UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 2015
CECO Environmental Corp.
(Exact Name of registrant as specified in its charter)
Delaware | 000-7099 | 13-2566064 | ||
(State or other jurisdiction of in corporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
4625 Red Bank Road Cincinnati, OH |
45227 | |||
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (513) 458-2600
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
x | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On May 7, 2015, CECO Environmental Corp., a Delaware corporation (CECO) issued a press release announcing its financial results for the three months ended March 31, 2015. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated herein by reference. Additionally, on May 7, 2015, CECO held a conference call for investors to discuss its financial results for the three months ended March 31, 2015. A copy of investor presentation is furnished as Exhibit 99.2 to this report and is incorporated herein by reference.
The information in this Item 2.02, including the exhibit, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 8.01 Other Events
The information set forth under Item 2.02 of this Current Report on Form 8-K is incorporated by reference in this Item 8.01.
Important Information for Investors and Stockholders
The information in this Form 8-K is not a substitute for the prospectus/proxy statement that CECO Environmental Corp. (CECO) and PMFG, Inc. (PMFG) will file with the SEC, which will include a prospectus with respect to shares of CECO common stock to be issued in the merger and a proxy statement of each of CECO and PMFG in connection with the merger between CECO and PMFG (the Prospectus/Proxy Statement). The Prospectus/Proxy Statement will be sent or given to the stockholders of CECO and PMFG when it becomes available and will contain important information about the merger and related matters, including detailed risk factors. CECOs AND PMFGs SECURITY HOLDERS ARE ADVISED TO READ THE PROSPECTUS/PROXY STATEMENT CAREFULLY WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The Prospectus/Proxy Statement and other documents that will be filed with the SEC by CECO and PMFG will be available without charge at the SECs website, www.sec.gov, or by directing a request when such a filing is made to (1) CECO Environmental Corp. by mail at 4625 Red Bank Road Suite 200, Cincinnati, Ohio 45227, Attention: Investor Relations, by telephone at 800-333-5475 or by going to CECOs Investor page on its corporate website at www.cecoenviro.com; or (2) PMFG, Inc. by mail at 14651 North Dallas Parkway Suite 500, Dallas, Texas 75254, Attention: Investor Relations, by telephone at 877-879-7634, or by going to PMFG, Inc.s Investors page on its corporate website at www.pmfginc.com. A final proxy statement or proxy/prospectus statement will be mailed to stockholders of CECO and PMFG as of their respective record dates.
The information in this Form 8-K is neither an offer to sell nor the solicitation of an offer to sell, subscribe for or buy any securities, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. This Form 8-K is also not a solicitation of any vote in any jurisdiction pursuant to the proposed transactions or otherwise. No offer of securities or solicitation will be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Proxy Solicitation
CECO and PMFG, and certain of their respective directors, executive officers and other members of management and employees may be deemed participants in the solicitation of proxies in connection with the proposed transactions. Information about the directors and executive officers of CECO is set forth in the proxy statement for CECOs 2015 annual meeting of stockholders and CECOs 10-K for the year ended December 31, 2014. Information about the directors and executive officers of PMFG is set forth in the proxy statement for PMFGs 2014 annual meeting of shareholders and PMFGs Form 10-K for the year ended June 28, 2014. Investors may obtain additional information regarding the interests of such participants in the proposed transactions by reading the prospectus/proxy statement for such proposed transactions when it becomes available.
Non-GAAP
CECO is providing non-GAAP historical financial measures within this Form 8-K as the Company believes that these figures are helpful in allowing individuals to better assess the ongoing nature of CECOs core operations. A non-GAAP financial measure is a numerical measure of a companys historical financial performance that excludes amounts that are included in the most directly comparable measure calculated and presented in the GAAP statement of operations.
Non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP gross profit margin, non-GAAP operating margin, non-GAAP earnings per basic and diluted share and non-GAAP Adjusted EBITDA, as we present them in the financial data included in this press release, have been adjusted to exclude the effects of expenses related to property, plant equipment valuation adjustments, acquisition and integration expense activities including retention, legal, accounting, banking, amortization and contingent earn-out expenses, foreign currency re-measurement, legal reserves and the associated tax benefit of these charges. Management believes that these items are not necessarily indicative of the Companys ongoing operations and their exclusion provides individuals with additional information to compare the companys results over multiple periods. Management utilizes this information to evaluate its ongoing financial performance. Our financial statements may continue to be affected by items similar to those excluded in the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP financial measures should not be construed as an inference that all such costs are unusual or infrequent.
Non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP gross profit margin, non-GAAP operating margin, non-GAAP earnings per basic and diluted shares and non-GAAP Adjusted EBITDA are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of CECOs results as reported under GAAP.
In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP gross profit margin, non-GAAP operating margin, non-GAAP earnings per basic and diluted share and non-GAAP Adjusted EBITDA, stated in this Form 8-K present the most directly comparable GAAP financial measure and reconcile to the most directly comparable GAAP financial measures.
