Q2 2023 Earnings Presentation August 8, 2023 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 performance. We use words such as "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," "will," "plan," "should" and similar expressions to identify ...

CECO Environmental Corp. (NASDAQ:CECO) Q2 2023 Earnings Conference Call August 8, 2023 8:30 AM ET Company Participants Steven Hooser - Investor Relations Todd Gleason - President and Chief Executive Officer Peter Johansson - Chief Financial and Strategy Officer Conference Call Participants Robert Brown - Lake Street Capital Markets Aaron Spychalla - Craig-Hallum James Ricchiuti - Needham & Company Amit Dayal - H.C. Wainright Bill Dezellem - Tieton Capital Management LLC Operator Good morning, and welcome to ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2023 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 0-07099 CECO ENVIRONMENTAL CORP. (Exact name of registrant as specified in its charter) Delaware 13-2566064 (State or other jurisdiction ...

CECO Environmental Corp. (NASDAQ:CECO) Q1 2023 Earnings Conference Call May 9, 2023 8:30 AM ET Company Participants Steven Hooser - Investor Relations Todd Gleason - Chief Executive Officer & Member of Board Peter Johansson - Chief Financial Officer & Strategy Officer Ramesh Nuggihalli - Chief Operating Officer Conference Call Participants Aaron Spychalla - Craig-Hallum Rob Brown - Lake Street Capital Markets Jim Ricchiuti - Needham & Company Sameer Joshi - H.C. Wainwright Operator Good morning and welcome ...

6 7 ($MM) Q1'23 YoY Comments Record 1Q GP$ level … Gross Margins improving year-over-year … covering inflation with price and execution, TTM rate of 30.9% … $270 $296 $322 $458 $527 Strong & Consistent Orders Growth = 2023 Revenue Growth Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 | --- | --- | |-------|-------| | | | | | | | $322 | | | $81 | | | 3% | | | (9)% | | $77 $83 $72 $79 $80 $94 $92 $105 $108 $116 $113 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Record Q3 ...

| --- | --- | --- | |------------------------------------------------------------------------|-------|------------| | (in thousands) \nCurrent assets (including cash of $1,557) | $ | 2,711 | | Property and equipment | | 188 | | Goodwill | | 7,344 | | Intangible - finite life | | 3,158 | | Total assets acquired | | 13,401 | | Current liabilities assumed | | (1,127 ) | | Deferred income tax liability | | (824 ) | | Net assets acquired | $ | 11,450 | The Company acquired customer lists and tradename intangible ...

CECO Environmental Corp. (NASDAQ:CECO) Q4 2022 Earnings Conference Call Transcript March 6, 2023 8:30 AM ET Company Participants Steven Hooser - IR Todd Gleason - CEO Peter Johansson - Chief Financial and Strategy Officer Conference Call Participants Aaron Spychalla - Craig-Hallum Capital James Ricchiuti - Needham & Company Robert Brown - Lake Street Capital Amit Dayal - H.C. Wainwright William Dezellem - Tieton Capital Gerard Sweeney - ROTH MKM Partners Operator Good morning and welcome to the CECO Env ...

