CECO Environmental Corp.

Good morning, and welcome to the Seco Environmental 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 Matt Eckle, Chief Financial Officer. Please go ahead.

Thank you for joining us on the SECO Environmental Fourth Quarter and Year-End 2021 Earnings Call. On the call with me today is Todd Gleason, Chief Executive Officer, and myself, Matt Eckle, Chief Financial Officer. Before we begin, I'd like to note that we have provided a slide presentation to help guide our discussions. The call will be webcast along with our earnings presentation, which is on our website at secoenviro.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 certain estimates and expectations and are subject to a number of risks and uncertainties. Actual future results may differ materially from those expressed or implied by the forward-looking statements. We encourage you to read the risks described in our SEC filings, including on Form 10-K for the year ended December 31, 2021. Except to the extent required by applicable securities 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'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'll turn the call over to Chief Executive Officer Todd Gleason. Todd?

Thanks, Matt, and good day, everyone. We're going to start with slide three of the presentation Matt mentioned to follow along with our prepared remarks. As we highlighted in this morning's earnings release, SECO had a strong finish to 2021. We previously forecasted in our third quarter earnings material that our growing backlog would start to show up in the financials and deliver solid revenue growth, both year over year and sequentially, and it is. With our continued strength in orders and strong backlog levels, we expect to maintain revenue growth year over year for the foreseeable future. No doubt there remains uncertainty and challenges in the global supply chain, overall inflationary pressures, and the continued labor shortage. However, we remain strategically focused on project execution, cost and change order management, and of course, taking price as appropriate. Down cash flow generation to finish the year was an additional highlight in the quarter. Matt will provide additional details around our cash generation and our utilization of cash to repurchase SECO stock and pay down debt. Turning to slide number four, let's review fourth quarter financials in more detail. Orders of $91 million grew 17% year over year. This marks the fourth consecutive quarter with orders right around $90 million. We will discuss how balanced our orders growth was across the majority of our platforms in just a minute. Q4 sales of $94 million were up double digits, both sequentially and year over year. We forecasted during the third quarter earnings report that we expected our backlog to produce revenues in the range of 85 to $100 million, which I am proud to report we delivered in Q4. Importantly, we continue to sustain near record level backlogs and expect that will deliver continued year over year revenue growth. Gross margins of 30.5% were significantly better than the third quarter of 2021. We remain focused on increasing gross margins even further, but remain cautious given the challenges we are all facing with short-term costs around the supply chain, logistics, and other items outside of our control. The increase in revenue and gross margins helped to deliver over $9 million of EBITDA, an increase of approximately $5.6 million when compared to the third quarter of 2021. Cash flow... of $2.2 million was up significantly year over year, and we remain positive in our ability to continue to generate solid free cash flows throughout 2022. So overall, a great finish to 2021, solid improvement sequentially, and in good shape for growth as we move into 2022 and beyond. Please turn to slide number five. On the left side, we visually show a few snapshots from the third quarter 2021's earnings release and management presentation. In that release, we provided various comments on our outlook for growth. It is important that we say what we're going to do and deliver against what we say. We feel good that across the board, we delivered on our outlook with sales and EBITDA growth and good margins. SECO is committed to a steady portfolio transformation. one that includes investments in organic growth and programmatic M&A. By delivering organic growth, improved margins, and cash flow, we know we will have momentum for the transformation and continued support of our shareholders. We will revisit this topic later in today's presentation as we continue to provide updates on our commitments and our journey. Now, let's move to slide number six. As a company with a significant portion of revenue from long-cycle projects, It was critical we rebuild our backlog in 2021. That mission was certainly accomplished as full year orders were up almost 30% year over year. Because SECO's 2021 starting backlog was depressed as a result of the impacts from lower orders during the COVID-related depths of 2020, we could not overcome margin pressures and lower volumes to grow 2021 EBITDA. But we ended 2021 strong and are navigating the well-discussed challenges. We feel very good about our position as we enter 2022. Please turn to slide number seven. You can see why we are encouraged by the momentum we have built. For 2021, seven out of eight SECO platforms grew orders strong double digits. From the 54% industrial air platform orders growth through the 77% emissions management growth and several other platforms that generated over 50% orders growth as well, we truly have a very balanced growth profile. The one platform that did not grow year over year was our separation and filtration platform. Yet, we expect that platform to have a much stronger 2022 as their pipeline continued to build throughout the year and is poised for future growth. You can read the commentary associated with each platform on the slide. You will see we have a good pulse of the various markets and remain confident We will grow our Q1 2022 orders book overall. I'm going to hand it over to Matt now to run through more specifics on our financials, and then I will wrap up our call with some other observations and comments. Matt?