CECE - Earnings call transcript Q3 2020 | CECO Environmental Corp.

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Operator

Good morning and welcome to the CECO Environmental Third Quarter 2020 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Matt Eckl, Chief Financial Officer of CECO Environmental. Please go ahead.

Matt Eckl

Thank you for joining us on the CECO Environmental third quarter 2020 conference call.

On the call today is; Todd Gleason, Chief Executive Officer; and myself Matt Eckl, Chief Financial Officer.

like to that help I'd a have begin, presentation slide guide we to we note provided Before our discussion. be at will on call webcast our with The earnings our website cecoenviro.com. along presentation accessed The presentation the the Relations section website. through materials of Investor be can like regarding forward-looking to statements. investors caution also I'd Any in that today's are historical based on statements are forward-looking made facts statements. presentation not Such number of a are subject statements are to based on and certain uncertainties. estimates and expectations and risks the materially vary from expressed forward-looking may statements. by results future Actual or those implied the read Form to We described year in December on you encourage filings SEC risks XX-K ended our the for XX, XXXX. the by that new events or any extent of Except as make laws, to revise to information future statements forward-looking whether required of we we obligation undertake result no the publicly otherwise. here securities or update today applicable a include Today's to presentation financial certain measures. also references will non-GAAP We press today's in deck. numbers reconcile release supplemental and back as of comparable the tables non-GAAP the slide the the as in GAAP well over with to And the that Todd. I'll turn call

Todd Gleason

and good Thanks joining morning. today. you Matt We appreciate us

we to healthy and focus pandemic, employees, of on we well. hope you and navigate as continue are customers all health of our safe safety COVID the through As communities. and We the

Please our a employees slide in and external for of turn the It has I've X. had been July. early Let's into since I get engage to busy many with materials. time informative CECO and to me joined the opportunity constituents.

I still see some opportunities. questions someone new the what are CECO updates lot as on asking of evaluating Here and observations and to relatively a

the like many a have delve impact. in more financials minute. We dramatic COVID But detail market seen into markets in we related the will pause from and companies, a

markets and pausing XXX. projects and orders sudden to XXXX acknowledge have and We in It refining. spending XXXX would our and would us I've recover, down by will but on later oil in But challenging customers the we confident because financial as year to like talent many pandemic the we or the decline various at regularly market be market crisis that this gas from COVID. touch events XX% is monitoring position to few over of slowing reminds that the on of customer We impact capital slide, of regardless a still good CECO. comments remain too. the overall, estimate energized rebound very are such in we been information. these of a certain tremendous the highlighted as markets attributable I are steadily materials. We continue little of

are employees the for XXX-plus strength engaged to want engineers this of XX% and our application our success workforce. and approximately Our which focused drive our core specialists At and comprise is customers. of

the customers' water is passion and at they In They expertise and are short, solution heart is core the minds have their and solving emissions team engineering a of Our our CECO's for CECO. of issues internally. providers. value

have been markets some to There We foundation introducing a many will focus items. for core heightened that points new arrival. driving advantage new this my place of and section these or areas continue we was slide, the we growth partnerships. and in The drive to in as of bottom of since leverage solid

and cases We in make push results. is recurring help we prioritize driving for to revenue. many progress job my and must more So will

revenue build new finally relationships some And position have we productivity and and continue streams drive done we companies, but place And like leadership incentives capabilities metrics utilize in putting work results. are our adjacent streamline processes. with to advance streams. good our enough. our and working new to We drive new markets, and not to to build evaluate operational We recurring revenue to programs can excellence most to

student our up honor with providing I an new growth. apply around leadership ESG shown our are action. will that we take to ESG more drive broadens and new environmental, joked social and leadership frequently that like staff processes with governance We programs. CECO resources up hasn't and steps with time and or on to test. game continue to starts that detail roll disclosure It's the

We We to need leadership talented CECO In going great have our a it. the drive show essence, start to have telling story we're assembled tell. a to to I for up cross-functional just test. team have has ESG robust initiative. later And transformation program too. on organically business for expansion this come growth inorganically. and and and both sustainable a market many we More to opportunities strategy underway.

