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Share prices of CECO Environmental Corp. (CECE - Snapshot Report) increased 13.6% to close at $18.64 on Mar 7 after the company declared its fourth-quarter and full-year 2013 results on Mar 6. The company reported adjusted net income of 26 cents per share, beating the Zacks Consensus Estimate of 20 cents per share by 30%. Earnings were also up 44.4% year over year, compared with 18 cents in the fourth quarter of 2012.

For full-year 2013, the company reported adjusted earnings of 98 cents per share, reflecting a year-over-year increase of 50.8% from the earnings of 65 cents in 2012.

The growth in earnings was driven by the company’s persistent focus on diligent operational execution and its cost optimization initiatives. The company is also streamlining its business by divesting some of its non-core businesses.

Operational Update

The company reported net sales of $68.7 million, up 100.2% year over year from $34.3 million in the year-earlier quarter. This increase in sales was primarily driven by successful integration of the company’s recent acquisitions like the Aarding, Adwest and Met-Pro Corporation. These acquisitions contributed as much as $34.3 million to the quarter’s revenues, out of which $23.3 million is attributable to sales in Met-Pro. However, revenues fell short of the Zacks Consensus Estimate of $71 million.

New order bookings were up 154% annually to $66.8 million in the quarter. For 2013, the new order bookings were at $199.2 million compared with $139.7 million in 2012.

Backlog at the end of the year was $98.5 million, a significant increase from the 2012 figure of $59.5 million. However, the backlog decreased slightly from $100.4 million in the third quarter of 2013. The company’s acquisitions contributed as much as $37.1 million to backlog.

Income and Expense

Gross profit increased by 92% to $21.5 million in the quarter compared with $11.2 million in the prior-year quarter. Selling and administrative expenses were $13.1 million during the quarter, up about 95.5%. Acquisition-related expenses totaled $0.6 million in the quarter.

Balance sheet

Exiting the year, the balance of cash and cash equivalents was $22.7 million, a decrease from $23.0 million in the prior year. The company had a debt (excluding current portion) of $79 million. The company had no bank debt in 2012.

Interest expenses increased to $0.8 million in the quarter from $0.3 million in the prior-year quarter.

Dividend

The company’s board of directors has approved a dividend of 5 cents a share payable on Mar 31, to shareholders of record on Mar 19.

Looking Ahead

The company remains positive about the scope of growth in 2014. It’s ‘One-CECO’ sales initiative is expected to drive up the company’s profits going forward. Moreover, CECO’s strengthening position in China is encouraging.

Zacks Rank

CECO currently carries a Zacks Rank #3 (Hold).

Performance of Some Other Stocks in the Pollution Control industry

Calgon Carbon Corporation (CCC - Analyst Report) reported fourth-quarter 2013 earnings of 20 cents per share compared with 16 cents per share in the year-ago quarter. The quarterly results beat the Zacks Consensus Estimate by a penny.

Tetra Tech Inc(TTEK - Analyst Report) reported fiscal first-quarter 2014 earnings of 42 cents per share, beating the Zacks Consensus Estimate of 38 cents. Earnings increased 2.4% from the prior-year figure of 41 cents a share.

Pall Corporation (PLL - Analyst Report) reported fiscal second-quarter 2014 (ended Jan 31, 2014) pro forma earnings of 82 cents a share, 2.5% above the Zacks Consensus Estimate of 80 cents. Earnings for the quarter also beat the prior-year quarter's earnings of 73 cents a share by 12%.

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