Ceco Environmental: Q3 and nine-month results

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Cincinnati, - CECO Environmental Corp., a leading provider of air pollution control technology and systems, announced third quarter and nine-month results for the period ended  September 30, 2012.
Financial highlights for the third quarter of 2012 compared to the third quarter of 2011 include:

    Net sales were $33.1 million compared to $32.9 million in the comparable quarter, an

increase of 0.5%;
    Gross profit increased by 8.6% to $10.5 million from $9.7 million;
    Gross margin increased to 31.8% from 29.4%;
    Operating income increased by 28.4% to $4.3 million from $3.3 million in 2011;
    Operating margin increased to 12.8% from 10.0% in 2011;
    Net income increased by 40.9% to $3.3 million compared to $2.3 million;
    Net income per diluted share was $0.19 compared to $0.14 in 2011;
    SG&A expenses remain fairly consistent as a percent of sales at 18.7% compared to 19.0%;
    Bookings increased by 17.4% to $41.8 million compared to $35.6 million in 2011;
    Cash and cash equivalents remain strong at $24.5 million compared to $12.7 million as of

December 31, 2011; and Backlog as of September 30, 2012 was $67.6 million compared to $54.9 million as of  December 31, 2011 and $55.3 million as of September 30, 2011.

Q3 2012 includes a $0.5 million net benefit from the US R&D tax credit for Fiscal Year  2011 relating to our innovative product technologies.

Financial highlights for the nine months ended September 30, 2012 compared to nine months

ended September 30, 2011 include:



Net sales were $100.7 million compared to $101.4 million for the comparable period in

2011, a decrease of 0.7%;
    Gross profit increased by 16.3% to $31.3 million from $26.9 million;
    Gross margin increased to 31.0% from 26.5%;
    Operating income increased 43.3% to $12.3 million from $8.6 million in 2011;
    Operating margin increased to 12.2% from 8.4% in 2011;
    Net income increased 41.0% to $7.8 million compared to net income of $5.5 million;Net income per diluted share was $0.47 compared to $0.34 in the previous year; SG&A expenses as a percent of sales increased slightly to 18.6% from 17.8%; and Year-to-date bookings increased by 10.7% to $113.4 million compared to $102.4 million in 2011.

"We are very pleased  with the results that CECO achieved in the third quarter and year to date as the Company continued to realize improving margins, greater profitability and increasing bookings," commented CECO's Chief Executive Officer, Jeff Lang. "The Company's significant booking momentum from our North America and international customers coupled with  our management team's focus on cost containment and margin improvement  contributed to

CECO's substantial growth in operating cash flow and continued operational excellence. We are ideally positioned for future organic and inorganic growth opportunities during the rest  of 2012 and into 2013."

CECO will host a conference call on Wednesday, November 7, 2012 at 8:30 a.m. EST to review its financial results for the quarter.  Conferencing details are as follows:

Dial in number:             
866-356-4441
International dial in number:
617-597-5396
Participant passcode:          
80596185
Replay:                           
888-286-8010
International:                    
617-801-6888
Passcode:                        
97031195

This call is being webcast by Thomson/CCBN and can be accessed at CECO's web site at www.cecoenviro.com.

The webcast is also being distributed through the Thomson StreetEvents Network.  Individual investors can listen to the call at www.earnings.com, Thomson's individual investor portal, powered by StreetEvents.  Institutional investors can access the call via Thomson StreetEvents (www.streetevents.com), a password-protected event management site.

ABOUT CECO ENVIRONMENTAL

CECO Environmental is a global leader providing air pollutions control technology. Through its subsidiaries – Busch International, CECO Filters, CECO Abatement Systems, Kirk & Blum, Effox-Flextor, Fisher-Klosterman/Buell, CECO China and A.V.C. Specialists – CECO provides a wide spectrum of air quality products and services including engineered equipment, cyclones, scrubbers, dampers, diverters, RTO's, component parts and monitoring and management services.  Industries served include refining, petro-chemical, power, aluminum, steel, automotive, chemical and large industrial processes.  Revenue from engineered equipment technology is approximately 75% and 25% from parts, services and aftermarket.  Global Growth, Operational Excellence, Margin Expansion, Safety, and Employee Development are  CECO's core competencies and long term objectives.

