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): August 27, 2015
CECO Environmental Corp.
(Exact Name of registrant as specified in its charter)
Delaware | 000-7099 | 13-2566064 | ||
(State or other jurisdiction of incorporation) |
(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 8.01. | Other Events. |
On May 3, 2015, CECO Environmental Corp., a Delaware corporation (the Company), entered into an Agreement and Plan of Merger (the Merger Agreement) with PMFG, Inc., a Delaware corporation (PMFG), Top Gear Acquisition Inc., a Delaware corporation and a wholly owned subsidiary of CECO (Merger Sub I), and Top Gear Acquisition II LLC, a Delaware limited liability company and wholly owned subsidiary of CECO (Merger Sub II). The Merger Agreement provides for, among other things, (1) the merger of PMFG with and into Merger Sub I, with PMFG as the surviving entity, and (2) a subsequent merger whereby PMFG will merge with and into Merger Sub II, with Merger Sub II as the surviving entity.
On August 27, 2015, PMFG issued a press release announcing its financial results for the fiscal year ended June 27, 2015. A copy of PMFGs press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference.
Important Information for Investors and Stockholders
This Current Report on Form 8-K is not a substitute for the final prospectus/proxy statement that CECO Environmental Corp. (CECO) filed with the U.S. Securities and Exchange Commission (the SEC) on July 31, 2015, which includes 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, Inc. (PMFG) in connection with the merger between CECO and PMFG. The prospectus/proxy statement has been sent or given to the stockholders of record as of the close of business on July 30, 2015 of each of CECO and PMFG and contains important information about the merger and related matters, including detailed risk factors. CECOs AND PMFGs SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE FINAL PROSPECTUS/PROXY STATEMENT AND OTHER DOCUMENTS RELATING TO THE MERGER THAT HAVE BEEN FILED WITH THE SEC IN THEIR ENTIRETY AND CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The prospectus/proxy statement and other documents that have been filed with the SEC by CECO and PMFG are available without charge at the SECs website, www.sec.gov, or by directing a request 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.
This communication is for informational purposes only and 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 communication 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 and executive officers may be deemed to be participants in the solicitation of proxies in connection with the proposed transactions and may have direct or indirect interests in the proposed transactions. Information about the directors and executive officers of CECO is set forth in its prospectus/proxy statement filed on July 31, 2015, the proxy statement for its 2015 annual meeting of shareholders and CECOs Annual Report on Form 10-K for the year ended December 31, 2014, which were filed with the SEC on April 10, 2015 and March 18, 2015, respectively. Information about the directors and executive officers of PMFG is set forth in its proxy statement filed on July 31, 2015, and the proxy statement for its 2014 annual meeting of shareholders and PMFGs Annual Report on Form 10-K for the year ended June 28, 2014, which were filed with the SEC on October 16, 2014 and September 10, 2014, respectively. 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.
Safe Harbor for Forward-Looking Statements
Any statements contained in this Current Report on Form 8-K other than statements of historical fact, including statements about managements beliefs and expectations of the proposed merger and related transactions and future results, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be evaluated accordingly. 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, target, should, may, will and similar expressions and their negative forms are intended to identify forward-looking statements.
Forward-looking statements 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 the ability to complete the proposed merger and related transactions between CECO and PMFG; the receipt of shareholder approvals; the availability of financing to be obtained by CECO; the ability to successfully integrate CECOs and PMFGs operations, product lines, technologies and employees; the ability to realize revenue and customer growth opportunities, combined revenue goals, marketing and cost synergies from the proposed merger between CECO and PMFG in a timely manner or at all; factors related to the businesses of CECO and PMFG including economic, political and financial market conditions generally and economic conditions in CECOs and PMFGs target markets; dependence on fixed-price contracts and the risks associated with those contracts, including actual costs exceeding estimates and method of accounting for contract revenue; fluctuations in operating results from period-to-period due to cyclicality of the businesses; the effect of the merger and related transactions on each of CECOs and PMFGs 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; unknown, underestimated or undisclosed commitments or liabilities; the potential for fluctuations in prices for manufactured components and raw materials; the potential impact of the announcement or consummation of the proposed transactions on the parties relationships with third parties, which may make it more difficult to maintain business and operational relationships; the substantial amount of debt expected to be incurred in connection with the proposed merger and CECOs ability to repay or refinance it, incur additional debt in the future or obtain a certain debt coverage ratio; diversion of management time from each of CECOs and PMFGs ongoing operations; the impact of federal, state or local government regulations; and the effect of competition in the air pollution control and industrial ventilation industry.
