income taxes

 

 

866

 

 

 

2,784

 

Total current assets

 

 

222,694

 

 

 

189,011

 

Property, plant and equipment, net

 

 

20,260

 

 

 

15,948

 

Right-of-use assets from operating leases

 

 

12,049

 

 

 

10,893

 

Goodwill

 

 

182,365

 

 

 

161,183

 

Intangible assets – finite life, net

 

 

36,095

 

 

 

25,841

 

Intangible assets – indefinite life

 

 

9,346

 

 

 

9,629

 

Deferred income taxes

 

 

505

 

 

 

505

 

Deferred charges and other assets

 

 

2,915

 

 

 

3,187

 

Total assets

 

$

486,229

 

 

$

416,197

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Current portion of debt

 

$

3,303

 

 

$

2,203

 

Accounts payable and accrued expenses

 

 

100,354

 

 

 

84,081

 

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

33,871

 

 

 

28,908

 

Note payable - current

 

 

500

 

 

 

 

Income taxes payable

 

 

1,799

 

 

 

1,493

 

Total current liabilities

 

 

139,827

 

 

 

116,685

 

Other liabilities

 

 

14,986

 

 

 

14,826

 

Debt, less current portion

 

 

107,034

 

 

 

61,577

 

Deferred income tax liability, net

 

 

9,809

 

 

 

8,390

 

Operating lease liabilities

 

 

9,153

 

 

 

8,762

 

Total liabilities

 

 

280,809

 

 

 

210,240

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Preferred stock, $.01 par value; 10,000 shares authorized, none issued

 

 

 

 

Common stock, $.01 par value; 100,000,000 shares authorized, 34,329,751 and
35,028,197 shares issued and outstanding at September 30, 2022 and
December 31, 2021, respectively

 

 

343

 

 

 

350

 

Capital in excess of par value

 

 

249,248

 

 

 

252,989

 

Accumulated loss

 

 

(27,595

)

 

 

(36,715

)

Accumulated other comprehensive loss

 

 

(21,457

)

 

 

(12,070

)

Total CECO shareholders' equity

 

 

200,539

 

 

 

204,554

 

Non-controlling interest

 

 

4,881

 

 

 

1,403

 

Total shareholders' equity

 

 

205,420

 

 

 

205,957

 

Total liabilities and shareholders' equity

 

$

486,229

 

 

$

416,197

 

 

 

 

 

 


CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

(in thousands, except share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

108,414

 

 

$

79,979

 

 

$

306,225

 

 

$

230,551

 

Cost of sales

 

 

75,988

 

 

 

57,254

 

 

 

215,696

 

 

 

158,164

 

Gross profit

 

 

32,426

 

 

 

22,725

 

 

 

90,529

 

 

 

72,387

 

Selling and administrative expenses

 

 

25,166

 

 

 

20,929

 

 

 

66,806

 

 

 

60,894

 

Amortization and earnout expenses

 

 

2,039

 

 

 

1,776

 

 

 

4,939

 

 

 

5,849

 

Restructuring expenses

 

 

 

 

 

397

 

 

 

73

 

 

 

655

 

Acquisition and integration expenses

 

 

1,287

 

 

 

219

 

 

 

3,827

 

 

 

357

 

Executive transition expenses

 

 

1,161

 

 

 

 

 

 

1,161

 

 

 

29

 

Income (loss) from operations

 

 

2,773

 

 

 

(596

)

 

 

13,723

 

 

 

4,603

 

Other income (expense), net

 

 

1,276

 

 

 

185

 

 

 

2,754

 

 

 

(1,155

)

Interest expense

 

 

(1,569

)

 

 

(722

)

 

 

(3,489

)

 

 

(2,152

)

Income (loss) before income taxes

 

 

2,480

 

 

 

(1,133

)

 

 

12,988

 

 

 

1,296

 

Income tax expense

 

 

314

 

 

 

63

 

 

 

3,287

 

 

 

813

 

Net income (loss)

 

 

2,166

 

 

 

(1,196

)

 

 

9,701

 

 

 

483

 

Non-controlling interest

 

 

223

 

 

 

53

 

 

 

579

 

 

 

259

 

Net income (loss) attributable to CECO Environmental Corp.

