CINCINNATI, Aug. 7 /PRNewswire-FirstCall/ -- CECO Environmental Corp.
(Nasdaq: CECE), a leading provider of industrial ventilation and pollution
control systems, today announced second quarter results for the period
ended June 30, 2008.
Financial highlights for the second quarter of 2008 compared to the
second quarter of 2007 include:
Net sales decreased from $59.2 million to $57.4 million
Gross profit increased from $9.9 million to $10.8 million
Gross profit as a percentage of sales increased by 2.1 percentage
points from 16.7% to 18.8%
Selling and administrative costs increased $1.8 million to $8.0 million
Operating income decreased from $3.3 million to $2.1 million
Net income was $1.0 million compared to $1.1 million in 2007
Earnings per diluted share were $0.07 compared to $0.08 in 2007
Financial highlights for the six months ended June 30, 2008 compared to
six months ended June 30, 2007 include:
Net sales increased from $102.7 million to $104.3 million
Gross profit decreased from $17.7 million to $17.5 million
Gross profit as a percentage of sales decreased by .4 percentage points
from 17.2% to 16.8%
Selling and administrative costs increased $3.6 million to $14.8 million
Operating income decreased from $5.8 million to $1.3 million
Net income was $.5 million compared to $2.3 million in 2007
Earnings per diluted share were $0.03 compared to $0.18
Although sales for the second quarter were down slightly, sales for the
six month period are $1.6 million ahead of last year. Gross profit as a
percentage of sales for the second quarter increased by 2.1 percentage
points which reflects the ongoing shift in our product mix to higher margin
products. It is important to note that this second quarter gross profit
percentage increase was negatively impacted by one full percentage point
due to additional costs incurred on one large project. Costs on this
project as previously discussed were incurred due to scope changes and
other customer related site issues and these costs have now been formally
submitted to the customer as a claim for reimbursement. We anticipate that
this claim will be settled in the third quarter and at that time additional
revenues will be recorded against these already recorded costs.
The increase in selling and administrative expenses for the six month
period is due to several factors. The primary factor for this increase is
the addition of selling and administrative expenses from our string of
recent acquisitions. The six months ended June 30, 2008 expenses include
six months of selling and administrative expense for Effox, Inc. compared
to four months of expense for the same period in 2007 plus six months of
expense for GMD Environmental compared to none in 2007 as well as four
months of expense for Fisher-Klosterman, Inc. ("FKI") compared to none in
2007.
Additional costs have also been incurred for expenses related to
Sarbanes-Oxley compliance which includes hiring additional financial staff,
utilizing outside consultants and paying additional audit fees for the
required independent audit report on our internal controls. As part of the
remediation process to comply with these regulations, we are also in the
process of implementing a new information technology system.
Management is highly focused on reducing these costs and we will do so
by integrating these new acquisitions into the CECO system while at the
same time addressing the need for compliance with the increasingly
stringent regulations affecting public companies.
Lastly, CECO's reported results for the second quarter and six months
ended June 30, 2007 included a non-cash interest charge of $740,000 related
to the unamortized discount on subordinated debt which was expensed due to
retirement of the debt using proceeds from a secondary stock offering.
Backlog as of June 30, 2008 was $88.1 million compared to $85.5 million
as of December 31, 2007.
Chairman and CEO, Phillip DeZwirek, stated, "We continue to be
optimistic about our 2008 fiscal year. Earlier this week we announced the
acquisitions of Flextor, Inc. and A.V.C. Specialists, Inc. We expect that
both of these acquisitions will be accretive to both CECO's revenues and
earnings. The acquisition of Flextor fits in well with our goal of
expanding our international business and the acquisition of AVC increases
our traditionally high margin parts business. We anticipate immediate
ongoing contributions from these newly acquired entities as well as from
our recent acquisitions of FKI, Inc. and GMD Environmental Technologies and
we will continue to pursue our strategy of vertical and horizontal
integration."
President and Chief Operating Officer, Richard Blum, stated, "Our
quarter and six month results continue to be impacted by the unsettled
claim for expenses related to our large 2007 contracting project which we
now anticipate will be resolved by the end of the third quarter. Looking
ahead, we are delighted to see many bright spots in our results. Revenues
in our equipment group have increased significantly for the quarter and six
month periods and reflect a shift in our sales mix to higher margin
products. These increased revenues have come from our Effox subsidiary,
which was acquired in March of 2007, and our FKI subsidiary which was
acquired in March of this year. All of our recent acquisitions have
provided us access to new robust markets such as the power industry and
refining industry as well as expansion into more diverse international
markets."
CECO will host a conference call on Thursday, August 7, 2008 at 10:30
a.m. EDT to review its financial results for the quarter. Conferencing
details are as follows:
Dial in number: 866-203-3436
International dial in number: 617-213-8849
Participant pass code: 56465149
Replay: 888-286-8010
Pass code: 63601365
ABOUT CECO ENVIRONMENTAL
CECO Environmental Corp. is North America's largest independent air
pollution control company. Through its subsidiaries -- Busch, CECOaire,
CECO Filters, CECO Abatement Systems, kbd/Technic, Kirk & Blum, H. M.
White, Inc., Effox, GMD, FKI, Flextor and AVC Specialists -- CECO provides
a wide spectrum of air quality services and products including: industrial
air filters, environmental maintenance, monitoring and management services,
and air quality improvements systems. CECO is a full-service provider to
the steel, military, aluminum, automotive, ethanol, aerospace, electric
power, semiconductor, chemical, cement, metalworking, glass, foundry and
virtually all industrial process industries.
For more information on CECO Environmental please visit the Company's
website at http://www.cecoenviro.com/
Contact:
Corporate Information
Phillip DeZwirek, CECO Environmental Corp.
Email: investors@cecoenviro.com
1-800-606-CECO (2326)
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward- looking statements may be identified by words such as "believe,"
"anticipate," "intend," "expect," "may," "could," "would," "will,"
"should," "plan," or similar statements. All forward-looking statements are
based largely on current expectations, beliefs and assumptions concerning
future events that are subject to certain substantial risks and
uncertainties. These risks and uncertainties, which are more fully
described in CECO's Annual and Quarterly Reports filed with the Securities
and Exchange Commission, include changes in economic conditions and changes
in market conditions in the industries in which the Company operates.
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.
CECO ENVIRONMENTAL CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Dollars in thousands, except per share data
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
2008 2007 2008 2007
Net sales $57,446 $59,247 $104,308 $102,710
Costs and expenses:
Cost of sales, exclusive
of items shown separately
below 46,616 49,336 86,836 84,962
Selling and administrative 7,977 6,204 14,763 11,221
Depreciation and amortization 795 400 1,386 726
55,388 55,940 102,985 96,909
Income from operations 2,058 3,307 1,323 5,801
Other income -- 6 -- 9
Interest expense (including
related party interest of $0
and $864, and $0 and $1,101,
respectively) (370) (1,160) (579) (1,718)
Income from continuing
operations before income
taxes 1,688 2,153 744 4,092
Income tax provision 659 1,006 290 1,801
Net income $1,029 $1,147 $454 $2,291
Per share data:
Basic net income $0.07 $0.09 $0.03 $0.19
Diluted net income $0.07 $0.08 $0.03 $0.18
Weighted average number of
common shares outstanding:
Basic 14,780,369 13,000,124 14,735,290 12,251,694
Diluted 15,207,924 13,577,836 15,186,105 12,848,505
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