These and other risks and uncertainties are discussed in more detail in CECOs and PMFGs current and future filings with the SEC, including the final prospectus/proxy statement under the heading Risk Factors, which was filed by each of CECO and PMFG on July 31, 2015, CECOs Annual Report on Form 10-K for the fiscal year ended December 31, 2014 under the heading Item 1A. Risk Factors, which was filed with the SEC on March 18, 2015 and PMFGs Annual Report on Form 10-K for the fiscal year ended June 28, 2014 under the heading Item 1A. Risk Factors, which was filed with the SEC on September 10, 2014. 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 as of the date the statement is made. All forward-looking statements attributable to CECO or PMFG or persons acting on behalf of either CECO or PMFG are expressly qualified in their entirety by the cautionary statements and risk factors contained in this Current Report on Form 8-K and CECOs and PMFGs respective filings with the SEC. 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 SEC, neither CECO nor PMFG undertakes any obligation to update or review any forward-looking statement or information, whether as a result of new information, future events or otherwise, except as required by law.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit No. |
Description | |
99.1 | PMFG, Inc.s Earnings Release issued August 27, 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: August 27, 2015 |
CECO ENVIRONMENTAL CORP. | |||
By: | /s/ Edward J. Prajzner | |||
Edward J. Prajzner Chief Financial Officer and Secretary |
EXHIBIT INDEX
Exhibit No. |
Description | |
99.1 | PMFG, Inc.s Earnings Release issued August 27, 2015 |
Exhibit 99.1
IMMEDIATE RELEASE
PMFG, Inc. (parent of Peerless Mfg. Co.) Reports Fourth Quarter and Fiscal Year 2015 Financial Results
Dallas, Texas August 27, 2015 PMFG, Inc. (the Company) (NASDAQ: PMFG) today reported financial results for the quarter and fiscal year ended June 27, 2015.
Fourth Quarter Fiscal Year 2015 Compared to 2014
Revenue in the fourth quarter of fiscal 2015 decreased $2.0 million, or 5.0 percent, to $37.7 million compared to the fourth quarter of fiscal 2014. The decline in revenue is largely attributed to a strong fourth quarter in fiscal 2014 in our Environmental Systems segment. On a sequential basis, revenue in the fourth quarter of fiscal 2015 increased $2.9 million, or 8.4 percent, over the third quarter of fiscal 2015.
Gross profit in the quarter of $9.4 million decreased $0.6 million compared to $10.0 million in the prior year period because of the decrease in revenue. Gross profit as a percent of revenue of 24.9 percent in the current quarter was essentially flat in comparison to 25.2 percent in the prior year period. Gross profit was negatively impacted in the current quarter by the write-off of approximately $0.8 million of excess and obsolete inventory taken as part of the Companys focus on improving working capital. Operating expenses increased $0.9 million, or 6.3 percent, in the quarter compared to the prior year period. Operating expenses in the fourth quarter of 2015 included $2.0 million of costs related to the pending merger with CECO Environmental Corp. (CECO), as well as $0.3 million of employee severance costs. The Company also recognized a non-cash impairment charge of $0.4 million in the fourth quarter of 2015 related to certain trade name and design guidelines.
Net loss attributable to PMFG, Inc. common stockholders was $6.7 million, or $0.31 per diluted share, in the quarter compared to a net loss of $30.0 million, or $1.42 per diluted share, in the prior year period.
Reporting Segments
Process Products segment revenue increased $1.4 million, or 5.1 percent, in the quarter to $27.4 million. The increase is attributable to higher revenue from oily-water separation systems (Skimovex) in the EMEA and APAC regions, partially offset by lower relative revenue from separation and filtration projects in the United States and Germany. The Process Products segment realized gross profit of $5.7 million in the quarter, an increase of $0.3 million over the prior year period. Gross profit as a percent of revenue improved to 20.7 percent compared to 20.4 percent in the prior year period. Cost overruns on specific projects and inefficiencies in the operation of our manufacturing facilities negatively impacted the gross profit margins in both the current and prior quarters. Excluding the impact of impairment of goodwill and intangible assets, segment operating income increased $0.8 million to $0.5 million compared to a loss of $0.3 million in the prior year period.
