5. Segment Overview
2020 revenues by solutions
Energy
Industrial
Liquid
65%
25%
10%
Total
Revenue
$ 316 M
2020 revenues by specific product offerings
Source: Company data
6. Strategy Overview
Acquisition strategy for future expansion
Expansion into Standard
and Configured Products
and After Market
Purchase
Price of
~$24M
GRC had
revenue of
~12M in 2021
Increases
market size
to $600M
from $200M
2020 revenues by company segments
After Market
margins are
40–50%
Source: Company data and public filings
7. Industry Overview
We foresee significant growth opportunities within the industry in future years.
Expected World Energy
Consumption
Air Purification Equipment Manufacturing Annual
Revenue Growth
Outlook 2021-2026
Source: Refinitiv, U.S. Energy Information Administration, IBIS World
$7.2B Industry
By 2026
8. Shareholders
Board Of Directors –
9 Members
Executive
Management – 8
Members
Compensation
Committee – 3
Members Nominations and
Governance
Committee – 3
Members
Audit Committee – 3
Members
Q1 2022 ESG reporting is likely to boost scores
Source: Refinitiv Source: Team Analysis
10. The Asset-Light Model Solidifies Competitive Position
Outsourcing 75% of manufacturing does not affect competitive efficiency output
Source: Team Analysis
11. A Fixed Cost Structure Improves Shareholder Return Over Time
6.83x
lower
Implications to
investors
Less PP&E leads to less capital expenditures than peers... ...increasing return to shareholders via buybacks...
...driven by paying down debt over time with low capex
Source: Team Analysis
Source: Company Data, Team Analysis
13. Strategic Shift Into Short Cycle to Improve Performance
Engineering
Studies
Replacements & Retrofits
Parts & Service
Aftermarket products bring stability in CECO's cashflow
Benefits of Short
Cycle Product
Process
Source: Team Analysis
19. Core
segment
of
Pollution
Control
Peer Group
Market Cap
(mUSD)
EV/Sales
(TTM)
Industrials &
Fluid
Fuel Tech
Inc.
44 0.74x
Advanced
Emissions
Solutions
127 0.73x
Air
Nederman
Holding
767 1.8x
Biorem Inc 27 1.0x
RV Implied Target Price: USD 7.70 Current
Price: $6.29
Target Price:
$7.78
Football Field Projection
Relative Valuation further confirms our BUY recommendation
Source: Team Analysis
Source: Team Analysis
20. • Demand for short-cycle products /
aftermarket services healthier than
expected.
• More strategic and successful M&A
deals help increase market share
globally
• Demand for short-cycle products worse
than expected with an unsuccessful
decoupling from the energy market
• Incongruent synergies with acquired
companies resulting in realized impairment
losses with a stagnating market share
Price Target:
$8.19
(26.19% Upside) Price Target:
$7.13
(9.94% Upside)
Scenario Analysis highlights true upside
Source: Team Analysis
21. • Decoupling from energy industry
Backlog cancellation risk
Subcontractor risk
Post-acquisitions integration risk
Commodity risk
Exposure to the
energy industry
Interest rate risk
Innovation risk
Fragmented
industry risk
High
Likelihood
High Impact
Mitigating Measures
• Creation of an integration team
• Historically low cancellation rates
No high impact and high likelihood risks identified
Source: Team Analysis
23. Appendices – Industry Overview
• SWOT Analysis:
STRENGTHS
• Asset-light model with fixed cost structure
• Diverse product portfolio
• Geographical footprint
• Broad customer base
WEAKNESS
• Goodwill and intangible concentration
• Fixed contract prices in inflationary environment
• Subcontractor dependency
• Energy industry exposure
OPPORTUNITIES
• Regulation in industrial emissions
• ESG ratings attracting new share holders
• Developing markets industrial growth
• Increasing expenditure in infrastructure
THREATS
• Failing to integrate new acquisitions into current product mix.
• High Interest rates increasing cost of borrowing.
• Industry cutting cost in air filtration services to decrease spending in
high inflation environment.
• Third-party manufacturing leading to substandard quality.
• Porters’ Five Forces
24. Appendices – Company specific info
Announce Date Target Name Acquirer Name Seller Name Total Value (mil.) Payment Type
6/4/20 Environmental Integrated Solutions Ltd
CECO Environmental Corp 10.3 Cash
10/29/2018 Jiangyin Zhongli Industrial Technology Co Ltd
Jiangsu Zhongli
Environmental Technology
Co ltd
CECO Environmental Corp N/A Undisclosed
4/2/18 Strobic Air Corp Cincinnati Fan & Ventilator Co Inc
CECO Environmental Corp N/A Undisclosed
3/1/18 Keystone Filter Porvair PLC CECO Environmental Corp N/A Cash
5/4/15 PMFG Inc CECO Environmental Corp 150.22 Cash or Stock
11/5/14 Jiangyin Zhongli Industrial Technology Co Ltd
CECO Environmental Corp 1.15 Cash
11/4/14 Emtrol LLC CECO Environmental Corp 38 Cash and Stock
9/30/2014 SAT Technology Inc CECO Environmental Corp N/A Undisclosed
8/14/2014 HEE Environmental Engineering LLC CECO Environmental Corp N/A Undisclosed
4/22/2013 Met-Pro Corp CECO Environmental Corp 158.72 Cash or Stock
3/4/13 Aarding Thermal Acoustics BV CECO Environmental Corp 41.37 Cash and Stock
1/22/2013 Adwest Technologies Inc CECO Environmental Corp N/A Undisclosed
8/4/08 Flextor Inc CECO Environmental Corp N/A Cash
8/4/08 AVC Specialists Inc CECO Environmental Corp N/A Cash
2/21/2008 Fisher-Klosterman Inc CECO Environmental Corp 16 Cash and Stock
11/1/07 GMD Environmental Technologies IncCECO Environmental Corp N/A Cash
1/9/07 Effox Inc CECO Environmental Corp Hammond Kennedy Whitney & Co Inc
7.5 Cash
2/2/06 HM White Inc CECO Environmental Corp N/A Undisclosed
6/22/2005 Manufacturing & corporate office Trademark Property Co CECO Environmental Corp 8 Undisclosed
9/7/99 Kirk & Blum Manufacturing Co/The CECO Environmental Corp 30 Cash
9/7/99 KBD/Technic Inc CECO Environmental Corp N/A Cash
3/30/1998 Integrated Facilities Management CECO Environmental Corp N/A Cash
A list of previous
acquisitions
