Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 30, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | CECO | |
Entity Registrant Name | CECO ENVIRONMENTAL CORP. | |
Entity Central Index Key | 0000003197 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity File Number | 0-07099 | |
Entity Tax Identification Number | 13-2566064 | |
Entity Address, Address Line One | 14651 North Dallas Parkway | |
Entity Address, Address Line Two | Suite 500 | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75254 | |
City Area Code | 214 | |
Local Phone Number | 357-6181 | |
Entity Common Stock, Shares Outstanding | 34,812,539 | |
Entity Interactive Data Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Document Transition Report | false | |
Document Quarterly Report | true | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Security Exchange Name | NASDAQ | |
Entity Incorporation, State or Country Code | DE |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 47,583 | $ 45,522 |
Restricted cash | 753 | 1,063 |
Accounts receivable, net | 112,433 | 83,086 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 64,856 | 71,016 |
Inventories, net | 37,911 | 26,526 |
Prepaid expenses and other current assets | 15,266 | 12,174 |
Prepaid income taxes | 6,583 | 1,271 |
Total current assets | 285,385 | 240,658 |
Property, plant and equipment, net | 25,010 | 20,828 |
Right-of-use assets from operating leases | 13,849 | 11,373 |
Goodwill | 209,825 | 183,197 |
Intangible assets – finite life, net | 52,340 | 35,251 |
Intangible assets – indefinite life | 9,514 | 9,508 |
Deferred income taxes | 801 | 829 |
Deferred charges and other assets | 3,333 | 3,077 |
Total assets | 600,057 | 504,721 |
Current liabilities: | ||
Current portion of debt | 4,726 | 3,579 |
Accounts payable | 94,236 | 73,407 |
Accrued expenses | 44,154 | 33,791 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 54,209 | 32,716 |
Notes Payable | 2,500 | 0 |
Income taxes payable | 3,473 | 3,207 |
Total current liabilities | 203,298 | 146,700 |
Other liabilities | 14,652 | 15,129 |
Debt, less current portion | 135,273 | 107,625 |
Deferred income tax liability, net | 7,591 | 8,666 |
Operating lease liabilities | 9,101 | 8,453 |
Total liabilities | 369,915 | 286,573 |
Commitments and contingencies | ||
Shareholders’ equity: | ||
Preferred stock, $.01 par value; 10,000 shares authorized, none issued | 0 | 0 |
Common stock, $.01 par value; 100,000,000 shares authorized, 34,811,077 and 34,381,668 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 347 | 344 |
Capital in excess of par value | 253,613 | 250,174 |
Accumulated loss | (10,266) | (19,298) |
Accumulated other comprehensive loss | (18,251) | (17,996) |
Total CECO shareholders' equity | 225,443 | 213,224 |
Non-controlling interest | 4,699 | 4,924 |
Total shareholders' equity | 230,142 | 218,148 |
Total liabilities and shareholders' equity | $ 600,057 | $ 504,721 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 34,811,077 | 34,381,668 |
Common Stock, shares outstanding | 34,811,077 | 34,381,668 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Net sales | $ 149,390 | $ 108,414 | $ 391,134 | $ 306,225 |
Cost of sales | 106,269 | 75,988 | 273,303 | 215,696 |
Gross profit | 43,121 | 32,426 | 117,831 | 90,529 |
Selling and administrative expenses | 30,439 | 25,166 | 86,082 | 66,806 |
Amortization and earnout expenses | 1,968 | 2,039 | 5,988 | 4,939 |
Acquisition and integration expenses | 1,386 | 1,287 | 2,210 | 3,827 |
Executive transition expenses | 1,258 | 1,161 | 1,417 | 1,161 |
Restructuring expenses | 217 | 0 | 217 | 73 |
Income from operations | 7,853 | 2,773 | 21,917 | 13,723 |
Other (expense) income, net | (216) | 1,276 | (670) | 2,754 |
Interest expense | (3,340) | (1,569) | (9,498) | (3,489) |
Income before income taxes | 4,297 | 2,480 | 11,749 | 12,988 |
Income tax expense | 585 | 314 | 1,577 | 3,287 |
Net income | 3,712 | 2,166 | 10,172 | 9,701 |
Noncontrolling interest | 382 | 223 | 1,140 | 579 |
Net income (loss) attributable to CECO Environmental Corp. | $ 3,330 | $ 1,943 | $ 9,032 | $ 9,122 |
Earnings per share: | ||||
Basic | $ 0.1 | $ 0.06 | $ 0.26 | $ 0.26 |
Diluted | $ 0.09 | $ 0.06 | $ 0.26 | $ 0.26 |
Weighted average number of common shares outstanding: | ||||
Basic | 34,771,742 | 34,455,657 | 34,612,163 | 34,791,129 |
Diluted | 35,301,429 | 34,871,313 | 35,215,843 | 35,035,041 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 3,712 | $ 2,166 | $ 10,172 | $ 9,701 |
Other comprehensive loss, net of tax: | ||||
Foreign currency translation loss | (1,160) | (5,890) | (255) | (9,387) |
Comprehensive income (loss) | $ 2,552 | $ (3,724) | $ 9,917 | $ 314 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock [Member] | Capital in Excess of Par Value [Member] | Accumulated Loss [Member] | Accumulated Other Comprehensive Loss [Member] | Noncontrolling Interest [Member] |
Beginning Balance at Dec. 31, 2021 | $ 205,957 | $ 350 | $ 252,989 | $ (36,715) | $ (12,070) | $ 1,403 |
Beginning Balance, Shares at Dec. 31, 2021 | 35,028 | |||||
Net income | 2,810 | 2,792 | 18 | |||
Restricted stock units issued | (67) | (67) | ||||
Restricted stock units issued, Shares | 34 | |||||
Share based compensation earned | 953 | 953 | ||||
Share based compensation earned, Shares | 14 | |||||
Translation gain (loss) | (531) | (531) | ||||
Noncontrolling interest distribution | (900) | (900) | ||||
Fair value of noncontrolling interest equity issued | 5,000 | 5,000 | ||||
Ending Balance at Mar. 31, 2022 | 213,222 | $ 350 | 253,875 | (33,923) | (12,601) | 5,521 |
Ending Balance, Shares at Mar. 31, 2022 | 35,076 | |||||
Beginning Balance at Dec. 31, 2021 | 205,957 | $ 350 | 252,989 | (36,715) | (12,070) | 1,403 |
Beginning Balance, Shares at Dec. 31, 2021 | 35,028 | |||||
Net income | 9,701 | |||||
Translation gain (loss) | (9,387) | |||||
Common stock repurchase and retirement (see Note 9) | $ (6,500) | |||||
Common stock repurchase and retirement (see Note 9), Shares | 981,000 | |||||
Ending Balance at Sep. 30, 2022 | $ 205,420 | $ 343 | 249,248 | (27,595) | (21,457) | 4,881 |
Ending Balance, Shares at Sep. 30, 2022 | 34,330 | |||||
Beginning Balance at Mar. 31, 2022 | 213,222 | $ 350 | 253,875 | (33,923) | (12,601) | 5,521 |
Beginning Balance, Shares at Mar. 31, 2022 | 35,076 | |||||
Net income | 4,724 | 4,385 | 339 | |||
Restricted stock units issued | (209) | $ (2) | (211) | |||
Restricted stock units issued, Shares | 183 | |||||
Share based compensation earned | 915 | 915 | ||||
Translation gain (loss) | (2,966) | (2,966) | ||||
Fair value of noncontrolling interest equity | (901) | (901) | ||||
Common stock repurchase and retirement (see Note 9) | (4,324) | $ (7) | (4,317) | |||
Common stock repurchase and retirement (see Note 9), Shares | (725) | |||||
Ending Balance at Jun. 30, 2022 | 210,461 | $ 345 | 250,262 | (29,538) | (15,567) | 4,959 |
Ending Balance, Shares at Jun. 30, 2022 | 34,534 | |||||
Net income | 2,166 | 1,943 | 223 | |||
Restricted stock units issued | (65) | (65) | ||||
Restricted stock units issued, Shares | 32 | |||||
Share based compensation earned | 1,242 | 1,242 | ||||
Share based compensation earned, Shares | 20 | |||||
Translation gain (loss) | (5,890) | (5,890) | ||||
Noncontrolling interest distribution | (301) | (301) | ||||
Common stock repurchase and retirement (see Note 9) | $ (2,193) | $ (2) | (2,191) | |||
Common stock repurchase and retirement (see Note 9), Shares | 256,000 | (256) | ||||
Ending Balance at Sep. 30, 2022 | $ 205,420 | $ 343 | 249,248 | (27,595) | (21,457) | 4,881 |
Ending Balance, Shares at Sep. 30, 2022 | 34,330 | |||||
Beginning Balance at Dec. 31, 2022 | 218,148 | $ 344 | 250,174 | (19,298) | (17,996) | 4,924 |
Beginning Balance, Shares at Dec. 31, 2022 | 34,382 | |||||
Net income | 2,469 | 1,978 | 491 | |||
Exercise of stock options | 612 | $ 1 | 611 | |||
Exercise of stock options, Shares | 52 | |||||
Restricted stock units issued | (621) | $ 1 | (622) | |||
Restricted stock units issued, Shares | 123 | |||||
Share based compensation earned | 808 | 808 | ||||
Translation gain (loss) | 766 | 766 | ||||
Ending Balance at Mar. 31, 2023 | 222,182 | $ 346 | 250,971 | (17,320) | (17,230) | 5,415 |
Ending Balance, Shares at Mar. 31, 2023 | 34,557 | |||||
Beginning Balance at Dec. 31, 2022 | 218,148 | $ 344 | 250,174 | (19,298) | (17,996) | 4,924 |
Beginning Balance, Shares at Dec. 31, 2022 | 34,382 | |||||
Net income | 10,172 | |||||
Translation gain (loss) | (255) | |||||
Common stock repurchase and retirement (see Note 9) | $ 0 | |||||
Common stock repurchase and retirement (see Note 9), Shares | 0 | |||||
Ending Balance at Sep. 30, 2023 | $ 230,142 | $ 347 | 253,613 | (10,266) | (18,251) | 4,699 |
Ending Balance, Shares at Sep. 30, 2023 | 34,811 | |||||
Beginning Balance at Mar. 31, 2023 | 222,182 | $ 346 | 250,971 | (17,320) | (17,230) | 5,415 |
Beginning Balance, Shares at Mar. 31, 2023 | 34,557 | |||||
Net income | 3,990 | 3,724 | 266 | |||
Exercise of stock options | 317 | 317 | ||||
Exercise of stock options, Shares | 25 | |||||
Restricted stock units issued | (270) | $ 1 | (271) | |||
Restricted stock units issued, Shares | 132 | |||||
Share based compensation earned | 1,389 | 1,389 | ||||
Share based compensation earned, Shares | 24 | |||||
Translation gain (loss) | 139 | 139 | ||||
Noncontrolling interest distribution | (599) | (599) | ||||
Ending Balance at Jun. 30, 2023 | 227,148 | $ 347 | 252,406 | (13,596) | (17,091) | 5,082 |
Ending Balance, Shares at Jun. 30, 2023 | 34,738 | |||||
Net income | 3,712 | 3,330 | 382 | |||
Exercise of stock options | 281 | 281 | ||||
Exercise of stock options, Shares | 25 | |||||
Restricted stock units issued | (203) | (203) | ||||
Restricted stock units issued, Shares | 48 | |||||
Share based compensation earned | 1,129 | 1,129 | ||||
Translation gain (loss) | (1,160) | (1,160) | ||||
Noncontrolling interest distribution | (765) | (765) | ||||
Common stock repurchase and retirement (see Note 9) | $ 0 | |||||
Common stock repurchase and retirement (see Note 9), Shares | 0 | |||||
Ending Balance at Sep. 30, 2023 | $ 230,142 | $ 347 | $ 253,613 | $ (10,266) | $ (18,251) | $ 4,699 |
Ending Balance, Shares at Sep. 30, 2023 | 34,811 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 10,172 | $ 9,701 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 8,769 | 7,609 |
Unrealized foreign currency (loss) gain | (138) | 2,525 |
Fair value adjustment to earnout liabilities | 296 | 0 |
Earnout payments | 0 | (1,007) |
Gain (loss) on sale of property and equipment | 43 | (7) |
Debt discount amortization | 271 | 279 |
Share-based compensation expense | 3,096 | 2,859 |
Bad debt expense | 154 | 823 |
Inventory reserve expense | 526 | 115 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | (25,961) | (15,772) |
Costs and estimated earnings in excess of billings on uncompleted contracts | 6,006 | (4,846) |
Inventories | (10,395) | (4,620) |
Prepaid expense and other current assets | (8,228) | (1,900) |
Deferred charges and other assets | (268) | 2,311 |
Accounts payable | 21,162 | 13,050 |
Accrued expenses | 7,868 | 4,598 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 19,330 | 6,567 |
Income taxes payable | 261 | (51) |
Other liabilities, net | (3,473) | (2,538) |
Net cash provided by operating activities | 29,491 | 19,696 |
Cash flows from investing activities: | ||
Acquisitions of property and equipment | (5,511) | (2,367) |
Net proceeds from sale of assets | 0 | 7 |
Net cash paid for acquisition | (48,102) | (44,900) |
Net cash used in investing activities | (53,613) | (47,260) |
Cash flows from financing activities: | ||
Borrowings on revolving credit lines | 94,200 | 73,600 |
Repayments on revolving credit lines | (63,200) | (35,900) |
Borrowing on long-term debt | 0 | 11,000 |
Repayments of long-term debt | (2,478) | (2,294) |
Deferred financing fees paid | 0 | (130) |
Deferred consideration paid for acquisitions | (1,247) | 0 |
Payments on finance leases and financing liability | (680) | (444) |
Earnout payments | (1,496) | 0 |
Proceeds from employee stock purchase plan and exercise of stock options | 1,435 | 169 |
Noncontrolling interest distributions | (1,364) | (1,201) |
Common stock repurchase | 0 | (6,558) |
Net cash provided by financing activities | 25,170 | 38,242 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 703 | (6,459) |
Net increase in cash, cash equivalents and restricted cash | 1,751 | 4,219 |
Cash, cash equivalents and restricted cash at beginning of period | 46,585 | 31,995 |
Cash, cash equivalents and restricted cash at end of period | 48,336 | 36,214 |
Cash paid during the period for: | ||
Interest | 8,531 | 3,239 |
Income taxes | $ 8,633 | $ 3,566 |
Basis of Reporting for Consolid
