CECO Environmental Corp.

Good morning, and welcome to the Seco Environmental Fourth Quarter 2022 Earnings 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 touch-tone 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. Please go ahead, sir.

Thank you, Rocco, and thank you for joining us on the SECO Environmental Fourth Quarter and Full Year 2022 Earnings Call. On the call with me today is Todd Gleason, Chief Executive Officer, and Peter Johanson, Chief Financial and Strategy Officer. Before we begin, I'd like to note that we have provided a slide presentation to help guide our discussion. This call will be webcast along with our earnings presentation, which is on our website at secoinviro.com. The presentation materials can also be accessed through the investor relations section of our 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 differ materially from those expressed or implied by forward-looking statements. We encourage you to read the risks described in our SEC filings included on Form 10-K and for the year ended December 31, 2022. 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 provided a comparable GAAP and non-GAAP numbers in today's press release and provided non-GAAP reconciliations in the supplemental tables in the back of the slide presentation. With that, I'd now like to turn the call over to Chief Executive Officer Todd Gleason. Todd?

Thanks, Stephen, and good day. I'm going to start with slide number three, which is entitled Q4 2022 Earning Summary. As we highlighted in today's press release, SECO had another fantastic quarter, which capstones an excellent full year 2022. A year where we set and met several growth and performance-related records and including exiting 2022 with a record backlog level. So we are well positioned for growth heading into 2023. We have a lot of good content to review with you this morning, and this summary slide highlights some of the key messages we hope you take away from our earnings presentation material. Our strong fourth quarter results across almost every financial metric really puts an exclamation point on our banner year. We are pleased to communicate robust top line and bottom line results, but even more pleased that we are consistently building a more resilient and sustainable business model. SECO is undergoing a steady transformation, and our results showcase our progress. While we have steadily delivered top line organic growth and bottom line income and margin improvements, we have also deployed capital in a programmatic fashion. In 2022, we closed four strategic and accretive acquisitions, and we have continued our steady deal-making program in 2023 with a transaction that we closed in January of this year. Each acquisition is already producing results at or above our expected growth model. We have deployed capital to repurchase $7 million worth of Seco stock. We will remain programmatic with our capital allocation in 2023 to add to our growth engine and drive additional shareholder value. I want to highlight that 2022 is the second consecutive year of tremendous orders growth. So this has not been an overnight phenomenon. Our full year 2021 orders growth came in at 29 percent. And for 2022, we drove 46 percent orders growth. That's a lot of growth. And as a result of our tremendous orders growth and record backlog levels, we are raising our outlook for full year 2023 which we announced in our press release earlier today. We will discuss our updated and increased 2023 outlook later in this presentation. More to come on each of these key takeaways as we go through the presentation. We are proud of the results we delivered in 2022, and we are well positioned for 2023 and beyond. Now, please turn to slide number four, and let's review our summary fourth quarter and full year 2022 financials. Peter will cover many of these key financial figures and metrics in a few minutes. Let me just focus on a few areas. Orders of $151 million were up 66% in the fourth quarter year over year. The $151 million was the second largest quarterly orders level in the company's history. So we bookended the year with tremendous orders growth. Sales growth of 24% in the fourth quarter reflects the great execution our global teams are driving to deliver solutions for our customers. For the full year, our sales grew 30%. Adjusted EBITDA of $13 million in the fourth quarter was up 38% over the prior year period. This produced margins of over 11% as we continue to prudently manage growth investments while we are expanding margins year over year. For the full year, we grew adjusted EBITDA 65% and delivered double-digit EBITDA margins up 210 basis points from full year 2021. As you can see on the slide, and Peter will reiterate, our EPS growth and free cash flow were also very, very strong. I might suggest you could work for diversified industrial companies for decades, like I have, and rarely seen such a balanced growth scorecard for a year and a fourth quarter. Our teams continue to do an incredible job navigating operational challenges and driving commercial success. We appreciate the trust our customers put in us every day, and we are providing world-class solutions and high-performance financial results. Next, I will highlight how balanced our orders and sales growth have been across our business platforms. So with that, please turn to slide number five. We shared a very similar version of this slide when we reviewed our third quarter 2022 earnings. What we are showing on this slide is our eight business platforms' full year's orders growth, which is the left arrow