DALLAS, Sept. 13,
2023 /CNW/ -- CECO Environmental Corp.
(Nasdaq: CECO) ("CECO"), a leading environmentally focused,
diversified industrial company whose solutions protect people, the
environment, and industrial equipment, today announced that on
Aug. 23, 2023, it completed the
acquisition of Kemco Systems, Co. LLC (Kemco), a Florida-based company that specializes in the
design, manufacturing and support of custom-engineered industrial
water recycling and energy conservation solutions for North
American industrial markets. Following the acquisition, the Company
announced it has raised its full-year 2023 outlook for revenue and
EBITDA.
Kemco Acquisition
Kemco, founded in 1969, marks the third acquisition for CECO
during 2023, and a continuation of CECO's steady execution of its
programmatic M&A strategy. The Kemco acquisition enhances
CECO's North American presence, extending the Company's industrial
water and wastewater treatment applications reach, adding new
energy conservation and water recycling solutions, and expanding
the addressable market into new high-value food processing,
commercial laundry, and ready-mix concrete customer segments and
end markets. Kemco generated full-year 2022 revenues of
approximately $22 million and
advances the Company's stated goals of owning differentiated
engineered solutions businesses with niche leadership positions and
more short-cycle and aftermarket revenue.
"I am excited to welcome the Kemco team to CECO and confident
that the combination will open new growth opportunities across
attractive industrial water markets. The acquisition of Kemco is
another important and strategic step to build upon our already
strong and diversified industrial water capabilities, which we have
been building with tremendous organic growth execution and the
acquisitions of Compass Water, Index Water, DS21, and General
Rubber," said Todd Gleason, Chief
Executive Officer, CECO
Environmental. "Kemco has a tremendous reputation with its
strong, blue-chip customer base and an installed base of more than
7,000 systems. When combined with our focused investment programs,
we expect to add additional market-leading solutions and
capabilities to further solve critical customer problems while
delivering sustainable growth."
Added Gleason, "While this acquisition helps expand our North
American presence in the water and wastewater treatment market,
CECO also has the opportunity to introduce these water recycling
and energy conservation solutions globally as a new offering,
especially in regions we already serve where companies are seeking
ways to reduce water usage, recycle their wastewater streams, and
conserve energy."
Kemco's leadership team will remain to drive the business and
work across CECO's other industrial water businesses to maximize
solution selling and services.
"We are excited to join a company that is so well aligned with
our mission of helping customers solve their water and energy
challenges, and we expect to enhance our value delivery to
customers seeking to reduce their environmental footprint while
improving their profitability," said Tom
Vanden Heuvel, Vice President and General Manager of Kemco
Systems. "Working with a group that is placing a greater emphasis
on closing the water loop was an important element of our
decision-making process. With CECO, we believe our customers will
feel the difference that a bigger team with global reach and a
broader technology base has to offer."
Janney Montgomery Scott LLC and McDermott, Will & Emery, LLP
served as advisors to Kemco for this transaction.
Company Raises Full Year 2023 Outlook
The Company increased its full year 2023 outlook to reflect
revenues forecasted to be at least $525
million, up approximately 24 percent year over year. The
Company also updated its expected full year 2023 adjusted EBITDA
forecasted to be at least $55
million, up approximately 30 percent year over year. The
updated expected full year revenue and adjusted EBITDA guidance
compares to the previous outlook, provided in August, of revenues
of between $500 and $525 million and adjusted EBITDA of between
$50 and $55
million.
"The combination of our continued strong execution in healthy
industrial markets and growing backlog, coupled with the
acquisition of Kemco Systems, gives us added visibility and
bolsters our confidence in our full year growth and profitability,"
stated Gleason. "We continue to steadily transform CECO and create
a high-performance industrial growth company. The acquisitions we
have completed over the past 24 months continue to deliver
performance at or above the high-growth financials associated with
each transaction, which helps CECO to advance leadership positions
in Industrial Air, Industrial Water and the Energy Transition
markets."