Basis of Reporting for Consolidated Financial Statements | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Reporting for Consolidated Financial Statements | 1. Basis of Reporting for Consolidated Financial Statements The accompanying unaudited condensed consolidated financial statements of CECO Environmental Corp. and its subsidiaries (the “Company,” “CECO,” “we,” “us,” or “our”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position as of September 30, 2023 and the results of operations, cash flows and shareholders’ equity for the three and nine months ended September 30, 2023 and 2022. The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year. The balance sheet as of December 31, 2022 has been derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on March 6, 2023 (the “Form 10-K”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These financial statements and accompanying notes should be read in conjunction with the audited financial statements and the notes thereto included in the Form 10-K. Unless otherwise indicated, all balances within tables are in thousands, except per share amounts. |
New Financial Accounting Pronou
New Financial Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
New Financial Accounting Pronouncements | 2. New Financial Accounting Pronouncements Accounting Standards Adopted in Fiscal 2023 On January 1, 2023, the beginning of the Company's fiscal year, the Company adopted Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which addresses how an acquirer should recognize and measure revenue contracts acquired in a business combination. The adoption of ASU 2021-08 did not have a material impact on the Company's Consolidated Financial Statements. Accounting Standards to be Adopted None. |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Accounts Receivable | 3. Accounts Receivable Accounts receivable as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Accounts receivable $ 116,786 $ 87,306 Provision for credit losses ( 4,353 ) ( 4,220 ) Total accounts receivable, net $ 112,433 $ 83,086 Accounts receivable, net as of the beginning of the prior year period, or January 1, 2022, were $ 75.0 million. Balances billed but not paid by customers under retainage provisions in contracts within the Condensed Consolidated Balance Sheets amounted to approximately $ 1.8 million and $ 1.6 million as of September 30, 2023 and December 31, 2022, respectively. Retainage receivables on contracts in progress are generally collected within a year or two subsequent to contract completion, and are recorded in either "Accounts receivable, net" or "Deferred charges and other assets" within the Condensed Consolidated Balance Sheets depending on timing of expected collection. Provision for credit losses was $ 0.2 million and $ 0.4 million for the three months ended September 30, 2023 and 2022, respectively, and $ 0.2 million and $ 0.8 million for the nine months ended September 30, 2023 and 2022 , respectively. |
Contract Assets and Liabilities
Contract Assets and Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Disclosure Text Block [Abstract] | |
Schedule of Regulatory Assets and Liabilities [Text Block] | 4. Contract Assets and Liabilities Contract assets and liabilities as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Costs and estimated earnings in excess of billings on uncompleted contracts $ 64,856 $ 71,016 Billings in excess of costs and estimated earnings on uncompleted contracts 54,209 32,716 As of the beginning of the prior year period, or January 1, 2022, costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts were $ 51.4 million and $ 28.9 million, respectively. The contract liabilities recorded in “Accrued expenses” on the Condensed Consolidated Balance Sheets were $ 9.2 million, $ 4.5 million and $ 4.4 million as of September 30, 2023, December 31, 2022 and January 1, 2022, respectively. Approximately 75 % of the Company's contract liabilities as of December 31, 2022 were recognized as revenue in the nine months ended September 30, 2023 . |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. Inventories Inventories as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Raw materials $ 27,273 $ 19,774 Work in process 11,001 7,183 Finished goods 2,947 2,436 Obsolescence allowance ( 3,310 ) ( 2,867 ) Total inventories $ 37,911 $ 26,526 Amounts credited to the allowance for obsolete inventory and charged to cost of sales were zero for each of the three months ended September 30, 2023 and 2022, and $ 0.5 million and $ 0.1 million for the nine months ended September 30, 2023 and 2022 , respectively. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 6. Goodwill and Intangible Assets Goodwill activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows: (in thousands) Nine months ended September 30, 2023 Year ended December 31, 2022 Goodwill / Tradename Goodwill Tradename Goodwill Tradename Balance at beginning of period $ 183,197 $ 9,508 $ 161,183 $ 9,629 Acquisitions 26,455 — 23,312 — Foreign currency translation 173 6 ( 1,298 ) ( 121 ) Balance at end of period $ 209,825 $ 9,514 $ 183,197 $ 9,508 Finite life intangible assets as of September 30, 2023 and December 31, 2022 consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Cost Accum. Amort. Cost Accum. Amort. Technology $ 16,517 $ 13,947 $ 14,457 $ 13,729 Customer lists 103,471 61,742 85,719 57,540 Tradenames 14,094 4,655 11,604 3,768 Foreign currency adjustments ( 1,725 ) ( 327 ) ( 1,864 ) ( 372 ) Total intangible assets – finite life $ 132,357 $ 80,017 $ 109,916 $ 74,665 Finite life intangible asset activity for the nine months ended September 30, 2023 and 2022 was as follows: Nine months ended September 30, (in thousands) 2023 2022 Intangible assets – finite life, net at beginning of period $ 35,251 $ 25,841 Amortization expense ( 5,306 ) ( 4,939 ) Acquisitions 22,318 16,438 Foreign currency adjustments 77 ( 1,245 ) Intangible assets – finite life, net at end of period $ 52,340 $ 36,095 Amortization expense of finite life intangible assets was $ 1.9 million and $ 2.0 million for the three months ended September 30, 2023 and 2022, respectively, and $ 5.3 million and $ 4.9 million for the nine months ended September 30, 2023 and 2022, respectively. Amortization over the next five years for finite life intangibles is expected to be $ 2.1 million for the remainder of 2023, $ 8.6 million in 2024, $ 7.6 million in 2025, $ 6.2 million in 2026, and $ 6.0 million in 2027. The Company completes its goodwill and indefinite life intangible asset impairment assessment annually in the fourth quarter, or more often if circumstances require. As a part of its impairment assessment, the Company first qualitatively assesses whether current events or changes in circumstances lead to a determination that it is more likely than not, defined as a likelihood of more than 50 percent, that the fair value of a reporting unit or indefinite life intangible asset is less than its carrying amount. If there is a qualitative determination that the fair value is more likely than not greater than the carrying value, the Company does not quantitatively test for impairment. If this qualitative assessment indicates a more likely than not potential that the asset may be impaired, the estimated fair value is calculated. If the estimated fair value is less than carrying value, an impairment charge is recorded. As of September 30, 2023, the Company reviewed its previous forecasts and assumptions based on its current projections, which are subject to various risks and uncertainties, including projected revenue, projected operational profit, terminal growth rates, and the cost of capital. The Company did not identify any triggering events during the three or nine months ended September 30, 2023 that would require an interim impairment assessment of goodwill or intangible assets. The Company’s assumptions about future conditions important to its assessment of potential impairment of its goodwill and indefinite life intangible assets are subject to uncertainty, and the Company will continue to monitor these conditions in future periods as new information becomes available, and will update its analysis accordingly. |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | 7. Accrued Expenses Accrued expenses as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Compensation and related benefits $ 8,764 $ 9,577 Accrued warranty 4,907 3,691 Contract liability 9,186 4,516 Short-term operating lease liability 4,187 3,228 Other 17,110 12,779 Total accrued expenses $ 44,154 $ 33,791 |
Senior Debt
Senior Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Senior Debt | 8. Senior Debt Debt as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Outstanding borrowings under the Credit Facility (as defined below) quarterly principal installments of $ 550 through September 2023, 825 through September 2025 and $ 1,100 thereafter with balance due upon maturity in Term loan $ 39,656 $ 41,309 Revolving credit facility 92,300 61,300 Total outstanding borrowings under the Credit Facility 131,956 102,609 Outstanding borrowings under the joint venture term debt 9,132 10,083 Unamortized debt discount ( 1,089 ) ( 1,488 ) Total outstanding borrowings 139,999 111,204 Less: current portion ( 4,726 ) ( 3,579 ) Total debt, less current portion $ 135,273 $ 107,625 Scheduled principal payments under the Credit Facility and joint venture term debt are $ 1.1 million remaining in 2023, $ 4.9 million in 2024, $ 5.2 million in 2025, $ 126.0 million in 2026, and $ 3.9 million in 2027. Credit Facility As of September 30, 2023 and December 31, 2022, $ 21.0 million and $ 18.9 million of letters of credit were outstanding, respectively. Total unused credit availability, in consideration of borrowing limitations, under the Company’s senior secured term loan and senior secured revolver loan with sub-facilities for letters of credit, swing-line loans and senior secured multi-currency loans (the "Credit Facility") was $ 26.7 million and $ 59.8 million at September 30, 2023 and December 31, 2022, respectively. Revolving loans may be borrowed, repaid and reborrowed until December 17, 2026, at which time all outstanding balances of the Credit Facility must be repaid. At the Company’s option, revolving loans and the term loans accrue interest at a per annum rate based on either the highest of (a) the federal funds rate plus 0.5 %, (b) the Agent’s prime lending rate, (c) Daily Simple SOFR plus the Daily Simple SOFR Adjustment of 0.11448 % plus 1.0%, or (d) 1.0%, plus a margin ranging from 1.75 % to 2.75 % depending on the Company’s Consolidated Leverage Ratio (“Base Rate”), or (d) a one/three/six-month Term SOFR Rate (as defined in the Credit Facility) plus the Term SOFR Adjustment ranging from 0.11 % to 0.43 % p lus 1.75 % to 2.75 % depending on the Company’s Consolidated Leverage Ratio. Interest on swing line loans is the Base Rate. Interest on Base Rate loans is payable quarterly in arrears on the last day of each calendar quarter and at maturity. Interest on Term SOFR rate loans is payable on the last date of each applicable Interest Period (as defined in the agreement), but in no event less than once every three months and at maturity. The weighted average stated interest rate on outstanding borrowings was 8.04 % and 6.75 % at September 30, 2023 and December 31, 2022, respectively. Under the terms of the Credit Facility, the Company is required to maintain certain financial covenants, including the maintenance of a Consolidated Net Leverage Ratio (as defined in the Credit Facility). In the third quarter of 2023, the Company entered into an Elevated Ratio Period resulting in a maximum Consolidated Net Leverage Ratio of 4.00 through June 30, 2024, after which time it will decrease to 3.50 until the end of the term of the Credit Facility. As of September 30, 2023 and December 31, 2022, the Company was in compliance with all related financial and other restrictive covenants under the Credit Facility. Joint Venture Debt On March 7, 2022, the Company's Effox-Flextor-Mader, Inc. joint venture ("EFM JV") entered into a loan agreement secured by the assets of the EFM JV in the aggregate principal amount of $ 11.0 million for the acquisition of General Rubber, LLC ("GRC"). As of September 30, 2023 and December 31, 2022, $ 9.1 million and $ 10.0 million was outstanding under the loan, respectively. Principal will be paid back to the lender monthly with the final installment due by February 27, 2027. Interest is accrued at the per annum rate based on EFM JV's choice of the 1/3/6 month Term SOFR rate plus 3.25%, with a floor rate of 3.75%. Interest is paid monthly on the last day of each month. The interest rate at September 30, 2023 and December 31, 2022 was 8.70 % and 6.60 % , respectively. As of September 30, 2023 and December 31, 2022, the EFM JV was in compliance with all related financial and other restrictive covenants under this loan agreement. This loan balance does not impact the Company’s borrowing capacity or the financial covenants under the Credit Facility. Foreign Debt The Company has a number of bank guarantee facilities and bilateral lines of credit in various foreign countries currently supported by cash, letters of credit or pledged assets and collateral under the Credit Facility. In March 2023, the Company amended the Credit Facility, allowing letters of credit and bank guarantee issuances of up to $ 80.0 million from the bilateral lines of cred it secured through pledged assets and collateral under the Credit Facility. As of September 30, 2023 and December 31, 2022, $ 41.4 million and $ 30.4 million in bank guarantees were outstanding, respectively, inclusive of $ 2.0 million and $ 0.6 million in outstanding bank guarantees as of September 30, 2023 and December 31, 2022 , respectively, under a Euro-denominated bank guarantee agreement held by a subsidiary of the Company located in the Netherlands and secured by local assets. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 9. Earnings per Share The computational components of basic and diluted earnings per share for the three months ended September 30, 2023 and 2022 are as follows: Three months ended September 30, (in thousands) 2023 2022 Numerator (for basic and diluted earnings per share) Net income attributable to CECO Environmental Corp. $ 3,330 $ 1,943 Denominator Basic weighted-average shares outstanding 34,772 34,456 Common stock equivalents arising from stock options and restricted stock awards 529 415 Diluted weighted-average shares outstanding 35,301 34,871 The computational components of basic and diluted earnings per share for the nine months ended September 30, 2023 and 2022 are as follows: Nine months ended September 30, (in thousands) 2023 2022 Numerator (for basic and diluted earnings per share) Net income attributable to CECO Environmental Corp. $ 9,032 $ 9,122 Denominator Basic weighted-average shares outstanding 34,612 34,791 Common stock equivalents arising from stock options and restricted stock awards 604 244 Diluted weighted-average shares outstanding 35,216 35,035 Options and restricted stock units included in the computation of diluted earnings per share are calculated using the treasury stock method. For the three months ended September 30, 2023 and 2022, zero and 1.2 million, respectively, and for the nine months ended September 30, 2023 and 2022, 0.7 million and 1.7 million, respectively, of outstanding options and restricted stock units were excluded from the computation of diluted earnings per share due to their anti-dilutive effect. Once a restricted stock unit vests, it is included in the computation of weighted average shares outstanding for purposes of basic and diluted earnings per share. Common Stock Repurchase On May 10, 2022, the Company's Board of Directors authorized a share repurchase program under which the Company may purchase up to $ 20.0 million of its outstanding shares of common stock through April 30, 2025. The authorization permits the Company to repurchase shares in the open market, through accelerated share repurchases, block trades, Rule 10b5-1 trading plans or through privately negotiated transactions in accordance with applicable laws, rules and regulations. Under the program, the Company repurchased zero and 256,000 shares at a cost of zero and $ 2.2 million during the three months ended September 30, 2023 and 2022 , respectively, and zero and 981,000 shares at a cost of zero and $ 6.5 million during the nine months ended September 30, 2023 and 2022 , respectively. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | 10. Share-Based Compensation The Company accounts for share-based compensation in accordance with Accounting Standards Codification (“ASC”) Topic 718, “Compensation – Stock Compensation,” which requires the Company to recognize compensation expense for share-based awards, measured at the fair value of the awards at the grant date. The Company recognized $ 1.2 million and $ 1.1 million of share-based compensation related expense during the three months ended September 30, 2023 and 2022, respectively, and $ 3.1 million and $ 2.9 million of share-based compensation related expense during the nine months ended September 30, 2023 and 2022, respectively. The Company granted approximately 345,000 and 68,000 restricted stock units during the three months ended September 30, 2023 and 2022, respectively, and approximately 733,000 and 755,000 restricted stock units during the nine months ended September 30, 2023 and 2022, respectively. There were approximately 25,000 and 101,000 options exercised during the three and nine months ended September 30, 2023, respectively. The Company received $ 0.3 million and $ 1.2 million in cash from employees and directors exercising options during the three and nine months ended September 30, 2023, respectively. The intrinsic value of options exercised was $ 0.1 million for each of the three and nine months ended September 30, 2023 . There were no options exercised during the three and nine months ended September 30, 2022 . |
Pension and Employee Benefit Pl
Pension and Employee Benefit Plans | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Pension and Employee Benefit Plans | 11. Pension and Employee Benefit Plans The Company sponsors a non-contributory defined benefit pension plan for certain union employees. The plan is funded in accordance with the funding requirements of the Employee Retirement Income Security Act of 1974. The Company presents the components of net periodic benefit cost (gain) within “Other (expense) income, net” on the Condensed Consolidated Statements of Income. Retirement plan expense is based on valuations performed by plan actuaries as of the beginning of each fiscal year. The components of the pension plan expense consisted of the following: Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Interest cost $ 318 $ 219 $ 955 $ 658 Expected return on plan assets ( 285 ) ( 390 ) ( 856 ) ( 1,170 ) Amortization of net actuarial loss 74 66 223 197 Net periodic benefit cost (gain) $ 107 $ ( 105 ) $ 322 $ ( 315 ) The Company made no contributions to its defined benefit plan during the nine months ended September 30, 2023 and 2022. For the remainder of 2023, the Company does not expect to make any contributions to fund the pension plan. The unfunded liability of the plan of $ 5.8 million and $ 5.5 million as of September 30, 2023 and December 31, 2022 , respectively, is included in “Other liabilities” on the Condensed Consolidated Balance Sheets. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. Income Taxes The Company files income tax returns in various federal, state and local jurisdictions. Tax years from 2018 forward remain open for examination by Federal authorities. Tax years from 2017 forward remain open for all significant s tate and foreign authorities. The Company accounts for uncertain tax positions pursuant to ASC Topic 740, “Income Taxes.” As of September 30, 2023 and December 31, 2022, the liability for uncertain tax positions totaled $ 0.1 million, which is included in “Other liabilities” on the Condensed Consolidated Balance Sheets. The Company recognizes accrued interest related to uncertain tax positions and penalties, if any, in income tax expense within the Condensed Consolidated Statements of Income. Certain of the Company’s undistributed earnings of our foreign subsidiaries are not permanently reinvested. Since foreign earnings have already been subject to United States income tax in 2017 as a result of the 2017 Tax Cuts and Jobs Act, the Company intends to repatriate foreign-held cash as needed. The Company records deferred income tax attributable to foreign withholding taxes that would become payable should it decide to repatriate cash held in our foreign operations. As of September 30, 2023 and December 31, 2022, the Company recorded deferred income taxes of approximately $ 0.8 million and $ 1.3 million, respectively, on the undistributed earnings of its foreign subsidiaries. Income tax expense was $ 0.6 million and $ 0.3 million for the three months ended September 30, 2023 and 2022, respectively, and $ 1.6 million and $ 3.3 million for the nine months ended September 30, 2023 and 2022, respectively. The effective income tax rate for the three months ended September 30, 2023 was 13.6 % compared with 12.7 % for the three months ended September 30, 2022, and the effective income tax rate for the nine months ended September 30, 2023 was 13.4 % compared with 25.3 % for the nine months ended September 30, 2022. The effective income tax rates for the three and nine months ended September 30, 2023 and 2022 differ from the United States federal statutory rate. The Company's effective rate is affected by certain other permanent differences, including state income taxes, non-deductible incentive stock-based compensation and differences in tax rates among jurisdictions in which it operates. |
Financial Instruments
Financial Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | 13. Financial Instruments The Company's financial instruments consist primarily of investments in cash and cash equivalents, receivables and certain other assets, notes payable, foreign debt and accounts payable, which approximate fair value due to their short-term nature or variable, market-driven interest rates. The fair value of the debt issued under the Credit Facility and joint venture term loan was $ 141.1 million and $ 112.7 million at September 30, 2023 and December 31, 2022, respectively. The fair value was determined considering market conditions, the Company's credit worthiness and the current terms of our debt, which is considered Level 2 on the fair value hierarchy. At September 30, 2023 and December 31, 2022, the Company had cash and cash equivalents of $ 47.6 million and $ 45.5 million, respectively, of which $ 37.0 million and $ 31.7 million, respectively, was held outside of the United States, principally in the Netherlands, United Kingdom, United Arab Emirates and China. |
Commitments and Contingencies -
Commitments and Contingencies - Legal Matters | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies - Legal Matters | 14. Commitments and Contingencies Asbestos cases The Company's subsidiary, Met-Pro Technologies LLC (“Met-Pro”), beginning in 2002, has been named in asbestos-related lawsuits filed against a large number of industrial companies including, in particular, those in the pump and fluid handling industries. In management’s opinion, the complaints typically have been vague, general and speculative, alleging that Met-Pro, along with the numerous other defendants, sold unidentified asbestos-containing products and engaged in other related actions which caused injuries (including death) and loss to the plaintiffs. Counsel has advised that more recent cases typically allege more serious claims of mesothelioma. The Company’s insurers have hired attorneys who, together with the Company, are vigorously defending these cases. Many cases have been dismissed after the plaintiff fails to produce evidence of exposure to Met-Pro’s products. In those cases, where evidence has been produced, the Company’s experience has been that the exposure levels are low and the Company’s position has been that its products were not a cause of death, injury or loss. The Company has been dismissed from or settled a large number of these cases. Cumulative settlement payments from 2002 through September 30, 2023 for cases involving asbestos-related claims were $ 6.4 million which together with all legal fees other than corporate counsel expenses have substantially been paid by the Company’s insurers. The average cost per settled claim, excluding legal fees, was approximately $ 37,000 . Based upon the most recent information available to the Company regarding such claims, there were a total of 301 cases pending against the Company as of September 30, 2023 with Illinois, New York, Pennsylvania and West Virginia having the largest number of cases, as compared with 247 cases that were pending as of December 31, 2022. During the nine months ended September 30, 2023, 132 new cases were filed against the Company, and the Company was dismissed from 54 cases and settled 24 cases. Most of the pending cases have not advanced beyond the early stages of discovery, although a number of cases are on schedules leading to or scheduled for trial. The Company believes that its insurance coverage is adequate for the cases currently pending against the Company and for the foreseeable future, assuming a continuation of the current volume, nature of cases and settlement amounts. However, the Company has no control over the number and nature of cases that are filed against it, nor as to the financial health of its insurers or their position as to coverage. The Company also presently believes that none of the pending cases will have a material adverse impact upon the Company’s results of operations, liquidity or financial condition. Other The Company is also a party to routine contract and employment-related litigation matters, warranty claims and routine audits of state and local tax returns arising in the ordinary course of its business. The final outcome and impact of open matters, and related claims and investigations that may be brought in the future, are subject to many variables, and cannot be predicted. The Company records accruals for estimated losses relating to claims and lawsuits when available information indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. The Company expenses legal costs as they are incurred. The Company is not aware of any pending claims or assessments, other than as described above, which may have a material adverse impact on its liquidity, financial position, results of operations, or cash flows. |