Safe Harbor for Forward-Looking Statements
Any statements contained in this Form 8-K other than statements of historical fact, including statements about managements beliefs and expectations, are forward-looking statements and should be evaluated as such. These statements are made on the basis of managements views and assumptions regarding future events and business performance. Words such as estimate, believe, anticipate, expect, intend, plan, target, project, should, may, will and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties include, but are not limited to: our ability to successfully complete the acquisition of PMFG; our ability to successfully integrate acquired businesses and realize the synergies from acquisitions, including PMFG, as well as a number of factors related to our business including economic and financial market conditions generally and economic conditions in CECOs service areas; dependence on fixed price contracts and the risks associated therewith, including actual costs exceeding estimates and method of accounting for contract revenue; fluctuations in operating results from period to period due to seasonality of the business; the effect of growth on CECOs infrastructure, resources, and existing sales; the ability to expand operations in both new and existing markets; the potential for contract delay or cancellation; changes in or developments with respect to any litigation or investigation; the potential for fluctuations in prices for manufactured components and raw materials; the substantial amount of debt incurred in connection with our recent acquisitions and our ability to repay or refinance it or incur additional debt in the future; the impact of federal, state or local government regulations; economic and political conditions generally; and the effect of competition in the product recovery, air pollution control and fluid handling and filtration industries. These and other risks and uncertainties are discussed in more
detail in CECOs filings with the Securities and Exchange Commission, including our reports on Form 10-K and Form 10-Q. Many of these risks are beyond managements ability to control or predict. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. Investors are cautioned not to place undue reliance on such forward-looking statements as they speak only to our views as of the date the statement is made. All forward-looking statements attributable to CECO or persons acting on behalf of CECO are expressly qualified in their entirety by the cautionary statements and risk factors contained in this Form 8-K and CECOs respective filings with the Securities and Exchange Commission. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, CECO undertakes no obligation to update or review any forward-looking statements, whether as a result of new information, future events or otherwise.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit |
Exhibit Title | |
99.1 | Press Release, dated May 7, 2015. | |
99.2 | Investor Presentation Slides, dated May 7, 2015. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: May 7, 2015 | CECO Environmental Corp. | |||||
By: | /s/ Edward J. Prajzner | |||||
Edward J. Prajzner | ||||||
Chief Financial Officer |
Exhibit 99.1
NasdaqGM:CECE | NEWS RELEASE |
CECO Environmental Corp. Reports First Quarter 2015 Financial Results
Achieves record quarterly revenue and bookings
| Revenue of $81.0 million for the first quarter was up 41.6% from the same period last year; organic revenue was up 8.6% on a constant currency basis compared to the same period last year. |
| Achieved record bookings in the first quarter of $93.9 million, including 9.3% year-over-year organic growth; backlog grew 9.2% sequentially. |
| Gross profit of $21.0 million (25.9% gross margin) for the first quarter was up 6.6%, from $19.7 million (34.5% gross margin) in the prior-year period. |
| Operating income of $3.0 million (3.7% operating margin) for the first quarter was down 45.4%, from $5.5 million (9.6% operating margin) in the prior-year period. Non-GAAP operating income was $7.5 million (9.3% non-GAAP operating margin) for the first quarter, down 9.6% from $8.3 million (14.5% non-GAAP operating margin) in the prior-year period. |
| Adjusted EBITDA was $8.6 million for the first quarter, down from $9.4 million in the prior-year period. |
| Net income per diluted share of $0.01 for the first quarter, compared with net income per diluted share of $0.12 in the prior-year period. Non-GAAP net income per diluted share was $0.21 for the first quarter of 2015, compared with $0.19 for the prior-year period. |
CINCINNATI, Ohio, May 7, 2015 CECO Environmental Corp. (NasdaqGM:CECE), a leading global environmental, energy and fluid handling technology company, today reported its financial results for the first quarter of 2015.
Revenue in the first quarter of 2015 was $81.0 million, up 41.6% from revenue of $57.2 million in the prior-years first quarter. Recent acquisitions contributed $20.5 million of revenue in the first quarter. Organic revenue increased 8.6% on a constant currency basis compared to last year.
Net income was $0.2 million in the first quarter of 2015 as compared to net income of $3.0 million in the first quarter of 2014. Excluding acquisition and integration expenses, amortization and earn-out expenses, inventory and plant, property and equipment valuation adjustments attributable to recent acquisitions, and foreign currency re-measurement, non-GAAP net income increased 14.0% to $5.7 million. Net income per diluted share was $0.01 in the first quarter of 2015 as compared with net income per diluted share of $0.12 in the first quarter of 2014. Non-GAAP net income per diluted share, adjusted as noted above, was $0.21 per diluted share in the first quarter 2015 share compared with $0.19 in the first quarter of 2014.
Cash and cash equivalents were $19.0 million and bank debt was $114.6 million as of March 31, 2015 compared to $19.4 million and $114.2 million, respectively, as of December 31, 2014.
BACKLOG AND BOOKINGS
Total backlog at March 31, 2015 was $153.0 million as compared with $140.1 million on December 31, 2014, and $104.9 million on March 31, 2014. Bookings were $93.9 million in the first quarter of 2015, compared with $63.6 million in the first quarter of 2014, an increase of 47.6%. Bookings increased 9.3% on an organic basis versus last year.
QUARTERLY DIVIDEND
On May 6, 2015, CECOs Board of Directors approved a quarterly dividend of $0.066 per share. The dividend will be paid on June 26, 2015 to all stockholders of record at the close of business on June 12, 2015. CECO initiated a Dividend Reinvestment Plan (DRIP) in 2012 that provides for the voluntary reinvestment of dividends by its stockholders.
OPERATIONAL SUMMARY
I am proud of the teams focus on our Sales Excellence and OneCECO initiatives, which helped drive 8.6% organic revenue growth and 9.3% organic bookings growth over the first quarter of 2014, said Jeff Lang, Chief Executive Officer of CECO. We continue to place an intense effort on these initiatives and I am proud of the progress we are making. However, I am disappointed with our gross margins in the quarter. We expected a lower gross margin due primarily to an anticipated mix shift related to the previously discussed large order in our Energy segment and the acquisitions made in 2014. Notwithstanding, we did not expect lower contributions from Emtrol and Effox related to the timing of some lower margin backlog being processed. These factors more than offset margin improvements made in the Fluid Handling segment. We expect margins to improve throughout the year as we process through our current backlog, which is at higher gross and operating margins.
Jeff Lang also commented, We are also excited by the opportunity to bring PMFGs product portfolio into the CECO family, which will be a key strategic addition to our business. We believe the combination of the sales and cost synergies are very compelling and will help to drive long-term shareholder value.
Jeff Lang, Chief Executive Officer, and Ed Prajzner, Chief Financial Officer, will discuss the Companys first quarter results during a conference call scheduled for Thursday, May 7, 2015 at 8:30 a.m. EST (7:30 a.m. Central Time).
CLICK HERE (or copy and paste this link: https://viavid.webcasts.com/starthere.jsp?ei=1062481) to register for, and listen to the live Earnings Call Webcast. The webcast of the live call and a copy of the presentation to be used during the call can also be accessed from the homepage of CECOs website at http://www.cecoenviro.com.
You may also participate by calling the US/Canada Dial-In # 1-888-438-5524 (Toll-Free) or the International Dial-In # 1-719-457-1035 (Conference ID 1888082) at 8:20 AM ET.
