CECE - Earnings call transcript Q3 2021 | CECO Environmental Corp.

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Operator

Good morning and welcome to the CECO Environmental Conference Call. All participants will be listen-only mode [Operator Instructions]. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Matt Eckl, Chief Financial Officer of CECO Environmental. ahead. go Please

Matt Eckl

joining XXXX for the Environmental CECO Thank Call. us Quarter Conference Third you on

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

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

Todd Gleason

Thanks, slide number Matt, start and three. to going We're good with morning.

Before provided key morning's the into this would earnings a we dive points and numbers, like to in few release. reiterate Matt I I

CECO quote highlighted two of a in bit my As the CECOs. release tale has of a

We are at a juxtaposition of sorts.

you and one up quarter, orders the On XX% the hand, have in XX% up year-to-date. CECO growth

long longer. on our orders quarters, even the given don't into sometimes average cycle However, turn nature of revenue for and businesses, several

for up real will outlook So XXXX highlight year-to-date and on waiting in our growth to revenue higher despite QX been and and bookings, income. and show income. revenue statement expect And we great forward that growth show It today. looking has income to We come.

our in lowered side, orders beginning backlog. throughout year which revenue XXXX been XXXX, of has been XXXX, flip the because mostly On down had flat our

despite margin of orders was growth essentially this So, a in the had our as booked lower revenue which great market from just And last XXXX. revenue I conditions quarter competitive year, flat. was year, orders profile QX mentioned, derived mostly very because our third

XXXX in quarters be real period'. various suggested COVID would we times, of numerous mentioned have sort we As 'our

in of over the and month to September, of enough shortages. financially hit storm perhaps profile a in the margin not very other disruptions customer logistics, solid somewhat a while July worst in delays started throughout but on Unfortunately, been hit chains, performance in All-in-all, supply and labor to recover CECO made operating We in year costs this inflation, lower close XXXX. our So global timing decade. protected quarter. the some working somewhat project gaps and early August was perfect progress margins. backlog third issues through backlog in we results challenges the and XXXX, unprecedented with quarter year have last our because

quarter fourth XXXX higher expect and demonstrate in results. income revenue to We

We to also enable have strategic transformation. focus on our and and investments growth for driving maintained

of our member the discuss including those remarks. a new items, the board balance of prepared We and of buyback the some will addition program successful during stock

So and a to that much today from real our release, hope and have orders we in line sustain the will we to backlog is minutes. in we revisit takeaway start from forward, going top growth, the key momentum margins better a expect we just which few

detail XX% reflect at the just the now you the So slide see of balanced numbers outlined. many QX of across narrative our year-over-year, four, looking I can very on platforms. orders

funnel $X billion. above Our sales remains

a sales customer were continue delays in we X% our markets. because Sales So limited issues expect third of and estimate million, impacted the year-over-year. approximately coming up modest too. effects restrictions, quarters million chain quarter, by of supply of end most $XX were that strong to COVID We the lingering orders in $XX

margins, our typically Third We gross expectations. levels and quarter EPS gross EBITDA average all well between were operational below and XX% and historic XX%. margins

really acceptable. not So margins gross are XX.X% our third quarter of

our in margins costs were up, We build sequentially. SG&A to flat have place back actions essentially

was our the margins in lower And month EBITDA improve margins third EPS. our did main it So throughout driver that those each gross the and were lower quarter.

or better our additional orders color the burdened So the process we certain inflation along that in offset pass Matt cost will third able have customer to cost to weren't around change costs fast major started quarter. we the just provide already. get to impacts. through enough time execute But

higher companies management execution that was at dials on around acknowledge have added another performing with The with. our will in would which in least the or basically cover just higher on margins point of the project few are not two around at a we optimal. Additionally, in is were dealing term ourselves there results. We which hold for quarter. our cash turned figure This Certainly, on could EBITDA minutes. But million. issues slide came level quarter. last driving a Matt that many accountable more short have free was cash third so execution, flow, be up last $X will year's we we flat the

CECO's a quarter. XX% last which five. Now backlog helped grown year-to-date, please which approximately $XXX We million. orders slide at rebuild similar slide to stands has have our provided turn to number

are short has the fourth execution slide cost that up almost and in full some challenges, XXXX will for we term So been air year grow. our six, while to orders year-to-date turn balanced across position are growth you we are you orders quarter and portfolio. see great if And navigating year-to-date. XX% our Industrial

electric do manufacturing wood As very to we markets. vehicle continue engineered in can other facilities, beverage well aluminum and end manufacturing,