ABOUT CECO ENVIRONMENTAL
CECO Environmental is a
leading environmentally focused, diversified industrial company,
serving a broad landscape of industrial air, industrial water and
energy transition markets across the globe through its key business
segments: Engineered Systems and Industrial Process Solutions.
Providing innovative technology and application expertise, CECO
helps companies grow their business with safe, clean, and more
efficient solutions that help protect people, the environment and
industrial equipment. In regions around the world, CECO works to
improve air quality, optimize the energy value chain, and provide
custom solutions for applications including power generation,
petrochemical processing, general industrial, refining, midstream
oil and gas, electric vehicle production, poly silicon fabrication,
battery recycling, beverage can, and water/wastewater treatment
along with a wide range of other applications. CECO is listed on
Nasdaq under the ticker symbol "CECO." Incorporated in 1966, CECO's
global headquarters is in Dallas,
Texas. For more information, please visit
www.cecoenviro.com.
ABOUT KEMCO SYSTEMS
Since 1969,
Clearwater, Florida-based Kemco
Systems has delivered more than 7,000 systems worldwide for
industrial Water Reuse/Recycle, Wastewater Treatment, Wastewater
Filtration, Efficient Hot Water Heating, High-Pressure Pumping,
Wastewater Heat Recovery, Stack Heat Recovery, Water Chilling,
Vapor/Steam Curing and Conditioning, and Total System Monitoring.
Kemco's systems are built to the highest standards for the most
challenging conditions and offer exceptional reliability,
outstanding quality and top value for its client's energy dollar.
Learn more about Kemco's solutions and experience at
https://www.kemcosystems.com.
SAFE HARBOR STATEMENT
Any statements contained in this Press Release, other than
statements of historical fact, including statements about
management's beliefs and expectations, are forward-looking
statements and should be evaluated as such. These statements are
made on the basis of management's views and assumptions regarding
future events and business performance and include, but are not
limited to, statements regarding CECO's full year 2023 outlook,
statements about CECO's expectations regarding the integration of
Kemco Systems, Co. LLC, into CECO; the benefits of the acquisition
of Kemco Systems, Co. LLC, and the expectations regarding the
transaction's impact on CECO's strategic growth plan. We use words
such as "believe," "expect," "anticipate," "intends," "estimate,"
"forecast," "project," "will," "plan," "should" and similar
expressions to identify forward-looking statements. Forward-looking
statements involve risks and uncertainties that may cause actual
results to differ materially from any future results, performance
or achievements expressed or implied by such statements. Potential
risks and uncertainties that could cause actual results to differ
materially include risks regarding the achievement of the
anticipated benefits of the acquisition, our ability to
successfully integrate acquired businesses and realize the
synergies from acquisitions, as well as a number of factors related
to our business, including the sensitivity of our business to
economic and financial market conditions generally and economic
conditions in our service areas; dependence on fixed price
contracts and the risks associated therewith, including actual
costs exceeding estimates and method of accounting for revenue; the
effect of growth on our infrastructure, resources, and existing
sales; the ability to expand operations in both new and existing
markets; the potential for contract delay or cancellation as a
result of on-going or worsening supply chain challenges;
liabilities arising from faulty services or products that could
result in significant professional or product liability, warranty,
or other claims; changes in or developments with respect to any
litigation or investigation; failure to meet timely completion or
performance standards that could result in higher cost and reduced
profits or, in some cases, losses on projects; the potential for
fluctuations in prices for manufactured components and raw
materials, including as a result of tariffs and surcharges, and
rising energy costs; inflationary pressures relating to rising raw
material costs and the cost of labor; the substantial amount of
debt incurred in connection with our strategic transactions and our
ability to repay or refinance it or incur additional debt in the
future; the impact of federal, state or local government
regulations; our ability to repurchase shares of our common stock
and the amounts and timing of repurchases, if any; our ability to
successfully realize the expected benefits of our restructuring
program; our ability to successfully integrate acquired businesses
and realize the synergies from strategic transactions; the
unpredictability and severity of catastrophic events, including
cyber security threats, acts of terrorism or outbreak of war or
hostilities or public health crises, as well as management's
response to any of the aforementioned factors; and our ability to
remediate our material weakness, or any other material weakness
that we may identify in the future that could result in material
misstatements in our financial statements. Additional risks and
uncertainties are discussed under "Part I – Item 1A. Risk Factors"
of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2022 and may be included in subsequently
filed Quarterly Reports on Form 10-Q. Many of these risks are
beyond management's ability to control or predict. 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. Investors are 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 under the federal securities laws or the rules
and regulations of the Securities and Exchange Commission, we
undertake no obligation to update or review any forward-looking
statements, whether as a result of new information, future events
or otherwise.