of We result our plan as to recently will strategy work. follow a execution off and kicked a have detailed

number Let's to keep turn moving. slide Please X.

to year-over-year. On of refining summary the delay continue gas Orders Both million, sales results. was financial approximately top and levels Sales million section, Customers which and markets came deliver. XX% in were of down EBITDA and sectors not and margins of a projects the to $X timing are was the energy our other million. we down oil in reality X%. spending. strive were $XX at the order $XX and Gross provide around reflect XX% and we of

was and flow Finally, per cash share adjusted free $X.XX earnings million. was $X

very for XX-month highlights safety, key focus them middle $X the section customers. delivering million compared well up flow free preceding cash to to period. the our environment, and challenging and while to CECO The continues on their I the XX-month team trailing efforts thank Our for to our market commentary. of operating want Despite was health execute slide

We portfolio many partners that Discussions with channel We with general many its in trends lifetime. customers worst near our of in at would proposals, Refining our view or the diversified bottom levels industrial and a experience suggest and well business markets. as my of bids is as provides a insights. have market

in products aren't discretionary. this category Our

to ramp production repair we up rebound and strong these here. address even we customers a as begin maintenance see will So various or believe programs,

Midstream been energy as slowdown. Time and result more We are engineering the halted the studies Oil tell. of the see has from perhaps so are the will on of also already front assessments and a climb we starting to Gas end steady bottom. largely

We In saw we more see bids to very show recovery in market encouraging this project signs will Air, and to believe continue Industrial are as the quarter. pockets of starting well.

were Our versus up markets and we in doubt the XX% remain but starting trends improve. No double-digits see quarter good expect and versus the and will XXXX. near-term, to of up in to markets are uncertain the quarter choppy previous to orders continue various growth third

of position we the discussed drive and I and As previous starting for focus on to slide. initiatives execution, management the have XXXX on remains beyond, cost the course

which to X, Now please provides turn detail orders slide market. number by on

submarket, products our instead of Handling year-over-year. will see right high-level can the this solutions. you won't the market numbers Energy in and on the but you and market XX% the And Industrial I CECO figures. side comments. segment, On some and numbers the were refining orders see side, slide, all make orders associated left with down read by Fluid

and of also RFQs. not and this Simply served and never this to has team engineering products in discretionary decades seen Generation bottomed are market rise. declines. and will are see and this double-digit level studies drop-off starting higher has believe this the rarely put Our end Power market. in Midstream We steadily to witnessed our levels out market has for of market this space

And XXXX, of to mixed Solutions segments, project but capital also difficult but year-over-year, growth. the saw improve. in are of delays those bookings. our reasons spending, Handling declines and continue some the which very third in markets related extremely very results good believe comparable Some Fluid are high saw we for quarter Industrial the result year-over-year to sequential to some We

a This look slide X additional to turn is report. earnings commentary. at Let's new market for our to slide

some me Let highlights. hit

XX% on These exposure. On right-side, typically that markets, the long-cycle the revenue. some And Starting we go revenue we've is energy the order left are least at nine bottom. side, we as with long-cycle XX-month to markets. have faster business to convert backlog from turn are over to timeframe. said, that at and listed into our a believe our to highlights the Refinery, markets on shorter-cycle full

for Gas This a nice slower new slower the U.S. in given natural demand several has CECO pandemic heading We supply deferred had market capital market rise. has positioned market are stabilized time. gas recovery Midstream in slowdown electricity some also delayed was expanding be this to by continues We COVID of generation products are Midstream into separation the to and expected, cyclones and water XXXX. Oil our new going will the has do and decline as offsetting recovery, as well continues this critical. market given and we years. and mission been penetration surplus job maintenance had constraints market demand naval in And a contracts. in the rebound. and for to market for believe FCC Power

NOx and leading in are We attenuation positioned with solutions well emissions. noise

pollution combat Industrial On comprise the side, environment. runs the to equipment while our quality to protecting efficiently Solutions air ensure leading solutions shorter-cycle