A taped replay of the conference call will be available from 11:30 AM ET on the day of the call until Thursday, May 21, 2015 at 11:59 PM ET. To access the taped replay, call the US/Canada Dial-In # 1-877-870-5176 or the International Dial-In # 1-858-384-5517 and enter conference ID 1888082.
ABOUT CECO ENVIRONMENTAL
CECO Environmental is a leading global environmental, energy and fluid handling technology company. Through its well-known brands, CECO provides a wide spectrum of products and services including dampers & diverters, cyclonic technology, thermal oxidizers, filtration systems, scrubbers, exhaust systems, fluid handling equipment and plant engineered services and engineered design build fabrication. These products play a vital role in helping companies achieve exacting production standards, meeting increasing plant needs and stringent emissions control regulations around the globe. CECO believes that it globally serves the broadest range of markets and industries including power, municipalities, chemical, industrial manufacturing, refining, petrochemical, metals, minerals & mining, hospitals and universities. CECO is focused on building long-term shareholder value by bringing its unique technology, portfolio and operational excellence to strategic key growth markets around the world, while maintaining the highest standards of employee development, project execution and safety leadership. CECO is listed on NASDAQ under the ticker symbol CECE and is a member company of the Russell 2000 Index. For more information on CECO Environmental, please visit the companys website at http://www.cecoenviro.com.
Contact:
Corporate Information
Jeff Lang, Chief Executive Officer
Edward Prajzner, Chief Financial Officer
1-800-333-5475
or
Investor Relations:
Shawn Severson
The Blueshirt Group
Phone: (415) 489-2198
Email: Shawn@blueshirtgroup.com
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data) | (unaudited) MARCH 31, 2015 |
DECEMBER 31, 2014 |
||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 18,990 | $ | 19,362 | ||||
Accounts receivable, net |
59,193 | 58,394 | ||||||
Costs and estimated earnings in excess of billings on uncompleted contracts |
31,985 | 24,371 | ||||||
Inventories, net |
23,818 | 23,416 | ||||||
Prepaid expenses and other current assets |
8,629 | 9,046 | ||||||
Prepaid income taxes |
4,373 | 4,190 | ||||||
Assets held for sale |
4,033 | 4,188 | ||||||
|
|
|
|
|||||
Total current assets |
151,021 | 142,967 | ||||||
Property, plant and equipment, net |
17,739 | 18,961 | ||||||
Goodwill |
168,126 | 167,547 | ||||||
Intangible assets-finite life, net |
54,833 | 58,398 | ||||||
Intangible assets-indefinite life |
19,465 | 19,766 | ||||||
Deferred charges and other assets |
6,244 | 6,726 | ||||||
|
|
|
|
|||||
$ | 417,428 | $ | 414,365 | |||||
|
|
|
|
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LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of debt |
$ | 11,463 | $ | 8,887 | ||||
Accounts payable and accrued expenses |
57,117 | 51,462 | ||||||
Billings in excess of costs and estimated earnings on uncompleted contracts |
15,029 | 14,597 | ||||||
Income taxes payable |
265 | 405 | ||||||
|
|
|
|
|||||
Total current liabilities |
83,874 | 75,351 | ||||||
Other liabilities |
26,997 | 27,884 | ||||||
Debt, less current portion |
101,442 | 103,541 | ||||||
Deferred income tax liability, net |
25,783 | 26,365 | ||||||
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|
|
|
|||||
Total liabilities |
238,096 | 233,141 | ||||||
|
|
|
|
|||||
Commitments and contingencies |
||||||||
Shareholders equity: |
||||||||
Preferred stock, $.01 par value; 10,000 shares authorized, none issued |
| | ||||||
Common stock, $.01 par value; 100,000,000 shares authorized, 26,411,511 and 26,404,869 shares issued in 2015 and 2014, respectively |
264 | 264 | ||||||
Capital in excess of par value |
169,420 | 168,886 | ||||||
Accumulated earnings |
17,510 | 19,051 | ||||||
Accumulated other comprehensive loss |
(7,506 | ) | (6,621 | ) | ||||
|
|
|
|
|||||
179,688 | 181,580 | |||||||
Less treasury stock, at cost, 137,920 shares in 2015 and 2014 |
(356 | ) | (356 | ) | ||||
|
|
|
|
|||||
Total shareholders equity |
179,332 | 181,224 | ||||||
|
|
|
|
|||||
$ | 417,428 | $ | 414,365 | |||||
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|
|
|
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
THREE MONTHS ENDED MARCH 31, |
||||||||
(dollars in thousands, except per share data) | 2015 | 2014 | ||||||
Net sales |
$ | 80,985 | $ | 57,170 | ||||
Cost of sales |
60,010 | 37,441 | ||||||
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|
|
|
|||||
Gross profit |
20,975 | 19,729 | ||||||
Selling and administrative expenses |
13,661 | 11,679 | ||||||
Acquisition and integration expenses |
331 | 70 | ||||||
Amortization and earn-out expenses |
4,004 | 2,488 | ||||||
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|
|
|
|||||
Income from operations |
2,979 | 5,492 | ||||||
Other expense, net |
(1,736 | ) | (106 | ) | ||||
Interest expense |
(960 | ) | (742 | ) | ||||
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|
|
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Income before income taxes |
283 | 4,644 | ||||||
Income tax expense |
85 | 1,623 | ||||||
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|
|
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Net income |
$ | 198 | $ | 3,021 | ||||
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|
|
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Earnings per share: |
||||||||
Basic |
$ | 0.01 | $ | 0.12 | ||||
|
|
|
|
|||||
Diluted |
$ | 0.01 | $ | 0.12 | ||||
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|
|
|
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Weighted average number of common shares outstanding: |
||||||||
Basic |
26,271,316 | 25,606,352 | ||||||
Diluted |
26,660,595 | 26,115,512 |
CECO ENVIRONMENTAL CORP. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2015 | 2014 | ||||||
Gross profit as reported in accordance with GAAP |
$ | 21.0 | $ | 19.7 | ||||
Gross profit margin in accordance with GAAP |
25.9 | % | 34.5 | % | ||||
Plant, property and equipment valuation adjustment |
0.2 | 0.2 | ||||||
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|
|
|
|||||
Non-GAAP gross margin |
$ | 21.2 | $ | 19.9 | ||||
Gross profit margin |
26.2 | % | 34.8 | % | ||||
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2015 | 2014 | ||||||
Operating income as reported in accordance with GAAP |
$ | 3.0 | $ | 5.5 | ||||
Operating margin in accordance with GAAP |
3.7 | % | 9.6 | % | ||||
Plant, property and equipment valuation adjustment |
0.2 | 0.2 | ||||||
Acquisition and integration expenses |
0.3 | 0.1 | ||||||