Acquisitions and Joint Ventures
Acquisitions and Joint Ventures | 9 Months Ended |
Sep. 30, 2023 | |
Business Combinations [Abstract] | |
Acquisitions and Joint Ventures | 15. Acquisitions and Joint Ventures Kemco Systems Co., LLC On August 23, 2023, the Company acquired 100 % of the equity interests of Kemco Systems Co., LLC ("Kemco") for $ 24.0 million in cash, which was financed with a draw on the Company’s revolving credit facility. As additional consideration, the former owners are entitled to earn-out payments up to $ 4.0 million based upon specified financial results through August 31, 2026. Based on projections at the acquisition date, the Company estimated the fair value of the earn-out to be $ 2.2 million. This fair value measurement is based on inputs not observable in the market, which is considered Level 3 on the fair value hierarchy. As of September 30, 2023, the earnout liability recorded in “Accrued expenses” and "Other liabilities", depending on the anticipated payout timing, on the Condensed Consolidated Balance Sheets is $ 2.2 million. Kemco designs and manufactures energy and water conservation systems and equipment for applications regarding wastewater reuse and recycle, heat recovery, water heating, and vapor energy. This acquisition advances the Company's position within the North American water and wastewater treatment market within the Engineered Systems segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including accounts receivable, net of $ 2,328 ) $ 8,902 Property and equipment 341 Right-of-use assets from operating leases 1,602 Intangible - finite life 11,610 Goodwill 11,005 Other assets 16 Total assets acquired 33,476 Current liabilities assumed ( 6,853 ) Other liabilities assumed ( 404 ) Net assets acquired $ 26,219 The Company acquired technology, customer lists and tradename intangible assets valued at $ 1.4 million, $ 8.7 million and $ 1.5 million, respectively. These assets were determined to have useful lives of 7 , 10 and 10 years, respectively. During the three months ended September 30, 2023, Kemco accounted for $ 3.6 million in revenue and $ 0.5 million of net income included in the Company’s results. Transcend Solutions On March 31, 2023, the Company acquired 100 % of the equity interests of Transcend Solutions, LLC ("Transcend") for $ 22.4 million, including $ 20.0 million in cash, which was financed with a draw on the Company’s revolving credit facility, $ 2.4 million of deferred cash consideration, consisting of $ 0.4 million of holdback paid within one year and $ 2.0 million of notes payable due in equal installments over two years . Transcend is a process filtration solution design and manufacturing company with applications in hydrocarbon and chemical processing. This acquisition improves the Company's short-cycle and long-cycle mix and expands the Company's reach into midstream oil and gas, liquified natural gas, hydrocarbon processing, and chemical processing applications within the Engineered Systems segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including cash of $ 52 and accounts receivable, net of $ 1,493 ) $ 2,614 Property and equipment 1,153 Intangible - finite life 8,930 Goodwill 10,671 Other assets 231 Total assets acquired 23,599 Current liabilities assumed ( 1,203 ) Net assets acquired $ 22,396 The Company acquired technology, customer lists and tradename intangible assets valued at $ 0.6 million, $ 7.6 million and $ 0.7 million, respectively. These assets were determined to have useful lives of 7 , 10 and 10 years, respectively. During the three and nine months ended September 30, 2023, Transcend accounted for $ 3.8 million and $ 6.2 million in revenue, respectively, and $ 0.5 million and $ 1.0 million of net income, respectively, included in the Company’s results. Malvar Engineering Limited On January 10, 2023, the Company acquired 100 % of the equity interests of Malvar Engineering Limited, including its subsidiaries Arkanum Management Limited and Wakefield Acoustics Limited (collectively, "Wakefield"), for $ 4.1 million in cash, which was financed with a draw on the Company’s revolving credit facility, and $ 0.4 million of deferred cash consideration . As additional consideration, the former owners are entitled to earn-out payments based upon specified financial results through July 31, 2023. Based on projections at the acquisition date, the Company estimated the fair value of the earn-out to be $ 0.6 million. As of September 30, 2023, the earnout liability recorded in “Accrued expenses” on the Condensed Consolidated Balance Sheets is $ 0.6 million, representing the fully earned amount to be paid in the fourth quarter of 2023. Wakefield is a producer of industrial engineered noise control solutions, including custom acoustical gen-set packages, ambient air baffles, acoustical louvres, and skid enclosures, primarily serving server farms for data centers, standby and emergency power generation, oil and gas, petrochemical, commercial construction, infrastructure, and general manufacturing industries. This acquisition advances the Company's position within the industrial silencing and noise attenuation market by adding a range of solutions and access to new geographic markets within the Engineered Systems segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including accounts receivable, net of $ 2,467 ) $ 3,240 Property and equipment 635 Intangible - finite life 1,778 Goodwill 4,779 Total assets acquired 10,432 Current liabilities assumed ( 4,860 ) Deferred income tax liability ( 444 ) Net assets acquired $ 5,128 The Company acquired customer lists and tradename intangible assets valued at $ 1.5 million and $ 0.3 million, respectively. These assets were determined to have useful lives of 10 years. During the three and nine months ended September 30, 2023, Wakefield accounted for $ 4.8 million and $ 10.3 million in revenue, respectively, and $ 0.5 million and $ 0.8 million of net income, respectively, included in the Company’s results. DS21 Co., Ltd. On September 19, 2022, the Company acquired 100 % of the equity interests of DS21 Co., Ltd. ("DS21") for $ 9.2 million, including $ 8.9 million in cash, which was financed with a draw on the Company’s revolving credit facility, and deferred cash consideration of $ 0.3 million paid within one year from the date of closing. DS21 is a South Korean-based design and manufacturing firm specializing in innovative water and wastewater treatment solutions. The addition of DS21 advances the Company's leadership position in niche oily water and produced water treatment, demineralization water treatment and ultra-pure water supply applications within the Company's Engineered Systems segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including cash of $ 1,453 and accounts receivable, net of $ 575 ) $ 5,099 Property and equipment 4,112 Intangible - finite life 422 Deferred income taxes 557 Other assets 169 Total assets acquired 10,359 Current liabilities assumed ( 1,008 ) Other liabilities ( 113 ) Net assets acquired $ 9,238 The Company acquired customer lists and tradename intangible assets valued at $ 0.1 million and $ 0.3 million, respectively. These assets were determined to have useful lives of 10 years . Western Air Ducts Limited On June 22, 2022, the Company acquired 100 % of the equity interests of Western Air Ducts Limited ("Western Air Ducts") for $ 10.7 million in cash, which was financed with a draw on the Company’s revolving credit facility, and deferred cash consideration of $ 0.8 million paid one year from the date of closing. Western Air Ducts is a leading European supplier of dust and fume extraction solutions, providing consultation, design, manufacturing, installation, and service. The acquisition diversifies and expands the Company's industrial air product offerings within the Industrial Process Solutions segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including cash of $ 1,557 and accounts receivable, net of $ 936 ) $ 2,711 Property and equipment 188 Intangible - finite life 3,158 Goodwill 7,344 Total assets acquired 13,401 Current liabilities assumed ( 1,127 ) Deferred income tax liability ( 824 ) Net assets acquired $ 11,450 The Company acquired customer lists and tradename intangible assets valued at $ 2.8 million and $ 0.4 million, respectively. These assets were determined to have useful lives of 10 years . During the three and nine months ended September 30, 2022, Western Air Ducts accounted for $ 0.7 million in revenue and $ 0.2 million of net loss included in the Company's results. Compass Water Solutions, Inc. On May 3, 2022, the Company acquired 100 % of the equity interests of Compass Water Solutions, Inc. ("Compass") for $ 9.0 million in cash, which was financed with a draw on the Company’s revolving credit facility, and $ 2.0 million in notes payable to the former owners over two years. As additional consideration, the former owners are entitled to earn-out payments based upon a multiple of specified financial results through April 30, 2023. Based on projections at the acquisition date, the Company estimated the fair value of the earn-out to be $ 1.4 million, which was paid in the third quarter of 2023. Compass is a leading global supplier of membrane-based industrial water and wastewater treatment systems that help customers achieve regulatory compliance of water discharge at the lowest lifecycle cost. The acquisition diversifies and expands the Company's industrial water product offerings within the Engineered Systems segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing . (in thousands) Current assets (including cash of $ 334 and accounts receivable, net of $ 1,254 ) $ 4,796 Property and equipment 101 Intangible - finite life 4,900 Goodwill 4,848 Total assets acquired 14,645 Current liabilities assumed ( 623 ) Deferred income tax liability ( 1,627 ) Net assets acquired $ 12,395 The Company acquired customer lists and tradename intangible assets valued at $ 4.4 million and $ 0.5 million, respectively. These assets were determined to have useful lives of 10 years . During the three and nine months ended September 30, 2022, Compass accounted for $ 1.5 million and $ 2.3 million in revenue, respectively, and $ 0.1 million and $ 0.2 million, respectively, of net loss included in the Company’s results. General Rubber LLC On March 7, 2022, the Company, through the EFM JV, acquired 100 % of the equity interests of General Rubber LLC ("GRC") for $ 19.7 million in cash, which was financed with a combination of a draw on the Company's revolving credit facility and issuance of term debt by the EFM JV. As additional consideration, the former owners of GRC were issued 10 % of the equity interest in the EFM JV, resulting in the Company holding 63 % of the equity in the joint venture. The fair value ascribed to the equity interest of the former owners of GRC was approximately $ 4.1 million. As of September 30, 2023 , there were $ 15.5 million in current assets, $ 27.2 million in long-lived assets, and $ 31.5 million in total liabilities related to the EFM JV included in the Condensed Consolidated Balance Sheets. For the three months and nine months ended September 30, 2023 , the EFM JV accounted for $ 9.9 million and $ 19.3 million, respectively, in revenue included in the Company's results. GRC engineers and manufactures non-metallic expansion joints and flow control products including rubber expansion joints, ducting expansion joints, and industrial pinch and duck bill valves, serving the industrial water and wastewater markets. The acquisition diversifies and expands the EFM JV product offerings within the Engineered Systems segment. The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including cash of $ 137 and accounts receivable, net of $ 2,043 ) $ 4,963 Property and equipment 459 Intangible - finite life 8,380 Goodwill 11,120 Total assets acquired 24,922 Current liabilities assumed ( 714 ) Deferred income tax liability ( 388 ) Net assets acquired $ 23,820 The Company acquired customer lists and tradename intangible assets valued at $ 7.7 million and $ 0.7 million, respectively. These assets were determined to have useful lives of 10 years . During the three and nine months ended September 30, 2022, GRC accounted for $ 3.9 million and $ 8.3 million in revenue, respectively, and $ 0.7 million and $ 1.5 million, respectively, of net income included in the Company’s results. The Company has finalized the valuation of assets acquired and liabilities assumed related to the 2022 acquisitions. The purchase accounting related to the 2023 acquisitions is subject