 

$

1,943

 

 

$

(1,249

)

 

$

9,122

 

 

$

224

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

(0.04

)

 

$

0.26

 

 

$

0.01

 

Diluted

 

$

0.06

 

 

$

(0.04

)

 

$

0.26

 

 

$

0.01

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

34,455,657

 

 

 

35,472,298

 

 

 

34,791,129

 

 

 

35,463,279

 

Diluted

 

 

34,871,313

 

 

 

35,472,298

 

 

 

35,035,041

 

 

 

35,729,887

 

 


CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

 

Nine months ended September 30,

 

(in thousands)

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

9,701

 

 

$

483

 

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

7,609

 

 

 

7,373

 

Unrealized foreign currency loss

 

 

2,525

 

 

 

1,531

 

Fair value adjustment to earnout liabilities

 

 

 

 

 

500

 

Earnout payments

 

 

(1,007

)

 

 

(587

)

Gain on sale of property and equipment

 

 

(7

)

 

 

(67

)

Debt discount amortization

 

 

279

 

 

 

304

 

Share-based compensation expense

 

 

2,859

 

 

 

2,466

 

Bad debt expense

 

 

823

 

 

 

456

 

Inventory reserve expense

 

 

115

 

 

 

428

 

Changes in operating assets and liabilities, net of acquisitions and divestitures:

 

 

 

 

 

 

Accounts receivable

 

 

(15,772

)

 

 

(7,502

)

Costs and estimated earnings in excess of billings on uncompleted contracts

 

 

(4,846

)

 

 

(5,091

)

Inventories

 

 

(4,620

)

 

 

(2,172

)

Prepaid expense and other current assets

 

 

(1,900

)

 

 

3,448

 

Deferred charges and other assets

 

 

2,311

 

 

 

43

 

Accounts payable and accrued expenses

 

 

17,648

 

 

 

5,655

 

Billings in excess of costs and estimated earnings on uncompleted contracts

 

 

6,567

 

 

 

3,903

 

Income taxes payable

 

 

(51

)

 

 

(23

)

Other liabilities

 

 

(2,538

)

 

 

(916

)

Net cash provided by operating activities

 

 

19,696

 

 

 

10,232

 

Cash flows from investing activities:

 

 

 

 

 

 

Acquisitions of property and equipment

 

 

(2,367

)

 

 

(1,740

)

Net proceeds from sale of assets

 

 

7

 

 

 

533

 

Net cash paid for acquisitions

 

 

(44,900

)

 

 

 

Net cash used in investing activities

 

 

(47,260

)

 

 

(1,207

)

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings on revolving credit lines

 

 

73,600

 

 

 

32,100

 

Repayments on revolving credit lines

 

 

(35,900

)

 

 

(36,900

)

Borrowings on long-term debt

 

 

11,000

 

 

 

 

Repayments of long-term debt

 

 

(2,294

)

 

 

(2,188

)

Deferred financing fees paid

 

 

(130

)

 

 

 

Payments on finance leases and financing liability

 

 

(444

)

 

 

(411

)

Earnout payments

 

 

 

 

 

(823

)

Proceeds from employee stock purchase plan and exercise of stock options

 

 

169

 

 

 

239

 

Noncontrolling interest distributions

 

 

(1,201

)

 

 

(107

)

Common stock repurchase

 

 

(6,558

)

 

 

(3,745

)

Net cash provided by (used in) financing activities

 

 

38,242

 

 

 

(11,835

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(6,459

)

 

 

(535

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

4,219

 

 

 

(3,345

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

31,995

 

 

 

37,811

 

Cash, cash equivalents and restricted cash at end of period

 

$

36,214

 

 

$

34,466

 

Cash paid (received) during the period for:

 

 

 

 

 

 

Interest

 

$

3,239

 

 

$

1,609

 

Income taxes

 

$

3,566

 

 

$

(2,678

)

 

 

 

 

 

 

 

 

 


CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

 