XX% handling and pump and industrial our the will been business bolstered XX% construction We as business which is filtration positive. Year-to-date, in fabrication our by to and fluid expect in And improve. experienced remain there demand good the sectors growth. and to year-to-date industry. Thanks really we has orders ahead in solutions, installation oil duct believe and air orders growth business, has automotive strong desalination start gas us of is of markets comprised still our

more business. also to expect this growth invest it distribution advancing for We and as largest are revenue our in is business cycle mix short

the management continued growth emissions to The levels, XXX%. is platform anticipate Our up gigawatt market from so here. starting power orders year-to-date we return has perspective, a growth generation largest XXXX at least to

year-to-date. the Our separation platform is loan and with orders declining business filtration

orders over expect pipeline finally, to we year-to-date, orders strong are our our are and have Orders beginning the cyclone Matt? then markets quarters and improvement midstream I acoustics with downturn business XX% as we set back. come grow the on additional is bed very Matt produced fluid a In XXXX and is to our deep up platform of believe to with a oil it business power gas wrap to to And this too. will coming improves. thermal water in and later some However, turn signs been up in show and as business out up climb refining. starting the now and outlook steadily XX% comments summary. and market generation our of orders the continues

Matt Eckl

Todd. Thanks,

orders and X the on slide with start left side. Let's

the We positively cyclone growth an power Texas won for award by Bangalore, of XX% large we in plant posted combined expertise for project sequential NOx required were segment. emissions several orders. Sequentially, FCC India. awarded we reduction upgrade refinery Most in and technical expansion equipment year-over-year acoustical and are in leading with with technology million SCR of cycle was led equipment including market the Germany our a a $XX our engineered systems pleased growth jobs our and

As industrial markets continue COVID. continues general vehicle highlighted, to although to budget air from continue down industrial year-over-year rebound and associated to with automotive as U.S. Todd book our during markets Air and the just electric strong Pollution grew the XX% leading as order Fluid seek growth handling, cuts MRS spend troughs sequentially Solutions. Control

$XXX the that of QX we remain As $XX very exact range in million strong expectations awards million orders, to the determine look will with a outcome. handful towards large our

highs well record remains Our billion or the sales near level. pipeline at above $X

provide in market continue opportunities and We bookings, marketing as investments growth to orders, in pipeline and to sales make pursuits. continue

trade search reps, shows sales We investing other help and are starting adding to reinvest in momentum. engine drivers growth sustain to optimization, in

the to year-over-year revenue flat right QX Moving sequentially. and is side,

To As chain installation their prolonging industrial recognition. systems biggest steel chain for QX stalled that Todd didn't was plants major negative to business. We million COVID our early delay QX. slowing to expectations contributor reasons like in a sign that engineered believe continue saw growth, segment, impacted supply into encountered handling forcing revenue factors of progress below We on pushed growth and or that purchases, our by in on customer Sequential we schedule, in mentioned, received, our on site deliver we was air our specific limited drawing material our inbound was believe schedule. slipped QX and our give partners partners. a supply technical we the $XX our vendor out examples, negatively certain had in were however, overruns which we delays cost platforms impacting customers And by fluid The fabrication lastly, It's impacted impediment out certain were off, across and where customers materials margins. to several seeker sales. challenges offset environment. resin to we volume allow around of XXXX, delays from revenue these and experienced

to QX expect associated double chain and in The we year expect at we highlighted for achieve QX full so the XXXX. growth remain month. supply our into but previously, issues least weekend with Todd look meaningful less QX choppy, we each versus if digit As growth

We as short-cycle through reported little behind for a we revenue, short-cycle saw sales. XX% So growth price up in quarter. be focused quickly sequentially. industrials coalescing the Briefly, in and driving in $XX.X in on to on that The more peerless increase and as we filters and continues in us are much bit million talk demand We'll shortly. operating XX% more team possible. in a year-over-year detail nice collectors our about dust getting metric, XXXX of our

CECO the services above we A back team, As well startup focused average. profile margin mix know AAST, advanced in business our and services. analytical emissions highlight few on the continuous training is months is we monitoring that

building the good sales in We region. have Coast Gulf especially been momentum

cecoenviro.com/aast can win check had emissions offerings. our showcases for want management and them updates customers I expanded an at You which Last to emergency to out NOx some for by platform. our service our highlight need a recent also customer compliance. their quarter,

a what more of trailer example need Onto fleet. the in there team and total moving NOx strategy it of quarter system evaluating transformational Our our demand the cash approximately environment, onto We're rental margins. great The the to But a sales. M&A for like customer solution. it also focus a the an focal capital nine. our admissions and small but of facilitate allocation an is mobile I customers of Green cycle is recurring ample point the This name higher our to regardless retrofitted leased this forward, of Machine. euphemistically customer a because remained ingenuity as Short whether is burners a referred SCR and the to low story. does team revenue challenges. are to flows margins slide solve CECO the