In of recovery there see and fluid mixture orders. or handling and continues improvement We continue delay. to in pumps a to sequential be filters,

have and solutions to We on demand. growth our believe delivery, be focused improving and will our quality investment will in we as increase in start

market it detail this financial is who time base one Solid your give large major me more installed to This revenue. Finally will over only but is serve positioned I hand letting Matt, a of and will to in serve large our through continue percent systems. for now Power Thanks JV small replacement the have the market that Effox results. we go we well material. will a our to on Gen Fuel, decline, our with in is secular

Matt Eckl

driven the other There I'll Todd. Handling started million by orders X% Activity $XX per the flat just is growing been over just automotive, in was a disappointed for with are we Energy gaining months. bookings choppy. levels pumps as slide $XX last the that industrials. the relatively start provided in of Thanks, lift year-over-year. orders, hand industrial million with year-to-date XX% are but And all peers we of million $XX are markets, sequential six markets at down has par in with semiconductor, hardest market To manufacturing, sequentially. perspective, sequentially XX% on our At wood bright situation and put primarily the quarter. and its orders. business, $XX million spots understand Fluid in orders facing several were X in hit Refinery momentum or averaging was on September.

snapback We've as COVID revenue XXXX cases. of our to that weathered is been this and future. near CapEx preserve our deferring to is integrated branded both continue FCC CapEx, What resolve that sequentially as Emtrol-Buell X% they conviction progress engineering back the of and in customers work market is the And right, had continue not maintenance large did have circle serve we market. they battle and independents To are in Customers anticipated. has and as commissioning high. delay this to cyclones Our certain up site resurgence this business a struggling. cycle a will the to was

reminder, a XX% completion As is basis. percentage of on revenue our a total of recognized

large scheduling and on have industrial of services suppliers progression the the Europe, down, and Middle and Especially stalled, are pre-COVID resolving moving water to EPC faster. user access. Similar business differences, project. in does due of progress. slow the than customers is end this occurring our of customer weighing our are As oily so levels execution our XX% project India backlog separation its situations The where site restrictions less keeping domestically on from at East

down projects. to our XX% two $XXX million, is quarter, U.S. is de-book year-over-year. slide we X% the did Unfortunately, Moving in at sequentially X, and backlog which

the expect awarded revenue thus or extremely costs on pandemic. returns. when aerospace COVID One be Neither is relations We there were this project great associated and months and these been of put projects to in these canceled. beyond with related market support Both progressed were orders customers from with another XX the has remain cancellations. no has hit manufacturers to industry, hard these re which hold that was

we this As schedules I'm our through pleased execution. push-pull customer margins team maintaining Despite our execution. the purposeful of very and scope, the here operating are navigates with period ever-changing cash much flows COVID, and

key slide Moving and our measures. on to XX profitability

project sequentially year-over-year margins gross were which mix. and primarily due is down points to two in at Our XX% the quarter,

jobs larger As and a to have CECO rates. completion projects few higher-margin our are our quarter, margins on replaced margin average below suggested putting pressure with with last come

those One of the Eastern Middle large mentioned. jobs, project, being double-digit previously

with EBITDA, our As measures project with year-over-year plants can taken in in out driven income and productivity costs adjusted areas, driving proactiveness, we by down the expect the can volume non-GAAP and to and offset operating margin. downturn. we sequentially we've you to response control, in Hitting I'm and on mix. both costs, were the pleased this are pruning which

beginning the XX% To a wages, QX, perspective, in exited As QX. furlough, a three all the executed of put of business the cost since lost global target, of communicated million savings our of end execute and the, we've eliminated on of on facilities, in shuttered this cut we $XX annualized year, workforce.

actions company, deep, have been that year. These asset-light tough been And an prides don't on people being these As we cuts. lightly. take a itself it's aggressive

focus However, preservation, months. while our XX to next has be our cash the maintaining market on through share,

final to point, nimbler in years technology make ERPs business us, a three simplify our us cuts different and As the CECO, enabled investing not and position. legal we consolidating much in has made would in a to reducing and made process units, actions by faster. the Had we over last be these cost entities, years, investment prior and

an and of our overcoming Aarding two implementation, footprint. and middle just quarter, A pandemic. we've We continue ERP SG&A our ERP, leadership the more to team past and our closed a simplification team thanks the this management further journey, special for, entities reducing during another IT

