Q4 2021 CECO Environmental Corp Earnings Call
Good morning, and welcome to the CECO Environmental Conference call.
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I would now like to turn the conference over to Matt Eckl Chief Financial Officer. Please go ahead. Thank you for joining us on the CECO environmental fourth quarter and year end 2020 one earnings call on the call with me today is Todd policing, Chief Executive Officer, and myself, Matt Eckl, Chief Financial Officer before we begin I'd like to note that we have.
Providing a slide presentation to help guide our discussion.
Our call will be webcast, along with our earnings presentation, which is on our web site at FICO and borrow dotcom degrees.
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 fact 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 our Form 10-K for the year ended December 31, 2021 except to the extent required by applicable securities laws, we undertake no obligation.
<unk> to update or publicly revise any of the 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've reconciled the comparable GAAP and non-GAAP numbers in today's press release as well as the supplemental tables.
And back of the slide deck.
I'll turn the call over to Chief Executive Officer, Todd Gleason Todd.
Thanks, Matt and good day everyone.
We're going to start with slide three of the presentation, Matt mentioned to follow along with our prepared remarks as we highlighted in this morning's earnings release CECO had a strong finish to 2021 .
<unk> forecasted in our third quarter earnings material that our growing backlog would start to show up in the financials and deliver solid revenue growth both year over year and sequentially and it is.
With our continued strength in orders and strong backlog levels, we expect to maintain revenue growth year over year for the foreseeable future.
No doubt there remains uncertainty and challenges in the global supply chain overall inflationary pressures and the continued labor shortage. However, we remain strategically focused on project execution cost and change order management and of course, taking price as appropriate.
Cash flow generation, we finished the year was an additional highlight in the quarter.
Matt will provide additional details around our cash generation and our utilization of cash to repurchase stock and pay down debt.
Turning to slide number four let's let's review fourth quarter financials in more detail.
Orders of $91 million grew 17% year over year.
This marks the fourth consecutive quarter with orders right around $90 million, we will discuss how balanced our orders growth was across the majority of our platforms in just a minute.
Q4 sales of $94 million were up double digits, both sequentially and year over year.
We forecasted during the third quarter earnings report that we expected our backlog to produce revenues in the range of $85 million to $100 million, which I am proud to report we delivered in Q4.
Importantly, we continue to sustain near record level backlogs and expect that we'll deliver continued year over year revenue growth.
Gross margins of 35% were significantly better than the third quarter of 2021.
Remain focused on increasing gross margins, even further but remain cautious given the challenges we're all facing.
Short term costs around the supply chain logistics and other items outside of our control.
The increase in revenue and gross margins helped to deliver over $9 million of EBITDA, an increase of approximately $5.6 million when compared to the third quarter of 2021 .
Cash flow of $2 $2 million was up significantly year over year, and we remain positive in our ability to continue to generate solid free cash flows throughout 2022 .
So overall, a great finish to the 2021 solid improvement sequentially and in good shape for growth as we move into 2020 two and beyond.
Please turn to slide number five.
On the left side, we visually show a few snapshots from the third quarter 2021 earnings release and management presentation.
In that release, we provided various comments on our outlook for growth. It is important that we say, what we're going to do and deliver against what we say we feel good that across the board we delivered on our outlook with sales and EBITDA growth and good margins.
<unk> is committed to a steady portfolio transformation one that includes investments in organic growth and programmatic M&A I delivering organic growth improve margins and cash flow. We know we will have momentum for the transformation and continued support of our shareholders.
We will revisit this topic later in today's presentation as we continue to provide updates on our commitments and our journey.
Now, let's move to slide number six.
As a company with a significant portion of revenue from long cycle projects. It was critical we rebuild our backlog in 2021 that mission was certainly accomplished as full year orders were up almost 30% year over year.
Because she goes 2021 starting backlog was depressed as a result of the impacts from lower orders during the COVID-19 related deaths of Twenty-twenty, we could not overcome margin pressures and lower volumes to grow 2021 EBITDA, but we ended 2021 strong and are navigating the well discuss challenges.
We feel very good about our position as we enter 2022.
Please turn to slide number seven.