Amortization and earn-out expenses |
4.0 | 2.5 | ||||||
|
|
|
|
|||||
Non-GAAP operating income |
$ | 7.5 | $ | 8.3 | ||||
Operating margin |
9.3 | % | 14.5 | % | ||||
Three Months Ended March 31, | ||||||||
(dollars in millions) | 2015 | 2014 | ||||||
Net income as reported in accordance with GAAP |
$ | 0.2 | $ | 3.0 | ||||
Plant, property and equipment valuation adjustment |
0.2 | 0.2 | ||||||
Acquisition and integration expenses |
0.3 | 0.1 | ||||||
Amortization and earn-out expenses |
4.0 | 2.5 | ||||||
Foreign currency remeasurement |
2.7 | | ||||||
Tax benefit of expenses |
(1.7 | ) | (0.8 | ) | ||||
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|
|
|
|||||
Non-GAAP net income |
$ | 5.7 | $ | 5.0 | ||||
Depreciation |
0.7 | 0.8 | ||||||
Non-cash stock compensation |
0.4 | 0.3 | ||||||
Other (income)/expense |
(1.0 | ) | 0.1 | |||||
Interest expense |
1.0 | 0.7 | ||||||
Income tax expense |
1.8 | 2.5 | ||||||
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|
|
|
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Non-GAAP Adjusted EBITDA |
$ | 8.6 | $ | 9.4 | ||||
Earnings per share: |
||||||||
Basic |
$ | 0.01 | $ | 0.12 | ||||
Diluted |
$ | 0.01 | $ | 0.12 | ||||
Non-GAAP net income per share: |
||||||||
Basic |
$ | 0.22 | $ | 0.20 | ||||
Diluted |
$ | 0.21 | $ | 0.19 |
NOTE REGARDING NON-GAAP FINANCIAL MEASURES
CECO is providing the non-GAAP historical financial measures presented above as the Company believes that these figures are helpful in allowing individuals to better assess the ongoing nature of CECOs core operations. A non-GAAP financial measure is a numerical measure of a companys historical financial performance that excludes amounts that are included in the most directly comparable measure calculated and presented in the GAAP statement of operations.
Non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP gross profit margin, non-GAAP operating margin, non-GAAP earnings per basic and diluted share and non-GAAP Adjusted EBITDA, as we present them in the financial data included in this press release, have been adjusted to exclude the effects of expenses related to property, plant equipment valuation adjustments, acquisition and integration expense activities including retention, legal, accounting, banking, amortization and contingent earnout expenses, foreign currency re-measurement, legal reserves and the associated tax benefit of these charges. Management believes that these items are not necessarily indicative of the Companys ongoing operations and their exclusion provides individuals with additional information to compare the companys results over multiple periods. Management utilizes this information to evaluate its ongoing financial performance. Our financial statements may continue to be affected by items similar to those excluded in the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP financial measures should not be construed as an inference that all such costs are unusual or infrequent.
Non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP gross profit margin, non-GAAP operating margin, non-GAAP earnings per basic and diluted shares and non-GAAP Adjusted EBITDA are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of CECOs results as reported under GAAP.
In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, non-GAAP gross profit margin, non-GAAP operating margin, non-GAAP earnings per basic and diluted share and non-GAAP Adjusted EBITDA, stated in the tables above present the most directly comparable GAAP financial measure and reconcile to the most directly comparable GAAP financial measures.
Safe Harbor
Any statements contained in this press release other than statements of historical fact, including statements about managements beliefs and expectations, are forward-looking statements and should be evaluated as such. These statements are made on the basis of managements views and assumptions regarding future events and business performance. Words such as estimate, believe, anticipate, expect, intend, plan, target, project, should, may, will and similar expressions are intended to identify forward-looking statements. Forward-looking statements (including oral representations) involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. These risks and uncertainties include, but are not limited to: our ability to successfully complete the acquisition of PMFG; our ability to successfully integrate acquired businesses and realize the synergies from acquisitions, including PMFG, as well as a number of factors related to our business including economic and financial market conditions generally and economic conditions in CECOs service areas; dependence on fixed price contracts and the risks associated therewith, including actual costs exceeding estimates and method of accounting for contract revenue; fluctuations in operating results from period to period due to seasonality of the business; the effect of growth on CECOs infrastructure, resources, and existing sales; the ability to expand operations in both new and existing markets; the potential for contract delay or cancellation; changes in or developments with respect to any litigation or investigation; the potential for fluctuations in prices for manufactured components and raw materials; the substantial amount of debt incurred in connection with our recent acquisitions and our ability to repay or refinance it or incur additional debt in the future; the impact of federal, state or local government regulations; economic and political conditions generally; and the effect of competition in the product recovery, air pollution control and fluid handling and filtration industries. These and other risks and uncertainties are discussed in more detail in CECOs filings with the Securities and Exchange Commission, including our reports on Form 10-K and Form 10-Q. Many of these risks are beyond managements ability to control or predict. Should one or more of these risks or uncertainties materialize, or should the assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. Investors are cautioned not to place undue reliance on such forward-looking statements as they speak only to our views as of the date the statement is made. All forward-looking statements attributable to CECO or persons acting on behalf of CECO are expressly qualified in their entirety by the cautionary statements and risk factors contained in this press release and CECOs respective filings with the Securities and Exchange Commission. Furthermore, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, CECO undertakes no obligation to update or review any forward-looking statements, whether as a result of new information, future events or otherwise.