Our a million at backlog quarter. straight for $XXX third is growing

year-to-date. Our book-to-bill ratio remained and X.Xx at TTM positive basis on a

last backlog was time XXXX, we QX back achieved of to record of levels quarters were for the which QX CECO. these Looking

price and billion below the Compared the our QX we outlook cycle $X see XX, are above with XXXX quarter of XX remains in on were margins underperformed third and that impacted pricing and address. down were host in the XX% margins well and our measures approximately in environment business a to and bid averages industrial and profitability activity really competitive several I book demand. of acoustics. late quarter. attributed On XX.X% decline sequential to has the when by challenges slide of Todd This including items XX% management platforms Gross pipeline of long margins terms revenue project more were excited and for impacted our month jobs of in XXX of historical growing drove last the same the impact to XXXX, quarter. air, XX several year, and emissions slow will mentioned Approximately bps also pricing our addition, in market In we a low. of

progressing our sequential inflation, jobs QX with place consolidated of margins. third and pre-COVID decline falling was both labor off next pressure on tied increased margins these As our started jobs to richer and this materials. The

and While we down has past orders the risk execution. QX port to first the delays, with quote supply worked our I projects at know stranded the been remaining margin several few projects cost for to to couldn't biggest negotiated in delays. start decline But this projects, rapid terms. or preparedness to chain and to is challenges operating pass on validity this our team mitigate due inflation to by customers expeditiously executed even environments. or a deliver of working on steel third caused In customers unprecedented our was of at the significant was The specific installation site change site address and has availability stop a market handful materials impacts a of on list projects overruns. XXXX. many were and and/or on The vendors customers the our where reduce to own in our times. We've and resistance had project the working for increases met pricing we in experience

to rest continue and to that we sequentially. items are margins assured We improve this root cause amplified by for our correcting period unique customers deliver we the were and expect

in operating basis, million million backlog. EBITDA declines, $X.X backlog year-over-year both and large a down to and despite not EBITDA SG&A [Indiscernible] a $X non-GAAP attributable by are deterioration volume but for be income our could As in growth contributed increases and effects offset adjusted margin such On to mostly sequentially. bonds funnel. during was slightly that reduction booked new marketing AAS&T measures related attributable associated wage year XXXX, and other with furloughs, and services grow spend, investments growth. COVID. Year-over-year modest to prior business cost which orders increases to are in are to are related bank and cuts Sequential increases all travel, of our affected new

remain our We and the expand vigilant disappointed modest cost to underperformance in quick in XX recover. investment the will few to highlights. we're QX, As stated but as margins volumes continue growth. EBITDA quarter A structure Slide in believe committed in summarizes in total.

to and a First one propel delayed fluid largely Revenue QX and We much going XX% million growth another to well industrial as backlog backlog $XX with expected. orders year-over-year engineered handling revenue than muted systems CECO into into strong is grew air slower XXXX. of execute. XXXX believe offset is

Second, gross SG&A $X.X of by GAAP lower year. incurred down OI in year-over-year certain the primarily the non-repeat was million cost on and restructuring expenses margins measures prior offset

quarter not $X.XX primarily SG&A sequentially expected than driven offsetting the margins sales lower quarter. by in and $X.XX was year-over-year down the EPS in gross non-GAAP $X.XX increases Third, and

slow of source flow Project produce volume did quarter working quarter approximately increases elevated quarters levels Turning creating estimate we free last cash XX. that We favorable positive Trade that turn $XX working few in a result. the milestones project $X as cash at tied to million and of this the up capital cash In progress. choppy, $XX milestones plus quarter. in the million slide capital a million remains remains but will QX QX. into in meantime, progress in next have were

improve QX collections. with lumpiness reiterate collections strictly in As our model. It's QX on emphasis always, I intend business restore progress project of upon an We our no success based to of milestone we the see AR.

in million million. Finally We $X XX, $XX balance in of on our sheet the debt slide remains great shape. pay to down quarter

our Our credit with updating opportunity year our the X.X to capacity of and at our forward bank our banking The strategy. execute favorable X.Xx of available. leverage defined partners. ratio a on M&A exists we third leverage look you revisiting million capacity take our agreement sits in at are great in sits credit and $XX QX. market progress our net now to to We're I with facility increase of advantage

back to worth highlight the shareholders. call. third our turn dilution $X.X price stock $X.XX, quarter stock has In executed and over like we retired compensation five years approximately target last approximately I'll the buyback I'd average XXX,XXX meeting earnings or of million. an our Todd? of and bought back CECO with Lastly, early authorization. share align we month $X past completed of since million over to Todd. we of the CECO back bought share with repurchase our shares with so This at August effectively [ph] With associated and buyback commitment it offsets that, Since