ERPs contingency markets least, automation plans already right the we As will if start don't the today To our we prepared. is size built in invested XXXX, tomorrow. team further, recover. serve activities, have And we've planning say this the us to well company process,

several metrics discussed. the the already Now of highlights. slide point page, out which three reading briefly XX of I'll on to summarizes Instead

when EBITDA with in gross $XX and Despite cost cutting EBITDA cost margins GAAP Non year-over-year. preserved down our revenue volume was million down million margin, reductions of efforts. down strong $X X.X%. SG&A SG&A XX% and our decremental quarter began at QX X% First from and our XX%, the at EBITDA lower we XXXX, were

on COVID period, laser-focused already this costs, with annualized $XX of during savings million than are achieved. greater We

volume working anticipate share we expenses. $X.XX transition, $X.XX tax project on On slide down $X.XX million executive EPS positive expense. per $X $X.XX still down on non-GAAP tax, to and a earnings on Final year-over-year, AR was total $XX expenses sequentially and and associated a to GAAP by capital loss mix XX% collections. on Second, a quarter interest was M&A positive of and SG&A down for a very approximately basis, offset XX, year-over-year, of integration, severance-related point, Pushing million, non-GAAP and rate a was regarding XXXX. year for with

Our has projects, grown but milestones. large that back-end primarily Eastern Middle our WIP on has Project loaded

flow to it which of ample generating our slide trailing cash to percentage XX%. business and we down our XX Todd. On project bank I'll this free the of the our basis, a look the back weather this capacity. bounced with TTM the executing a healthy million, see remains is in million And sheet free in X.X our flows are aspiration net And to times. forward in $X.X leverage $X in are debt Cash its We well. up Keeping million quarter. Concluding exceed back flow strong million to point, with XX% quarters. to QX coming crisp the turn X Due EBITDA, paramount previous to progression as AR to $X sub from was activity, quarter. and defined the the XX, months. $XX.X ratio We And is to comfortable CECO it pleased leverage model. TTM. I'm pandemic. prepared is at balance on a paid cash are

Todd Gleason

are our turn in really capitalize weather that Thanks growth, forward recovery. XX. replenish to Matt. of markets to be to stress, the to good sustainable want slide The we challenging. course downturn we orders to But Please the look we backlog. and position may number on And

in downturn XXXX, our pandemic, then challenged. acquisitions. some through navigated the however, infrastructure, by sector was with the downturn, set the power produced statement. time more We sights the organization. divestitures and refinery level integrate The structurally to CECO ratios reducing proactive. times. And to down actions slowed, yet CECO debt gen organization previous COVID this on put went sharply and were various markets is declines associated complexity, three Let's playbook This similar The more has the perspective integrating In had above driven the orders. our when and rapid

to $XX decisive costs structural We action by have over reduce million. taken

can drive less redundancy to and faster far so have We returns. actions focus complexity, we on

we good have EIS of best put ability to and in to year. have first so very sized initiatives the such focus on growth for the sheet it used for this can half shape, appropriately we position as market balance ourselves is in acquisitions, Our in And recoveries.

backlog slide and this reinforces by XX, markets been and orders downturn, our the growth impacted Please streamlined the have organization view. market While healthy structure is to will and leverage turn as recover. our which we focus,

from have we the this listed be continue believe These should sustain in on robust. and targets the the slide. drive we highlighted some in to topline Obviously, productivity to normalized growth we the initiatives, committed emerge X% our As can targets are remain our we markets. presentations, top which in we scenarios, growth financial downturn same earnings of growth, and previous recovery more