You can see why we are encouraged by the momentum we have built for 2021 seven out of eight of CECO platforms grew orders strong double digits from the 54% industrial air platform orders growth through the 77% emissions management growth and several other platforms that generated.
Over 50% orders growth as well, we truly have a very balanced growth profile. The one platform that did not grow year over year was our separation and filtration platform. Yet we expect that platform to have a much stronger 2022 as their pipeline continued to build throughout the year and it's.
Poised for future growth.
You can read the commentary associated with each platform on the slide you will see we have a good pulse of the various markets and remain confident we will grow our Q1 2022 orders book overall.
I'm going to hand, it over to Matt now to run through more specifics on our financials and then I will wrap up our call with some other observations and comments Matt.
Thanks, Todd starting with slide nine in orders. We are pleased that all three segments grew year over year with sequential growth in both fluid handling and engineered systems.
Italy engineered systems grew 7% as we were awarded several wins for our water treatment in thermal acoustic solutions throughout the middle East.
Our fluid handling platform was up 33% versus Q3, as we saw a significant increase in quotes and bookings for our Dean pumps and Murphy AG filters.
Serve the surging U S petrochemical and automotive markets respectively. Both of these markets are experiencing growth we haven't seen in years and we are pleased with the capex investments made to improve our cost position and cut our lead times by 30% and that of the competition.
It's showing up in our results industrial air was down sequentially against tough comparisons, but up 3% versus same quarter last year fourth quarter is seasonally this platform's slowest given our customers' capex spend cycles on the right revenue moved up into the right in a big way up 13% year over year and 70% so.
As we started to see the fruits of all our labors pay off as Todd highlighted our long cycle backlog based business takes time to turn to revenue, but once it does flow through to EBITDA is significant most of the sequential increase came from engineered systems were approximately 10 million of revenue slipped out of Q3 and into Q4 I.
Fly chain challenges with our subcontractors started to loosen.
While inbound material receipts are still slow customers are signing off on technical drawings quicker, which is allowing us to procure materials sooner driving faster revenue recognition. This is a clear correlation between countries.
Turning up as Covid cases, subside and customers and our subcontractors getting back to work for our long cycle platforms. This is welcome news.
We're all pleased to see our long cycle project business was growing revenue, but I'm, even more pleased with how our short cycle and recurring revenue businesses are performing.
CECO improve the economics of the company and garner the appropriate valuation, we must grow our higher margin more repeatable platforms organically and inorganically in.
In the quarter, we reported $21 million, a short cycle sales up 8% sequentially in an astounding, 24% year over year for the full year, we produced $76 million of short cycle product sales up 6% year over year, which includes standard equipment like industrial dust collectors dampers and pumps as well as aftermarket parts and service.
Yes.
Just in the past week, we closed on our announced acquisition of G. R. C. A leader in flow control products, such as duckbill valves rubber expansion joints. We are excited to add <unk> to our portfolio for their superior products.
G. R. A C also adds fantastic economics for CECO shareholders and will contribute approximately $12 million more in short cycle sales to CECO in 2022.
This increases our short cycle, Mexico, approximately $100 million and predictable more recurring revenues, we continue to focus on M&A opportunities for the future concentrate on product businesses with stronger aftermarket and higher margins.
My first slide I'll double down what I stated in our last earnings call, we expect double digit topline growth in 2022.
Slide 10 shows our backlog is at $214 million up $30 million year over year and slightly down sequentially on FX. Our book to Bill ratio was strong in 2020 one at one one times and our 12 month pipeline shows no signs of slowing down at 2 billion and growing while today's focus is Q4 results.
Also highlight that we have a very good visibility to the first two months of Q1.
We would suggest orders have rarely been this strong at CECO through the first two months of the quarter. We were excited to provide more of an update on our Q1 earnings release in May.
On slide 11, we saw good bounce back in Q4 across all metrics, which improved sequentially on the heels of a strong sales performance.
Gross margins rebounded to 35% non-GAAP NOI was at $7 6 million and adjusted EBITDA crested 9 million nearly 10%.
In Q3, I described the quarter's underperformance in thirds.
A third on prior year pricing, a third uninflated and a third on execution well.