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

(in millions, except ratios)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating income (loss) as reported in accordance with GAAP

 

$

2.8

 

 

$

(0.6

)

 

$

13.7

 

 

$

4.6

 

Operating margin in accordance with GAAP

 

 

2.6

%

 

 

(0.8

)%

 

 

4.5

%

 

 

2.0

%

Amortization and earnout expenses

 

 

2.0

 

 

 

1.8

 

 

 

4.9

 

 

 

5.8

 

Restructuring expenses

 

 

 

 

 

0.4

 

 

 

0.1

 

 

 

0.7

 

Acquisition and integration expenses

 

 

1.3

 

 

 

0.2

 

 

 

3.8

 

 

 

0.4

 

Executive transition expenses

 

 

1.2

 

 

 

 

 

 

1.2

 

 

 

 

Non-GAAP operating income

 

$

7.3

 

 

$

1.8

 

 

$

23.7

 

 

$

11.5

 

Non-GAAP operating margin

 

 

6.7

%

 

 

2.3

%

 

 

7.7

%

 

 

5.0

%

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

(in millions, except share data)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income (loss) as reported in accordance with GAAP

 

$

1.9

 

 

$

(1.2

)

 

$

9.1

 

 

$

0.2

 

Amortization and earnout expenses

 

 

2.0

 

 

 

1.8

 

 

 

4.9

 

 

 

5.8

 

Restructuring expenses

 

 

 

 

 

0.4

 

 

 

0.1

 

 

 

0.7

 

Acquisition and integration expenses

 

 

1.3

 

 

 

0.2

 

 

 

3.8

 

 

 

0.4

 

Executive transition expenses

 

 

1.2

 

 

 

 

 

 

1.2

 

 

 

 

Foreign currency remeasurement

 

 

2.5

 

 

 

(0.1

)

 

 

2.5

 

 

 

1.5

 

Tax benefit expense of adjustments

 

 

(1.8

)

 

 

(0.6

)

 

 

(3.1

)

 

 

(2.1

)

Non-GAAP net income

 

$

7.1

 

 

$

0.5

 

 

$

18.5

 

 

$

6.5

 

Depreciation

 

 

0.9

 

 

 

0.8

 

 

 

2.7

 

 

 

2.3

 

Non-cash stock compensation

 

 

1.1

 

 

 

0.9

 

 

 

2.9

 

 

 

2.5

 

Other (income) expense

 

 

(3.8

)

 

 

(0.1

)

 

 

(5.3

)

 

 

(0.3

)

Interest expense

 

 

1.6

 

 

 

0.7

 

 

 

3.5

 

 

 

2.2

 

Income tax expense

 

 

2.1

 

 

 

0.7

 

 

 

6.4

 

 

 

2.9

 

Noncontrolling interest

 

 

0.2

 

 

 

0.1

 

 

 

0.6

 

 

 

0.3

 

Adjusted EBITDA

 

$

9.2

 

 

$

3.6

 

 

$

29.3

 

 

$

16.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

(0.04

)

 

$

0.26

 

 

$

0.01

 

Diluted

 

$

0.06

 

 

$

(0.04

)

 

$

0.26

 

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.21

 

 

$

0.01

 

 

$

0.54

 

 

$

0.18

 

Diluted

 

$

0.20

 

 

$

0.01

 

 

$

0.53

 

 

$

0.18

 

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

(in millions, except ratios)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net cash provided by operating activities

 

$

1.0

 

 

$

6.1

 

 

$

19.7

 

 

$

10.2

 

Earnout payments (within operating activities)

 

 

 

 

 

0.6

 

 

 

1.0

 

 

 

0.6

 

Acquisitions of property and equipment

 

 

(0.9

)

 

 

(0.7

)

 

 

(2.4

)

 

 

(1.7

)

Free cash flow

 

$

0.1

 

 

$

6.0

 

 

$

18.3

 

 

$

9.1

 

 


NOTE REGARDING NON-GAAP FINANCIAL MEASURES

 

CECO is providing certain non-GAAP historical financial measures as presented above as we believe that 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 a company's historical financial performance that excludes amounts that are included in the most directly comparable measure calculated and presented in accordance with GAAP.