Environmental Systems segment revenue decreased $3.3 million, or 24.4 percent, in the fourth quarter of fiscal 2015 to $10.3 million, attributed largely to fewer environmental and combustion opportunities for burner conversion projects. The demand for combustion modifications and conversions is directly impacted by environmental regulations and the relative price and availability of natural gas to other fuel sources. The Environmental Systems segment realized gross profit of $3.7 million in the current quarter, or 36.0 percent of segment revenue. Segment operating income decreased $0.7 million to $1.6 million compared to $2.3 million in the prior year period.
Fiscal Year-To-Date 2015 Compared to 2014
Revenue for the fiscal year ended June 27, 2015 increased $28.0 million, or 21.4 percent, to $158.6 million. The year-over-year growth in revenue is largely attributed to increased Environmental Systems revenue in the United States with positive contributions from the EMEA and APAC regions.
Gross profit increased by $9.7 million, or 27.0 percent, to $45.6 million compared to $35.9 million in fiscal 2014. Included in the cost of goods sold for fiscal 2015 is $399,000 benefit from the reimbursement of previously incurred warranty costs. Included in the cost of goods sold for fiscal 2014 is $485,000 of restructuring costs related to the closure of a manufacturing plant in Texas and the relocation of the fabrication activities to the remaining plants in Texas. Gross profit as a percent of revenue improved to 28.7 percent in fiscal 2015 compared to 27.5 percent in the prior year period. During fiscal 2015, gross profit as a percentage of revenue benefitted from operational initiatives designed to improve project execution, but was offset by cost overruns and customer back-charges on specific projects.
Operating expenses increased $5.5 million, or 11.8 percent, in the fiscal year largely attributed to the acquisition of CCA, global information technology system expenditures, process-improvement initiatives and costs related to the pending merger with CECO. The Company recognized a loss on impairment of goodwill and intangibles totaling $26.6 million in fiscal 2014. The net loss attributable to PMFG, Inc. common stockholders was $8.5 million or $0.40 per diluted share for fiscal 2015 compared to a net loss of $38.4 million and $1.82 per diluted share in the prior fiscal year.
Reporting Segments
Process Products segment revenue increased $6.3 million, or 6.4 percent, to $105.3 million in fiscal 2015. The increase in revenue is attributed to higher demand for pressure vessels and oily water separation systems destined for the EMEA region. Gross profit in fiscal 2015 was generally flat compared to the prior fiscal year as the benefit of higher revenue was offset by cost overruns and back-charges. Excluding the impact of the impairment of goodwill and intangible assets, segment operating income increased $2.3 million, or 61.7 percent, to $6.1 million.
Environmental Systems segment revenue increased $21.7 million, or 68.4 percent, to $53.3 million in fiscal 2015. The higher revenue reflects the acquisition of CCA, combined with higher demand for environmental solutions. Segment operating income increased $5.3 million to $11.7 million in fiscal 2015.
Net Bookings and Backlog
Net bookings totaled $19.1 million and $123.9 million during the three and twelve month periods ended June 27, 2015, respectively. This compares to net bookings of $48.3 million and $159.3 million for the three and twelve month periods ended June 28, 2014. Bookings in the third quarter of fiscal 2015 were $27.6 million. The decrease in year-over-year bookings reflects the delay in the awards of several large projects, cancellation of planned infrastructure projects in Eastern Europe, as well as the overlap of certain larger projects awarded during fiscal 2014. We believe the delays in anticipated project awards resulted in part from recent declines in global oil prices and uncertainties regarding the timing, direction and trajectory of future movements in energy prices.
The backlog at June 27, 2015 was $81.2 million compared to $99.8 million at the end of March 2015. We estimate approximately 85 percent of the backlog value at June 27, 2015 will be recognized as revenue over the next 12 months.
Financial Condition and Cash Flows
At June 27, 2015, the Company reported $34.8 million of cash and cash equivalents (including $17.3 million of restricted cash and cash equivalents used as collateral for term loans and outstanding letters of credit), total assets of $162.5 million, net current assets of $36.1 million and a current ratio of 1.5 to 1.0.
