Recently CECOEnvironmental corp. (CECE - Snapshot Report) declared its first quarter 2013 results. The company reported an adjusted net income of 18 cent per share, beating Zacks Consensus Estimate of 15 cents per share by 20%. Earnings were also up 38.5% year over year, as compared with 13 cents in the first quarter of 2012. However, GAAP net income per share remained flat year over year at 12 cents.
The company reported net sales of $34.4 million, up 4.07% year over year from $33.0 million in the year-earlier quarter. This increase in sales was primarily attributable to the 19.7% growth in revenue in the Engineered Equipment Technology and Parts Group (EET&P). This was partially offset by a 41.8% decrease in the Contracting/Services Group (C/S). New Order Bookings were up 22.5% annually to $37.6 million. The increased bookings resulted mainly from the company’s recent acquisitions.
Engineered Equipment Technology and Parts Group (EET&P) net sales increased by $4.1 million or by 19.6% to $25.0 million compared with $20.9 million in the same quarter last year. This increase is mainly attributable to CECO’s recent acquisitions of Adwest and Aarding along with a revenue increase from China operations. However, this was partially offset by a $2.2 million decrease in revenues from the Fisher-Klosterman division. Operating income from the group increased 30.3% year over year.
Contracting / Services Group (C/S) reported net sales of $4.1 million during the quarter compared with $7.1 million in the same period of 2012. The year-over-year decrease was a result of the decline in volume during the quarter. Operating income also dipped to $0.6 million compared with $1.1 million in the year-ago quarter.
Component Parts Group (CP) net sales were flat at $5.1 million. However, operating income for the quarter reduced marginally to $0.9 million compared with $1.1 million in the first quarter of 2012. This was due to increased competitive pricing pressure faced by the company in the marketplace.
Income and Expense
Gross profit increased by 9.8% to $11.2 million in the quarter compared with $10.2 million in 2012. Selling and administrative expenses were marginally up by 4.8% during the quarter. However, acquisition related expenses totaled $1.1 million related to the Aarding acquisition and Met-Pro transaction.
As on March 31, 2013, the balance of cash and cash equivalents were $6.9 million with a long-term debt of $0.8 million.
Interest expense was low at $97,000 in the quarter from $271,000 in the first quarter of 2012. The decrease resulted from the continued conversion of CECO’s subordinated debt into equity since the first quarter of 2012. All the remaining notes were converted in 2012.
CECO, which is among the prominent air-pollution control technology products and services, currently has a Zacks Rank #1 (Strong Buy). Other industry participants worth mentioning include Calgon Carbon (CCC - Analyst Report) , Fuel-Tech, Inc. and Industrial Services of America, Inc. , all having Zacks Rank #2 (Buy).