to final adjustment, primarily for the valuation of intangible assets pending final valuation results for such assets and tax balances for the further assessment of the acquiree’s tax positions. These preliminary estimates and assumptions could change significantly during the purchase price measurement period as the Company finalizes the valuation of assets acquired and liabilities assumed. These changes could result in material variances in the Company's future financial results, including variances in the estimated purchase price, fair values recorded and expenses associated with these items. Goodwill recognized represents value the Company expects to be created by combining the various operations of the acquired businesses with the Company’s operations, including the expansion into markets within existing business segments, access to new customers and potential cost savings and synergies. Goodwill related to these acquisitions is not deductible for tax purposes. The following unaudited pro forma financial information represents the Company’s results of operations as if these acquisitions had occurred at the beginning of the fiscal year prior to the acquisition: Three months ended September 30, Nine months ended September 30, (in thousands, except per share data) 2023 2022 2023 2022 Net sales $ 153,443 121,567 $ 404,819 $ 349,803 Net income attributable to CECO Environmental Corp. 3,732 2,477 9,536 10,898 Earnings per share: Basic $ 0.11 $ 0.07 $ 0.28 $ 0.31 Diluted $ 0.11 $ 0.07 $ 0.27 $ 0.31 The pro forma results have been prepared for informational purposes only and include adjustments to amortize acquired intangible assets with finite life, reflect additional interest expense on debt used to fund the acquisition, and to record the income tax consequences of the pro forma adjustments. These pro forma results do not purport to be indicative of the results of operations that would have occurred had the purchase been made as of the beginning of the periods presented or of the results of operations that may occur in the future. |
Business Segment Information
Business Segment Information | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Business Segment Information | 16. Business Segment Information The Company’s operations are organized and reviewed by management along with its solutions or end markets that the segment serves and presented in two reportable segments. The results of the segments are reviewed through the “Income from operations” line on the Condensed Consolidated Statements of Income . The Company’s reportable segments are organized as groups of similar products and services, as described as follows: Engineered Systems segment: The Engineered Systems segment serves the power generation, hydrocarbon processing, water/wastewater treatment, oily water separation and treatment, marine and naval vessels, and midstream oil and gas sectors. The Company addresses the global demand for environmental and equipment protection solutions with its highly engineered platforms including emissions management, fluid bed cyclones, thermal acoustics, separation and filtration, and dampers and expansion joints. Industrial Process Solutions segment: The Industrial Process Solutions segment serves the broad industrial sector with solutions for air pollution and contamination control, fluid handling, and process filtration in applications such as aluminum beverage can production, automobile production, food and beverage processing, semiconductor fabrication, electronics production, steel and aluminum mill processing, wood manufacturing, desalination, and aquaculture markets. The Company assists customers in maintaining clean and safe operations for employees, reducing energy consumption, minimizing waste for customers, and meeting regulatory standards for toxic emissions, fumes, volatile organic compounds and odor elimination through its platforms including duct fabrication and installation, industrial air, and fluid handling. The financial segment information is as follows: Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Net sales (less intra-, inter-segment sales) Engineered Systems segment $ 105,540 $ 65,630 $ 267,516 $ 189,938 Industrial Process Solutions segment 43,850 42,784 123,618 116,287 Total net sales $ 149,390 $ 108,414 $ 391,134 $ 306,225 Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Income from operations Engineered Systems segment $ 15,759 $ 8,991 $ 39,601 $ 24,467 Industrial Process Solutions segment 5,586 5,226 15,769 14,847 Corporate and Other (1) ( 13,492 ) ( 11,444 ) ( 33,453 ) ( 25,591 ) Total income from operations $ 7,853 $ 2,773 $ 21,917 $ 13,723 (1) Includes corporate compensation, professional services, information technology, and other general and administrative corporate expenses. Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Property and equipment additions Engineered Systems segment $ 392 $ 96 $ 1,081 $ 128 Industrial Process Solutions segment 570 330 2,281 743 Corporate and Other 629 508 2,149 1,496 Total property and equipment additions $ 1,591 $ 934 $ 5,511 $ 2,367 Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Depreciation and amortization Engineered Systems segment $ 1,462 $ 1,398 $ 3,948 $ 3,253 Industrial Process Solutions segment 1,109 1,153 3,217 3,212 Corporate and Other 548 390 1,604 1,144 Total depreciation and amortization $ 3,119 $ 2,941 $ 8,769 $ 7,609 (in thousands) September 30, 2023 December 31, 2022 Identifiable assets Engineered Systems segment $ 420,665 $ 332,820 Industrial Process Solutions segment 159,763 150,458 Corporate and Other (2) 19,629 21,443 Total identifiable assets $ 600,057 $ 504,721 (2) Corporate and Other assets consist primarily of cash and income tax related assets. (in thousands) September 30, 2023 December 31, 2022 Goodwill Engineered Systems segment $ 141,174 $ 114,746 Industrial Process Solutions segment 68,651 68,451 Total goodwill $ 209,825 $ 183,197 Intra-segment and Inter-segment Revenues The Company has multiple divisions that sell to each other within segments (intra-segment sales) and between segments (inter-segment sales), as follows: Three months ended September 30, 2023 Less Inter-Segment Sales (in thousands) Total Intra- Industrial Process Solutions Engineered Systems Net Sales to Net sales Engineered Systems segment $ 114,605 $ ( 8,639 ) $ ( 426 ) $ — $ 105,540 Industrial Process Solutions segment 49,264 ( 5,231 ) — ( 183 ) 43,850 Total net sales $ 163,869 $ ( 13,870 ) $ ( 426 ) $ ( 183 ) $ 149,390 Three months ended September 30, 2022 Less Inter-Segment Sales (in thousands) Total Intra- Industrial Process Solutions Engineered Systems Net Sales to Net sales Engineered Systems segment $ 68,738 $ ( 2,904 ) $ ( 204 ) $ — $ 65,630 Industrial Process Solutions segment 44,079 ( 1,126 ) — ( 169 ) 42,784 Total net sales $ 112,817 $ ( 4,030 ) $ ( 204 ) $ ( 169 ) $ 108,414 Nine months ended September 30, 2023 Less Inter-Segment Sales (in thousands) Total Intra- Industrial Process Solutions Engineered Systems Net Sales to Net sales Engineered Systems segment $ 286,575 $ ( 18,173 ) $ ( 886 ) $ — $ 267,516 Industrial Process Solutions segment 132,946 ( 8,871 ) — ( 457 ) 123,618 Total net sales $ 419,521 $ ( 27,044 ) $ ( 886 ) $ ( 457 ) $ 391,134 Nine months ended September 30, 2022 Less Inter-Segment Sales (in thousands) Total Intra- Industrial Process Solutions Engineered Systems Net Sales to Net sales Engineered Systems segment $ 201,092 $ ( 10,693 ) $ ( 461 ) $ — $ 189,938 Industrial Process Solutions segment 121,122 ( 4,468 ) — ( 367 ) 116,287 Total net sales $ 322,214 $ ( 15,161 ) $ ( 461 ) $ ( 367 ) $ 306,225 |
New Financial Accounting Pron_2
New Financial Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Standards Adopted in Fiscal 2023 | Accounting Standards Adopted in Fiscal 2023 On January 1, 2023, the beginning of the Company's fiscal year, the Company adopted Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which addresses how an acquirer should recognize and measure revenue contracts acquired in a business combination. The adoption of ASU 2021-08 did not have a material impact on the Company's Consolidated Financial Statements. |
Accounting Standards to be Adopted | Accounting Standards to be Adopted None. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Receivables [Abstract] | |
Summary of Accounts Receivable | Accounts receivable as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Accounts receivable $ 116,786 $ 87,306 Provision for credit losses ( 4,353 ) ( 4,220 ) Total accounts receivable, net $ 112,433 $ 83,086 Accounts receivable, net as of the beginning of the prior year period, or January 1, 2022, were $ 75.0 million. |
Contract Assets and Liabiliti_2
Contract Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Table Text Block [Abstract] | |
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block] | Contract assets and liabilities as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Costs and estimated earnings in excess of billings on uncompleted contracts $ 64,856 $ 71,016 Billings in excess of costs and estimated earnings on uncompleted contracts 54,209 32,716 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Raw materials $ 27,273 $ 19,774 Work in process 11,001 7,183 Finished goods 2,947 2,436 Obsolescence allowance ( 3,310 ) ( 2,867 ) Total inventories $ 37,911 $ 26,526 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill / Tradename | Goodwill activity for the nine months ended September 30, 2023 and the year ended December 31, 2022 was as follows: (in thousands) Nine months ended September 30, 2023 Year ended December 31, 2022 Goodwill / Tradename Goodwill Tradename Goodwill Tradename Balance at beginning of period $ 183,197 $ 9,508 $ 161,183 $ 9,629 Acquisitions 26,455 — 23,312 — Foreign currency translation 173 6 ( 1,298 ) ( 121 ) Balance at end of period $ 209,825 $ 9,514 $ 183,197 $ 9,508 |
Intangible Assets - Finite Life | Finite life intangible assets as of September 30, 2023 and December 31, 2022 consisted of the following: September 30, 2023 December 31, 2022 (in thousands) Cost Accum. Amort. Cost Accum. Amort. Technology $ 16,517 $ 13,947 $ 14,457 $ 13,729 Customer lists 103,471 61,742 85,719 57,540 Tradenames 14,094 4,655 11,604 3,768 Foreign currency adjustments ( 1,725 ) ( 327 ) ( 1,864 ) ( 372 ) Total intangible assets – finite life $ 132,357 $ 80,017 $ 109,916 $ 74,665 |
Summary of Finite Lived Intangible Assets Activities | Finite life intangible asset activity for the nine months ended September 30, 2023 and 2022 was as follows: Nine months ended September 30, (in thousands) 2023 2022 Intangible assets – finite life, net at beginning of period $ 35,251 $ 25,841 Amortization expense ( 5,306 ) ( 4,939 ) Acquisitions 22,318 16,438 Foreign currency adjustments 77 ( 1,245 ) Intangible assets – finite life, net at end of period $ 52,340 $ 36,095 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Summary of Accrued Expenses | Accrued expenses as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Compensation and related benefits $ 8,764 $ 9,577 Accrued warranty 4,907 3,691 Contract liability 9,186 4,516 Short-term operating lease liability 4,187 3,228 Other 17,110 12,779 Total accrued expenses $ 44,154 $ 33,791 |
Senior Debt (Tables)
Senior Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Debt | Debt as of September 30, 2023 and December 31, 2022 consisted of the following: (in thousands) September 30, 2023 December 31, 2022 Outstanding borrowings under the Credit Facility (as defined below) quarterly principal installments of $ 550 through September 2023, 825 through September 2025 and $ 1,100 thereafter with balance due upon maturity in Term loan $ 39,656 $ 41,309 Revolving credit facility 92,300 61,300 Total outstanding borrowings under the Credit Facility 131,956 102,609 Outstanding borrowings under the joint venture term debt 9,132 10,083 Unamortized debt discount ( 1,089 ) ( 1,488 ) Total outstanding borrowings 139,999 111,204 Less: current portion ( 4,726 ) ( 3,579 ) Total debt, less current portion $ 135,273 $ 107,625 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Number of Shares Outstanding for Calculation of Earnings Per Share | The computational components of basic and diluted earnings per share for the three months ended September 30, 2023 and 2022 are as follows: Three months ended September 30, (in thousands) 2023 2022 Numerator (for basic and diluted earnings per share) Net income attributable to CECO Environmental Corp. $ 3,330 $ 1,943 Denominator Basic weighted-average shares outstanding 34,772 34,456 Common stock equivalents arising from stock options and restricted stock awards 529 415 Diluted weighted-average shares outstanding 35,301 34,871 The computational components of basic and diluted earnings per share for the nine months ended September 30, 2023 and 2022 are as follows: Nine months ended September 30, (in thousands) 2023 2022 Numerator (for basic and diluted earnings per share) Net income attributable to CECO Environmental Corp. $ 9,032 $ 9,122 Denominator Basic weighted-average shares outstanding 34,612 34,791 Common stock equivalents arising from stock options and restricted stock awards 604 244 Diluted weighted-average shares outstanding 35,216 35,035 |