Unrestricted cash and cash equivalents decreased $9.7 million during the fiscal year ended June 27, 2015, compared to a decrease of $25.7 million in the prior fiscal year. Cash flows in fiscal 2015 include $3.3 million used in operating activities, $1.8 million used in investing activities, $2.7 million used in financing activities and $1.9 million effect of exchange rate changes on cash.
About PMFG
We are a leading provider of custom engineered systems and products designed to help ensure that the delivery of energy is safe, efficient and clean. We primarily serve the markets for natural gas infrastructure, power generation and petrochemical processing. Headquartered in Dallas, Texas, we market our systems and products worldwide.
Safe Harbor Under The Private Securities Litigation Reform Act of 1995
Certain statements contained in this press release that are not historical facts are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors that could cause the actual results to be materially different from those expressed or implied by such forward-looking statements. The words anticipate, preliminary, expect, believe, intend and similar expressions identify forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for these forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause actual results to differ materially from the anticipated results expressed in these forward-looking statements. The risks and uncertainties that may affect the Companys results include the ability to complete the pending merger with CECO; the Companys ability to increase revenue and market share; the receipt of new, and the non-cancellation of existing, contracts; the Companys ability to effectively manage its business functions while growing its business in a rapidly changing environment; the Companys ability to identify growth opportunities, including through acquisitions and strategic partnerships; the Companys ability to satisfy financial and nonfinancial covenants and requirements of our debt agreements; the Companys ability to adapt and expand its services in such an environment; the quality of the Companys plans and strategies; and the Companys ability to execute such plans and strategies. Other important information regarding factors that may affect the Companys future performance is included in the public reports that the Company files with the Securities and Exchange Commission, including the information under the heading Risk Factors in our Proxy Statement filed on July 31, 2015 and the information under Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended June 28, 2014. The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this release, or to reflect the occurrence of other events. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The inclusion of any statement in this release does not constitute an admission by the Company or any other person that the events or circumstances described in such statement are material.
For Further Information Contact:
Mr. Peter J. Burlage, President and Chief Executive Officer
Mr. Ronald L. McCrummen, Chief Financial Officer
PMFG, Inc.
14651 North Dallas Parkway, Suite 500
Dallas, Texas 75254
Phone: (214) 353-5545
Fax: (214) 351-4172
www.peerlessmfg.com
Important Information for Investors and Stockholders
The information in this press release is not a substitute for the prospectus/proxy statement (the Joint Proxy Statement/Prospectus) that CECO filed with the SEC on July 31, 2015, which includes a prospectus with respect to shares of CECO common stock to be issued in the pending merger with CECO (the Merger) and a proxy statement of each of CECO and PMFG in connection with the Merger. The Joint Proxy Statement/Prospectus has been sent or given to the stockholders of record as of the close of business on July 30, 2015 of each of CECO and PMFG and will contain important information about the Merger and related matters, including detailed risk factors. CECOS AND PMFGS SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS RELATING TO THE MERGER HAVE BEEN FILED WITH THE SEC IN THEIR ENTIRETY AND CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The Joint Proxy Statement/Prospectus and other documents that have been filed with the SEC by CECO and PMFG are available without charge at the SECs website, www.sec.gov, or by directing a request 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.
This communication is for informational purposes only and 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 communication 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
PMFG and CECO, 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 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. 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. Investors may obtain additional information regarding the interests of such participants in the proposed transactions by reading the Joint Proxy Statement/Prospectus for such proposed transactions.
PMFG, Inc.