Todd Gleason

to number turn Please Matt. XX. Thanks, slide

guidance We or haven't outlook. quarterly details historically around or given annual financial

the lower given quarter, be this an helpful it thought However, future than to margin is why of anomaly EBITDA would quarter past the more results and than normal we a gross highlight third trend. in

slide, the approximately of which of this has a $XX million On real side left our dollars. bookings, reiterate million or $XX in quarterly up XXXX the quarter been up we average XX%

cycle it repeatedly the have of revenue. our turn stated, to projects, takes a quarters we for long As to bookings given few nature

year-to-date million. As been revenue a has only average result, quarterly $XX

from but XXXX we with revenue bookings way we has last those depressed bookings. year's So, the off as are still working up volumes flat and been backlog year-over-year are in year, mostly entered lower

really slide, QX as of the Moving good future sign grown $XXX to entered quarter, as now you we see to million growth. of a can is has million fourth enter XXXX the up backlog middle our we the from XX%, that for $XXX

or approach is very of to So of our to performance and about will we so how next unfold The future so? $XX expect million the annualized Since the are roughly that model how a right we speaking. quarters to basis that an simple we to translating out side quarters reflected in speak. think sales, over four do averaging backlog be slide

times million some are always drive speaking, but generally this projects million range. to is puts the orders, So short-cycle quarters There $XXX $XX approximately million takes $XXX would sales. in four with and and

would are and between discuss to you to which margins, profits, the can down turn this firmly see to rebound slide expect how XX%. likely we and gross our XX%, historic Moving above into XX%

and there levels current SG&A million course, quarterly we with simple line understand EBITDA $XX.X help which deliver more in growth, decreased, can't to XX% comfortable We where subsequently be the appropriate. investing margins with should remain levels be This on and Of even model you to working growth profile. growth more would more certainly top evaluating to markets, or expect mix. which resources costs, approximately and of the margins higher hard are prices predict our between project inflation we of may the upside? $XX.X Finally pursuing increase Could produce better million, bottom line. deliver all and

these or think to and deliver you So XXXX. that a potentially gives pressures, activities this CECO way We upside. cost slide we meaningful about help helpful simple model into this and enter QX future hope are head offset as

we near with XX. sales brief. record $X number over And our Great will Let's billion. sales great as at orders year-to-date up remains will go or funnel slide generate levels wrap be forward. I

culminated as to will a in not the $X Signal has so. our what to funnel of we a their for as M&A quarter experience would and board. the good welcome I answer before finally, the transformed release to Operator? role in his and Directors. portfolio we our Richard market execution And Board Matt with need we that. Richard disruptions. the Richard well morning, which Wallman Officer We for of Roper our buyback would Chief been end but forward this done that an are do our rates million not including on companies very participation Allied complete of any like with Honeywell. have member share executive our to leading we have. happy slide, transforming activity that, and questions to look regardless associated our has Financial have And his to his on improve programmatic we you portfolio be and several vast We We career, meaningful long understand have standing with with margin year look of We said, throughout pleased companies to Technologies. forward very boards I and ways, in third

Operator

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

Jim Ricchiuti

to think the bit dynamics backlog. with a inflationary I'm the pressures, morning. assume good pressures Hi, I of of some facing to the just understand more cost respect and the little that of the a about you cost a you're when start bit mean, I there's trying benefits along. that in the about backlog that some profit profile pressures? backlog and factor to the should of of the given you increases see the lag just existing pass price ongoing How we

Todd Gleason

Yes, this Jim, Matt is wants to add Todd. And this. to if

to backlog So, in we book-to-margins, against visibility executing that of book-to-margin. terms how and obviously our have we're then

whole need that. et knew execution that the were supply margins of list to to than to going knew that of which low really And they've we we we don't we be XX% going lower us. be sort been quarter, to historically obviously, what items is a range, than issues that's chain a associated to As with we they had impacted XX% slightly the here cetera. in XX%, third some -- were we from that then lower entered knew And inflation, revisit

in two to to enough the have we price, we accept any et own to back orders surcharges ability enough obviously, for quarter One, get to to or weren't ability to it accept prices things, fast the customers, distributors, model the third cetera, Our do your to supply has your it's through able down additional hard that reasons. were business sometimes just do change get seeing through things, just to in channel. as push pressures you do through chain fast

we a of price we in were CECO again, have And the we to the probably project that. at to the other long let's bit which little percent a speed cycle, you just wait complete because process. get do just that component, we're business sort which So that through is behind, on of third were then more get we is go price, model situation for then quarter even say able the to if our

the may for have now price gotten we but few to in up. third and pricing have did, for quarter, So, we we wait that good quarters a show to

we So the execution supply than caught third quarter in of a of labor with got historically the bit have kind probably costs, more we little cetera. the the in all the chain, et noise chain,

we So then in September, fourth and have through state mid our see made to from I'll to as throughout we we're that that end we're to to intra that in We in improved. gross to you quarter, back margins higher just that that at. starting believe the margin year our been believe July to Matt? get heading and quarter up pricing the of the the reflect continue able good start lot ability into we've going to see we of saw moves we gross especially next historically have a confidence range steadily