Part I [Business](index=2&type=section&id=Item%201.%20Business) A diversified industrial company providing environmental solutions for air, water, and energy transition markets globally - CECO is an environmentally focused, diversified industrial company providing solutions for industrial air, water, and energy transition markets globally[379](index=379&type=chunk) - The company's growth is driven by factors including a global focus on the environment, stringent regulations, investment in net-zero technologies, emerging market industrialization, and increased demand for cleaner power generation[384](index=384&type=chunk)[386](index=386&type=chunk) - CECO's strategy focuses on providing leading solutions in niche applications, leveraging technology and application expertise, and pursuing value-added, accretive acquisitions[312](index=312&type=chunk)[391](index=391&type=chunk) - As of December 31, 2022, CECO had approximately **1,000 employees**, with 126 US employees being unionized[10](index=10&type=chunk) Backlog Information | Date | Backlog (USD) | YoY Change | | :--- | :--- | :--- | | Dec 31, 2022 | $311.7 million | +45.7% | | Dec 31, 2021 | $213.9 million | | [Business Segments](index=6&type=section&id=Business%20Segments) The company operates through two segments, Engineered Systems and Industrial Process Solutions, serving distinct industrial markets - **Engineered Systems Segment:** Serves power generation, hydrocarbon processing, water/wastewater treatment, and midstream oil & gas with solutions like emissions control, cyclones, thermal acoustics, and filtration systems[315](index=315&type=chunk) - **Industrial Process Solutions Segment:** Serves broad industrial sectors (e.g., automotive, food & beverage, semiconductor) with solutions for air pollution control, fluid handling, and process filtration[316](index=316&type=chunk) [Human Capital Management](index=10&type=section&id=Human%20Capital%20Management) The company focuses on talent development, employee safety with a low incident rate, and diversity and inclusion initiatives - The company has approximately **1,000 employees** across nine countries as of December 31, 2022[10](index=10&type=chunk) - In 2022, **85% of employees** engaged with an online learning platform, spending an average of two hours per month on skill development[11](index=11&type=chunk) - The company's domestic Total Recordable Incident Rate (TRIR) for 2022 was **1.1%**, compared to the benchmark industry average of 4.1%[56](index=56&type=chunk) - CECO is actively working to build a more diverse workforce by expanding job postings to diverse job boards and developing a comprehensive Diversity, Equity, and Inclusion roadmap[58](index=58&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from fixed-price contracts, supply chain disruptions, raw material costs, cybersecurity, and its debt load - The majority of projects are performed on a **fixed-price basis**, exposing the company to risks of cost overruns if initial estimates are inaccurate[71](index=71&type=chunk) - The company's backlog was **$311.7 million** at Dec 31, 2022; however, the inability to deliver on this backlog due to material or labor shortages could affect future sales[77](index=77&type=chunk) - The company is exposed to price volatility and inflation for raw materials like steel and resin, which may adversely affect profitability[81](index=81&type=chunk) - As of December 31, 2022, the company had **$112.7 million of indebtedness**, which could make it difficult to satisfy obligations and limit growth[146](index=146&type=chunk) - Increased global cybersecurity threats pose a risk to the company's systems, networks, and data[177](index=177&type=chunk) - Approximately **35% of 2022 revenues** were from outside the U.S., exposing the company to risks from currency fluctuations and changes in trade policies[139](index=139&type=chunk)[227](index=227&type=chunk) [Properties](index=22&type=section&id=Item%202.%20Properties) The company operates 30 principal facilities globally, with its executive offices located in Dallas, Texas Principal Operating Facilities by Segment (as of Dec 31, 2022) | Segment | Owned | Leased | Total | | :--- | :--- | :--- | :--- | | Engineered Systems | 1 | 15 | 16 | | Industrial Process Solutions | 1 | 11 | 12 | | Corporate | 0 | 2 | 2 | | **Total** | **2** | **28** | **30** | [Legal Proceedings](index=22&type=section&id=Item%203.%20Legal%20Proceedings) The company faces numerous asbestos-related lawsuits but believes its insurance coverage is adequate to prevent material adverse impact - As of December 31, 2022, there were **247 pending asbestos-related cases** against the company's subsidiary, Met-Pro, an increase from 223 cases at the end of 2021[189](index=189&type=chunk) - Cumulative settlement payments for asbestos-related claims from 2002 through December 31, 2022, were **$6.2 million**, which have been substantially paid by the company's insurers[131](index=131&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on Nasdaq, no dividends were paid, and a share repurchase program is active - The company's common stock is traded on The Nasdaq Global Select Market under the symbol **"CECO"**[254](index=254&type=chunk) - **No cash dividends** were paid in 2022, 2021, or 2020, as the company intends to retain future earnings to finance operations and growth[255](index=255&type=chunk) Share Repurchases (Q4 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value Remaining in Program | | :--- | :--- | :--- | :--- | | Oct 2022 | 51,257 | $9.79 | $13.0 million | | Nov 2022 | 0 | N/A | $13.0 million | | Dec 2022 | 0 | N/A | $13.0 million | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net sales and operating income grew significantly in 2022, driven by organic growth and acquisitions, despite margin pressure from inflation - The company's strategy focuses on operational excellence, margin expansion, and capital deployment towards industrial air, water, and energy transition markets[298](index=298&type=chunk)[299](index=299&type=chunk) - The company is experiencing shortages and inflationary pressures for raw materials and labor, which are being mitigated through alternate sourcing and price increases[300](index=300&type=chunk)[404](index=404&type=chunk) - Orders booked increased by **46% to $526.6 million** in 2022, with 86.4% of the growth being organic[405](index=405&type=chunk) Key Financial Highlights (2022 vs 2021) | Metric (in millions) | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $422.6 | $324.1 | +30.4% | | Gross Profit | $128.2 | $100.9 | +27.1% | | Operating Income | $22.2 | $9.9 | +124.2% | | Non-GAAP Operating Income | $34.8 | $19.1 | +82.2% | | Net Income | $17.4 | $1.4 | +1142.9% | [Business Segments Analysis](index=32&type=section&id=Business%20Segments%20Analysis) Both the Engineered Systems and Industrial Process Solutions segments achieved strong sales and operating income growth in 2022 - Engineered Systems segment sales grew by **$76.3 million (40.8%)** in 2022, with 77.3% of the increase from organic growth[426](index=426&type=chunk) - Industrial Process Solutions segment sales grew by **$22.2 million (16.2%)** in 2022, with 93.2% of the increase from organic growth[428](index=428&type=chunk) Segment Net Sales (in thousands) | Segment | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Engineered Systems | $263,224 | $186,926 | $205,494 | | Industrial Process Solutions | $159,403 | $137,214 | $110,517 | | **Total** | **$422,627** | **$324,140** | **$316,011** | Segment