For more information on CECO Environmental please visit the company's website at http://www.cecoenviro.com.

Contact:
Corporate Information
Jeff Lang, CECO Environmental Corp.
1-800-333-5475





CECO ENVIRONMENTAL CORP.



CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)



Dollars in thousands, except per share data





THREE MONTHS ENDED
SEPTEMBER 30,


NINE MONTHS ENDED
SEPTEMBER 30,



2012


2011


2012


2011

Net sales   


$    33,102


$    32,947


$  100,720


$  101,440

Cost of sales  


22,574


23,249


69,461


74,571






Gross profit


10,528


9,698


31,259


26,869

Selling and administrative


6,197


6,270


18,724


17,958

Amortization   


80


118


252


341






Income from operations


4,251


3,310


12,283


8,570

Other (expenses) income, net


(69)


103


(133)


436

Interest expense (including related party interest of $60 and

   $59, and $178 and $177, respectively)


(291)


(296)


(828)


(870)






Income from operations before income taxes


3,891


3,117


11,322


8,136






Income tax expense


623


798


3,524


2,606






Net income


$      3,268


$      2,319


$      7,798


$      5,530






Per share data:





Basic net income


$        0.22


$        0.16


$        0.53


$        0.39






Diluted net income   


$        0.19


$        0.14


$        0.47


$        0.34






Weighted average number of common shares outstanding:





Basic  


14,630,264


14,371,752


14,591,325


14,340,119






Diluted    


17,258,552


17,157,305


17,199,337


17,130,767



CECO ENVIRONMENTAL CORP.



CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)



Dollars in thousands, except per share data






SEPTEMBER 30,
2012




  DECEMBER 31,    
2011


ASSETS









Current assets:









Cash and cash equivalents



$


24,455




$


12,724


Accounts receivable, net




21,281





23,109


Costs and estimated earnings in excess of billings on

   uncompleted contracts




7,057





10,643


Inventories, net




4,292





4,344


Prepaid expenses and other current assets




2,399





2,650


Total current assets




59,484





53,470





Property and equipment, net




5,128





5,651


Goodwill




14,777





14,661


Intangibles – finite life, net




274





526


Intangibles – indefinite life




3,230





3,218


Deferred income tax asset, net




848





848


Deferred charges and other assets




714





971





$


84,455




$


79,345



LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:









Accounts payable and accrued expenses



$


12,101




$


13,569


Billings in excess of costs and estimated earnings on

   uncompleted contracts




8,501





9,647


Income taxes payable




1,531





393


Total current liabilities




22,133





23,609


Other liabilities




3,197





3,146


Convertible subordinated notes (including related parties

   notes of $3,950 in 2012 and 2011)




8,760





9,600


Total liabilities




34,090





36,355





Shareholders' equity:









Preferred stock, $.01 par value; 10,000 shares authorized,

   none issued













Common stock, $0.01 par value; 100,000,000 shares

   authorized, 14,849,502 and 14,654,262 shares issued in

   2012 and 2011




148





146


Capital in excess of par value




45,393





44,249


Accumulated earnings




7,410





1,301


Accumulated other comprehensive loss




(2,230)





(2,350)






50,721





43,346


Less treasury stock, at cost, 137,920 shares in 2012 and

   2011




(356)





(356)


Total shareholders' equity




50,365





42,990





$


84,455




$


79,345



This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All forward-looking statements are subject to certain risks, uncertainties and assumptions.  These risks and uncertainties, which are more fully described in CECO's Annual and Quarterly Reports filed with the Securities and Exchange Commission, and include, but are not limited to: our dependence on fixed price contracts and the risks associated therewith, including actual costs exceeding our estimates and our method of accounting for contract revenue; our history of losses and possibility of further losses; fluctuations in operating results from period to period due to seasonality of our business; the effect of growth on our infrastructure, resources, and existing sales; our ability to expand our operations in both new and existing markets; the potential for contract delay or cancellation; the potential for fluctuations in prices for manufactured components and raw materials; the impact of federal, state or local government regulations; economic and political conditions generally; and the effect of competition in the air pollution control and industrial ventilation industry. 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.  We caution investors that other factors might, in the future, prove to be important in affecting our results of operations. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Investors are further 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 by law, we undertake  no obligation to publicly update or revise any forward-looking statements, whether because

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