Important Information for Investors and Stockholders
This communication does not constitute an offer to sell or the solicitation of an offer to buy securities or a solicitation of any vote or approval. This communication is not a substitute for the prospectus/proxy statement that CECO and PMFG will file with the SEC. Investors in CECO or PMFG are urged to read the prospectus/proxy statement, which will contain important information, including detailed risk factors, when it becomes available. The prospectus/proxy statement and other documents that will be filed by CECO and PMFG with the SEC will be available free of charge at the SECs website, www.sec.gov, or by directing a request when such a filing is made to (1) CECO Environmental Corp., by mail at 4625 Red Bank Road Suite 200, Cincinnati, Ohio 45227, Attention: Investor Relations, by telephone at 800-333-5475 or by going to CECOs Investor page on its corporate website at www.cecoenviro.com; or (2) PMFG, Inc. by mail at 14651 North Dallas Parkway Suite 500, Dallas, Texas 75254, Attention: Investor Relations, by telephone at 877-879-7634, or by going to PMFG, Inc.s Investors page on its corporate website at www.pmfginc.com. A final prospectus/proxy statement will be mailed to CECOs stockholders and shareholders of PMFG.
Proxy Solicitation
CECO and PMFG, and certain of their respective directors, executive officers and other members of management and employees may be deemed participants in the solicitation of proxies in connection with the proposed transactions. Information about the directors and executive officers of CECO is set forth in the proxy statement for CECOs 2015 annual meeting of stockholders and CECOs 10-K for the year ended December 31, 2014. Information about the directors and executive officers of PMFG is set forth in the proxy statement for PMFGs 2014 annual meeting of shareholders and PMFGs Form 10-K for the year ended June 28, 2014. Investors may obtain additional information regarding the interests of such participants in the proposed transactions by reading the prospectus/proxy statement for such proposed transactions when it becomes available.
Q1
2015 Financial Results Conference Call May 7, 2015
A global industrial technology company focused on
environmental, energy, fluid handling industries
Exhibit 99.2 |
Non-GAAP Financial Information
CECO is providing the non-GAAP historical financial measures in this
presentation, as the Company believes that these figures are helpful in allowing
individuals to better assess the ongoing nature of CECOs core operations. A
"non-GAAP financial measure" is a numerical measure of a company's
historical financial performance that excludes amounts that are included in the
most directly comparable measure calculated and presented in the GAAP
statement of operations. Non-GAAP gross margin, non-GAAP operating
income, non-GAAP net income, non-GAAP adjusted EBITDA, non-GAAP gross profit margin, non-
GAAP
operating
margin,
non-GAAP
earnings
per
basic
and
diluted
share,
as
we
present
them
in
the
financial
data
included
in
this
presentation,
have
been adjusted to exclude the effects of expenses related to property, plant, and
equipment valuation adjustments, acquisition and integration expense
activities including retention, legal, accounting, banking, amortization and
earnout expenses, the impact of foreign currency remeasurement and the
associated tax benefit of these charges. Management believes that these items are
not necessarily indicative of the Companys ongoing operations and
their exclusion provides individuals with additional information to compare the Company's results over multiple periods. Additionally, management
utilizes
this
information
to
evaluate
its
ongoing
financial
performance.
Our
financial
statements
may
continue
to
be
affected
by
items
similar
to
those
excluded in the non-GAAP adjustments described above, and exclusion of these
items from our non-GAAP financial measures should not be construed as an
inference that all such costs are unusual or infrequent. Non-GAAP gross
margin, non-GAAP operating income, non-GAAP net income, non-GAAP adjusted EBITDA, non-GAAP gross profit margin, non-
GAAP
operating
margin,
and
non-GAAP
earnings
per
basic
and
diluted
shares
are
not
calculated
in
accordance
with
GAAP,
and
should
be
considered
supplemental to, and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. Non-GAAP financial measures have
limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. As a
result, you should not consider these measures in isolation or as a substitute for
analysis of CECOs results as reported under GAAP. In accordance with
the requirements of Regulation G issued by the Securities and Exchange Commission, non-GAAP gross margin, non-GAAP
operating income, non-GAAP net income, non-GAAP adjusted EBITDA,
non-GAAP gross profit margin, non-GAAP operating margin, and non-GAAP
earnings per basic and diluted share stated in the tables above are reconciled to
the most directly comparable GAAP financial measures. Free cash flow
has
limitations
due
to
the
fact
that
it
does
not
represent
the
residual
cash
flow
available
for
discretionary
expenditures,
since
it
does
not
take
into
account debt service requirements or other non-discretionary expenditures that
are not deducted from the measure. Adjusted EBITDA and Free Cash Flow
are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial
measures calculated in accordance with GAAP Additionally, CECO cautions
investors that the non-GAAP financial measures used by the Company may
not be comparable to similarly titled measures of other companies. Safe Harbor
Statement 2 |
Forward-looking Statements
Any statements contained in this presentation other than statements of historical
fact, including statements about managements beliefs and expectations,
are forward-looking statements and should be evaluated as such. These statements are made on the basis of
managements
views
and
assumptions
regarding
future
events
and
business
performance.