Matt Eckl

our around When now, the said lower Jim. backlog right is we now look at in XX% right sitting that margins bid

are the so back the that we'll margins bid up. just margins. bid lows There back than more And chain agree Todd that margins stepping up. effects in occurred with was But of I impacted [ph] that supply step is quarter, compounding our

say XX%. I'd low So

Jim Ricchiuti

of of we is then, of year? towards I should And something pricing more next meaningful that going benefits anticipate some actions of see? the you're think second to the half some more

Matt Eckl

next businesses. on platform upon In depending our year, the to first of you'll that price come elasticity, start It see depends each half back.

tell our industrial to air you're correlation businesses like demand greater where greater would than I Some have a a growing, that others. business, going to is demand you have elasticity.

faster. a correlation. going going Therefore So to to climb you're pricing is have tighter

why they're growth, Our businesses the a P&L. the in is perfect seeing larger power and and you're pumps, cycle business example demand market jobs, where and up long priced That's competitive. that high, gen, the businesses we're they're there's refinery singular are getting where instantaneously. It's impacted short like showing still in cycle the that's highly by but across

you you that nature to see I'm year. businesses, those of QX next going So those tell won't long cycle till a QX, because

Jim Ricchiuti

Okay.

Todd Gleason

quarter? Jim, you're right, another historical that like, a quarter see snap a I has we'd slightly add actually, bold quarter the think, could averages, a well, margins, point, back to was, underperformed asking a a future se. to I reluctant coming on we we way off look know higher per see think than and And could just management make in to we be average historic way, maybe statement we our question that

potentially that I example. the acknowledge for would right. pushing through I the However, yes, at orders mean, change we end are of day,

we show approve in change order. quarter have little change not sustainable. whereas but price that get cetera. come just So real. that's particular able higher up If to up artificial, see customer those actions artificial. to they're I been A not Those a may starting et But that -- quarter a you're may it's to margin now in order bit they not have going are it's through, artificially things drive a these mean, also one real, approved a your not is period. by But not same because customer in

our So QX could said, then we way that what back see is or I build and which up, them. we margins say hope gross steadily of Matt our early a of back sort snapback hold would X Potentially. rather XXXX?

Jim Ricchiuti

Got lot. it. Thanks a

Operator

Thank you.

next question from Please Wainwright. H.C. Amit Dayal, comes ahead. go Our

Amit Dayal

mostly that you issues external chain and issues presentation. these Appreciate beyond? had resolved guys. deal in et Good the internal and visibility mentioned all Were color logistical are the you morning execution some Thank around to aspects, these and or with cetera, supply you. Todd, For impacting XQ performance. QX

Matt Eckl

comments Yes. as well. Thanks the Amit. We appreciate

that our larger you QX fabrication or platforms, in take platforms into was it emissions well few about as those know, separated quarters, but of gross are duct So as the up it through Matt? the All worked hit hardest, spotlight the lot really on seven gross price we've later we it. all or et But part chain, in quickly, early of job of up of in the a really the that it stronger the July change business, to pretty steel in orders performance ability have at quarter a issues, an costs industrial some as great you from ways, see headlines sort in entering perspective. platforms for results, through going and deliver that can quarter we're if hit now say last bit kind cetera. their now execution have want we have of through was margin and in or that them prices to that they other you've labor eight slow supply of weren't heard of to whether margin articulated fewer most if quarter that imagine ones QX. where that we're business, over feel it We more or so behind executing, I we a change have the example, to approved. our air, be are August, No industries part sort to or a yes, not sort and fourth. would we've the sort catch started quickly, an of deliver able you shortages, our half platforms of our terms to quite as our -- in some of fourth want a the put pace execution And get those and of you it you put early QX in is able of does call to had the the did can but picking parts wobbly like behind them look issues on little then three were got throughout quickly two quite across started projects, call wants saw of one of to orders

Matt Eckl

not production. We're go you most to mentioned air a emerge they were also, and the heavily labor I the that, duck to Yes. fab, is when think off tell tied able it's where platforms intensive, pricing I would quickly steel outsource Todd operated to you, industrial as to individuals have where impacted site. that management, which about to emissions which