Pension and Employee Benefit _2
Pension and Employee Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Components of Pension and Employee Benefit Expenses | Retirement plan expense is based on valuations performed by plan actuaries as of the beginning of each fiscal year. The components of the pension plan expense consisted of the following: Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Interest cost $ 318 $ 219 $ 955 $ 658 Expected return on plan assets ( 285 ) ( 390 ) ( 856 ) ( 1,170 ) Amortization of net actuarial loss 74 66 223 197 Net periodic benefit cost (gain) $ 107 $ ( 105 ) $ 322 $ ( 315 ) |
Acquisitions and Joint Ventur_2
Acquisitions and Joint Ventures (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
General Rubber LLC [Member] | |
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including cash of $ 137 and accounts receivable, net of $ 2,043 ) $ 4,963 Property and equipment 459 Intangible - finite life 8,380 Goodwill 11,120 Total assets acquired 24,922 Current liabilities assumed ( 714 ) Deferred income tax liability ( 388 ) Net assets acquired $ 23,820 |
Schedule of Unaudited Pro Forma Financial Information | The following unaudited pro forma financial information represents the Company’s results of operations as if these acquisitions had occurred at the beginning of the fiscal year prior to the acquisition: Three months ended September 30, Nine months ended September 30, (in thousands, except per share data) 2023 2022 2023 2022 Net sales $ 153,443 121,567 $ 404,819 $ 349,803 Net income attributable to CECO Environmental Corp. 3,732 2,477 9,536 10,898 Earnings per share: Basic $ 0.11 $ 0.07 $ 0.28 $ 0.31 Diluted $ 0.11 $ 0.07 $ 0.27 $ 0.31 |
Kemco Systems Co Llc [Member] | |
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including accounts receivable, net of $ 2,328 ) $ 8,902 Property and equipment 341 Right-of-use assets from operating leases 1,602 Intangible - finite life 11,610 Goodwill 11,005 Other assets 16 Total assets acquired 33,476 Current liabilities assumed ( 6,853 ) Other liabilities assumed ( 404 ) Net assets acquired $ 26,219 The Company acquired technology, customer lists and tradename intangible assets valued at $ 1.4 million, $ 8.7 million and $ 1.5 million, respectively. These assets were determined to have useful lives of 7 , 10 and 10 years, respectively. |
Compass Water Solutions, Inc [Member] | |
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing . (in thousands) Current assets (including cash of $ 334 and accounts receivable, net of $ 1,254 ) $ 4,796 Property and equipment 101 Intangible - finite life 4,900 Goodwill 4,848 Total assets acquired 14,645 Current liabilities assumed ( 623 ) Deferred income tax liability ( 1,627 ) Net assets acquired $ 12,395 |
Malvar Engineering Limited [Member] | |
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including accounts receivable, net of $ 2,467 ) $ 3,240 Property and equipment 635 Intangible - finite life 1,778 Goodwill 4,779 Total assets acquired 10,432 Current liabilities assumed ( 4,860 ) Deferred income tax liability ( 444 ) Net assets acquired $ 5,128 |
Western Air Ducts Ltd [Member] | |
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including cash of $ 1,557 and accounts receivable, net of $ 936 ) $ 2,711 Property and equipment 188 Intangible - finite life 3,158 Goodwill 7,344 Total assets acquired 13,401 Current liabilities assumed ( 1,127 ) Deferred income tax liability ( 824 ) Net assets acquired $ 11,450 |
Transcend Solution [Member] | |
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including cash of $ 52 and accounts receivable, net of $ 1,493 ) $ 2,614 Property and equipment 1,153 Intangible - finite life 8,930 Goodwill 10,671 Other assets 231 Total assets acquired 23,599 Current liabilities assumed ( 1,203 ) Net assets acquired $ 22,396 |
DS21 Co., Ltd. | |
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of closing. (in thousands) Current assets (including cash of $ 1,453 and accounts receivable, net of $ 575 ) $ 5,099 Property and equipment 4,112 Intangible - finite life 422 Deferred income taxes 557 Other assets 169 Total assets acquired 10,359 Current liabilities assumed ( 1,008 ) Other liabilities ( 113 ) Net assets acquired $ 9,238 |
Business Segment Information (T
Business Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Net Sales and Income from Operation by Business Segment | The financial segment information is as follows: Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Net sales (less intra-, inter-segment sales) Engineered Systems segment $ 105,540 $ 65,630 $ 267,516 $ 189,938 Industrial Process Solutions segment 43,850 42,784 123,618 116,287 Total net sales $ 149,390 $ 108,414 $ 391,134 $ 306,225 Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Income from operations Engineered Systems segment $ 15,759 $ 8,991 $ 39,601 $ 24,467 Industrial Process Solutions segment 5,586 5,226 15,769 14,847 Corporate and Other (1) ( 13,492 ) ( 11,444 ) ( 33,453 ) ( 25,591 ) Total income from operations $ 7,853 $ 2,773 $ 21,917 $ 13,723 Includes corporate compensation, professional services, information technology, and other general and administrative corporate expenses. |
Property and Equipment Additions, Depreciation and Amortization and Identifiable Assets | Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Property and equipment additions Engineered Systems segment $ 392 $ 96 $ 1,081 $ 128 Industrial Process Solutions segment 570 330 2,281 743 Corporate and Other 629 508 2,149 1,496 Total property and equipment additions $ 1,591 $ 934 $ 5,511 $ 2,367 Three months ended September 30, Nine months ended September 30, (in thousands) 2023 2022 2023 2022 Depreciation and amortization Engineered Systems segment $ 1,462 $ 1,398 $ 3,948 $ 3,253 Industrial Process Solutions segment 1,109 1,153 3,217 3,212 Corporate and Other 548 390 1,604 1,144 Total depreciation and amortization $ 3,119 $ 2,941 $ 8,769 $ 7,609 (in thousands) September 30, 2023 December 31, 2022 Identifiable assets Engineered Systems segment $ 420,665 $ 332,820 Industrial Process Solutions segment 159,763 150,458 Corporate and Other (2) 19,629 21,443 Total identifiable assets $ 600,057 $ 504,721 (2) Corporate and Other assets consist primarily of cash and income tax related assets. |
Goodwill | (in thousands) September 30, 2023 December 31, 2022 Goodwill Engineered Systems segment $ 141,174 $ 114,746 Industrial Process Solutions segment 68,651 68,451 Total goodwill $ 209,825 $ 183,197 |
Intra-Segment and Inter-Segment Revenues | The Company has multiple divisions that sell to each other within segments (intra-segment sales) and between segments (inter-segment sales), as follows: Three months ended September 30, 2023 Less Inter-Segment Sales (in thousands) Total Intra- Industrial Process Solutions Engineered Systems Net Sales to Net sales Engineered Systems segment $ 114,605 $ ( 8,639 ) $ ( 426 ) $ — $ 105,540 Industrial Process Solutions segment 49,264 ( 5,231 ) — ( 183 ) 43,850 Total net sales $ 163,869 $ ( 13,870 ) $ ( 426 ) $ ( 183 ) $ 149,390 Three months ended September 30, 2022 Less Inter-Segment Sales (in thousands) Total Intra- Industrial Process Solutions Engineered Systems Net Sales to Net sales Engineered Systems segment $ 68,738 $ ( 2,904 ) $ ( 204 ) $ — $ 65,630 Industrial Process Solutions segment 44,079 ( 1,126 ) — ( 169 ) 42,784 Total net sales $ 112,817 $ ( 4,030 ) $ ( 204 ) $ ( 169 ) $ 108,414 Nine months ended September 30, 2023 Less Inter-Segment Sales (in thousands) Total Intra- Industrial Process Solutions Engineered Systems Net Sales to Net sales Engineered Systems segment $ 286,575 $ ( 18,173 ) $ ( 886 ) $ — $ 267,516 Industrial Process Solutions segment 132,946 ( 8,871 ) — ( 457 ) 123,618 Total net sales $ 419,521 $ ( 27,044 ) $ ( 886 ) $ ( 457 ) $ 391,134 Nine months ended September 30, 2022 Less Inter-Segment Sales (in thousands) Total Intra- Industrial Process Solutions Engineered Systems Net Sales to Net sales Engineered Systems segment $ 201,092 $ ( 10,693 ) $ ( 461 ) $ — $ 189,938 Industrial Process Solutions segment 121,122 ( 4,468 ) — ( 367 ) 116,287 Total net sales $ 322,214 $ ( 15,161 ) $ ( 461 ) $ ( 367 ) $ 306,225 |
Accounts Receivable - Summary o
Accounts Receivable - Summary of Accounts Receivable (Detail) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Jan. 01, 2022 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Accounts receivable | $ 116,786 | $ 87,306 | |
Provision for credit losses | (4,353) | (4,220) | |
Total accounts receivable, net | $ 112,433 | $ 83,086 | $ 75,000 |
Accounts Receivable - Additiona
Accounts Receivable - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Jan. 01, 2022 | |
Receivables [Abstract] | ||||||
Amount billed but not received under retainage provisions in contracts | $ 1,800 | $ 1,800 | $ 1,600 | |||
Accounts receivable, net | 112,433 | 112,433 | $ 83,086 | $ 75,000 | ||
Provision for credit losses | $ 200 | $ 400 | $ 200 | $ 800 |
Contract Assets and Liabiliti_3
Contract Assets and Liabilities - Summary of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Contract with Customer, Asset, after Allowance for Credit Loss, Current [Abstract] | |||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ 64,856 | $ 71,016 | $ 51,400 |
Billings in excess of costs and estimated earnings on uncompleted contracts | $ 54,209 | $ 32,716 | $ 28,900 |
Contract Assets and Liabiliti_4
Contract Assets and Liabilities (Additional Information) (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Contract with Customer, Asset, after Allowance for Credit Loss, Current [Abstract] | |||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ 64,856 | $ 71,016 | $ 51,400 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 54,209 | 32,716 | 28,900 |
Accrued expenses | $ 9,200 | $ 4,500 | $ 4,400 |
Contract Liabilities Recognized As Revenue | 75% |
Inventories - Summary of Invent
Inventories - Summary of Inventories (Detail) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory, Net [Abstract] | ||
Raw materials | $ 27,273 | $ 19,774 |
Work in process | 11,001 | 7,183 |
Finished goods | 2,947 | 2,436 |
Obsolescence allowance | (3,310) | (2,867) |
Total inventories | $ 37,911 | $ 26,526 |
Inventories - Additional Inform
Inventories - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | ||||
Amounts credited to the allowance for obsolete inventory | $ 0 | $ 0 | $ 0.5 | $ 0.1 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill / Tradename (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill, beginning balance | $ 183,197 | $ 161,183 |
Goodwill, Acquisitions | 26,455 | 23,312 |
Goodwill, foreign currency translation | 173 | (1,298) |
Goodwill, ending balance | 209,825 | 183,197 |
Tradename, beginning balance | 9,508 | 9,629 |
Tradename, Acquisitions | 0 | 0 |
Tradename, foreign currency translation | 6 | (121) |
Tradename, ending balance | $ 9,514 | $ 9,508 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets - Finite Life (Detail) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 132,357 | $ 109,916 |
Accumulated Amortization | 80,017 | 74,665 |
Technology [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 16,517 | 14,457 |
Accumulated Amortization | 13,947 | 13,729 |
Customer Lists [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 103,471 | 85,719 |
Accumulated Amortization | 61,742 | 57,540 |
Tradename [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 14,094 | 11,604 |
Accumulated Amortization | 4,655 | 3,768 |
Foreign Currency Adjustments [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | (1,725) | (1,864) |
Accumulated Amortization | $ (327) | $ (372) |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Finite Lived Intangible Assets Amortization Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Intangible assets – finite life, net at beginning of period | $ 35,251 | $ 25,841 | ||
Amortization expense | $ (1,900) | $ (2,000) | (5,306) | (4,939) |
Acquisition | 22,318 | 16,438 | ||
Foreign currency adjustments | 77 | (1,245) | ||
Intangible assets – finite life, net at end of period | $ 52,340 | $ 36,095 | $ 52,340 | $ 36,095 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule Of Goodwill And Other Intangible Assets [Line Items] | ||||
Amortization expense of finite life intangible assets | $ 1,900 | $ 2,000 | $ 5,306 | $ 4,939 |
Amortization expense of finite life intangibles for 2023 | 2,100 | 2,100 | ||
Amortization expense of finite life intangibles for 2024 | 8,600 | 8,600 | ||
Amortization expense of finite life intangibles for 2025 | 7,600 | 7,600 | ||
Amortization expense of finite life intangibles for 2026 | 6,200 | 6,200 | ||
Amortization expense of finite life intangibles for 2027 | $ 6,000 | $ 6,000 |
Accrued Expenses - Summary of A
