CECO Environmental Corp. (CECE) declared its first-quarter fiscal 2014 results on May 8, after the closing bell. The company reported adjusted net income (excluding one-time items) of 19 cents per share which was 17.4% below the Zacks Consensus Estimate of 23 cents per share. However, quarterly earnings were up 5.6% year over year, compared with 18 cents in the first quarter of 2013.
Earnings growth was driven by the company’s persistent focus on diligent operational execution and its cost optimization initiatives.CECO Environmental is also streamlining its business by divesting some of its non-core assets.
CECO Environmental reported net sales of $57.2 million, up 66.4% year over year from $34.4 million in the year-ago quarter. Increase in sales primarily resulted from successful integration of the company’s recent acquisitions like the Aarding, Adwest and Met-Pro Corporation. These acquisitions contributed as much as $25.2 million to the quarter’s revenues.
New order bookings were up 69.1% to $63.6 million versus $37.6 million in the prior-year quarter.
Backlog at the quarter-end was $104.9 million, compared with $78.5 million in the preceding-year quarter and $98.5 million in the previous quarter.
Income and Expense
Gross profit increased by 76.4% to $19.7 million compared with $11.2 million in the prior-year quarter. Selling and administrative expenses were $11.7 million, up about 77.2%. Acquisition-related expenses totaled $2.5 million.
Exiting the quarter, CECO Environmental had cash and cash equivalents worth $19.2 million compared with $22.7 million as on Dec 31, 2013. The company had a debt (excluding current portion) of $75.3 million versus $79 million as on Dec 31, 2013.
Interest expenses increased significantly to $742 million from $97 million in the year-ago quarter.
Following the first quarter release, the company’s board of directors approved a 20% dividend increase to 6 cents a share payable on Jun 27, to shareholders of record on Jun 13.
CECO Environmental remains positive about the growth prospect in 2014. It’s ‘One-CECO’ sales initiative is expected to drive up the company’s profits going forward. Moreover, CECO’s strengthening position in China is encouraging.
CECO Environmental currently carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the pollution control sector are Fuel-Tech, Inc. (FTEK), Vertex Energy, Inc (VTNR) and Pall Corporation (PLL). While Fuel-Tech and Vertex Energy hold a Zacks Rank #1 (Strong Buy), Pall has a Zacks Rank #2 (Buy).