While 35% gross margin is up 200 basis points from last quarter, we still have work to do to get back to historical levels or better I'll comment on each start briefly.
Older backlog pricing with some projects booked in 2020 for example remains a headwind and will linger through 2022.
Larger projects often turned from backlog to revenue over nine to 18 months in certain international projects, sometimes extended over two years. It will take some time for old jobs to roll off and new higher price jobs to roll and we are confident in our pricing strategy and win rates across key markets, where there is inelastic demand.
For engineered systems like FCC cyclone and D knocks solutions in some markets such as power generation. The broader competition is more aggressive given the limited number of pursuits.
Conversely, our short cycle businesses have introduced multiple successful price increases in 2020 . One we are executing additional price actions in 2022, yet. Another reason, we are allocating capital to M&A and short cycle businesses.
Regarding inflation remains a challenge that we are regularly tracking and managing.
Steel and metal pricing softened a bit towards the end of 2020 , one but started to climb again. This year. This will be a continued focus of our platforms and project management teams have done a nice job getting change orders on a high percentage of projects impacted and we monitor every quote that goes to the customers ensuring we've documented the steel price component of our bed in case it fluctuate.
And we want to applaud leaders like Eric Lindeman, and King of Holzworth and the project management and procurement organization is there are two great. Examples of leaders that Chico creatively navigating disinflationary environment, you personally are making a difference for CCAR. Thank you.
Beyond materials, we're seeing inflation in our labor cost as well retaining talent across project managers sales reps and all the functional areas is extremely important I think every company has seen increased competition for talent, especially those roles that are highly fungible and end market agnostic.
<unk> retaining recruiters has been one of the toughest positions to keep.
And most companies are learning what it means to operate in a post COVID-19 environment with virtual employees, becoming more the norm at Teco people are our number one asset we are introducing higher merit increases more hybrid work environments and lots of new training and development opportunities along with greater benefits and more equity ownership to better align our into.
Higher team with shareholders, we have some great programs in place to reward and retain and recruit talent and will look to add even more benefits features in 'twenty to 'twenty two.
The final third was execution and supply chain I'm very pleased with our execution in Q4, we completed key F. N B a studies dove into root causes and remediate critical issues rematch our C. O O also commissioned a third party led enterprise wide project management assessment to identify productivity opportunities Lastly, we hired Edward.
Comp day, our first ever continuous improvement leader, specifically focus on lean operations.
My chain challenges associated with logistics subcontractor and material availability still persist, but we've course corrected many of the areas we can control.
The effect of these outcomes plus volume shows up in the non-GAAP operating income and adjusted EBITDA graphs, both improved nearly three X sequentially great results year over year, we were down slightly because of challenging comparisons non-GAAP SG&A at 20 million was flat sequentially, but up 3 million versus same period in the prior year on head count add backs merit inflation.
Incentive comp and onetime Covid savings in 2020 that didn't repeat in 2021 .
Summarize our EBITDA I'm pleased and we expect to see a continuation of EBITDA expansion and full year 2022.
Slide 12 summarizes the fourth quarter in total a few housekeeping items first.
First gap, Hawaii was up 1.6 million year over year as expenses, such as amortization and earn out restructuring and M&A were lower in 2020 one.
non-GAAP away on the other hand exclude these nonrecurring items. It was down 1.2 million year over year, mostly on volume and gross margins.
Additionally, non-GAAP EPS was 10 census in the quarter down six cents year over year attributed to a loss of two cents on operations down four cents on certain foreign projects denominated in euros in rupees.
Really weakened against the dollar.
Slide 13 is a full year view of 2020 one's performance much of isn't territory, we've already covered what I would point investors to the upper right in the bottom right side of the data table.
Orders up 81 million and free cash flow up $11 million year over year. These are great precursors to CECO in 2022.
Everything in between outlined that 2021 with Chico's Cobra year in my opinion, we are well positioned to provide additional growth in 2022, we here at team CECO are only looking up into the right.
Slide 14 trade working capital was largely benign in the quarter as what turned to a R. A our aging is in a great place and teams are working to improve on milestones in the meantime, free cash flows to remain choppy, but did manage to produce 2 million source of cash in the quarter.
