May 9, 2006
CECO ENVIRONMENTAL REPORTS FIRST QUARTER RESULTS
Revenues increase by 62% to 24.4 million
Income From Operations increases by $1.7 million
NEW YORK, May 9, 2006 - CECO
Environmental Corp. (NASDAQ: CECE), a leading provider of industrial
ventilation and pollution control systems today announced first quarter results
for the period ended March 31, 2006.
Chairman and CEO, Phillip DeZwirek, stated, “Our first quarter of 2006 is
off to a strong start. This quarter typically starts out slowly as activities start
up on new contracts but this year, due to our large backlog at the end of 2005 and
the continuing strong economy, our first quarter 2006 performance was noteworthy.
President and Chief Operating Officer, Richard Blum, commented “With
significant bookings in January, February and March of 2006, our backlog now stands
at $40.5 million as compared to $22.7 million as of March 31, 2005 and our momentum
continues into the new year.”
Consolidated net sales for the first quarter were $24.4 million, an increase of
$9.3 million or 62% compared to the same quarter in 2005. Slightly increased sales
from our component parts and duct products coupled with significant increases in
construction revenues and equipment revenues accounted for the increase in sales.
First quarter 2006 gross profit was $4.1 million (17.0%) compared to gross profit
of $2.2 million (14.4%) during the same period in 2005. This increase was due to
higher margins on construction and equipment contracts.
Operating profit generated during the first quarter of FY2006 was $696,000
compared to an operating loss of $960,000 during the comparable period in FY2005.
This represents a $1.7 million increase for the quarter.
CECO reported a pretax loss during the first quarter of 2006 of $955,000 compared
to a pretax loss of $1.5 million for the same period in FY2005. The pretax loss in
2006 was negatively impacted by a non-cash charge, included in other expense, for the
fair market value adjustment of detachable stock warrants which amounted to $1.1
million. It is important to note that net income before tax and this non-cash charge
was $145,000 in the first quarter of 2006 compared to a net loss before tax of $1.5
million during the same period in 2005. 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.
Federal and state income tax benefit was $219,000 during the first quarter of
2006 as compared to a benefit of $875,000 during the first quarter of 2005. The
estimated federal and state effective income tax rate in the first quarter of 2006
was 23%, compared to 58% in 2005. Our statutory income tax rate is affected by
certain permanent differences including expenses for market valuation of warrants
and non-deductible interest expense.
Due to the combination of non-cash charges and the lower 2006 tax rate which
created less tax benefit, the net loss for the quarter ended March 31, 2006 was
$736,000 compared with a net loss of $632,000 for the same period in 2005. However,
as previously stated, most of the non-cash charges will be reversed and become
income in the current quarter.
CECO Environmental |
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Consolidated Statement of Operations |
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(In thousands, except share and per share data) |
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(unaudited) |
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Three months ended |
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3/31/2006 |
3/31/2005 |
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Net sales |
$ 24,382 |
$ 15,055 |
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Cost of sales |
20,249 |
12,882 |
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Gross Profit |
4,133 |
2,173 |
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Selling & Administrative |
3,145 |
2,841 |
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Depreciation & amortization |
292 |
292 |
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Operating income (loss) |
696 |
(960) |
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Other (expense) income |
(1,080) |
50 |
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Interest expense |
(571) |
(597) |
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Loss before tax |
(955) |
(1,507) |
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Income tax benefit |
(219) |
(875) |
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Net (loss) |
$ (736) |
$ (632) |
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Per share data |
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Net loss per basic share |
$ (0.07) |
$ (0.06) |
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Weighted average shares outstanding |
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Basic and diluted |
10,913,503 |
9,993,260 |
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