So got fabricators who and we have that on filled projects managing customers per have our our We plants demand up and there don't caught between requirements in managing site. are se. getting

moved we've see and steady we're around, some to that up. think I starting step projects a

I QX, identified if the in so were steady and to after QX. August, through we've margins, would root a say But at July, fall look Amit. you'll gross into causes a September, So and we step up issues our that of largely and from expect step I up execution gone see

Amit Dayal

just that And This level from more do you. a materializing itself? later? Thank you XQ one me. rate see run turn, maybe million little for maybe $XX in Okay. Or you

Matt Eckl

a of feel the $XX next relatively essentially of bookings our year that the first heading start articulated we year we for half in that roughly consistent sort next early of of least that average reflects think I year-to-date. fourth Yes, the basis. quarter million we as expect to be would revenue into in at would the

for we again, don't my quote unfortunately, long that we're I the two are the find we're we P&L So say guidance. though to tale to growing nicely, the want doesn't in of quarter. CECOs up that because fourth That said will helpful, quarters. like specific the start its as in way growth a fact growing, it few cycle We given be give I'd to yes,

Amit Dayal

have all I'm I Thank taking That's you. other questions now. Okay. offline. for

Operator

Thank you.

Sullivan, question Next Tate from Group. comes Please Maxim ahead. go

Tate Sullivan

you. Thank

the in the time in to in and or else little a that had with I any backlog as but about just make you in adjustments mean, Were and/or can chain, backlog what July issues project the talk the please? talked some supply of you of about about You quarter related some talk temporary those cancellations in quarter well? projects just the can to is the you any backlog

Todd Gleason

Yes. small $X from We always we Otherwise, we call in it's million minor of that to significant. nothing it out. always had and $X the out in quarter, projects come have anywhere cancellations, million

around on getting was sub-contractors And all can backlog issue And issue. own the to the and or up. So our time, biggest customers manage logistics to down project our were Shuffling a down, world. were managers The slowing was materials sub-contractor customer fast their that says a having they not our have to moving wasn't depending ask out to dedicated anything, the upon they premium We're have don't the your have to of If because that, manage at the where deal. big to run call come that speed do obviously, put halt. or fully slow subcontractors a you them things at business. through them.

QX consistent about business model, [ph] saw leverage in appear in at exponential and the line. that bottom move to growth us steel in think resin challenged supply to into was world model us. the when we operating gets were ports impact industrial Norfolk there's challenge Miami, it around, on where It saw trying So Beach, say our the I Long to I would in that extreme the for country, business QX trying get our chains if

we weakness is think in I customer We don't anything seems in our about our don't feel that set. strong. extremely We feel cash see the any weak, backlog flow there. very good

next point So the to quarter and XXXX. it's to growth in into just going

So our a But it. pretty the about Don't right million $XXX we it's time love of to plus execute confident one ability now. have we're backlog blip.

Tate Sullivan

That's have. Thank you. great. will I I all after. offline it Okay,

Todd Gleason

Tate. Thanks

Operator

[Operator you. Instructions] Thank

Capital. comes Please Dezellem, Our go ahead. William from question Tieton next

William Dezellem

Thank you.

to second First question issues, changed logistics is what relative the quarter? versus the

Matt Eckl

So three. I maybe two things Well think.

certain things we getting occur, but areas. to say, just freights cost because the that expedited freight up logistical it expedited and components, to you stuck logistics ports in So have think said, obviously, seen I from whether access had for needed needed that went just would most to delivery, companies pay you be still were

too. “at for had solution main have definitely already or million mean, were this, third in and to just our I was we then, may foundation we that the they were articulated costs waiting $XX any of any customer of than et for our us -- third come there waiting the but the they be But historically. sure. or some of goal logistics, electronics, more some because quarter million for revenue are by delivered", the to we're that person solution, expedition for that, that And in our bill, we delayed cetera. sort it some were hit call quarter for has $X And of here the isn't gates out bundling had to So, that ready to

vendors the do fault, at saying larger maybe. Rarely installers and a we for both how suppliers Yes, solution per -- wall part it's cost we're it in other are So call waiting customer a waiting are -- but quarter, logistics Is wait of But a you other project. other we they're to plug right? come, delays? sit that? that we times, that from We're just not a perspective the to also single or the around or their into cost that us se. we're And customers

if parts of the got was some been I their say of of logistics project that of control. So some our outside that might delayed, would have

Todd Gleason

One an in whatsoever. out throw to example avoid had actually that damages. liquidated Yes. to order We we some customer did QX a there, item see in Bill I material is of airfreight didn't to

jobs tell one that you that's QX. that some didn't also So specific that rolled I in had that example. exist in we QX, off profitable

that were call your of jobs COVID and more year now the QX backlog back let's to awarded bid in period. it last So in is tied

the period we which roll have of saw didn't then year, in pricing sequentially. we QX QX So QX into this

tell QX in happen QX. So didn't two those examples you, of things I are that will in that happened

