CECO Environmental Corp . ( CECE ) declared third-quarter 2014 adjusted earnings of 28 cents per share, which came 7.7% above the Zacks Consensus Estimate of 26 cents per share. The bottom line was up 16.7 % year over year, compared with 24 cents earned in the third quarter of 2013. However, the news that came on Nov 6 did not provide much momentum to the company shares which remained flattish.
Earnings growth was driven by the company's aggressive acquisition strategy, persistent focus on diligent operational execution and cost-optimization initiatives. CECO Environmental is also streamlining its business by divesting some of its non-core assets. The company benefited from the strong performance of its Energy and Fluid Handling and Filtration segments. However, sluggishness in Air Pollution Control business deterred growth to some extent.
CECO Environmental reported net sales of $63.3 million, an increase of 27.1% from $49.8 million in the year-ago quarter. Organically, revenues declined around 1.2% year over year. Increase in sales was primarily attributable to successful integration of the company's recent acquisitions like the Aarding, Adwest and Met-Pro Corporation, among others.
New order bookings for the quarter increased 45% year over year and 21% sequentially to $69.7 million. Backlog at the quarter-end was $106.2 million, compared with $98.5 million as on Dec 31, 2013.
Income and Expense
Gross profit increased to $21.1 million from $14.6 million in the prior-year quarter. The company reported operating income of $5.2 million, a significant turnaround from a loss of $3.4 million in the third quarter of 2013.
Selling and administrative expenses stood at $13 million, up about 39.5% year over year.
CECO Environmental ended the quarter with cash and cash equivalents of $18 million compared with $22.7 million as on Dec 31, 2013. The company had a debt (excluding current portion) of $76.1 million and shareholders' equity of $177.9 million at the end of quarter.
CECO Environmental remains positive about the growth prospect in 2014 and 2015. It's 'One-CECO' sales initiative is projected to drive profits, going forward. Further, the company expects to benefit from increasing investments in sales excellence initiatives, which are likely to propel growth across all of its business segments. Moreover, CECO recently completed three strategic acquisitions which are expected to be key growth drivers, going ahead. The company's growth in China is also encouraging.
CECO Environmental currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the pollution control sector are Fuel Advanced Emissions Solutions, Inc. ( ADES ), Vertex Energy, Inc ( VTNR ) and Heritage-Crystal Clean, Inc ( HCCI ). All these stocks hold a Zacks Rank #2 (Buy).
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