Lastly on slide 15, our balance sheet is in the best shape. It has ever been after several strategic actions in the quarter.
We worked with our syndicate to amend and extend our 2019 credit facility increasing flexibility for M&A.
Thanks to the CECO leaders, Paul Gore, Jennifer Turner, and our syndicate for the partnership here.
We concluded on our announced $5 million share buyback authorization program back in October 2021 .
And thanks to the team at need them for executing this for US Lastly, we paid down $1.5 million of got in the quarter.
We will evaluate future stock buyback programs as we believe in returning capital to our shareholders as part of our overall capital allocation strategy. However, we are currently holding our dry powder for a healthy pipeline of M&A that we believe generates greater total returns.
Great example of this is last week's closing of the DRC acquisition as mentioned Jerry sees a flow control leader, serving the industrial water markets. It's a solid bolt on to our damper and expansion joint platform and great economics for the CECO shareholder we are laser focused on using our inexpensive cost of debt to make accretive acquisitions of smaller to medium size.
Industrial leaders with more short cycle sales higher margin profiles and lower capital intensity.
M&A funnel as well over 200 million of opportunities and he or she is just one of several we expect to bring to closure in 2022.
As we wrap 2021 I'm more excited about <unk> future than I have ever been before the market demand is hot our balance sheet is healthy we're growing in new Adjacencies and seekers transformative journey is underway.
I'll elaborate more on what we see ahead.
Thanks, Matt I agree I am pleased with our 2021 results and excited for 2022 and beyond now let's go to slide number 17.
On the left side is a summary of the general outlook, we provided back in November of 2021 the.
The concept, which is highlighted here is that our average quarterly orders of $90 million, which start to produce around $90 million of revenue in future quarters and as we've been highlighting today fourth quarter 2021 reflected that level of sales. We also expected to return to gross margins in the greater than 30%.
Range, which we also did in the fourth quarter.
The balance of this slide reiterates that we continue to feel confident about this directional outlook. Certainly we are aware there are quarterly puts and takes that relate to in period costs, which do ebb and flow in any given quarter. Additionally, we acknowledged persistent challenges in supply chains and with short term inflation, but we aim to offset many.
Of these challenges with good cost management M&A and other strategic actions, we remain committed to growth and feel very confident in our ability to deliver.
Turning to slide number 18.
Here, we show some additional snapshots of several press releases CECO distributed already in Q1 of this year.
This slide back to the thematic reason for showing slide five earlier in this presentation. We are demonstrating traction on strategic areas. We've discussed regarding chico's transformation. We have publicly stated that when we were ready we would start to action strategic accretive M&A and as Matt already covered.
We announced and then completed the accretive acquisition of G. R. C. We have a robust pipeline of M&A targets and we will continue to provide transparent updates on our progress another.
Another snapshot on this slide relates to a large geothermal energy project with <unk>.
We highlighted our focus and internal investments to participate more actively in the energy transition.
This term represents the array of sustainable energy initiatives and projects taking off all over the world in Q1, we already publicly announced Chico's project win in this large geothermal project with engineered solutions from CECO Peerless branded portfolio, we are actively bidding and winning projects that relate to numerous other <unk>.
G transitions.
Given our diverse highly engineered solutions, you can expect to hear about future hydrogen carbon capture and other biogas related project wins and investments. It is an exciting time to have decades of experience solving complex engineering challenges in the energy markets Chico's diverse leadership position as a real advantage.
Now, let's wrap up with slide 19.
We made great progress in 2020 one.
We are also glad it is in our rearview mirror.
We enter 2022 with a stronger and more diverse backlog than we entered last year.
And our pipeline of over $2 billion in sales opportunities remains robust there are significant opportunities big and small that we are pursuing and already doing a great job of winning in 2020 two as Matt mentioned, we are off to a very fast start we feel.
That's all in backlog and our active pipeline gives us a lot of confidence we will deliver steady growth in 2022 that is our expectation and adding some M&A activity will obviously add to our expected organic growth.
We are very close to publishing our inaugural ESG report.
We look forward to that announcement and sharing our ESG goals objectives targets and commitments. Our first report will just be one step and a continual journey towards our commitment.