William Dezellem

the then, broad environmental me And let helpful. to That's move topic.

weekend what I that Environmental place of Summit today in COP are environmental to top the a in degree the solution took the problems you think To mind that last are corners? XX and all Glasgow. week

Matt Eckl

Yes.

occur fuel there's it we be future. to it this Bill Hydrogen, winters or methane, continues winter think an be look the emissions So is interesting that shortage the gas whether no future. Natural many bridge in for of whether COX, one be a

air. ability, believe we many We're certainly in or eliminating the in NOx. categories Our industrial of leader

ESG. so I we and more of really that all, we're on coming from only to industrial look, business And perspective. do excited our rarely think look to all company's digit get been a focus but at remain And back growth I strong. businesses industrial continue look, as strong almost growth And double when industrial not say our remain all has of

feel being and historically wouldn't in about are western countries the up, put because as good As of have We world as larger very our have to polluters. those those countries want we around proven being companies it. countries solutions countries, solutions in and and in competitive those the competitive step some from are are countries go those And in they not proven. solutions, that otherwise to know the maybe we that

general CECO. been of not in I think what's a on on our as a we demand industrial, result to profile is just like order more only absolutely but benefit going environmental;

Todd Gleason

making We're impact how look at and investments a we take COX can methane. to

been Nox, We that coal that burning XX see If solution they're it to in next is and today of street methane a we and you they about said a preparing because of the be and in, to CECO Air Los you've barely that the plants was and power ever XX were Act and Angeles, years when gas that emissions. emitted of NOx reduce be the came ago, of of to plants, thing what COX years Clean amount by able is the across part was tackle part going can driven natural a need power ago. to XX ago. The did that solution years belt. fragment CECO is smoke

William Dezellem

you thank for that. And

So Or prepared relative when that part those say today? to have do those your you the COX and acquisition you of all methane, you're that tackle strategy? that's to solutions

Todd Gleason

matter it's nobody air capture, way fact Its just methane. a a in way of strategy. a just part big of is yet. on think elements yet don't doing is for whether scale, commercial anybody them direct post-combustion, our I is some that fall There pre-combustion, has acquisition to

you what If EPA saw opportunity there. just week, last posted big

and today. there VOC could COX process and dollars yet, Our are our We're it but just resources looking to and how that. destruction not just take at we methane do investing teams are for apply we

Matt Eckl

there quick ready hasn't begin today”, commitment other is the us innovation, the that dollars “we're a -- right? hard a is industry invest at say, you're innovation adopt been there to certain it's of how two reasons be not when comments, And want one areas difficult that commercial there, it for to for you sure scale. of if to from in big not So industry to because and

it, that. whether because and let's a them and ESG to regulated I'm cost or again, the as So be that it to for excited it's becomes that start advantage just on adopt methane second, to solutions, a methane for about we just mandated clear think going be stick we're there's becomes industry advantage in going

absolutely for design can engineers application Our methane. solutions

proven, do interchangeable. in So an ubiquitous Those we product, a a just engineer solution make innovative can not and design for install and have design for or a that. reliable or us. are we they're we product, a or we Whether product whether us, we have of

William Dezellem

topic I'm one more, to then and going me. this stick Alright. on [Indiscernible]. Pardon

Matt Eckl

ahead. Go

William Dezellem

Okay.

that So is relative the sense at where items, that these trying focused to industry, two methane to it COX? are figure we industry is and out point still on is your industry if interested? now they're Or

Todd Gleason

set that is There going is interested. for be -- believe to competitive industry the different, demand We is Bill.

Oil those to solving to This in gas going methane space, traditionally and lead of not research systems types because this. closest and is and to going are be against up pops after it. that. different moms that traditionally were is Those they're they're for it, that folks the go are the up against are regulated not So, we industries. that against

part looking a [ph] acquire players big attack a people lot be You're competitive of out and who we're we going EMEA until of like going we there's also energy of are going that set. to to see [Indiscernible] so individuals Exxon, -- to can it's different how at can like be people and a the transition those that

William Dezellem

both. you Thank

Matt Eckl

Bill. Thanks,

Operator

you. Thank

question, Please ahead. Next Capital. Roth Gerry Sweeney, go

Gerry Sweeney

my Todd morning, taking for Thanks call. good and Matt. Hey,

Matt Eckl

morning. Good

Gerry Sweeney

about cetera. question. this management start of some business I guess, level change potentially with think, I suppliers, all chains. higher A They supply on the But it's of your of customers, changing cascading talk in specifically extra Does evolving obviously, strategy, an some et your this because asset quarter. of outsource and that working down chain? layer lot supply the fabricators. A a a just lot of issues -- of is lot light,

