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CONFIDENTIAL. 2009. INTEGRATED CLEAN AIR SOLUTIONS. K&B Parts. Flextor. A.V.C. Specialists. Fisher- Klosterman. GMD Environmental. SAFE HARBOR STATEMENT.
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CONFIDENTIAL 2009 INTEGRATED CLEAN AIR SOLUTIONS K&B Parts Flextor A.V.C. Specialists Fisher- Klosterman GMD Environmental
SAFE HARBOR STATEMENT In addition to historical information, this presentation contains forward-looking statements. These statements relate to future events or our future financial performance. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors. The following factors, among others, could cause our actual results and performance to differ materially from the results and performance projected in, or implied by, the forward-looking statements: our dependence on fixed price contracts and the risks associated therewith, including actual costs exceeding our estimates and our method of accounting for contract revenue; our history of losses and possibility of further losses; the effect of poor operating results on our company; fluctuations in operating results from period to period due to seasonality of our business; the effect of growth on our infrastructure, resources, and existing sales; our ability to expand our operations in both new and existing markets; the potential for contract delay or cancellation; the potential for fluctuations in prices for manufactured components and raw materials; our ability to raise capital and the availability of capital resources; our ability to fully utilize and retain executives; the impact of federal, state, or local government regulations; labor shortages or increases in labor costs; economic and political conditions generally; and the effect of competition in the air pollution control and industrial ventilation industry. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in, or implied by, these forward-looking statements, even if new information becomes available in the future. Although the Company believes the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
CORE STRATEGY – HORIZONTAL AND VERTICAL INTEGRATION Contracting Group Equipment Group Provides “turnkey” capability Provides diverse technologies • Horizontal Integration – adding “planks” to the equipment platform – diversifying our customer base • Vertical Integration – turning equipment companies into turnkey providers – thus increasing revenue Flextor GMD Environmental Fisher- Klosterman A.V.C. Specialists
MULTIPLE CUSTOMIZED PRODUCTS & APPLICATIONS H.M. White – Phosphate and E Coat Line CECO Filters
MULTIPLE CUSTOMIZED PRODUCTS & APPLICATIONS CECO Abatement - RTO EFFOX – Rotary Vane Damper
REGULATION HELPS OUR BUSINESS • Positive effects of air pollution control and energy legislation • Industrial air quality has been improving through EPA mandated Maximum Achievable Control Technology ("MACT") standards • OSHA established Threshold Limit Values ("TLV") for more than 1,000 industrial contaminants • New standards are continually promulgated • Enforcement of these standards will increase
COMPETITIVE LANDSCAPE • Highly fragmented market • Many small companies that provide only limited products and services offering • Majority specialize by geographic region or specific type of product/service • CECO Environmental is a leading full-service provider of air pollution control and industrial ventilation products and services • No public turnkey competitors • CECO Environmental’s major competitive advantages • Experienced management, operating and engineering teams • Vertically integrated – complete end-to-end solution • Long-standing, strong customer relationships across multiple end markets • Over 100 years of operating excellence
GROWTH STRATEGIES • Expand customer base, penetrate new markets and increase presence in existing end markets • Internal development • Strategic acquisitions • International strategy • Selectively develop production facilities in emerging markets (China, India, Mexico) • Establish relationships with sales organizations • Enter into technology licensing agreements (Europe) • Develop innovative solutions • Leverage 100 years of engineering and manufacturing experience • Continue to develop customized products (oxidizers, etc.) • Maintain strong customer focus • Expand with multinationals – especially in power • Increase penetration in existing markets through cross-selling opportunities • Focus on complete, reliable turnkey solution – simplify project management
CUSTOMERS, CONTRACTS & END MARKETS • More than 3,000 active customers • Balanced cross-section of industries • Power, refining, chemical and automotive are current largest sources of revenue • This list continually changes • Backlog at September 30, 2008 of $87 million • New contract wins of approximately $181 million through November 30, 2008
INTERNATIONAL FOCUS • Bookings in 45 countries in 2008 • Facilities in China and India • Office in Mexico • Operation in Brazil • Largest foreign markets are Canada, China, Japan, Korea, Saudi Arabia, Mexico, and Taiwan • International business is 10% of revenue and growing CECO Filter’s Replacement Filters (Singapore)
SUCCESSFUL ACQUISITION TRACK RECORD • Fragmented industry offers significant acquisition opportunities • Accretive to earnings – leverage fixed operating infrastructure and G&A costs Flextor, Inc. – Acquired August 2008 • Access to customers worldwide and especially in South America A.V.C. Specialists – Acquired August 2008 • Additional parts business to complement FKI’s Buell division Fisher-Klosterman, Inc. – Acquired February 2008 • Strategic access to petrochemical, petroleum and power markets GMD Environmental – Acquired November 2007 • Cupola emission control and gas treatment equipment Effox, Inc. – Acquired February 2007 • Entrance into multi-billion dollar energy, power and utilities markets H.M. White – Integrated February 2006 • Strategic access to automotive market, especially paint shop work • and “Strand” air houses
SUCCESSFUL ACQUISITION TRACK RECORD • Continued . . . • Acquisitions have generated significant sales and EBITDA • On going acquisition program underway
COMPLEMENTARY ORGANIC GROWTH OPPORTUNTIES • Ability to identify and address the market’s needs… Founded CECO Abatement - 2001 Founded K&B Duct - 2001 Founded CECOaire - 2004 Founded CECO Filters India - 2004 Organized CECO Energy Management - 2006
Financial Information K&B Parts Flextor A.V.C. Specialists Fisher- Klosterman GMD Environmental
STRONG SALES GROWTH • Strong sales momentum with recurring revenue in response to industry conditions… CAGR: 34% (1) CAGR: 36.3% Net Sales
IMPRESSIVE ADJUSTED EBITDA GENERATION • Ability to layer-on acquisitions generates attractive adjusted EBITDA… CAGR: 53% (1) EBITDA
CONTINUED EBITDA MARGIN EXPANSION • Further leverage of fixed operating structure and G&A expenses… (1) Adjusted EBITDA Margin
EXCEPTIONAL GROWTH IN EPS • Enhanced profitability gained through leverage of fixed operating cost structure and absorption of fixed G&A expenses… • Based on fully diluted shares outstanding.
FINANCIAL HIGHLIGHTS – 2008 through September 30th (CONTINUED)
LOOKING FORWARD Our backlog provides near-term visibility of the future $ in million’s
CONFIDENTIAL 2009 INTEGRATED CLEAN AIR SOLUTIONS K&B Parts Flextor A.V.C. Specialists Fisher- Klosterman GMD Environmental