The sustainability.
CECO has committed to steady transformation investing to grow organically and move into more sustainable and emerging markets.
And with our healthy balance sheet, we expect to be programmatic acquirers of accretive and strategic transactions.
Before we open the line to questions, let me just share.
One last thought.
We're certainly troubled by the situation in Ukraine, well Siegel does not have a direct exposure to material business in Ukraine or Russia. It is certainly a major impact to global markets on a personal and leadership perspective, our thoughts are with the millions of people that are being displaced and under siege, we're evaluating way CECO.
You can lend support we pray for returned to piece our hearts are certainly with the Ukrainian people.
With that we welcome your questions and we'll open up the line operator.
We will now begin the question and answer session.
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If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Jim Ricchiuti with Needham and company. Please go ahead.
Thank you good morning.
Congratulations by the way on the improved results Q4 question a couple of questions first one G. R. C. I'm wondering if you could.
Talk a little bit more about that business.
From the standpoint of how much customer overlap there might be a potential opportunities that you see for for cross selling and I Wonder if you could also share with us what kind of backlog they have recognizing that it sounds like they are more skewed towards short cycle business.
Yeah. Thanks, Jim I appreciate the comments on the quarter couple of comments and I'll hand, it over to Matt who will provide additional color as well so first of all.
There's always some overlap in customers, but our big opportunity here. We think is is utilizing both channels I, suppose, but especially the CECO international channel and and are in a lot of a lot of our larger projects as well to bring the the G. R C product line through our.
Our projects are infrastructure projects, you know, we've got a large and developed our salesforce in the middle East.
Other parts of the world. They just haven't had a chance to to branch out internationally as aggressively so we'll be able to leverage that AR and AR and they've got a really good strong distribution themselves. So our ability to bring whether it's our flow control products through expanding our distribution. They see projects, we don't historic.
Lee just you know really well established an infrastructure water, which is an area that we've been investing will continue to invest so I think it's a really nice balance between the two obviously, we're a much larger organization. So we've got certain areas of scale and balance sheet strength to help also accelerate some investments Matt if you want to add anything to that $2 million backlog.
Jim.
Thank you.
Got it thanks, and and I Wonder if you could talk a little bit about the.
The revenues that you already alluded to that slipped from Q3 to Q4, how much of that.
Were you able to ship all of that and you know to what extent have you seen additional slippage just in light of the ongoing supply chain issues that we're all hearing about and that was the material shortages.
Yeah, we're seeing a you know it seems like every quarter, we have projects that move around so we mentioned in the third quarter, we had approximately $10 million of revenue. They're just you know got pushed around a pushed out of the third quarter I would say we captured we captured that and then we probably lost you know.
You know a few million from the fourth quarter and you know that that I mean, when I say last I mean, just got pushed out as well. So it's choppy, Jim where were still experiencing it in the first quarter that doesn't mean these projects are going away.
We have a tremendous amount of confidence in our project teams and the year, but every quarter is has dynamics right every quarter seems to have you know, whether it's $5 million to $10 million worth of of revenue and where you don't know when you're a project business you have to wait not just for your products to come.
In in your supply chain, but then when were ready to go we have to wait for those customers you know in all of their other suppliers to have everything and so there's a lot of variables at play we really like the momentum we have in the marketplace, but it's choppy.
Got it and I'll jump back in the Q1 final question, if I may though before I do a nice improvement in gross margin how should we be thinking about.
Gross margins in the near term, you're obviously, you're beginning to get some benefit presumably from some of the pricing actions you've taken in some of the other initiatives you have underway and the way to think about gross margins.
Yeah, I think that's going to continue to be a little choppy too just because of like you said that you know that the market continues to you know the market continues to through throw new challenges at us in terms of cost increases whether it's you know how much we're paying at the pump you know we all saw what happened to Nicole and just a very short period of time. So we have.
To adjust for that I work with our suppliers work across our logistics. So I think you know we're in an environment right now where we're doing a nice job of getting price has to flow through our backlog of course, which you know creates a little bit of an imbalance at times, So think of it as being in a flat could be slightly down a little bit.
