CECO Environmental Corp.

Good morning and welcome to the SECO Environmental First Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star 1 1 on your telephone keypad. To withdraw your question, please simply press star 1 1 again. Please note this event is being recorded. I would now like to turn the conference over to Steven Heuser, Investor Relations. Please go ahead.

Thank you, Howard, and thank you for joining us for the SECO Environmental First Quarter 2024 Earnings Call. On the call with me today is Todd Gleason, Chief Executive Officer, and Peter Johansen, 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. The call will be webcast along with our earnings presentation, which is on our website at secoinviro.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 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-Q for the quarter ended March 31, 2024. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any 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 the 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 deck. And with that, I'd now like to turn the call over to Todd Gleason, Chief Executive Officer. Todd?

Thanks, Stephen. And to our audience, thank you for your interest and continued support. Please turn to slide number three, as I will highlight some key takeaways related to our first quarter performance. As outlined in today's press release, we started 2024 by delivering a solid first quarter, which puts us in a strong position in terms of our full year outlook. Later, we will go through each of these financials in more detail, but let me touch on just a few of the highlights listed on this slide. I am pleased that our backlog of approximately $390 million is back to near record levels. Our book to bill in the first quarter was driven by very good orders levels, which was in line with our expectations to start the year. First quarter sales and adjusted EBITDA were at record levels for a first quarter, so we feel good about how our top line and bottom line kicked off 2024. Importantly, the quarter was highlighted by record gross margins for any quarter, which we believe demonstrates our strategic progress to drive operational excellence programs and steadily advancing and further diversifying our overall portfolio. Lastly, our working capital performance was very strong, helping to dramatically improve our year-over-year free cash flow performance. Now, turning to sales, we exit Q1 with a record pipeline of sales pursuits, and we are excited about the breadth and balance of this pipeline. especially some important energy transition orders, which could be meaningful in 2024 and over the coming years. And while we didn't make any acquisitions in Q1, we were active with capital allocation. During the quarter, we opportunistically took advantage of some short-term share price dislocations and bought back $3 million of SECO stock. We now have repurchased $15 million of stock since 2021, which leaves $10 million remaining on the stock buyback authorization that we announced in May of 2022. Turning to M&A, like I said, while we have not announced any transactions in a few quarters, we remain very pleased with the quality and activity of the M&A environment and the pipeline of strategic opportunities we continue to evaluate. We will continue to move forward with our M&A process and keep you posted. All in all, we feel great about our position and our ability to drive meaningful performance. And as always, I want to thank Team Seco for your customer focus, accountability, and high performance. Now, turning to slide number four, we will expand a little bit more on our financials. Let's start with orders which came in at approximately $145 million, essentially flat with the same strong results we delivered to start 2023. These orders helped to drive the strong book-to-bill that I just mentioned, and sales were approximately $126 million, up 12% year over year. Q1 sales were modestly impacted by seasonal aspects related to fewer project days and project timing, that accelerated some sales forward into Q4 of 2023 and delayed a little revenue recognition into Q2 of this year. On a trailing 12-month basis, our sales are up 26%. We remain committed to very strong double-digit full-year sales growth, and our near record backlog gives us a great visibility to upcoming periods of growth. Adjusted EBITDA of $13.2 million is the highest first quarter EBITDA result in company history. And our 10.5% EBITDA margins are up almost 200 basis points year over year. On a trailing 12-month basis, EBITDA is approximately $61 million, up 44%. Our adjusted EPS and free cash flow also reflect our ability to offset higher interest expense, tax items, and working capital needs related to future growth. We are very pleased with these results, and they give us very solid confidence that we are in great position to start 2024. I will provide some additional commentary on our outlook for the full year after Peter provides further review of our financials. With that, I'll hand it over to Peter.