CECO Environmental Corp.

Good morning, ladies and gentlemen, and welcome to the SECO Environmental Q1 2021 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Matt Eckel, Chief Financial Officer of SECO Environmental. Please go ahead.

Thank you for joining us on the SECO Environmental first quarter 2021 conference call. On the call today is Todd Gleason, Chief Executive Officer, and myself, Matt Eckel, Chief Financial Officer. Before we begin, I'd like to note that we have provided a slide presentation to help guide our discussion. The call will be webcast along with our earnings presentation on our website at cecoenviro.com. The presentation materials can be accessed through the investor relations section of the website. I'd also like to caution investors regarding forward-looking statements. Any statements made in today's presentation that are not based on historical facts are forward-looking statements. Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties. Actual future results may vary materially from those expressed or implied by the forward-looking statements. We encourage you to read the risks described in our SEC filings on Form 10-K for the year ended December 31, 2020. Except to the extent required by applicable security laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that we make here today, whether as a result of new information, future events, or otherwise. Today's presentation will also include references to certain non-GAAP financial measures. We reconciled the comparable GAAP and non-GAAP numbers in today's press release, as well as the supplemental tables in the back of the slide deck. And with that, I'll turn the call over to Todd.

Thanks, Matt, and good morning, everyone. I would like to start by thanking our CEQA employees for their dedication and contributions to ensure we continue to deliver for our stakeholders. We would also like to thank our suppliers and partners around the world for helping us to navigate these challenging times. We appreciate all your efforts. Before we discuss the quarterly results, let me also welcome Ramesh Noogahalli to our leadership team as SECO's first Chief Operating Officer. Ramesh is a proven executive with significant experience driving high performance businesses. Ramesh has been an executive general manager for several leading industrial companies, including international assignments in the Middle East and Asia Pacific. Additionally, Ramesh has helped to create and execute growth strategies and M&A activities at the corporate and business unit level. It's great to have him on the team. Now, please turn to slide three as I will highlight the key financial results for the first quarter. Building off the momentum from the fourth quarter of 2020, we started 2021 strong. As we stressed in our last earnings conference call, it was critical we start 2021 with a solid bookings quarter. We did that and more. Orders were $92 million, up 22% year-over-year. We will discuss the details of our orders in a few minutes, but we are pleased with the balanced contribution for many of our businesses and end-market momentum. Sales were down 11% year-over-year as our $72 million of revenue reflected the lower starting backlog position we had entering 2021. We expect sales to pivot towards growth in the second half given our backlog is back above $200 million after our book to bill was approximately 1.3 times. So it is great to replenish our backlog and turn towards revenue growth. Q1 gross margins were 33.9% which were down approximately 120 basis points on project mix. We continue to see very good project execution and are pleased with our margin levels given how challenged 2020 was from a bookings perspective. Adjusted EBITDA was $6.4 million in the quarter, down approximately $1 million, but reflecting a strong conversion to sales. This demonstrates the important work we have done to streamline our SG&A costs. Adjusted earnings per share of $0.09 was down year over year, but again, we were coming off a tough year as the COVID pandemic slowed our 2020 growth, and so we started 2021 with a lower backlog. Free cash flow was another major highlight in the first quarter at $9.4 million, just an outstanding start to the year. While our cash flow generation can be choppy from quarter to quarter, we continue to be confident we will generate excellent free cash flow in 2021. Now, please turn to slide number four. For several years, we have communicated SECO as three segments, energy, industrial, and fluid handling, or PUPS. But the fact is, Seco is really a collection of leading platforms that provide our customers with engineered systems or industrial process solutions to solve complex challenges in their operating environment or to protect the natural environment. No doubt certain projects are aligned with various end markets such as energy, but overall we can and do sell engineered systems beyond the energy sector in our historic consolidation of the results. In fact, we continue to see new demand for various systems in water treatment and other areas that are outside the core energy segment. As such, we are retiring the segment names energy as well as industrial air and fluid handling. Instead, going forward, we will refer to these segments as engineered systems and industrial process solutions. This broadens our thinking with respect to market opportunity and removes the external view that we have energy-only products in our largest segments. Within these two segments are well-established business platforms that serve as leaders in emission management, air pollution control, noise and vibration management, separations technologies, and so on. This is how our customer buys and how they recognize Seco Environmental as a leader, not as an energy company per se or fluid handling, but instead a solutions provider to solve their most complex challenges in environmental or industrial process areas. As we roll out our strategies in the coming months, we will articulate our focus to steadily build on our leadership position and advance in adjacent industrial markets. These platforms are structurally in place today, and we are prioritizing growth initiatives, both organic and inorganic, for each. When we articulate a major project award in the rapidly growing electric vehicle arena, which is a real example of some of our orders growth so far this year, It is important to understand it is within the air pollution control arena. Similarly, a recently announced multi-million dollar project award to supply our leading arting noise abatement solutions may be associated with the energy markets, but it really extends beyond historic energy segment alone. We are helping to provide grid stabilization solutions to support renewable energy sources. As we think more broadly about investments to advance our leading platforms, we expect to find adjacencies and growth avenues. I expect our platform leaders need to and will think aggressively about their markets and where we can invest for more growth. And I want them to challenge their teams to think beyond their traditional markets and look for adjacencies and new opportunities. It's all about growth. It's all about sustainable growth. I will now turn it back over to Matt and he will provide more detail on our financial results and key metrics. Then I will conclude with some final comments. Matt?