 

Non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, non-GAAP earnings per basic and diluted share and adjusted EBITDA, as we present them in the financial data included in this press release, have been adjusted to exclude the effects of amortization expenses for acquisition-related intangible assets, contingent retention and earnout expenses, restructuring expenses primarily relating to severance and legal expenses, acquisition and integration expenses which include retention, legal, accounting, banking, and other expenses, foreign currency remeasurement and other nonrecurring or infrequent items and the associated tax benefit of these items. Management believes that these items are not necessarily indicative of the Company’s ongoing operations and their exclusion provides individuals with additional information to better compare the Company's results over multiple periods. Management utilizes this information to evaluate its ongoing financial performance. Our financial statements may continue to be affected by items similar to those excluded in the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP financial measures should not be construed as an inference that all such costs are unusual or infrequent.

 

Non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, non-GAAP earnings per basic and diluted share and adjusted EBITDA are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of CECO’s results as reported under GAAP. Additionally, CECO cautions investors that non-GAAP financial measures used by the Company may not be comparable to similarly titled measures of other companies.

 

In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, non-GAAP earnings per basic and diluted share and adjusted EBITDA stated in the tables above are reconciled to the most directly comparable GAAP financial measures.

 

Non-GAAP measures presented on a forward-looking basis were not reconciled to the comparable GAAP financial measures because the reconciliation could not be performed without unreasonable efforts. The GAAP measures are not accessible on a forward-looking basis because we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include amortization expenses for acquisition-related intangible assets, contingent retention and earnout expenses, restructuring expenses primarily relating to severance and legal expenses, acquisition and integration expenses which include retention, legal, accounting, banking, and other expenses, foreign currency remeasurement and other nonrecurring or infrequent items and the associated tax benefit of these items. The unavailable information could have a significant impact on our GAAP financial results.

 


SAFE HARBOR

Any statements contained in this Press Release, other than statements of historical fact, including statements about management’s beliefs and expectations, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, and should be evaluated as such. These statements are made on the basis of management’s views and assumptions regarding future events and business performance. We use words such as “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “plan,” “should” and similar expressions to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Potential risks and uncertainties, among others, that could cause actual results to differ materially are discussed under “Part I – Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and may be included in subsequently filed Quarterly Reports on Form 10-Q, and include, but are not limited to: the sensitivity of our business to economic and financial market conditions generally and economic conditions in our service areas; dependence on fixed price contracts and the risks associated therewith, including actual costs exceeding estimates and method of accounting for revenue; the effect of growth on our infrastructure, resources, and existing sales; the ability to expand operations in both new and existing markets; the potential for contract delay or cancellation as a result of on-going or worsening supply chain challenges; liabilities arising from faulty services or products that could result in significant professional or product liability, warranty, or other claims; changes in or developments with respect to any litigation or investigation; failure to meet timely completion or performance standards that could result in higher cost and reduced profits or, in some cases, losses on projects; the potential for fluctuations in prices for manufactured components and raw materials, including as a result of tariffs and surcharges, and rising energy costs; inflationary pressures relating to rising raw material costs and the cost of labor; the substantial amount of debt incurred in connection with our strategic transactions and our ability to repay or refinance it or incur additional debt in the future; the impact of federal, state or local government regulations; our ability to repurchase shares of our common stock and the amounts and timing of repurchases, if any; our ability to successfully realize the expected benefits of our restructuring program; our ability to successfully integrate acquired businesses and realize the synergies from strategic transactions; and the unpredictability and severity of catastrophic events, including cyber security threats, acts of terrorism or outbreak of war or hostilities or public health crises, such as uncertainties regarding the extent and duration of impacts of matters associated with the novel coronavirus (“COVID-19”), as well as management’s response to any of the aforementioned factors. Many of these risks are beyond management’s ability to control or predict. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. Investors are cautioned not to place undue reliance on such forward-looking statements as they speak only to our views as of the date the statement is made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update or review any forward-looking statements, whether as a result of new information, future events or otherwise.