Words
such
as
estimate,
believe,
anticipate,
expect,
intend,
plan,
target,
project,
should,
may,
will
and similar expressions are intended to identify forward-
looking statements. Forward-looking statements (including oral representations)
involve risks and uncertainties that may cause actual results to differ
materially from any future results, performance or achievements expressed or implied by such statements. These
risks
and uncertainties include, but are not limited to: our ability to successfully
complete the acquisition of PMFG; our ability to successfully integrate
acquired businesses and realize the synergies from acquisitions, including PMFG, as well as a number of factors related to our
business including economic and financial market conditions generally and economic
conditions in CECOs service areas; dependence on
fixed
price
contracts
and
the
risks
associated
therewith,
including
actual
costs
exceeding
estimates
and
method
of
accounting
for
contract revenue; fluctuations in operating results from period to period due to
seasonality of the business; the effect of growth on CECOs
infrastructure, resources, and existing sales; the ability to expand operations in both new and existing markets; the potential for
contract delay or cancellation; changes in or developments with respect to any
litigation or investigation; the potential for fluctuations in prices for
manufactured components and raw materials; the substantial amount of debt incurred in connection with our recent
acquisitions and our ability to repay or refinance it or incur additional debt in
the future; the impact of federal, state or local government regulations;
economic and political conditions generally; and the effect of competition in the product recovery, air pollution control and
fluid handling and filtration industries. These and other risks and uncertainties
are discussed in more detail in CECOs filings with the Securities and
Exchange Commission, including our reports on Form 10-K and Form 10-Q. Many of these risks are beyond
managements ability to control or predict. Should one or more of these risks
or uncertainties materialize, or should the assumptions prove incorrect,
actual results may vary in material aspects from those currently anticipated. Investors are cautioned not to place undue
reliance on such forward-looking statements as they speak only to our views as
of the date the statement is made. All forward-looking statements
attributable to CECO or persons acting on behalf of CECO are expressly qualified in their entirety by the cautionary
statements and risk factors contained in this presentation and CECOs
respective filings with the Securities and Exchange Commission. Furthermore,
forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws
or the rules and regulations of the Securities and Exchange Commission, CECO
undertakes no obligation to update or review any forward-looking
statements, whether as a result of new information, future events or otherwise.
Safe Harbor Statement
3 |
Important Information for Investors and Stockholders
This communication does not constitute an offer to sell or the solicitation of an
offer to buy securities or a solicitation of any vote or approval.
This
communication
is
not
a
substitute
for
the
prospectus/proxy
statement
that
CECO
and
PMFG
will
file
with
the
SEC.
Investors
in
CECO
or
PMFG
are
urged
to
read
the
prospectus/proxy
statement,
which
will
contain
important
information,
including
detailed risk factors, when it becomes available. The prospectus/proxy statement
and other documents that will be filed by CECO and PMFG with the SEC will be
available free of charge at the SECs website, www.sec.gov, or by directing a request when such a filing is
made to (1) CECO Environmental Corp., by mail at 4625 Red Bank Road Suite 200,
Cincinnati, Ohio 45227, Attention: Investor Relations, by telephone at
800-333-5475 or by going to CECOs Investor page on its corporate website at www.cecoenviro.com; or (2)
PMFG, Inc. by mail at 14651 North Dallas Parkway Suite 500, Dallas, Texas 75254,
Attention: Investor Relations, by telephone at 877-
879-7634, or by going to PMFG, Inc.s Investors page on its corporate
website at www.pmfginc.com. A final prospectus/proxy statement will be
mailed to CECOs stockholders and shareholders of PMFG. Safe Harbor
Statement 4
Proxy Solicitation
CECO and PMFG, and certain of their respective directors, executive officers and
other members of management and employees may be deemed participants in the
solicitation of proxies in connection with the proposed transactions. Information about the directors and
executive officers of CECO is set forth in the proxy statement for CECOs 2015
annual meeting of stockholders and CECOs 10-K for the year
ended
December
31,
2014.
Information
about
the
directors
and
executive
officers
of
PMFG
is
set
forth
in
the
proxy
statement
for
PMFGs 2014 annual meeting of shareholders and PMFGs Form 10-K for
the year ended June 28, 2014. Investors may obtain additional information
regarding the interests of such participants in the proposed transactions by reading the prospectus/proxy
statement for such proposed transactions when it becomes available.
|
Jeff
Lang President and Chief Executive Officer
5 |
6
Revenue
Revenue of $81 million, up 41.6% year-over-year
Revenue on an organic basis is up 8.6% vs. 1Q14 using constant FX
Bookings / Backlog
1Q15 bookings of $93.9 million up 48% year-over-year
Organic bookings up 9.3% in Q1, $69.5 million vs. $63.6 million in prior
year
Record
backlog
of
$153.0
million
vs.
$140.1
million
at
year
end,
up
9.2%
EPS
GAAP EPS for 1Q15 of $0.01 compared to $0.12 in 1Q14
Non-GAAP EPS for 1Q15 of $0.21 vs. $0.19 in 1Q14
1Q15 Quarterly Financial Highlights |
1Q15
Quarterly Financial Highlights 7
Non-GAAP Gross Margin
Gross margin of 26% compared to 35% in prior year, primarily
attributable to:
Expected shift in mix and 2014 acquisitions which have reshaped our gross
profit
The large strategic energy job
Underperformance of Emtrol and Effox in Q1
Non-GAAP Operating Margin
The gross margin decrease adversely impacted operating margins,
However, SG&A declined as a percentage of sales to 17% from a little
over 20% last year, offsetting a portion of the gross profit decline
As such, operating margins decreased 520 bps to 9.3% over last years
14.5%
Adjusted EBITDA
Adjusted
EBITDA
of
$8.6
million,
down
from
$9.4
million
in
prior
year |
Business Conditions & Strategic Review
8
Overall end markets are unchanged; we are executing better on our Sales
Excellence
and
initiatives.
Environmental segment continues to gain momentum
Energy segment
global natural gas power generation business is up.
Solid fuel is picking up globally but soft domestically; we are bolstering with
after-market strategies
Fluid Handling and Filtration is on track for a solid 2015
Integration of Zhongli and Emtrol are ahead of plan
Aftermarket sales continues to gain momentum
Acquisition of PMFG a significant strategic event |
9
Strong strategic fit
1.
Key step towards becoming market leader, including natural gas value chain
3.
Enhances global footprint, particularly in China and the Middle East
5.
4.
Provides access to attractive end markets to drive long-term growth
6.
Brings a leading portfolio of highly engineered product offerings
8.
Poised to benefit from a balanced portfolio and diverse end markets
7.
Grows aftermarket & recurring revenue opportunity
2.
Poised to achieve significant sales and cost synergies
Announcement of Proposed Acquisition of PMFG, Inc. -
Key Transaction Benefits & Strategic Rationale |
10
(1)
Pro forma for the full year impact of the Emtrol, Zhongli, HEE, and SAT
acquisitions. (2)
Includes $15M of synergies that are expected to be fully-realized in 2017.
(3)
See
Appendix
for
reconciliation
for
Adjusted
EBITDA
and
Adjusted
EBITDA
with
synergies
to
net
income
Illustrative 2014 Revenues & EBITDA Bridge
($ in millions)
Gross Margin (%)
Gross Profit
Revenues
Adj. EBITDA (w/ Syn.)
