CECO Earnings In Line in 4Q

Zacks

CECO Environmental Corp (CECE) reported financial results for the fourth quarter and full year 2012 with earnings came of 18 cents a share, in line with the Zacks Consensus Estimate. However, earnings were up 5.9% on a year-over-year basis.

For the full year 2012, CECO reported earnings of 65 cents a share, 13.3% lower than the Zacks Consensus Estimate. However, earnings for the full year grew 27.5% year over year.  

Quarterly Details

Net sales for the quarter contracted 9.3% year over year to $34.3 million from $37.8 million in the prior-year period. The decline in sales was primarily attributable to timing on projects in process and the plan for completion converting into revenue.

Backlog, as of Dec 31, 2012, was $59.5 million compared with $54.9 million, as of Dec 31, 2011. Bookings in the fourth quarter were $26.3 million compared with $37.4 million in the fourth quarter of 2011.

Gross profit was $11.2 million compared with $11.3 million in the fourth quarter of 2011, while gross margin for the quarter increased to 32.7% from 29.9% in the prior-year period. Operating income for the quarter increased 15.8% to $4.4 million versus $3.8 million in the fourth quarter of 2011. Operating margin increased to 12.8% from 10.1% in the comparable prior-year period.  

Balance Sheet/Cash

Cash and cash equivalents were $23.0 million as of Dec 31, 2012 compared to $12.7 million as of Dec 31, 2011 with no bank debt. The company had shareholders’ equity of $61.9 million as of Dec 31, 2012.

Dividend

On Mar 6, 2013, the board of directors increased the quarterly dividend by 11% to 50 cents a share from the previous quarterly dividend of 45 cents. The dividend will be paid on Mar 28, 2013 to all shareholders of record at the close of business on Mar 18, 2013. 

Acquisition

CECO Environmental Corp., leading provider of air pollution control technology systems, product recovery and filtration technology, recently announced that its has acquired Aarding Thermal Acoustics B.V., one of the global leaders in natural gas turbine exhaust systems and silencer applications.

The acquisition of Aarding comes at an opportune time when globally investments in the natural gas sector are increasing. Therefore through this acquisition, CECO will able to capture higher share of this growing market. CECO believes that the acquisition of Aarding will accretive to its earnings going forward, as CECO is set to expand its global portfolio and enhance its core technology in one of the highest growth areas of its industry.

CECO currently carries a Zacks Rank #2 (Buy) while some of its competitors that can be considered at the moment are Chicago Bridge & Iron (CBI), Calgon Carbon Corp. (CCC) and Orion Marine Group Inc. (ORN), which currently carry a Zacks Rank #2 (Buy) and Zacks Rank #1 (Strong Buy), respectively.

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