We expect margin This from expansion to achieve level. today's is EBITDA XX%. margins greater than a XXX-plus

associated the our and We with productivity continued structure will need actions. streamlined volume cost conversion

to Finally, free historically producing we now control solid company flow cash things right With on and financial maintain focus intend pedigree. longer-term a increasing are have we achievable can drive those to goals, that been results. we

continue growth we and We actions, focus are on our to but programs. productivity cost increasing

like forward expand what orders. we Our XXX% adjacent goal And, grow done naval revenue. to in we to military look is recurring increasing to over have new into markets,

slide be for to sharing a articulating highlights, this look As XX, following Please phased thank in our again along and and commitments. publicly. We I story ESG to mentioned in will rollout earlier, our you we ESG-related metrics forward turn material.

once questions. would to we get We to like thank, But CECO. team to again, are anxious your

solid customers. our In continue to We results the and we quarter, safety health to focus and on had for we will execution. deliver continue will

portfolio in our trends we the our in markets even And very most Gas, in end Refining of in of Oil with seeing Several activity. the right see better discussed. moves and heading Midstream increased are we direction remain position are depressed, and We but markets. we

Over respect our and to will strategic initiatives the coming progress with rollout. highlight quarters, we ESG

to to like questions. a Our hard for solid very team that, the deliver CECO With we for bright results would you. but continues for to position and work line Thank also your now, here future. open

Operator

We from question Company. Instructions] of session. & Jim begin first Ricchiuti [Operator ahead. question-and-answer comes will the Please The go Needham now

Jim Ricchiuti

maintenance-related in couple a Question guys seem long suggesting to you be good a think of you doing of Hi, some -- the been to for questions. a recovery And going business. What that this you obviously, time. morning. have there's -- be refinery

to your next these really get what's So, best and to having to guess as no choice of going QX, some early when year? seeing or Is it is point customers that that? you're it of start

Todd Gleason

Yes. Todd. group. talk the is the and question, good Good you to and This Jim to of rest

engineering couple a So, in and market, in early cycle. sort the good Number work remarks, of that mentioned replacement see already of to for product, into our we're more associated as need we that maintenance, one; repair, with we're of studies oftentimes sort prepared which thoughts. starting realizing the that the goes

exact starting likely we're as goes, terms So, see to at But the study again, as of orders. demand in more activity. far and in looking timing of that sort XXXX we're an uptick early

understand what good variety reasons feel we front in for that's Timing is us we of So that today. But sort recovery of end about elusive of obviously we now. right market coming. see all the a

Jim Ricchiuti

it business associated de-bookings with that that that How you to of of -- XXXX? or were there some wondering and more see should QX? we how of any some aerospace, cancellations first in about the revenue half revenue related to the with just respect much was And -- the was in think to of planning when was

Todd Gleason

See in that was those. No revenue then it. over majority this backlog with it to is he expand current Again were to of revenue at vast the Yes. year. and a next Matt. I'll with all wants certainly the or if Those the associated hand was I'll -- least period on take associated Todd, bookings

Matt Eckl

percentage. Most engineering forecast the XXXX. was that supposed Only a was Jim our was small of of It's for QX. planned Yes, for very off very that to little there, kick portion QX. in planned in

Jim Ricchiuti

of QX, I could QX? there Okay. bookings slip you your -- is is but just And QX? right of some we just we any mean you look there how obviously color more a if are that really provide is as I question. this way think wondering world I'm and one soft seasonally different see improvement, to sequential any could might that to were in think And now. really And

Matt Eckl

Yes, don't from businesses. a because the of on we really the last bookings the when with to CapEx. you what's look CapEx we're years growth. Albeit, and quarter to hopeful perspective. the XX% on last decisions our company majority and our typically have you a elections customers that's go is you them we're if reason that breaking at some on by four see lightest And industrials of in to be usually factor is COVID is that the of going QX our business like free, night, sequential things track orders seasonality why the But of hold with judicious are quarter some any seeing

we're better absolutely So, QX. QX to that QX positive be going and feeling than is

