CECO Environmental acquires Compass Water Solutions – Advice Eating

Expands industrial water capacity and expands CECO’s short-cycle mix

Dallas, May 10, 2022 /PRNewswire/ — CECO Environmental Corp. (Nasdaq: CECE) (“CECO”), a leading environmentally focused, diversified industrial company whose solutions help protect people, planet and industries, today announced that it has acquired Compass Water Solutions, Inc. (“Compass”), a global leader in membrane-based industrial water and wastewater treatment Systems that help customers achieve water discharge regulatory compliance at the lowest life cycle cost. The transaction complements CECO’s growing industrial water technologies anchored by Peerless-Skimovex® Brand.

Compass generates about 11 million dollars of sales in 2021 with double-digit EBITDA margins. The total purchase price was $12.5 million and funded by a mix of cash and debt. Approximately 70 percent was paid at closing, with the balance being paid over a two-year period. CECO expects the acquisition to be accretive to overall company EBITDA margins, earnings per share and free cash flow in 2022.

With this acquisition, CECO expands its addressable industrial water technology market by over $250 million, with expected growth rates in excess of six percent CAGR through 2025 for industrial oilwater and seawater reverse osmosis applications. CECO anticipates that the Compass acquisition will unlock greater value by leveraging CECO’s international sales resources, existing US Navy expertise and global engineering and manufacturing footprint. In addition to market growth rates, expected tighter water discharge regulations coupled with hard-to-achieve international certifications should drive higher sales. Compass’s installed base of over 8,000 systems worldwide has created a robust aftermarket parts and services business that accounts for approximately 40 percent of current revenues. Finally, with an average order size of less than $250,000Compass increases CECO’s short-cycle business mix to about 100 million dollarsor 30 percent of the company’s total sales in 2021.

“Compass brings key technical solutions and an experienced leadership team to our growing industrial water capabilities, and we look forward to welcoming them to the CECO organization,” said Todd Gleason, CEO of CECO Environmental. “CECO completed three industrial water acquisitions in 2022, all sharing our common mission to protect people, environment and industrial assets. We expect these companies, coupled with our global footprint and leading brands, to continue to deliver strong revenue and revenue growth in this strategic market,” added Mr. Gleason.

Compass Water Solutions® (“Compass”) is a global leader in the engineering, manufacture, sales and service of membrane-based water and wastewater treatment systems. Compass helps customers achieve water discharge environmental sustainability (“spill insurance”) at the lowest life cycle cost using high performance oil-water separators, dirty water separators, reverse osmosis water purifiers, water filtration and purification technology. The company is widely known for its brand name, international certifications, a global installed base and nearly 50 years of application experience across multiple industries. The company is headquartered in Tustin, California, and operates an ISO 9001 certified assembly plant. For more information, please visit www.compasswater.com

CECO is a global leader in industrial air quality and liquid handling, serving a broad landscape of industrial and other niche markets. CECO provides innovative technology and application expertise, helping companies grow their business with safe, clean and more efficient solutions that help protect our shared environment. In regions around the world, CECO works to improve air quality, optimize the energy value chain, and provide custom engineered systems for applications such as power generation, petrochemical processing, general industry, refining, midstream oil and gas, electric vehicle production, and polysilicon manufacturing, battery recycling, beverage cans and water/wastewater treatment, among a wide range of other applications. CECO is listed on the Nasdaq under the ticker symbol “CECE”. For more information, please visit www.cecoenviro.com.

McLean Group acted as financial advisor and O’Melveny as legal advisor to Compass. BDO United States of America LLP and Dykema Gossett PLLC served as advisors on behalf of CECO.

All statements contained in this press release, other than statements of historical fact, including statements regarding management’s beliefs and expectations, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both in of the amended version, and should be assessed as such. These statements are based on management’s beliefs and assumptions regarding future events and business results and include, but are not limited to, statements about CECO’s expectations regarding the integration of Compass into CECO; the benefits of acquiring Compass and expectations regarding the impact of the transaction on CECO’s strategic growth plan. We use words such as “believe”, “expect”, “anticipate”, “intend”, “estimate”, “forecast”, “project”, “will”, “plan”, “should” and similar expressions to mean forward-looking identify -looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Potential risks and uncertainties related to the Compass acquisition that could cause actual results to differ materially include risks related to achieving the anticipated benefits of the acquisition, our ability to successfully integrate acquired businesses and the synergies from acquisitions and a variety of risks factors related to our business, including general economic and financial market conditions and economic conditions in CECO’s service businesses; the ability to expand operations in both new and existing markets; Unpredictability and severity of catastrophic events, including cybersecurity threats, acts of terrorism or the outbreak of war or hostilities, or public health crises such as ); and the effect of competition in the air quality and fluid handling industries. Additional risks and uncertainties are discussed in “Part I – Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the current fiscal year December 31, 2021. Many of these risks cannot be controlled or predicted by management. Should one or more of these risks or uncertainties materialize, or should assumptions prove incorrect, actual results may vary in material respects from those currently anticipated. Investors are cautioned not to place undue reliance on any such forward-looking statements, which reflect our views only as of the date made. In addition, forward-looking statements speak only as of the date they are made. Except as required by federal securities laws or the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update or review any forward-looking statements, whether as a result of new information, future events or otherwise.

company contact:
Matthew EcklCFO
(888) 990-6670

Investor Relations contact:
Steven Hoosertripartite consultants, LLC
214-872-2710 | [email protected]

Kimberly plaqueHead of Corporate Communications
[email protected]

SOURCE CECO Environmental Corp.

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