March 28, 2006
CECO ENVIRONMENTAL REPORTS FOURTH QUARTER AND 2005 RESULTS
2005 income from operations increases by 198% to $3.5 million
4th Qtr. income from operations increases 288% to $2.0 million
2005 revenues increase 18% to $81.5 million
NEW YORK, March 28, 2006 - CECO
Environmental Corp. (NASDAQ: CECE), a leading provider of industrial
ventilation and pollution control systems today announced fourth quarter and
twelve month results for the period ended December 31, 2005.
Chairman and CEO, Phillip DeZwirek, stated, "We are delighted with the recent
strong momentum in our business that has allowed us to overcome an unusually
slow start in the first quarter of 2005. Fourth quarter 2005 results were very
strong resulting in a $1.5 million increase in operating income over last years
fourth quarter. "
"With a backlog of $29 million at year end, significant bookings in January,
February and March of 2006 and lower interest rates due to our December 2005
banking arrangement, we expect to continue to produce improved financial results."
Consolidated sales were $23.0 million for the fourth quarter and $81.5 million
for FY2005 compared to $21.7 and $69.4 during the same periods in FY2004.
Revenues increased significantly in the second and third quarters of 2005
coupled with a slight increase in the fourth quarter. This overall increase
came primarily from a large increase in equipment sales as well as an increase
in contracting revenues and sales of component parts.
Gross profit excluding depreciation and amortization was $6.0 million (26.2%) in
the fourth quarter of FY2005 and $17.0 million (20.9%) for FY2005 compared to
gross profit of $3.6 million (16.8%) and $13.1 million (18.9%) during the same
periods in FY2004. The gross margin percentage increased by 10.6 points during
the fourth quarter of FY2005 and 2.0 points in FY2005. We benefited from better
overall margins in our product mix and backlog as jobs closed out with lower than
anticipated costs.
Operating profit generated during the fourth quarter of FY2005 was $2.0 million
and $3.5 million for FY2005 compared to $525,000 and $1.2 million during the
comparable periods in FY2004. This represents a 288% increase for the quarter
and a 198% increase for FY2005.
CECO reported pretax earnings during the fourth quarter of 2005 of $736,000 and
$212,000 for FY2005 compared to $17,000 and a loss of $1.2 million for the same
periods in FY2004. Pretax earnings in 2005 were negatively impacted by non-cash
charges, included in other expense, for the fair market value adjustment of
detachable stock warrants and the write off of impaired fixed assets. The
warrant charge amounted to $549,000 and $806,000 for the fourth quarter and
FY2005 year respectively and the asset write off amounted to $173,000 for the
fourth quarter and FY2005. When the warrants are exercised or expire in 2006,
the company will receive a capital contribution and the previously recorded
charges will revert to income.
Fourth quarter FY2005 was negatively affected by an unfavorable tax adjustment
resulting in a net loss of ($393,000) or ($0.04) per share compared to a net
loss of ($510,000) or ($0.05) per share during the fourth quarter of 2004.
FY2005 net loss was ($435,000) or ($0.04) per share compared with ($928,000)
or ($0.09) per share for the same period last year. The effective tax rate
during 2005 was unfavorably affected by certain permanent differences including
the non-deductible, non-cash charge for warrants of $806,000 and non-deductible
interest expense of $447,000 relating to amortization of the subordinated debt
discount.
Orders booked during the fourth quarter of FY2005 were $29.6 million and $89.6
million for FY2005. This represents a 19% increase compared to $24.9 for the
fourth quarter of 2004 and an 8% increase compared to $82.8 for FY2004. The
backlog was $29 million at December 31, 2005.
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