So, a on mark energy about QX. we're and positive it's question

Todd Gleason

I'll note Jim. too

the and And oftentimes Just they're -- Things quarter customers' heard who a Anyway year, customer. of maybe here a third of even of last higher a I we likely the out XXXX lot demand the year control would heading been Things regardless, it. year third it certainly sometimes direct but second more timing supplying balance. our end control came is expected even the the quarter. and project third great about was our of be last into quarter ultimate period. was could have quarter that than last I've into half wasn't

early, the which the comparable mentioned that year-over-year. I around one tough little notes somewhat QX So, is into QX was brought a of

just year we had make looks again ignoring quarter quarter look little environment would of year. last which environment, you you it if And quarters almost fourth even fourth if a year normalized a would to little to to bit more last were versus think a I the the comparable between tough up two in last non quarter spread low, -- the I tees third COVID have want a the normalized want quarterly there. move but

anyway feel to is that higher. So, regardless, we sequentially QX be going

Jim Ricchiuti

it. for the color. a Thanks Got lot. Thanks

Operator

Dayal Wainwright. go ahead. The Amit next H.C. of question Please comes from

Amit Dayal

Todd Thank you. and Good morning Matt.

Todd Gleason

hope I well. is all

Matt Eckl

Good morning Amit.

Amit Dayal

thank you. Yes, Very morning. good

your revenue the are of it recurring for what taking you to today? maybe exposure for thinking you as maybe you the NS into on entry opportunity emphasis And In leverage make sort are it. expansion, resources easiest yes, steps to to to of lower stands the opportunities of terms if vertical your current infrastructure an

Todd Gleason

think I our say to -- that energy we're exposure sector. to know that I Yes, looking don't lower I'd the

our I in we just little what some bit organization. and pockets a head and within It we tackling planning on next and revenue especially defining of on recurring revenue metrics think focus into on pound as I is cycle see a from the it we applying perspective have year of where recurring we to our of data opportunity having where really recurring. as work. focus is insights guess kind table blocking more more metrics and -- its do simply our management on around

And leave on there's that than those often -- systems filters that there after in solutions project more and us parts business. so I'm I and with ensure moving to do believe away opportunity we their cycle where earlier with think if customers to well-positioned not from we that we're in have opportunity typically and some and focus strong but for in not customers and we large replacement historically. we're it's back -- we're just go very the -- front installed table I alone an been in where have necessarily service replacement of a replacement base

Amit Dayal

where almost as weaker behavior or stay and said, to into lower a like this slowly this three market environment, performance they of et maybe is are where now new sort run? bounce environment on coming of with they CapEx, adapting softer of kind perspective, from quarters And going you we're fewer four customer is sort or of things cetera, Understood. there or manage a

Todd Gleason

quarters, mean, or I next look Again, at I degree we're out think with the markets seeing above we already year's Yes. four say over last as we high a can confidence. of industrial levels. three,

So around capital -- and in and of et the a demand deployment, we're and still COVID investment of concerns middle lot there's still cetera.

good in already level we very sequentially. some bottom refining of we're organization, timing like issues. to we about at our back the continue one that's the So and impacted a and There's we've areas a hardest much industrial going have that always many certainly been believe would hit, other the section good feel at challenges industrial But sector. companies, in the we Energy, that the is say being again, said we probably the that like seen. hardest, deepest good

in in demands and similar we see no to even come provide, capital to are now, going repair, as the starts becomes that one for fourth we back where side. so that's for see a But the we of replacement to We year there's based things we solutions repair we've and that of we're of sector to and just large demonstrate, the cash demand seen that refining for the the in that everybody expect in that to Now, a based far space. participate conserving perspective, XXXX and our from year to pipeline believe quarter the size right have the little a to the it just in occur -- off -- industry energy probably is scenario believe trying maintenance, they story of -- marketplace. as would to the has and prudently just been right conservative very going

Amit Dayal

of weakness you for indicated the it And cost maybe Understood. there you Matt. respect maybe with persists, that, Matt, possible cuts areas one if on would potential Thank are What question focusing cuts? you cost if be for to that. what further materializes? level

Matt Eckl

tied cost of The most sold is be majority is all focused our to for We'll third-party our production predominantly. our network, which of Yes. on SG&A goods the part.

