CECO Environmental Corp.

Good morning and welcome to the SECO Environmental Second Quarter 2021 Conference Call. All participants will be in 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 then one on your touchtone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Stephen Hoosier, Investor Relations Representative. Please go ahead.

Thank you for joining us on the SECO Environmental Second Quarter 2021 Conference Call. On the call with me today is Todd Gleason, Chief Executive Officer, and Matt Echol, 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, which is on our website at cecoinviro.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 fact are forward-looking statements. Such statements are based on estimates and expectations and are subject to a number of risks and uncertainties. We encourage you to read the risks described in our SEC filings, including on Form 10-K, for the year ended December 31, 2020. Except to the extent required by applicable securities laws, we undergo no obligation to update or publicly revise any of the full-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've 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'd now like to turn the call over to Chief Executive Officer, Todd Gleason.

Thanks, Stephen, and good morning, everyone. We appreciate your support and interest in SECO Environmental. I would like to start by thanking our SECO 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 continue to navigate these uncertain times. We appreciate all your efforts. Today we will hit on a few topics. First, I will share my perspective on the second quarter as well as certain key takeaways from the first half of 2021. Then, Matt will go through the financials and several operational items. I will outline our enterprise strategy and aspirations over the next three to five years. Then, we will wrap up and take your questions. Let's go ahead and get started. Please turn to slide number three. Continuing the momentum from the past few quarters, we once again had great growth in order bookings. were approximately $86 million, up 43% 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 in market momentum. Orders were down sequentially, but that is completely associated with timing and not an indication of any softening. Sales of $79 million were up 5% year-over-year and 9% sequentially. Daniel Berryman, Peter Kurt Johansson, Mary Rusnak, Todd Gleason We have navigated these challenges and believe we are back on track for growth. Due to gross margins were 32.1%, which were down approximately 220 basis points on project mix and some modest in-the-quarter inflation. We continue to see very good project execution and have raised prices to protect margins. Matt will talk about this more in just a minute. Adjusted EBITDA was $6.4 million in the quarter, down $1.8 million year-over-year. Last year's second quarter benefited from certain one-time cost actions in that period, such as a workforce furlough and other one-time items. So the comparison is somewhat tough versus Q2 2020. Adjusted earnings per share of $0.09 was down year-over-year for the same reasons I just mentioned. But with our growing orders, Future revenue growth and streamlined cost structure, we expect improved EPS results in the coming periods. Free cash flow was negative in the quarter, but year-to-date we are positive and we expect to have a good second half free cash flow generation. Something that isn't highlighted on this slide but I'd like to take a minute to comment on is the share repurchase authorization we announced today. Our board has approved a $5 million stock buyback program, which we intend to fully utilize before the end of this year. We are confident in our current business trajectory, our ability to generate strong free cash flows, and our growth and strategic prospects. This $5 million level does not impact our ability to deploy capital towards strategic acquisitions. It is simply an action we are taking to reduce the number of shares and reward shareholders. Let's please turn to slide number four. The key takeaway from the first half of 2021 is our outstanding orders growth. With year-to-date orders up over 30% and backlog over $210 million or up 15%, we believe we are very well positioned for strong growth. Our pipeline remains active and at high levels. I am proud of our team's focus to drive growth while maintaining solid margins. This momentum and growth will produce stronger earnings in the coming periods and allow us to invest in our key growth initiatives. Let's go to slide number five. Last quarter we highlighted we were in the midst of aligning our business platforms by technology to drive growth in core markets where we are already leaders and expansion into adjacent markets. We will continue to report our platform results into two segments, industrial and process solutions and engineered systems. This alignment process was completed in the second quarter. Our leadership teams are very focused and engaged. It has been a well-received structure and our people are energized to drive higher growth and profitability. We are also pleased that it is already delivering real and exciting results. The direct line of sight to business opportunities is more efficient. The platform design allows our leaders to go after short and medium-term adjacent opportunities much more quickly. and within several platforms, we are seeing some very important international wins in growing sustainable energy spaces. One example is a recent renewable power project in our Southeast Asia region. In our role, SECO's peerless cyclone separation technology will remove moisture from geothermal steam generated as it is extracted from the subsurface of the earth, which in turn will sustainably power the grid. We are also seeing immediate impacts in industrial air, which has shown extremely good bookings year-to-date. Our platform leadership is positioned to drive faster decisions and surface opportunities to pursue, which of course has fewer layers of decision-making. We are also able to identify gaps in our operating performance so we can apply the right resources to address these areas. Every company has opportunities to improve productivity, delivery, customer service, and similar. Thank you very much. Matt?