above each platform, and their respective full year revenue growth, which is the right arrow. SECO's unique diversification and broad growth is highlighted across these platforms. Six of our eight platforms delivered year-over-year orders growth in 2022. Several of our platforms, such as separation and filtration, really crushed it with orders as we participated in strong markets and positioned our business for growth in new applications and new geographies. The two platforms that had orders declines in 2022 have done a great job building their pipeline for strong growth in the near future. In fact, in our industrial duct fabrication and installation services business, we had a few orders booked in January of this year. Had those particular orders booked in Q4, we likely would have had a seventh platform demonstrate year-over-year orders growth. Revenue grew year-over-year across all of our platforms in 2022. Now that is balance. The Nimble platform organizations and their excellent leadership teams are finding new ways to win and new markets to serve. So whether it is orders that produce future growth or sales which reflect the execution of our delivery for customers, our broad-based growth is delivering for our company and for our shareholders. Now let's turn to slide number six. Today's SECO is more balanced and pursuing more opportunities than ever before. Across everything we do, our focus is to protect people. Our focus is to protect the environment and protect our customers' industrial equipment. Our largest market, from a solutions perspective, is the industrial air category. With over a half dozen leading brands serving a multitude of applications in end markets, we continue to advance our leadership position in this area. And I am stressing advance because we have a real seat at the leadership table, helping our customers in a variety of unique and differentiated applications and end markets as shown on the right section of this slide. We have also been steadily building our position in industrial water, which has grown to represent approximately 25 percent of our company sales. Within industrial water, we solve complex customer challenges in produced water treatment, oily water separation, industrial wastewater management, high purity water supply, desalination, and other growing and strategically important applications. Two of our acquisitions in 2022 help bolster niche leadership positions, and we will continue to grow our industrial water business to likely secure a larger percent of overall SECO, which leads to the businesses within SECO that serve the energy transition. For many decades, SECO has built and maintained a strong position supporting core or legacy energy markets. From natural gas infrastructure to advanced refining technologies to emissions control and noise abatement, our brands are well recognized and respected. As energy markets continue transitioning to more sustainable sources and processes, SECO is in prime position to serve this sector as it shifts processes and builds new critical infrastructure. We highlight carbon capture and gas-liquid separation practices two areas that are seeing and will continue to see robust investment and robust growth. We are winning key projects in these areas, and we will continue to highlight unique wins and opportunities going forward. Now, before I hand it over to Peter, let's quickly review our full-year 2022 capital allocation. Please turn to slide seven. The four acquisitions we closed in 2022 are listed on the left of the slide. In 2022, we spent approximately $45 million to acquire these businesses. Each business has significant growth opportunities, and we are already winning. The management teams that came with these acquisitions are key leaders in our current and future success, and our integration process is yielding new synergistic opportunities. Each transaction has brought something unique to Seco, but overall, Each has been accretive to our financial profile, and each is hitting or exceeding their financial models. On the right, we provide a summary of our share buyback levels. In 2021, we completed our first share buyback and repurchased $5 million worth of stock at attractive prices. Additionally, in 2022, we repurchased $7 million worth of shares at an average price of $6.80 per share. I would say that is a great use of capital. We have roughly $13 million remaining on our multi-year stock buyback authorization. Our businesses don't require a lot of new CapEx or maintenance capital given the nature of our operating model, which is project-based and relies on a global network of fabrication and supply chain partners. As we grow our shorter cycle businesses, we will see modest incremental growth in CapEx budgets, but nothing material. We continue to make important investments to drive productivity, quality, and safety, as well as invest in new technologies to enhance our fulfillment and business processes. The final bullet point in that section is important to highlight. In a little over a year, we have more than doubled our resources in India, and we expect to grow even more. These resources support regional growth but also provide high-level engineering talent to our organization for around-the-clock design, engineering studies, and other various application engineering and project management work. So overall, a very forward-looking strategic capital deployment program that will continue to drive growth and, we believe, long-term shareholder value. I will now hand it over to Peter. to review our financial performance in more detail. Peter?