Income from Operations (in thousands) | Segment | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Engineered Systems | $36,200 | $25,770 | $34,170 | | Industrial Process Solutions | $22,705 | $15,054 | $7,220 | | Corporate and Other | ($36,744) | ($30,967) | ($28,044) | | **Total** | **$22,161** | **$9,857** | **$13,346** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a solid liquidity position with sufficient cash and credit availability to fund operations for the next year - In 2022, financing activities included **$39.3 million in net borrowings** on the revolving credit line and $11.0 million in new joint venture debt, primarily to fund acquisitions[456](index=456&type=chunk) Liquidity Position (in millions) | Metric | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $45.5 | $29.9 | | Working Capital | $94.0 | $72.3 | | Total Debt | $111.2 | $63.8 | | Unused Credit Availability | $59.8 | $45.9 | Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Cash from Operations | $29,649 | $13,298 | $4,421 | | Cash used in Investing | ($48,257) | ($2,083) | ($9,235) | | Cash from (used in) Financing | $38,176 | ($15,556) | $3,724 | [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies require significant management judgment, particularly in revenue recognition, impairment testing, and income taxes - A significant portion of revenue is recognized over time for fixed-price contracts using the **cost-to-cost method**, which requires significant estimates of total project costs[463](index=463&type=chunk)[541](index=541&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually on October 1; the **2022 test resulted in no impairment charges**[470](index=470&type=chunk)[472](index=472&type=chunk) - The company must assess the realizability of its deferred tax assets; as of December 31, 2022, it had state and local net operating loss carryforwards of **$48.3 million**[195](index=195&type=chunk)[477](index=477&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks stem from changes in interest rates on its variable-rate debt and foreign currency exchange rates - The company is exposed to interest rate risk as a substantial portion of its **$112.7 million debt** (as of Dec 31, 2022) is at variable rates[483](index=483&type=chunk)[484](index=484&type=chunk) - A hypothetical **10% change** in the estimated weighted average borrowing rate would result in an estimated annual impact of **$0.8 million**[484](index=484&type=chunk) - The company is exposed to foreign currency risk, which resulted in net foreign currency transaction gains of **$6.3 million in 2022**[485](index=485&type=chunk) [Financial Statements and Supplementary Data](index=37&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's audited consolidated financial statements and supplementary data for the past three fiscal years [Notes to Consolidated Financial Statements](index=57&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key accounting policies, acquisitions, debt structure, and legal contingencies like asbestos litigation - In 2022, the company acquired General Rubber LLC, Compass Water Solutions, Inc., Western Air Ducts Limited, and DS21 Co., Ltd[200](index=200&type=chunk)[206](index=206&type=chunk)[210](index=210&type=chunk)[216](index=216&type=chunk)[273](index=273&type=chunk) - The company's Credit Facility includes a **$140.0 million** senior secured revolving credit commitment maturing in December 2026, with **$59.8 million** of unused availability at year-end[28](index=28&type=chunk)[29](index=29&type=chunk)[372](index=372&type=chunk) - Under a May 2022 authorization, the company repurchased and retired approximately **1,032,000 shares for $7.0 million** during the year[102](index=102&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Assets | $504,721 | $416,197 | | Total Liabilities | $286,573 | $210,240 | | Total Shareholders' Equity | $218,148 | $205,957 | Consolidated Statement of Income Highlights (in thousands) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net Sales | $422,627 | $324,140 | $316,011 | | Gross Profit | $128,225 | $100,922 | $105,128 | | Net Income Attributable to CECO | $17,417 | $1,426 | $8,211 | Consolidated Statement of Cash Flows Highlights (in thousands) | Account | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $29,649 | $13,298 | $4,421 | | Net cash used in investing activities | ($48,257) | ($2,083) | ($9,235) | | Net cash provided by (used in) financing activities | $38,176 | ($15,556) | $3,724 | [Controls and Procedures](index=37&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal controls were effective as of year-end 2022 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2022[491](index=491&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2022, based on the COSO framework (2013)[493](index=493&type=chunk) - The independent registered public accounting firm, BDO USA, LLP, issued an **unqualified opinion** on the effectiveness of the Company's internal control over financial reporting[496](index=496&type=chunk)[500](index=500&type=chunk) - There were **no material changes** in internal control over financial reporting during the fourth quarter of 2022[501](index=501&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=41&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, officers, and governance is incorporated by reference from the 2023 Proxy Statement - The required information for this item is incorporated by reference from the company's 2023 Proxy Statement[511](index=511&type=chunk) [Executive Compensation](index=41&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2023 Proxy Statement - The required information for this item is incorporated by reference from the company's 2023 Proxy Statement[512](index=512&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=41&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference, with details on equity compensation plans provided Equity Compensation Plan Information (as of Dec 31, 2022) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Available for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by Security Holders | 1,353,752 | - | 3,267,075 | | Not Approved by Security Holders | 1,262,276 | $10.65 | 0 | | **Total** | **2,616,028** | | **3,267,075** | [Certain Relationships and Related Transactions, and Director Independence](index=42&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related transactions and director independence is incorporated by reference from the 2023 Proxy Statement - The required information for this item is incorporated by reference from the company's 2023 Proxy Statement[516](index=516&type=chunk) [Principal Accounting Fees and Services](index=42&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding accounting fees and services is incorporated by reference from the 2023 Proxy Statement - The required information for this item is incorporated by reference from the company's 2023 Proxy Statement[516](index=516&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=43&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including key corporate and financial agreements - Financial statements are included following the signature page of the report[519](index=519&type=chunk) - The exhibit index lists all documents filed with the report, such as the Second Amended and Restated Credit Agreement, various Equity Incentive Plans, and certifications by the CEO and CFO[520](index=520&type=chunk)[521](index=521&type=chunk)[522](index=522&type=chunk)[525](index=525&type=chunk)