Matt Eckl

Yes.

we change doesn't strategy, our Gerry. So necessarily we would say,

it's think good question. I a

word, we change that, had of, would we you we think to they that if et outsourced just -- are want control that, fabricators acknowledge costs logistics -- only -- that able quarters many if I being done change pushed And little at like have light we all to rapidly destiny. I our Not that to go -- right, would areas bit a asset control can escalate of time, have own quite cetera. wouldn't Yes, to I it in say call unprecedented. maybe CEO times. I'm have we're we've And back could we we're costs, that unprecedented rapid in change make within our in use going the it not it's as historically much and manufacturing just to into bring in as as to to we strategy. but that our out look few we areas a assembly areas fabricators. and where can't manufacturing when can footprint, to going we not

board feel part we this think shall our the design I across for most again. like We like the too pass.

unprecedented this think an this to We expect that time. don't continue. is I

You look and XXXX. XXXX back XXXX, and XXXX, at

that dramatically. in went years period I steel, labor that good every It's that's XX them quarter, at through We're pretty what going restrictions caught In all enough, XX around cetera, they ago, it. prices still have company, in shortages of struggled improving. We're pass through been going already work little in this. And from one to the on Things really travel, hit which bit et up and we then, a we've working that coupled aluminum, And I that. it's that, fast. would they this short Again, noise. change period. years. us to And COVID But to acknowledge So we was industrial at doesn't was got with a our a we then copper, it continue. I us strategy. light fast have all question, probably It slightly different asset could at it. all expect been good yes, on the Gerry. would other good next, have to And

Gerry Sweeney

the know curious. that suspected shock I sudden was was it I a cascade. Okay. No, some I And of answer. just was and again,

computers an out Wallman acquisition from The Mr. Roper. technology, just cetera. because and And joined. a that How other you Where back especially And, goes does that And he his we in front? impact to change this does a on lot, does transformed Honeywell maybe Or update He's called even own Roper are -- bit? and strategy? front? et little again, have is, question on it visions? it

Matt Eckl

excited appreciate for as Thanks. know Richard his a also tremendous to I've and amount brings Richard happened sound Yes. have join experience. of Look committed input a our front He and few like to organization we're strategy have of I always decades, They're of we're that to board. board. at our us. much an to and guidance and balance the we in understands the all where

periods good. rearview month. Our more said, M&A in through we more week, every the we're every here, which to sort looks COVID always get and of We've pipeline putting day, wanted every our mirror

Third an put dip. direction right quarter was step more. in the still unfortunate that But to an important behind us

into short And that in only Labs seen not Roper as variety his experience, you he companies our of fourth Now you're you're and stronger, brings mix. year, And different cycle, steady views margin approach in an has been A his execution Charles to of to amount of committed I profile a a our bigger board, that in and Richard a see results with sensible steady point as to our industrial tremendous part he's to do just M&A. we'll but addition Over are at also where new shareholder River understands next a we move to to enhance of from to forward take point different life, our from maturity what businesses look into professional their believe other a others, of time, mentioned, and EPS drive get ways adding board perspective. programmatic to very CECO, value. along going planning -- a the Richard B in building quarter to places is and of beyond. Richard going we're And and start

Gerry Sweeney

very it. appreciate helpful. Got I you. me. it. That's Thank That's it for

Todd Gleason

there Hey, operator, any are through you. queue? we Thank other questions, the

Operator

and that question concludes our answer session. Well,

you. Mr. remarks. Todd closing Now, I for will Thank to go Gleason back

Todd Gleason

a for understand we we look, Okay, to will be is we excited abilities the support extremely was team XXXX. in steps growth to again, And we about and for head in look are the world. appreciate start are booking to we It as future that. day execute every We that I'd the tough transpire today's our up other. And CECO our We of everyone. deliver our believe And our customers all confident up as each we our environment, and forward still all growth challenging great in very QX. into a remains against with own questions feel around have periods and Thank very we that growth to it more and putting the growth. pipeline again QX backlog like associates in call been you we great. starting into to year long. continue you, thank strong. following and everyone's P&L we what Thank the on

Operator

today's presentation. attending for Thank you concludes This conference. today's

disconnect. now may You

Steven Hooser	IR
Todd Gleason	CEO & Director
Matt Eckl	CFO
Jim Ricchiuti	Needham & Company
Amit Dayal	H.C. Wainwright
Tate Sullivan	Maxim Group
William Dezellem	Tieton Capital
Gerry Sweeney	Roth Capital

CECO Environmental (CECO) 8 Nov 212021 Q3 Earnings call transcript