COMPANY WATCH
Ceco Environmental Corp, USA
DXP Enterprises Inc, USA
Key Figures (US$ million) Three months ended 31.3 2016
2015
103.2
81.0
Cost of Sales
71.6
60.0
Gross Profit
31.6
21.0
Selling and Admin
20.9
13.7
Income from Operations
5.8
3.0
Net Income
3.1
0.2
Net Income Attributable to Ceco Environmental Corp
3.1
0.2
Net Sales
Key Figures (US$ million) Three months ended 31.3 2016
2015
Sales Of Which: Innovative Pumping Solutions
253.6
341.6
47.4
74.3
Cost of Sales
184.7
243.5
Gross Profit
68.8
98.0
Selling, General and Admin Expenses
70.8
80.0
13.3
34.8
0.3
8.6
Operating Income/(Loss)
(2.0)
18.1
Net Income/(Loss)
(5.2)
9.7
Net Income/(Loss) Attributable to DXP Enterprises Inc
(5.1)
9.7
Operating Income for Reportable Segments Of Which: Innovative Pumping Solutions
COMMENT Ceco Environmental Corp’s first quarter 2016 revenue was up 27% on a year earlier to US$103.2 million, with recent acquisitions contributing US$24.9 million. Operating income almost doubled in the first quarter of 2016 to US$5.8 million, compared with US$3.0 million in 2015. Net income was US$3.1 million for the first quarter of 2016, up from US$0.2 million last year. Ceco Environmental recorded first quarter 2016 bookings of US$120.1 million, resulting in backlog of US$228.1 million, both of which are all-time records for the company. Total backlog at 31 March 2016 stood at US$228.1 million compared with US$211.2 million on 31 December 2015, and US$153.0 million on 31 March 2015. First quarter 2016 bookings of US$120.1 million were a 28% increase on last year’s US$93.9 million and well up on the US$100.3 million recorded in the fourth quarter of 2015. “I am very pleased we have now fully completed the integration of our Peerless
May 2016
acquisition in less than nine months since the closing of the transaction. We have not only fully achieved the promised operational and overall business synergies of US$15 million more than one year ahead of schedule, but we now expect to achieve US$18 million in total synergies. As a result, Peerless’ adjusted EBITDA was US$5 million for the first quarter of 2016 versus an operating loss in their same quarter last year,” said Ceco Environmental CEO Jeff Lang. “While we anticipate some macroeconomic shifting in a few markets and regions for the remainder of the year, we are confident that the actions we took in 2015 and our diversity of end markets, geographies and revenue streams provide us with a foundation to drive profitable growth through various cycles. The direction and core of our business is fundamentally strong, and we have the right team in place to deliver earnings growth, margin expansion and sales improvement into the future,” added Lang. ■ www.cecoenviro.com
COMMENT DXP Enterprises Inc’s 2016 first quarter sales of US$253.6 million were down 9.0% on the fourth quarter of 2015 and 25.8% on the first quarter of 2015. Adjusted EBITDA was US$6.8 million for the current quarter compared with US$14.7 million in the fourth quarter of 2015 and US$27.4 million for the first quarter of 2015. Innovative Pumping Solutions’ revenue for the first quarter of 2016 was US$47.4 million, a decline of 9.1% sequentially with a 0.6% operating income margin. David Little, DXP Enterprises chairman and CEO, said: “We appreciate the continued hard work, perseverance and sacrifices from our DXPeople as we work through the prolonged oil and gas downturn and industrial softness. DXP’s industrial end markets, which is 60% of our business today, appears to have bottomed and shows signs of
positive upward movement. Oil and gas, which today is 40% of DXP, is attempting to find a bottom as declines are decreasing.” Little said that the company was taking substantial steps to reorganise without hurting sales efforts and its ability to capitalise on the eventual turnaround of the oil and gas market. “Should conditions improve, the combination of strong early feedback on DXP’s pump offering, a gradual return of project work and continued improvements to our cost structure will result in strong earnings growth,” said Little. Mac McConnell, chief financial officer of DXP Enterprises, added: “Our first quarter results reflect the continued sales decline we experienced during the first half of the first quarter. During the second half of the first quarter we took steps to cut costs with an effort to optimise costs and sustain earnings going forward.” ■ www.dxpe.com
Pump Industry Analyst
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