(3)
SG&A
SG&A (%)
Adj. EBITDA
(3)
30.0%
28.9%
29.6%
$98.4
$45.7
$144.1
$327.9
$158.1
$486.0
$60.0
(2)
$109.5
$58.0
$51.5
17.7%
32.6%
22.5%
$47.1
($2.1)
$45.0
Pro Forma
(12/31/2014)
(12/31/2014)
Standalone
(1) |
Ed
Prajzner Chief Financial Officer
11 |
12
Record revenue of $81.0 million, up 42% y/y and 6% sequentially
2014 acquisitions added approximately $20.5 y/y
On a constant currency basis, organic revenue grew 8.6%
($ in millions)
1Q15 Quarterly Financial Highlights
Revenue
$34.4
$44.4
$49.8
$68.7
$57.2
$66.6
$63.3
$76.1
$81.0
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15 |
Backlog
($ in millions)
13
1Q15 Quarterly Financial Highlights
Bookings
Solid 1Q15 backlog of $153.0 million, up 9.2% from year end
Strong 1Q15 bookings of $93.9 million, up 9.3% organically
$75.8
$77.9
$100.4
$98.5
$104.9
$96.0
$106.2
$140.1
$153.0
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
$37.6
$46.5
$48.0
$66.8
$63.6
$57.7
$69.9
$63.7
$93.9
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15 |
14
1Q15 Financial Highlights
Non-GAAP Gross Margin
Non-GAAP gross margin of 26.2% due to expected mix changes and
acquisitions
Operating margin of 9.3%, down 520 bps y/y and down 160 bps q/q
Good SG&A control
Non-GAAP Operating Margin
32.6%
32.2%
30.1%
32.4%
34.8%
32.3%
33.6%
29.8%
26.2%
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
13.4%
13.9%
11.4%
13.6%
14.5%
14.9%
12.9%
10.9%
9.3%
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15 |
15
Adjusted EBITDA
Adjusted EBITDA of $8.6 million vs. $9.4 million in the prior year
Non-GAAP EPS of $0.21, up from $0.19 in 1Q14
We have consistently excluded FX re-measurement in 2014 and 2013
Non-GAAP EPS
($ in millions)
1Q15 Quarterly Financial Highlights
$5.0
$6.7
$6.4
$9.7
$9.4
$11.0
$9.4
$8.9
$8.6
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
$0.18
$0.30
$0.24
$0.23
$0.19
$0.25
$0.25
$0.22
$0.21
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
See supplemental slide for adjusted EBITDA reconciliation and important disclosures regarding
CECOs use of adjusted EBITDA.
Note: |
16
Environmental Segment
Revenue
Revenue of $41.7 million was up 56% y/y
Bookings of $51.2 million in 1Q15, up 66% y/y with >15%
due to organic
The OneCECO systems approach is gaining traction with creating
customer value
Aftermarket continues to gain momentum to bolster our P&L
Overall a solid quarter in our Environmental segment
Bookings
($ in millions)
First Quarter Results
$26.7
$32.9
$27.7
$40.3
$41.7
1Q14
2Q14
3Q14
4Q14
1Q15
$30.9
$26.4
$24.6
$33.3
$51.2
1Q14
2Q14
3Q14
4Q14
1Q15 |
17
Revenue
Revenue of $24.3 million was up 59% y/y
Bookings of $26.5 million in 1Q15, up 81.5% sequentially
Aftermarket and retrofit opportunities continue to grow
Bookings
Energy Segment
($ in millions)
First Quarter Results
$15.3
$16.8
$18.0
$20.2
$24.3
1Q14
2Q14
3Q14
4Q14
1Q15
$17.8
$14.8
$28.4
$14.6
$26.5
1Q14
2Q14
3Q14
4Q14
1Q15 |
18
Revenue
Revenue of $15.2 million, down 4.4% sequentially
Bookings of $16.2 million, up 2.5% sequentially
Margin expansion and operational excellence continuing on plan
Added strategic Sales leadership resources during Q1
Bookings
Fluid Handling & Filtration Segment
($ in millions)
First Quarter Results
$15.5
$16.7
$17.6
$15.9
$15.2
1Q14
2Q14
3Q14
4Q14
1Q15
$15.1
$16.6
$16.7
$15.8
$16.2
1Q14
2Q14
3Q14
4Q14
1Q15 |
19
12/31/2011
12/31/2012
12/31/2013
12/31/2014
3/31/2015
Cash & Equivalents
$ 12.7
$
23.0
$ 22.7
$ 19.4
$ 19.0
Total Assets
$ 79.3
$ 94.1
$348.5
$414.4
$417.4
Total Bank Debt
$ 0.0
$
0.0
$ 89.1
$112.4
$112.9
Convertible Debt
$ 9.6
$
0.0
$ 0.0
$ 0.0
$ 0.0
Shareholders
Equity
$ 43.0
$
62.0
$170.4
$181.2
$179.3
Current Asset
Current Liabilities
Net Working Capital
$ 53.5
$(23.6)
$ 29.9
$ 64.3
$(27.5)
$ 36.8
$124.8
$(59.3)
$ 65.5
$143.0
$(75.4)
$ 67.6
Balance Sheet
.