NOTE REGARDING NON-GAAP FINANCIAL
MEASURES
CECO is providing certain non-GAAP historical financial measures
as presented above as we believe that these figures are helpful in
allowing individuals to better assess the ongoing nature of CECO's
core operations. A "non-GAAP financial measure" is a numerical
measure of a company's historical financial performance that
excludes amounts that are included in the most directly comparable
measure calculated and presented in accordance with GAAP.
Adjusted EBITDA, as we present it in the financial data included
in this press release, has been adjusted to exclude the effects of
amortization expenses for acquisition-related intangible assets,
contingent retention and earnout expenses, restructuring expenses
primarily relating to severance and legal expenses, acquisition and
integration expenses which include retention, legal, accounting,
banking, and other expenses, foreign currency remeasurement and
other nonrecurring or infrequent items and the associated tax
benefit of these items. Management believes that these items are
not necessarily indicative of the Company's ongoing operations and
their exclusion provides individuals with additional information to
better compare the Company's results over multiple periods.
Management utilizes this information to evaluate its ongoing
financial performance. Our financial statements may continue to be
affected by items similar to those excluded in the non-GAAP
adjustments described above, and exclusion of these items from our
non-GAAP financial measures should not be construed as an inference
that all such costs are unusual or infrequent.
Adjusted EBITDA is not calculated in accordance with GAAP, and
should be considered supplemental to, and not as a substitute for,
or superior to, financial measures calculated in accordance with
GAAP. Non-GAAP financial measures have limitations in that they do
not reflect all of the costs associated with the operations of our
business as determined in accordance with GAAP. As a result, you
should not consider these measures in isolation or as a substitute
for analysis of CECO's results as reported under GAAP.
Additionally, CECO cautions investors that non-GAAP financial
measures used by the Company may not be comparable to similarly
titled measures of other companies.
Non-GAAP measures presented on a forward-looking basis are not
reconciled to the comparable GAAP financial measures because the
reconciliation could not be performed without unreasonable efforts.
The GAAP measures are not accessible on a forward-looking basis
because we are currently unable to predict with a reasonable degree
of certainty the type and extent of certain items that would be
expected to impact GAAP measures for these periods but would not
impact the non-GAAP measures. Such items may include amortization
expenses for acquisition-related intangible assets, contingent
retention and earnout expenses, restructuring expenses primarily
relating to severance and legal expenses, acquisition and
integration expenses which include retention, legal, accounting,
banking, and other expenses, foreign currency remeasurement and
other nonrecurring or infrequent items and the associated tax
benefit of these items. The unavailable information could have a
significant impact on our GAAP financial results.
Company Contact:
Peter Johansson, Chief Financial and
Strategy Officer
(888) 990-6670
Investor Relations Contact:
Steven Hooser or Jean Marie Young
Three Part Advisors
214-872-2710
investor.relations@onececo.com
News Media:
Kimberly Plaskett, Corporate
Communications Director
CECO-Communications@onececo.com
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SOURCE CECO Environmental Corp.