our And contracts and so, there's customers. suppliers that to It's It's to line. go to not CECO and not in of cost internal with back-to-back tied at. backlog a COGS lot our

we savings. of continuing would be proactive Look, number plan. last million the greater exceed That's we've in the done, our And time obligation we'll of with taken we're SG&A nature spoke, I since than fourth So on focus $XX of the contingency that that been executed. annualized we there. what met based here some quarter. actions suspect

remarks, don't shareholder I and COVID if as through cost and said the are prepared preserving value markets this heading rebound about in period. or and cash we XXXX, to So our it's

market positioned this, we're we're opportunities, of in coming are did XXXX. and after just more we and saw and and XXXX going So options downturn, well but the sure of be resurgence to we to like in out take when XXXX returns, win counting a that this share up ensure

not but I'm ready above plans. yet, target for more just So new the $XX have to us million we're we a and prepare

Todd Gleason

think like and a for to us. And this we're other now to that weathering understands add be Yes. our I'll lot for a lot for employees I buckle and challenging team each everyone that. time understand perform a is down a It's and really it. of of and are customers, period with players And just right pushing CECO organizations great the companies

we well we at the think average trying I their to, organization that understand appreciate historic So organization will produces -- conversion. streamlined just continue and in we're that historical and they what have to we be recovery like commitment above hard margin above will for place we put structurally and work, volume a know

in back look is model, short-term things when structural in it most costs to importantly fewer do to costs, we add nature realize a sustained of ourselves the at comes to certain position as up. internally for So our is we course, are appropriate, where but that is, volume goal to back have put

we and systems have and our so for smarter on keep better rolling producing very to we us better what that and working that's reduced So are and returns. sleeves that come when up of redundancy, we ways margin will processes this structure; above-average we're out

Amit Dayal

have Understood. for questions. That’s you so much taking Appreciate all it. the Thank I guys.

Todd Gleason

questions. Thank you. Great

Operator

ahead. Sullivan from next The Tate go Maxim of comes question Group. Please

Tate Sullivan

your separation work thanks looking just anymore? Navy morning across just Can your And please? all you. segments, exposure slide that where Thank you Hi. Good I well can you mean exposure specifically, defense and your your is then at within water or as review aerospace X, give is your aerospace portfolio? product comments. and And for

Todd Gleason

cancel to we're just time we'll the of aerospace there's customers to we not again, reason hand Good We're on It just definition point de-book happened a it. over to talk engineering wording may exposure Matt. to to slide XX manufacturing certain We to that's canceled. aerospace reengage trying And I'll that any engineering you. metals, months, time we delay were aluminum, direct in customers. exposure. industry just is is in – selling they selling that. said, we have by morning. keep look, Todd work. in the like But to know that's is necessarily to to files, isn't in the then Boeing, our This either that distribution directly what supply and clear. want the the for to it Good And projects have too an Aerospace supply organization mean example, be that that through that the keep may let's But that industry. would say, that and

growing. is naval particular but On well the for the that air naval products we in size U.S. are on and materials, it. let we We solutions composite bidding up that over naval and of cetera, of with beyond of beyond our serve nice I'll vessels naval some et mostly expansion and have so side, longer-term solutions interesting even solutions $XX provide for control of of $XX the some our vessels. Defense million there's rustproof, believe in year-over-year. Department geographic variety certainly XXX% million size Matt It's to the applications the working intake have quality of moment. and opportunity it's we global I a other vessels. naval more a maintenance a for sort – believe But business or provides it's air because at on about But that that

Matt Eckl

we to or customers and better as Yes. year. That of CapEx exposures word the said to aerospace in better." industrial for our QX that prepared get purposes cancel this used I is tied we segment. just transparency projects mentioned it's way And operate, delay it. I'd customer until in didn't last the the "We remarks, mentioned only were actually the was de-book booked of things said, we probably that to QX in Those them They need that. the are one add