Selected Balance Sheet
Information
Note: Balance Sheet figures presented as reported in Company filings
$151.0
$(83.9)
$ 67.1
Net Debt to Pro Forma EBITDA = 2.03 Leverage Ratio
Balance Sheet Detail
($ Millions) |
Supplemental
20 |
21
Non-GAAP Gross Margin
($ in millions)
Annual
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Annual
2014
Q1
2015
$ 61.6
$ 19.7
$ 21.4
$ 21.1
$ 22.6
$ 84.8
$ 21.0
31.2%
34.4%
32.1%
33.3%
29.7%
32.2%
25.9%
1.1
-
-
-
-
$
- -
0.2
0.2
0.1
0.2
0.1
$
0.6
0.2
$ 62.9
$ 19.9
$ 21.5
$ 21.3
$ 22.7
$ 85.4
$ 21.2
31.9%
34.8%
32.3%
33.6%
29.8%
32.4%
26.2%
with GAAP
with GAAP
Gross profit as reported in accordance
Gross profit margin in accordance
Inventory valuation adjustment
Plant, property and equipment
Non-GAAP gross margin
Non-
GAAP Gross profit margin
valuation adjustment |
22
Non-GAAP Operating Margin
($ in millions)
Operating income as reported in accordance with GAAP
$ 7.0
$ 5.5
$ 7.2
$ 5.2
$ 3.8
$ 21.7
$ 3.0
Operating margin in accordance with GAAP
3.5%
9.6%
10.8%
8.2%
5.0%
8.2%
3.7%
Inventory valuation adjustment
1.1
-
-
-
-
-
-
Plant, property and equipment valuation
adjustment
0.2
0.2
0.1
0.2
0.1
0.6
0.2
Acquisition and integration expenses
7.2
0.1
0.2
0.1
0.9
1.3
0.3
Amortization and earn-out expenses
6.8
2.5
2.4
2.4
2.8
10.1
4.0
Legal reserves
3.5
-
-
0.3
-
0.3
-
Non-GAAP operating income
$
25.8
$ 8.3
$ 9.9
$
8.2
$ 7.6
$ 34.0
$ 7.5
Non-GAAP Operating margin
13.1%
14.5%
14.9%
12.9%
10.0%
12.9%
9.3%
Annual
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Annual
2014
Q1
2015 |
23
Non-GAAP NI & EBITDA
($ in millions)
Annual
2009
Annual
2010
Annual
2011
Annual
2012
Annual
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Annual
2014
Q1
2015
Net income as reported in accordance with GAAP
$ (15.0)
$
2.1
$
8.3
$ 10.9
$
6.6
$
3.0
$ 4.5
$
3.7 $
1.9 $ 13.1
$ 0.2
Inventory valuation adjustment
-
-
-
-
1.1
-
-
-
-
-
-
Plant, property and equipment valuation adjustment
-
-
-
-
0.2
0.2
0.1
0.2
0.1
0.6
0.2
Acquisition and integration expenses
-
-
-
-
7.2
0.1
0.2
0.1
0.9
1.3
0.3
Amortization and earn-out expenses
-
-
-
-
6.8
2.5
2.4
2.4
2.8
10.1
4.0
Legal reserves
-
-
-
-
3.5
-
-
0.3
-
0.3
-
Foreign currency remeasurement
-
-
-
-
(1.1)
-
-
1.7
1.2
2.9
2.7
Tax benefit of expenses
-
-
-
-
(4.6)
(0.8)
(0.7)
(1.2)
(1.0)
(3.7)
(1.7)
Non-GAAP net income
$ (15.0)
$
2.1
$
8.3
$ 10.9
$ 19.7
$
5.0
$ 6.5
$
7.2
$
5.9
$
24.6
$
5.7
Depreciation
2.5
1.8
1.4
1.2
1.6
0.8
0.7
0.8
0.8
3.1
0.7
Non-cash stock compensation
1.0
0.9
0.7
0.7
1.1
0.3
0.4
0.5
0.5
1.7
0.4
Goodwill impairment
17.1
-
-
-
-
-
-
-
-
-
-
Other (income)/expense
0.8
0.1
(0.5)
0.1
0.1
0.1
0.1
(0.2)
(0.6)
(0.6)
(1.0)
Interest expense
1.3
1.2
1.1
1.2
1.5
0.7
0.8
0.7
0.9
3.1
1.0
Income tax expense
(3.1)
1.4
3.4
4.5
4.5
2.5
2.5
0.4
1.4
6.8
1.8
Non-GAAP EBITDA
$
4.6
$
7.5
$ 14.4
$
18.6 $
28.5
$
9.4 $ 11.0
$ 9.4
$
8.9
$ 38.7
$
8.6
Basic Shares Outstanding
20,116,991
25,606,352
25,643,508
25,691,884
26,057,831
25,750,972
26,271,316
Diluted Shares Outstanding
20,719,951
26,115,512
26,107,648
26,129,427
26,467,984
26,196,901
26,598,799
Earnings (loss) per share:
Basic
$ 0.33
$ 0.12
$ 0.18
$ 0.14
$
0.07
$ 0.51
$ 0.01
Diluted
$ 0.32
$ 0.12
$ 0.17
$ 0.14
$ 0.50
$ 0.01
$
0.07 |
24
($ in Millions)
CECO
Reported
Pro-forma
(Recent
Acquisitions)
CECO
Standalone
PMFG
Pro-forma
CECO
Combined
GAAP Revenues
$263.2
$64.7
$327.9
$158.1
$ 486.0
GAAP Gross profit
$84.8
$13.6
$98.4
$45.7
$144.1
SG&A as reported in accordance with GAAP
$51.4
$6.6
$58.0
$51.5
$109.5
GAAP Net income
$13.1
$8.1
$21.2
($33.1)
($11.9)
Amortization and earn-out expenses
$10.1
-
$10.1
$0.9
$11.0
Other
(1)
$5.1
$0.3
$5.4
$26.5
$31.9
Tax benefit of expenses
($3.7)
-
($3.7)
($2.2)
($5.9)
Non-GAAP net income
$24.6
$8.4
$33.0
($7.8)
$25.2
Depreciation
$3.1
-
$3.1
$1.8
$4.9
Non-cash stock compensation
$1.7
-
$1.7
$1.1
$2.8
Other (income)/expense
($0.6)
-
($0.6)
($0.1)
($0.7)
Interest expense
$3.1
-
$3.1
$1.8
$4.9
Income tax expense
$6.8
-
$6.8
1.1
$7.9
Non GAAP Adjusted EBITDA
$38.7
$8.4
$47.1
($2.1)
$45.0
Non-GAAP Adjusted EBITDA (with Synergies)
$60.0
GAAP to Non-GAAP Adjusted EBITDA Reconciliation
(Twelve Months ended 12/31/2014)
(1) Includes
plant,
property
and
equipment
(PPE)
valuation
adjustments,
acquisition
and
integration
expenses,
legal
reserves
and
foreign
currency
remeasurement |
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