Accrued Expenses - Summary of Accrued Expenses (Detail) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Compensation and related benefits | $ 8,764 | $ 9,577 |
Accrued warranty | 4,907 | 3,691 |
Contract liability | 9,186 | 4,516 |
Short-term operating lease liability | 4,187 | 3,228 |
Other | 17,110 | 12,779 |
Total accrued expenses | $ 44,154 | $ 33,791 |
Senior Debt - Summary of Debt (
Senior Debt - Summary of Debt (Detail) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Total outstanding borrowings under the Credit Facility | $ 139,999 | $ 111,204 |
Less: current portion | (4,726) | (3,579) |
Debt, less current portion | 135,273 | 107,625 |
Term Loan [Member] | ||
Debt Instrument [Line Items] | ||
Total outstanding borrowings under the Credit Facility | 39,656 | 41,309 |
Revolving Credit Loan [Member] | ||
Debt Instrument [Line Items] | ||
Revolving credit facility | 92,300 | 61,300 |
Senior Debt [Member] | ||
Debt Instrument [Line Items] | ||
Total outstanding borrowings under the Credit Facility | 131,956 | 102,609 |
Line Of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Outstanding borrowing under the joint venture term debt | 9,132 | 10,083 |
Term Debt [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized debt discount | $ (1,089) | $ (1,488) |
Senior Debt - Summary of Debt_2
Senior Debt - Summary of Debt (Parenthetical) (Detail) - Term Loan [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Debt Instrument [Line Items] | |
Frequency of periodic payment | quarterly |
Debt Instrument, Redemption, Through September 2025 [Member] | |
Debt Instrument [Line Items] | |
Outstanding borrowings, quarterly principal installments payable amount | $ 825 |
Debt Instrument, Redemption, Through June 2023 [Member] | |
Debt Instrument [Line Items] | |
Outstanding borrowings, quarterly principal installments payable amount | 550 |
Debt Instrument, Redemption, Thereafter [Member] | |
Debt Instrument [Line Items] | |
Outstanding borrowings, quarterly principal installments payable amount | $ 1,100 |
Senior Debt - Additional Inform
Senior Debt - Additional Information (Detail) - USD ($) $ in Millions | 9 Months Ended | |||
Sep. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 07, 2022 | |
Line Of Credit Facility [Line Items] | ||||
Credit facility principal payments 2023 | $ 1.1 | |||
Credit facility principal payments 2024 | 4.9 | |||
Credit facility principal payments 2025 | 5.2 | |||
Credit facility principal payments 2026 | 126 | |||
Credit facility principal payments 2027 | $ 3.9 | |||
Weighted average interest rate on outstanding borrowings | 8.04% | 6.75% | ||
Maximum consolidated leverage ratio | 4% | 3.50% | ||
EFM JV [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Weighted average interest rate on outstanding borrowings | 8.70% | 6.60% | ||
Credit Agreement [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Unused credit availability under credit facility | $ 26.7 | $ 59.8 | ||
Credit Agreement [Member] | EFM JV [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Secured Debt | $ 11 | |||
Federal Funds Rate [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |||
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.11448% | |||
Minimum [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Maximum consolidated leverage ratio | 1.75% | |||
Minimum [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Credit Agreement [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.11% | |||
Minimum [Member] | Base Rate [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |||
Maximum [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Maximum consolidated leverage ratio | 2.75% | |||
Maximum [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Credit Agreement [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.43% | |||
Maximum [Member] | Base Rate [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 2.75% | |||
Letters of Credit [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Aggregate principal amount outstanding under the credit facilities | $ 21 | 18.9 | ||
Letters of Credit [Member] | EFM JV [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Aggregate principal amount outstanding under the credit facilities | 9.1 | 10 | ||
Bank Guarantees [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Bank guarantee issuance under bilateral lines and collateral | $ 80 | |||
Bank guarantee agreement outstanding amount | 41.4 | 30.4 | ||
Bank Guarantees [Member] | Euro Denominated Bank Guarantee [Member] | ||||
Line Of Credit Facility [Line Items] | ||||
Bank guarantee agreement outstanding amount | $ 2 | $ 0.6 |
Earnings per Share - Number of
Earnings per Share - Number of Shares Outstanding for Calculation of Earnings Per Share (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Net loss attributable to CECO Environmental Corp. | $ 3,330 | $ 1,943 | $ 9,032 | $ 9,122 |
Denominator | ||||
Basic weighted-average shares outstanding | 34,771,742 | 34,455,657 | 34,612,163 | 34,791,129 |
Common stock equivalents arising from stock options and restricted stock awards | 529,000 | 415,000 | 604,000 | 244,000 |
Diluted weighted-average shares outstanding | 35,301,429 | 34,871,313 | 35,215,843 | 35,035,041 |
Earnings per Share - Additional
Earnings per Share - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | May 10, 2022 | |
Earnings And Dividends Per Share [Abstract] | ||||||
Anti-dilutive options and restricted stock units outstanding | 0 | 1,200,000 | 700,000 | 1,700,000 | ||
Purchase of outstanding shares of common stock | $ 20,000 | |||||
Repurchase of common stock (in shares) | 0 | 256,000 | 0 | 981,000 | ||
Repurchase of common stock | $ 0 | $ 2,193 | $ 4,324 | $ 0 | $ 6,500 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Recognized share-based compensation awards | $ 1.2 | $ 1.1 | $ 3.1 | $ 2.9 |
Non-Employee Director [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Cash received from employee stock option exercised | $ 0.3 | $ 1.2 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 25,000 | 101,000 | ||
Option exercised, intrinsic value | $ 0.1 | $ 0 | $ 0.1 | $ 0 |
Restricted Stock Units [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of restricted stock awards granted | 345,000 | 68,000 | 733,000 | 755,000 |
Pension and Employee Benefit _3
Pension and Employee Benefit Plans - Components of Pension and Employee Benefit Expenses (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pension Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Net periodic benefit cost (gain) | $ 107 | $ (105) | $ 322 | $ (315) |
Health Care Plan [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Interest cost | 318 | 219 | 955 | 658 |
Expected return on plan assets | (285) | (390) | (856) | (1,170) |
Amortization of net actuarial loss | $ 74 | $ 66 | $ 223 | $ 197 |
Pension and Employee Benefit _4
Pension and Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |||
Defined benefit plan contributions | $ 0 | $ 0 | |
Unfunded liability plans | $ 5.8 | $ 5.5 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income Taxes [Line Items] | |||||
Liability for uncertain tax positions | $ 100 | $ 100 | $ 100 | ||
Income tax expense | $ 585 | $ 314 | $ 1,577 | $ 3,287 | |
Effective income tax rate | 13.60% | 12.70% | 13.40% | 25.30% | |
Foreign Subsidiaries [Member] | |||||
Income Taxes [Line Items] | |||||
Deferred income taxes on undistributed earnings | $ 800 | $ 1,300 | |||
Federal Authorities [Member] | |||||
Income Taxes [Line Items] | |||||
Open tax years | 2018 | ||||
State and Foreign Authorities [Member] | |||||
Income Taxes [Line Items] | |||||
Open tax years | 2017 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Fair Value Of Financial Instruments [Line Items] | ||
Cash and cash equivalents | $ 47,583 | $ 45,522 |
Cash held outside United States, principally in Netherlands, United Kingdom, China, and Canada | 37,000 | 31,700 |
Credit Facility [Member] | ||
Fair Value Of Financial Instruments [Line Items] | ||
Fair value of debt issued | $ 141,100 | $ 112,700 |
Commitments and Contingencies_2
Commitments and Contingencies - Legal Matters - Additional Information (Detail) | 9 Months Ended | |
Sep. 30, 2023 USD ($) | Dec. 31, 2022 Case | |
Commitments and Contingencies Disclosure [Abstract] | ||
Cumulative settlement payments for cases involving asbestos-related claims | $ 6,400,000 | |
Average cost per settled claim excluding legal fees | $ 37,000 | |
Number of claims pending | Case | 247 | |
Assessment regarding Loss contingency impact Description | not aware of any pending claims or assessments, other than as described above, which may have a material adverse impact on its liquidity, financial position, results of operations, or cash flows. |
Acquisitions and Joint Ventur_3
Acquisitions and Joint Ventures - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||||||
Mar. 07, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Aug. 23, 2023 | Mar. 31, 2023 | Jan. 10, 2023 | Dec. 31, 2022 | Sep. 19, 2022 | Jun. 22, 2022 | May 03, 2022 | |
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Equity, Fair Value Adjustment | $ (901) | ||||||||||||
Assets Current | $ 285,385 | $ 285,385 | $ 240,658 | ||||||||||
Liabilities | 369,915 | 369,915 | $ 286,573 | ||||||||||
Pre tax loss | $ 4,297 | $ 2,480 | $ 11,749 | $ 12,988 | |||||||||
Revolving Credit Facility [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Deferred cash consideration | $ 2,400 | ||||||||||||
Customer Lists [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Intangible assets, Useful Life | 10 years | 10 years | |||||||||||
Net assets acquired | $ 7,600 | $ 7,600 | |||||||||||
Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Intangible assets, Useful Life | 10 years | 10 years | |||||||||||
Net assets acquired | $ 700 | $ 700 | |||||||||||
Technology [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Intangible assets, Useful Life | 7 years | 7 years | |||||||||||
Net assets acquired | $ 600 | $ 600 | |||||||||||
Malvar Engineering Limited [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquisition of equity | 100% | ||||||||||||
Contingent consideration | $ 4,100 | ||||||||||||
Earn out, Fair value | 600 | ||||||||||||
Accounts payable and accrued expenses | 600 | 600 | |||||||||||
Deferred cash consideration | 400 | ||||||||||||
Net revenue | 500 | 800 | |||||||||||
Net assets acquired | $ 5,128 | ||||||||||||
Revenues | 4,800 | 10,300 | |||||||||||
Malvar Engineering Limited [Member] | Customer Lists [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | 1,500 | 1,500 | |||||||||||
Malvar Engineering Limited [Member] | Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 300 | $ 300 | |||||||||||
Malvar Engineering Limited [Member] | Customer Lists and Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Intangible assets, Useful Life | 10 years | 10 years | |||||||||||
Kemco Systems Co Llc [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquisition of equity | 100% | ||||||||||||
Contingent consideration | $ 24,000 | ||||||||||||
additional consideration | 4,000 | ||||||||||||
Earn out, Fair value | 2,200 | ||||||||||||
Accounts payable and accrued expenses | $ 2,200 | $ 2,200 | |||||||||||
Net revenue | 500 | ||||||||||||
Net assets acquired | $ 26,219 | ||||||||||||
Revenues | 3,600 | ||||||||||||
Kemco Systems Co Llc [Member] | Customer Lists [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 8,700 | $ 8,700 | |||||||||||
Intangible assets, Useful Life | 10 years | 10 years | |||||||||||
Kemco Systems Co Llc [Member] | Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 1,500 | $ 1,500 | |||||||||||
Intangible assets, Useful Life | 10 years | 10 years | |||||||||||
Kemco Systems Co Llc [Member] | Technology [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 1,400 | $ 1,400 | |||||||||||
Intangible assets, Useful Life | 7 years | 7 years | |||||||||||
Transcend Solution [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquisition of equity | 100% | ||||||||||||
Contingent consideration | $ 20,000 | ||||||||||||
Holdback Payble | 400 | ||||||||||||
Notes Payable | 2,000 | ||||||||||||
Deferred cash consideration | 22,400 | ||||||||||||
Net revenue | $ 500 | $ 1,000 | |||||||||||
Net assets acquired | $ 22,396 | ||||||||||||
Revenues | 3,800 | 6,200 | |||||||||||
General Rubber LLC [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Gain (Loss) on Sales of Loans, Net | 153,443 | 121,567 | 404,819 | 349,803 | |||||||||
Net revenue | 700 | 1,500 | |||||||||||
Net assets acquired | $ 23,820 | ||||||||||||
Revenues | 3,900 | 8,300 | |||||||||||
General Rubber LLC [Member] | Other Non Investees [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Percentage of equity method investment in joint venture | 63% | ||||||||||||
General Rubber LLC [Member] | Customer Lists [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | 7,700 | 7,700 | |||||||||||
General Rubber LLC [Member] | Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 700 | $ 700 | |||||||||||
General Rubber LLC [Member] | Customer Lists and Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Intangible assets, Useful Life | 10 years | 10 years | |||||||||||