Condensed Financial Information
(In thousands, except per share amounts)
Three Months Ended June 27, | Three Months Ended June 28, | |||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
Operating Results | GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | ||||||||||||||||||
Revenues |
$ | 37,698 | $ | | $ | 37,698 | $ | 39,693 | $ | | $ | 39,693 | ||||||||||||
Cost of goods sold |
28,313 | 28,313 | 29,673 | (44 | ) | 29,629 | ||||||||||||||||||
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Gross profit |
9,385 | | 9,385 | 10,020 | 44 | 10,064 | ||||||||||||||||||
Operating expenses |
14,636 | (2,001 | ) | 12,635 | 13,775 | | 13,775 | |||||||||||||||||
Loss on impairment of goodwill and intangibles |
406 | (406 | ) | | 26,631 | (26,631 | ) | | ||||||||||||||||
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Operating income |
(5,657 | ) | 2,407 | (3,250 | ) | (30,386 | ) | 26,675 | (3,711 | ) | ||||||||||||||
Other income (expense): |
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Interest income |
21 | | 21 | (40 | ) | | (40 | ) | ||||||||||||||||
Interest expense |
(257 | ) | | (257 | ) | (527 | ) | | (527 | ) | ||||||||||||||
Foreign exchange gain (loss) |
(808 | ) | | (808 | ) | (132 | ) | | (132 | ) | ||||||||||||||
Other income (expense) |
97 | | 97 | 3 | | 3 | ||||||||||||||||||
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Income (loss) before income taxes |
(6,604 | ) | 2,407 | (4,197 | ) | (31,082 | ) | 26,675 | (4,407 | ) | ||||||||||||||
Income tax benefit (expense) |
(72 | ) | (72 | ) | 1,023 | (2,150 | ) | (1,127 | ) | |||||||||||||||
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Net earnings (loss) |
$ | (6,676 | ) | $ | 2,407 | $ | (4,269 | ) | $ | (30,059 | ) | $ | 24,525 | $ | (5,534 | ) | ||||||||
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Less net earnings (loss) attributable to noncontrolling interest |
(13 | ) | | (13 | ) | (51 | ) | | (51 | ) | ||||||||||||||
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Net earnings (loss) attributible to PMFG common stockholders |
$ | (6,663 | ) | $ | 2,407 | $ | (4,256 | ) | $ | (30,008 | ) | $ | 24,525 | $ | (5,483 | ) | ||||||||
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Basic earnings per share |
$ | (0.31 | ) | $ | (0.20 | ) | $ | (1.42 | ) | $ | (0.26 | ) | ||||||||||||
Diluted earnings per share |
$ | (0.31 | ) | $ | (0.20 | ) | $ | (1.42 | ) | $ | (0.26 | ) | ||||||||||||
Weighted-average shares outstanding |
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Basic |
21,297 | 21,297 | 21,067 | 21,067 | ||||||||||||||||||||
Diluted |
21,297 | 21,297 | 21,067 | 21,067 | ||||||||||||||||||||
Adjusted EBITDA |
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Net earnings (loss) |
$ | (4,269 | ) | $ | (5,534 | ) | ||||||||||||||||||
Depreciation and amortization |
731 | 731 | ||||||||||||||||||||||
Interest expense, net |
236 | 567 | ||||||||||||||||||||||
Income tax expense (benefit) |
72 | 1,127 | ||||||||||||||||||||||
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Adjusted EBITDA |
$ | (3,230 | ) | $ | (3,109 | ) | ||||||||||||||||||
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PMFG, Inc.
Condensed Financial Information
(In thousands, except per share amounts)
Twelve Months Ended June 27, | Twelve Months Ended June 28, | |||||||||||||||||||||||
2015 | 2014 | |||||||||||||||||||||||
Operating Results | GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | ||||||||||||||||||
Revenues |
$ | 158,643 | $ | | $ | 158,643 | $ | 130,650 | $ | | $ | 130,650 | ||||||||||||
Cost of goods sold |
113,046 | 399 | 113,445 | 94,754 | (529 | ) | 94,225 | |||||||||||||||||
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Gross profit |
45,597 | (399 | ) | 45,198 | 35,896 | 529 | 36,425 | |||||||||||||||||
Operating expenses |
52,002 | (1,832 | ) | 50,170 | 46,505 | (576 | ) | 45,929 | ||||||||||||||||
Loss on impairment of goodwill and intangibles |
406 | (406 | ) | | 26,631 | (26,631 | ) | | ||||||||||||||||
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Operating income |
(6,811 | ) | 1,839 | (4,972 | ) | (37,240 | ) | 27,736 | (9,504 | ) | ||||||||||||||
Other income (expense): |
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Interest income |
80 | | 80 | 23 | | 23 | ||||||||||||||||||
Interest expense |
(1,748 | ) | | (1,748 | ) | (1,668 | ) | | (1,668 | ) | ||||||||||||||
Foreign exchange gain (loss) |
