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Ceco Environmental Corp, USA
COMPANY PROFILE
Ceco Environmental Corp, USA Profile
Ceco Environmental is a diversified provider of products and services for industrial applications. It reports in three segments: Energy; Environmental; and Fluid Handling and Filtration. Its Energy division provides a range of customised solutions for the power and petrochemical sectors including gas and liquid separation/filtration equipment. The company’s Environmental segment supplies a range of product recovery and air pollution control technologies including fabric filters and cartridge collectors. The Fluid Handling and Filtration business unit offers pumps, filtration and exhaust solutions for a variety of industries including the aquarium/aquaculture, plating and metal finishing, food and beverage, chemical/petrochemical, wastewater treatment, desalination and pharmaceutical markets. Analysis
Ceco Environmental recorded net sales in fiscal 2016 of US$417.0 million, an increase of 13.5% on the prior year. The uplift was attributed primarily to the acquisition of PMFG at the beginning of September 2015, which contributed an incremental US$60.9 million of sales in 2016. This increase was partially offset by a decreased volume of sales of the company’s air pollution control equipment. The PMFG acquisition pushed sales in Ceco’s Energy segment 43.0% higher than the 2015 comparator to US$203.4 million. In contrast, revenues were lower in the company’s other two segments. Sales fell 3.2% in the Environmental division to US$153.3 million reflecting decreased volumes of its scrubber and mist eliminators product lines. In the Fluid Handling and Filtration segment they were 8.6% lower at US$61.8 million with the biggest impact being lower demand for pumps in the North American industrial market. Ceco’s profitably in fiscal 2016 was significantly impacted by intangible asset and goodwill impairment charges totalling US$57.9 million. These charges pushed the company to an operating loss for the year of US$25.6 million compared with a year earlier gain of US$4.9 million, while a net loss of US$38.3 million compared with the year earlier deficit of US$5.7 million. The impairment charge was largely attributed to the Fluid Handling and Filtration segment resulting in it recording an operating loss for the year of US$36.2 million against 2015’s gain of US$11.7 million. Charges also impacted the Environmental sector’s income, which was down 7.6% to US$15.7 million. In contrast, the Energy segment again benefited from its PMFG acquisition that helped push its operating income up by more than five times to US$23.6 million. Key Figures (US$ million) Ceco Environmental Corp
COMMENT After a number of years dominated by acquisitions, Ceco Environmental is now preparing for a new phase of transformation. The company’s acquisition strategy has been used to horizontally expand its scope of technology, products and services to allow vertical integration into a growing group of turnkey system providers. This has enabled it to offer customers an end-to-end solution that includes engineering and project management services, procurement and fabrication, construction and installation, aftermarket and the sales of consumables. The company has also used it to drive global expansion that has seen it grow sales to customers outside its home market of the USA from 14% in fiscal 2012 to 37% in 2016, although the latter was a dip from 38% in the prior year. Ceco is now looking to implement a strategic refresh to leverage its US$5 billon installed equipment base and improve its organic growth. It is also seeking to reduce its debt, while maintaining a focus on global growth, market coverage and expansion of its Asian operations. Ceco anticipates a challenging macroeconomic environment in fiscal 2017, but believes global trends towards cleaner and more environmentally friendly power generation and more stringent emissions control auger well in the longer term for its product portfolio. It will be an evolution undertaken by new leadership with the company currently recruiting a new CEO following Jeffrey Lang’s departure earlier this year. n
Year ended 31.12 2016 2015 2014 2013 2012
Net Sales Of Which: Energy Environmental Fluid Handling and Filtration
417.0 367.4 263.2 197.3 135.1
Cost of Sales
282.2
258.3
178.4
135.8
92.6
Operating Income/(Loss) Of Which: Energy Environmental Fluid Handling and Filtration
(25.6)
4.9
21.7
7.0
16.7
Income/(Loss) before Tax
(33.0)
(3.1)
16.2
6.5
15.4
Net Income/(Loss)
(38.3)
(5.7)
13.1
6.6
10.9
203.4 142.2 70.3 69.4 40.2 153.3 158.4 127.7 101.2 88.6 61.8 67.6 65.6 25.2 6.2
23.6 3.5 7.8 9.3 7.6 15.7 17.0 16.8 15.4 14.6 (36.2) 11.7 13.2 1.4 1.0
Contact Details
Chair: Jason DeZwirek President and Interim CEO: Dennis Sadlowski Address: 4625 Red Bank Road, Suite 200
Tel: +1 513 458 2600
Cincinnati OH 45227-1552 , USA Web: www.cecoenviro.com 6