The specifically I to we the we'll because material anything pie other rolls but mentioned, Midstream. million confident We leave but enough hasn't about it's that we're just feel had combing Tate. been that it as there, gas and do. elsewhere as in upper break I work growing re-awarded And actually a our see and it and – apply Peerless military that on in yet, it's when But oil We has Midstream been big our suspect corner Todd else was area $XX for about progressed one it's I absolutely just into trying tied aerospace out as the left of And to but did is P&L the think canceled. late. But it. there, it to it the win that's backlog our could right split thing out far the I either shrinking exposure opportunity no It's technology on a chart us take of that's to of of $XX brand. none value the in don't to million, those. small. it to

for So recent that good as Dallas win months. office, in team the of here

Tate Sullivan

context. Okay. Thank you that both for

Todd Gleason

Tate. Thanks,

Operator

Please Triton from [Operator Instructions] Capital. go comes [indiscernible] of next The ahead. question

Unidentified Analyst

for as often leading utilization? those to you. a spreads? watch indicator? And recognize I Great. business, see crack that industry Is Is the is go start Thank there it on what to to projects? do key move it two something metrics together, that's else refining you the to forward or Relative

Todd Gleason

add that Those like those Yes. CapEx add puts would refinery maintenance that. order to both and Valero about I would and talk oftentimes in specific view, of I turnarounds. season turnaround will also out, business Marathon's

see helps you that well. that going as If up

XX the I of close the we're crack spreads. refinery five-year we're average it As sell By note, to we below say points you at nailed want – globally. to way Bill another just

our look it, you refineries there's FCC in here product. and a U.S.; don't China, the have using they So just if they're the name refinery Cyclone, an at India,

Unidentified Analyst

I'm not question – the FCC, use fluid not I refineries Thank cracking assume here to additional catalyst Okay. ask fluid use some that Do going some you. cyclones; stands then. do approach? for

Todd Gleason

the a a other couldn't exact it very give means, which actually separates I which on are and those small catalyst crude for separate you're part to for you the wherever are heat percentage, but the because what a is percentage. push depends trying to is the high There most most very the the It but cracking. you to into crack, it part, But go. then for need to you want byproducts, way downstream and percentage. you

Unidentified Analyst

to are largely not or is have a the of I'm then your really that up. plant that blow we required these about plant And safety being of in And turnarounds required. some want spirit bump requirement general are unless there up the the equation? just regulatory your to on that beginning And thought that there against, regulatory as a asking today requirements? what here regulatory part question the these But to you've is of historically running put is and call mentioned smart, you facilities

Todd Gleason

about Cyclones the the regulatory if most for I refining the -- there associated regulatory cyclone compliance equipment about some you're associated efficiency; part in refining FCC it with general, component But and just with are process talking talking you're the that associated with think in. it. participates you're about talking

more it side. regulatory requirement is it's the a requirement on process than refining So

areas, markets both Bill our other know energy and industrial a variety obviously, in cetera. you in et of other across as Now

Now of regulatory then and other of and at a then regulatory compliance But the parts of notably component of looking they start you're parts -- in bigger products can why various are becomes you up parts to there. market the step world U.S. various the and vary. if we're demand especially and

Unidentified Analyst

Okay.

make real cyclone. the So correct? and refineries key here with turnaround that upgrade to ultimately that do is the economic an just turning it's sure And FCC to around and to decreases. The the I'm clear. decision efficiency Is

Todd Gleason

Couldn’t have said better it ourselves.

Unidentified Analyst

both Great. the Thank time. you for

Todd Gleason

you, Thank Bill.

Operator

our Todd for concludes like question-and-answer would closing conference any I to to Gleason turn session. over back the This remarks.

Todd Gleason

thank it's our customers U.S. day; out others to communities for CECO constituents throughout in thanks up again And very hard interesting to for you. to cycle. employees time And the everybody with day and working their time look stay period next are We keep an and the hope our work. obviously every and following our that many the up everybody great election healthy, want I time. forward stays in the and Thank the continues healthy. questions. the We of

we're that becoming think I normalized environment. more all So interested a in

our day. with everybody forward we'll touch customers, have our So being drive to we and both for great look and continue to employees, in Thanks our a and shareholders.

Operator

conference The attending you for has Thank today's concluded. presentation. now

now may You disconnect.

CECO Environmental (CECO) 4 Nov 202020 Q3 Earnings call transcript