(905 | ) | | (905 | ) | (799 | ) | | (799 | ) | ||||||||||||||
Other income (expense) |
1,682 | (1,238 | ) | 444 | 89 | | 89 | |||||||||||||||||
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Income (loss) before income taxes |
(7,702 | ) | 601 | (7,101 | ) | (39,595 | ) | 27,736 | (11,859 | ) | ||||||||||||||
Income tax benefit (expense) |
(520 | ) | (520 | ) | 1,277 | (2,293 | ) | (1,016 | ) | |||||||||||||||
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Net earnings (loss) |
$ | (8,222 | ) | $ | 601 | $ | (7,621 | ) | $ | (38,318 | ) | $ | 25,443 | $ | (12,875 | ) | ||||||||
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Less net earnings (loss) attributable to noncontrolling interest |
250 | | 250 | 66 | | 66 | ||||||||||||||||||
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Net earnings (loss) attributible to PMFG common stockholders |
$ | (8,472 | ) | $ | 601 | $ | (7,871 | ) | $ | (38,384 | ) | $ | 25,443 | $ | (12,941 | ) | ||||||||
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Basic earnings per share |
$ | (0.40 | ) | $ | (0.37 | ) | $ | (1.82 | ) | $ | (0.61 | ) | ||||||||||||
Diluted earnings per share |
$ | (0.40 | ) | $ | (0.37 | ) | $ | (1.82 | ) | $ | (0.61 | ) | ||||||||||||
Weighted-average shares outstanding |
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Basic |
21,274 | 21,274 | 21,086 | 21,086 | ||||||||||||||||||||
Diluted |
21,274 | 21,274 | 21,086 | 21,086 | ||||||||||||||||||||
Adjusted EBITDA |
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Net earnings (loss) |
$ | (7,621 | ) | $ | (12,875 | ) | ||||||||||||||||||
Depreciation and amortization |
2,582 | 2,582 | ||||||||||||||||||||||
Interest expense, net |
1,668 | 1,645 | ||||||||||||||||||||||
Income tax expense (benefit) |
520 | 1,016 | ||||||||||||||||||||||
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Adjusted EBITDA |
$ | (2,851 | ) | $ | (7,632 | ) | ||||||||||||||||||
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June 27, | June 28, | |||||||
Condensed Balance Sheet Information | 2015 | 2014 | ||||||
Current assets |
$ | 102,874 | $ | 104,834 | ||||
Non-current assets |
59,619 | 62,389 | ||||||
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Total assets |
$ | 162,493 | $ | 167,223 | ||||
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Current liabilities |
$ | 66,806 | $ | 49,725 | ||||
Long term debt |
2,900 | 14,149 | ||||||
Other non current liabilities |
5,175 | 5,877 | ||||||
Total equity |
87,612 | 97,472 | ||||||
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Total liabilities and equity |
$ | 162,493 | $ | 167,223 | ||||
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STATEMENT REGARDING NON-GAAP RESULTS
PMFG, Inc. has provided a reconciliation of non-GAAP measures in order to provide the users of this financial information with a better understanding of the impact on our financial results resulting from certain events. Adjustments in the three and twelve months ended June 27, 2015 relate to the impairment of goodwill and intangible assets and non-recurring costs associated with the proposed Merger with CECO. Also excluded in the non-GAAP results for the twelve months ended June 27, 2015 is the gain resulting from the sale of the Companys heat exchanger product line and a one-time settlement with the Nitram selling shareholders to reimburse the Company for previously incurred warranty and environmental remediation and monitoring costs. Adjustments in the three and twelve months ended June 28, 2014 relate to non-recurring costs associated with the purchase of Combustion Components Associates, Inc. and transitioning to our new manufacturing facilities offset by the gain on the sale of the former manufacturing facility in Denton, Texas and the impairment of the goodwill and intangible assets. Management believes that excluding these items from the Companys financial results provides investors with a clearer perspective of the current underlying operating performance of the Company, a clearer comparison between results in different periods and greater transparency regarding supplemental information used by management in its financial and operational decision making. These non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measures should be considered in addition to, but not as a substitute for, the information contained in our financial statements prepared in accordance with GAAP.