Compass Water Solutions, Inc [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquisition of equity | 100% | ||||||||||||
Contingent consideration | $ 9,000 | ||||||||||||
Notes Payable | 2,000 | ||||||||||||
Earn out, Fair value | 1,400 | ||||||||||||
Net revenue | 100 | 200 | |||||||||||
Net assets acquired | $ 12,395 | ||||||||||||
Revenues | 1,500 | 2,300 | |||||||||||
Compass Water Solutions, Inc [Member] | Customer Lists [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 4,400 | $ 4,400 | |||||||||||
Compass Water Solutions, Inc [Member] | Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 500 | $ 500 | |||||||||||
Compass Water Solutions, Inc [Member] | Customer Lists and Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Intangible assets, Useful Life | 10 years | 10 years | |||||||||||
Western Air Ducts Ltd [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquisition of equity | 100% | ||||||||||||
Contingent consideration | $ 10,700 | ||||||||||||
Deferred cash consideration | 800 | ||||||||||||
Net revenue | 200 | 200 | |||||||||||
Net assets acquired | $ 11,450 | ||||||||||||
Revenues | $ 700 | $ 700 | |||||||||||
Western Air Ducts Ltd [Member] | Customer Lists [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 2,800 | $ 2,800 | |||||||||||
Western Air Ducts Ltd [Member] | Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 400 | $ 400 | |||||||||||
Western Air Ducts Ltd [Member] | Customer Lists and Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Intangible assets, Useful Life | 10 years | 10 years | |||||||||||
DS21 Co., Ltd. | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquisition of equity | 100% | ||||||||||||
Contingent consideration | $ 8,900 | ||||||||||||
Deferred cash consideration | 9,200 | ||||||||||||
Net assets acquired | 9,238 | ||||||||||||
DS21 Co., Ltd. | Revolving Credit Facility [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Deferred cash consideration | $ 300 | ||||||||||||
DS21 Co., Ltd. | Customer Lists [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 100 | $ 100 | |||||||||||
DS21 Co., Ltd. | Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquired intangible assets | $ 300 | $ 300 | |||||||||||
DS21 Co., Ltd. | Customer Lists and Tradename [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Intangible assets, Useful Life | 10 years | 10 years | |||||||||||
Joint Venture Agreement [Member] | |||||||||||||
Business Acquisition Contingent Consideration [Line Items] | |||||||||||||
Acquisition of equity | 100% | ||||||||||||
Contingent consideration | $ 19,700 | ||||||||||||
Fair value | $ 4,100 | ||||||||||||
Percentage of equity hold in joint venture | 10% | ||||||||||||
Assets Current | $ 15,500 | $ 15,500 | |||||||||||
Noncurrent Assets | 27,200 | 27,200 | |||||||||||
Liabilities | 31,500 | 31,500 | |||||||||||
Revenues | $ 9,900 | $ 19,300 |
Acquisitions and Joint Ventur_4
Acquisitions and Joint Ventures - Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands | Sep. 30, 2023 | Aug. 23, 2023 | Mar. 31, 2023 | Jan. 10, 2023 | Dec. 31, 2022 | Sep. 19, 2022 | Jun. 22, 2022 | May 03, 2022 | Mar. 07, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | ||||||||||
Right-of-use assets from operating leases | $ 13,849 | $ 11,373 | ||||||||
Goodwill | $ 209,825 | $ 183,197 | $ 161,183 | |||||||
General Rubber LLC [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Current assets | $ 4,963 | |||||||||
Property and equipment | 459 | |||||||||
Intangible - finite life | 8,380 | |||||||||
Goodwill | 11,120 | |||||||||
Total assets acquired | 24,922 | |||||||||
Current liabilities assumed | (714) | |||||||||
Deferred income tax liability | (388) | |||||||||
Net assets acquired | $ 23,820 | |||||||||
Kemco Systems Co Llc [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Current assets | $ 8,902 | |||||||||
Property and equipment | 341 | |||||||||
Right-of-use assets from operating leases | 1,602 | |||||||||
Intangible - finite life | 11,610 | |||||||||
Goodwill | 11,005 | |||||||||
Other Assets | 16 | |||||||||
Total assets acquired | 33,476 | |||||||||
Current liabilities assumed | (6,853) | |||||||||
Other liabilities Assumed | (404) | |||||||||
Net assets acquired | $ 26,219 | |||||||||
Compass Water Solutions, Inc [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Current assets | $ 4,796 | |||||||||
Property and equipment | 101 | |||||||||
Intangible - finite life | 4,900 | |||||||||
Goodwill | 4,848 | |||||||||
Total assets acquired | 14,645 | |||||||||
Current liabilities assumed | (623) | |||||||||
Deferred income tax liability | (1,627) | |||||||||
Net assets acquired | $ 12,395 | |||||||||
Western Air Ducts Ltd [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Current assets | $ 2,711 | |||||||||
Property and equipment | 188 | |||||||||
Intangible - finite life | 3,158 | |||||||||
Goodwill | 7,344 | |||||||||
Total assets acquired | 13,401 | |||||||||
Current liabilities assumed | (1,127) | |||||||||
Deferred income tax liability | (824) | |||||||||
Net assets acquired | $ 11,450 | |||||||||
Transcend Solution [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Current assets | $ 2,614 | |||||||||
Property and equipment | 1,153 | |||||||||
Intangible - finite life | 8,930 | |||||||||
Goodwill | 10,671 | |||||||||
Other Assets | 231 | |||||||||
Total assets acquired | 23,599 | |||||||||
Current liabilities assumed | (1,203) | |||||||||
Net assets acquired | $ 22,396 | |||||||||
DS21 Co., Ltd. | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Current assets | $ 5,099 | |||||||||
Property and equipment | 4,112 | |||||||||
Intangible - finite life | 422 | |||||||||
Deferred income taxes | 557 | |||||||||
Other Assets | 169 | |||||||||
Total assets acquired | 10,359 | |||||||||
Current liabilities assumed | (1,008) | |||||||||
Other liabilities Assumed | (113) | |||||||||
Net assets acquired | $ 9,238 | |||||||||
Malvar Engineering Limited [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Current assets | $ 3,240 | |||||||||
Property and equipment | 635 | |||||||||
Intangible - finite life | 1,778 | |||||||||
Goodwill | 4,779 | |||||||||
Total assets acquired | 10,432 | |||||||||
Current liabilities assumed | (4,860) | |||||||||
Deferred income tax liability | (444) | |||||||||
Net assets acquired | $ 5,128 |
Acquisitions and Joint Ventur_5
Acquisitions and Joint Ventures - Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed (Parenthetical) (Detail) - USD ($) $ in Thousands | 9 Months Ended | ||||||||
Aug. 23, 2023 | Mar. 31, 2023 | Jan. 10, 2023 | Sep. 19, 2022 | Jun. 22, 2022 | May 03, 2022 | Mar. 07, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | |||||||||
Accounts Receivable, Net Current Assets | $ 25,961 | $ 15,772 | |||||||
Kemco Systems Co Llc [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Accounts Receivable, Net Current Assets | $ 2,328 | ||||||||
Malvar Engineering Limited [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Accounts Receivable, Net Current Assets | $ 2,467 | ||||||||
General Rubber LLC [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash, Current assets | $ 137 | ||||||||
Accounts Receivable, Net Current Assets | $ 2,043 | ||||||||
Transcend Solution [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash, Current assets | $ 52 | ||||||||
Accounts Receivable, Net Current Assets | $ 1,493 | ||||||||
Compass Water Solutions, Inc [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash, Current assets | $ 334 | ||||||||
Accounts Receivable, Net Current Assets | $ 1,254 | ||||||||
Western Air Ducts Ltd [Member] | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash, Current assets | $ 1,557 | ||||||||
Accounts Receivable, Net Current Assets | $ 936 | ||||||||
DS21 Co., Ltd. | |||||||||
Business Acquisition [Line Items] | |||||||||
Cash, Current assets | $ 1,453 | ||||||||
Accounts Receivable, Net Current Assets | $ 575 |
Acquisitions and Joint Ventur_6
Acquisitions and Joint Ventures - Schedule of Unaudited Pro Forma Financial Information (Details) - General Rubber LLC [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Net sales | $ 153,443 | $ 121,567 | $ 404,819 | $ 349,803 |
Net income attributable to CECO Environmental Corp. | $ 3,732 | $ 2,477 | $ 9,536 | $ 10,898 |
Earnings per share: | ||||
Basic | $ 0.11 | $ 0.07 | $ 0.28 | $ 0.31 |
Diluted | $ 0.11 | $ 0.07 | $ 0.27 | $ 0.31 |
Business Segment Information -
Business Segment Information - Net Sales and Income from Operation by Business Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | ||
Segment Reporting Information [Line Items] | |||||
Net sales | $ 149,390 | $ 108,414 | $ 391,134 | $ 306,225 | |
Income from operations | 7,853 | 2,773 | 21,917 | 13,723 | |
Engineered Systems Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 105,540 | 65,630 | 267,516 | 189,938 | |
Income from operations | 15,759 | 8,991 | 39,601 | 24,467 | |
Industrial Process Solutions Segment [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 43,850 | 42,784 | 123,618 | 116,287 | |
Income from operations | 5,586 | 5,226 | 15,769 | 14,847 | |
Corporate and Other [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Income from operations | [1] | $ (13,492) | $ (11,444) | $ (33,453) | $ (25,591) |
[1] Includes corporate compensation, professional services, information technology, and other general and administrative corporate expenses. |
Business Segment Information _2
Business Segment Information - Property and Equipment Additions, Depreciation and Amortization and Identifiable Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | ||
Segment Reporting Information [Line Items] | ||||||
Property and equipment additions | $ 1,591 | $ 934 | $ 5,511 | $ 2,367 | ||
Depreciation and amortization | 3,119 | 2,941 | 8,769 | 7,609 | ||
Identifiable assets | 600,057 | 600,057 | $ 504,721 | |||
Engineered Systems Segment [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Property and equipment additions | 392 | 96 | 1,081 | 128 | ||
Depreciation and amortization | 1,462 | 1,398 | 3,948 | 3,253 | ||
Identifiable assets | 420,665 | 420,665 | 332,820 | |||
Industrial Process Solutions Segment [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Property and equipment additions | 570 | 330 | 2,281 | 743 | ||
Depreciation and amortization | 1,109 | 1,153 | 3,217 | 3,212 | ||
Identifiable assets | 159,763 | 159,763 | 150,458 | |||
Corporate and Other [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Property and equipment additions | 629 | 508 | 2,149 | 1,496 | ||
Depreciation and amortization | 548 | $ 390 | 1,604 | $ 1,144 | ||
Identifiable assets | [1] | $ 19,629 | $ 19,629 | $ 21,443 | ||
[1] Corporate and Other assets consist primarily of cash and income tax related assets. |
Business Segment Information _3
Business Segment Information - Goodwill (Detail) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 |
Segment Reporting Information [Line Items] | |||
Goodwill | $ 209,825 | $ 183,197 | $ 161,183 |
Engineered Systems Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Goodwill | 141,174 | 114,746 | |
Industrial Process Solutions Segment [Member] | |||
Segment Reporting Information [Line Items] | |||
Goodwill | $ 68,651 | $ 68,451 |
Business Segment Information _4
Business Segment Information - Intra-Segment and Inter-Segment Revenues (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 149,390 | $ 108,414 | $ 391,134 | $ 306,225 |
Engineered Systems Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 105,540 | 65,630 | 267,516 | 189,938 |
Industrial Process Solutions Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 43,850 | 42,784 | 123,618 | 116,287 |
Operating Segments [Member] | Intra-Segment Sales [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (13,870) | (4,030) | (27,044) | (15,161) |
Operating Segments [Member] | Reportable Subsegments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 163,869 | 112,817 | 419,521 | 322,214 |
Operating Segments [Member] | Engineered Systems Segment [Member] | Intra-Segment Sales [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (8,639) | (2,904) | (18,173) | (10,693) |
Operating Segments [Member] | Engineered Systems Segment [Member] | Reportable Subsegments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 114,605 | 68,738 | 286,575 | 201,092 |
Operating Segments [Member] | Industrial Process Solutions Segment [Member] | Intra-Segment Sales [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (5,231) | (1,126) | (8,871) | (4,468) |
Operating Segments [Member] | Industrial Process Solutions Segment [Member] | Reportable Subsegments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 49,264 | 44,079 | 132,946 | 121,122 |
Inter-Segment Elimination [Member] | Engineered Systems Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | (183) | (169) | (457) | (367) |
Inter-Segment Elimination [Member] | Industrial Process Solutions Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ (426) | $ (204) | $ (886) | $ (461) |