Pump Industry Analyst
April 2017
Ceco Environmental Corp, USA Profile
Ceco Environmental is a diversified provider of products and services for industrial applications. It reports in three segments: Energy; Environmental; and Fluid Handling and Filtration. Its Energy division provides a range of customised solutions for the power and petrochemical sectors including gas and liquid separation/filtration equipment. The company’s Environmental segment supplies a range of product recovery and air pollution control technologies including fabric filters and cartridge collectors. The Fluid Handling and Filtration business unit offers pumps, filtration and exhaust solutions for a variety of industries including the aquarium/aquaculture, plating and metal finishing, food and beverage, chemical/petrochemical, wastewater treatment, desalination and pharmaceutical markets. Analysis
Ceco Environmental recorded net sales in fiscal 2016 of US$417.0 million, an increase of 13.5% on the prior year. The uplift was attributed primarily to the acquisition of PMFG at the beginning of September 2015, which contributed an incremental US$60.9 million of sales in 2016. This increase was partially offset by a decreased volume of sales of the company’s air pollution control equipment. The PMFG acquisition pushed sales in Ceco’s Energy segment 43.0% higher than the 2015 comparator to US$203.4 million. In contrast, revenues were lower in the company’s other two segments. Sales fell 3.2% in the Environmental division to US$153.3 million reflecting decreased volumes of its scrubber and mist eliminators product lines. In the Fluid Handling and Filtration segment they were 8.6% lower at US$61.8 million with the biggest impact being lower demand for pumps in the North American industrial market. Ceco’s profitably in fiscal 2016 was significantly impacted by intangible asset and goodwill impairment charges totalling US$57.9 million. These charges pushed the company to an operating loss for the year of US$25.6 million compared with a year earlier gain of US$4.9 million, while a net loss of US$38.3 million compared with the year earlier deficit of US$5.7 million. The impairment charge was largely attributed to the Fluid Handling and Filtration segment resulting in it recording an operating loss for the year of US$36.2 million against 2015’s gain of US$11.7 million. Charges also impacted the Environmental sector’s income, which was down 7.6% to US$15.7 million. In contrast, the Energy segment again benefited from its PMFG acquisition that helped push its operating income up by more than five times to US$23.6 million. Key Figures (US$ million) Ceco Environmental Corp
COMMENT After a number of years dominated by acquisitions, Ceco Environmental is now preparing for a new phase of transformation. The company’s acquisition strategy has been used to horizontally expand its scope of technology, products and services to allow vertical integration into a growing group of turnkey system providers. This has enabled it to offer customers an end-to-end solution that includes engineering and project management services, procurement and fabrication, construction and installation, aftermarket and the sales of consumables. The company has also used it to drive global expansion that has seen it grow sales to customers outside its home market of the USA from 14% in fiscal 2012 to 37% in 2016, although the latter was a dip from 38% in the prior year. Ceco is now looking to implement a strategic refresh to leverage its US$5 billon installed equipment base and improve its organic growth. It is also seeking to reduce its debt, while maintaining a focus on global growth, market coverage and expansion of its Asian operations. Ceco anticipates a challenging macroeconomic environment in fiscal 2017, but believes global trends towards cleaner and more environmentally friendly power generation and more stringent emissions control auger well in the longer term for its product portfolio. It will be an evolution undertaken by new leadership with the company currently recruiting a new CEO following Jeffrey Lang’s departure earlier this year. n
Year ended 31.12 2016 2015 2014 2013 2012
Net Sales Of Which: Energy Environmental Fluid Handling and Filtration
417.0 367.4 263.2 197.3 135.1
Cost of Sales
282.2
258.3
178.4
135.8
92.6
Operating Income/(Loss) Of Which: Energy Environmental Fluid Handling and Filtration
(25.6)
4.9
21.7
7.0
16.7
Income/(Loss) before Tax
(33.0)
(3.1)
16.2
6.5
15.4
Net Income/(Loss)
(38.3)
(5.7)
13.1
6.6
10.9
203.4 142.2 70.3 69.4 40.2 153.3 158.4 127.7 101.2 88.6 61.8 67.6 65.6 25.2 6.2
23.6 3.5 7.8 9.3 7.6 15.7 17.0 16.8 15.4 14.6 (36.2) 11.7 13.2 1.4 1.0
Contact Details
Chair: Jason DeZwirek President and Interim CEO: Dennis Sadlowski Address: 4625 Red Bank Road, Suite 200
Tel: +1 513 458 2600
Cincinnati OH 45227-1552 , USA Web: www.cecoenviro.com 6
Pump Industry Analyst
April 2017