Financial Data and Key Metrics Changes - CECO Environmental reported record third quarter revenue and EBITDA, marking the second highest revenue quarter in the company's history [9] - Revenue for Q3 was $108 million, up 36% year-over-year, with year-to-date sales also increasing over 30% [14][38] - Adjusted EBITDA for Q3 was $9.2 million, a 165% increase year-over-year, with EBITDA margins improving by 420 basis points [14][49] Business Line Data and Key Metrics Changes - All eight platforms of CECO delivered double-digit order growth over the past 18 months, with 75% of platforms showing year-to-date growth compared to the first three quarters of 2021 [16][17] - Industrial air represents about 50% of sales, industrial water accounts for 25%, and energy transition makes up the remaining 25% [19] Market Data and Key Metrics Changes - CECO's backlog reached $280 million, up 27% from Q3 2021 and 30% from year-end 2021, with a book-to-bill ratio over 1.2 times [45] - The opportunity pipeline exceeds $2 billion, indicating strong future growth potential [46] Company Strategy and Development Direction - CECO is focused on capital allocation programs, including strategic acquisitions and stock repurchases, to enhance value creation [11][30] - The company aims to maintain a balanced growth profile across its platforms and is committed to executing against its operational commitments [12][76] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges but expressed confidence in the company's ability to navigate these issues and maintain strong performance [72][76] - The macroeconomic environment is viewed positively, with significant investments expected in infrastructure and energy transition markets [78] Other Important Information - CECO has raised its full-year 2022 guidance, expecting orders to exceed $475 million and sales to exceed $410 million, reflecting a strong growth outlook [56][57] - The company is targeting adjusted EBITDA of $39 million for the full year, a 50% increase compared to 2021 [58] Q&A Session Summary Question: Are supply chain issues still affecting performance? - Management indicated that while supply chain challenges persist, the team is effectively managing these issues and maintaining performance [72] Question: How does the company view the macroeconomic environment? - Management expressed confidence in the company's diverse growth profile and strong backlog, which provides visibility despite economic uncertainties [76][78] Question: What is the timeline for margin improvement initiatives? - Management stated that a third of operational excellence programs have been implemented, with ongoing efforts to enhance margins over the next 12 to 24 months [79] Question: What is the outlook for weaker business lines? - Management noted that while some platforms have shown declines, they expect improvements in the fourth quarter driven by strong pipelines [85] Question: Can you elaborate on the recent carbon capture project? - Management confirmed that the $4 million order for carbon capture is from a new customer, with potential for similar projects in the future [93][94]

Q3 2022 Earnings Release November 7, 2022 Forward-looking statements and Non-GAAP information 2 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 performance. We use words such as "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," "will," "plan," "should" and similar expressions to identify ...