If you want to think about where we're currently at but again, our long term aspirations and experiences that will get those gross margins back up as we work our way through the year, but it was a nice improvement sequentially. So we appreciate the comment.
Thanks, a lot.
Yeah.
Our next question comes from Sameer Joshi with H C. Wainwright. Please go ahead.
Yeah, Good morning, and thanks for taking my questions again, congratulations for the good progress for the near term and one Q historically it is a sort of a low quarter of the year and add to that that you had some spillage from Q2 that do that.
And for Q or should we expect <unk> to be a.
Significantly lower.
For Q numbers.
Yeah, I think your point around our first quarter like a lot of companies first quarters are you know, sometimes or you know have proven to be a little bit of a lower quarter. There's a there's a there's a bit of an increase in first quarter costs as we sort of reset the year from an SG&A you know, there's a lot more accruals that happened in the first.
As you start through the year and again like we just said, it's going to be a little choppy out there in terms of our ability to execute on all of our projects in the supply chain inflation, we're working through these things and and we feel like I said, great about 2022 but the first quarter will you know will certainly well certainly rich.
<unk> a trend that we've probably had historically, which is you know it sequentially. If you go from the fourth quarter to the first quarter. We just have we have some pressures that every company why shouldn't say every but a lot of companies and we certainly have they just theres going to be a little bit more cost sequentially, but but but nothing that's different than probably a historic trend.
As proven.
Understood and then just a quick question on to oversee the DST acquisition.
There.
That business, our sequential and year or improvement that you have seen is is there any granularity you can shed on that.
Excellent no sequential improvement that's expected is it pretty flat base business every single quarter no seasonality are really associated with the year over year, we are expecting growth out of that business, they're ending the year with a pretty decent backlog and orders are strong, especially with the infrastructure bill coming through in spending happening in the water market.
Great and then just one on the M&A front you reiterated your looking at the small to midsized opportunities do you have any active discussions that may materialize in the next couple of quarters or all of these are longer term mid to longer term exploration.
Yeah, you know, we're a where we're probably not going to give us a huge your description of what we're looking at in our pipeline, but other than to say.
You know we will be programmatic are we are looking at transactions that are accretive from a margin perspective, we expect give us more short cycle sales.
Expand in the areas of industrial Air industrial water in the energy transition those are our focus areas. We think that's where we already have a seat at the leadership table, we're going to continue to invest in our ceded that leadership table.
All of the things we're looking at just also continue to bolster our sort of our strong commitment to protecting people protecting the environment and protecting industrial equipment. So you know, we're staying true to our swim lane so to speak on M&A. You know these are small to medium sized deals at the moment just because we are we like that.
Size of transaction for us as we just kind of continue to shape our portfolio in the right direction in a steady fashion, we'll look at larger transactions, but that's really where we're looking right now.
Got it thanks, I'll take my other questions offline.
Again, if you'd like to ask a question. Please press Star then one.
Our next question comes from Bill.
Along with Titan capital. Please go ahead.
Thank you [laughter], let's begin if we could with the AR and the strength of January and February orders this year.
Would you please provide a little more detail behind.
Behind that.
Broadbased Belk a good good to speak with you. Thanks for the question. This is Todd pretty balanced across most of our platforms as we've demonstrated throughout 'twenty 'twenty. One. So Q1 maintains that we've been talking about our pipeline stayed strong.
So I would say two or three things balanced across most of our platforms.
Starting to see in the quarter, some larger energy and energy transition jobs that we think are a proof of the patients that we've had to you know to stay focused in certain areas are starting to really show up in our order bookings and we would.
Just that.
The first quarter is the first two months of the first quarter is as strong as we've seen in the first two months of a quarter and a number of years.
From a bookings perspective.
Great. Thank you and then what more would you like to add relative to G. R C and ER and that acquisition and what it.
And what it brings to to you all in the near term and longer term.
I think it's a great growth opportunity they are well positioned in the market, we feel that their size is and their position in the market is something that we can both work and take advantage of in defense that are you know theres a theres a lot of opportunities there for both of us to partner across projects.
But you know we think that it's a business that are you know could be to exit sites and with the right investment.
And the right focus and their leadership team is is fantastic. They really understand their operations are there are there markets are the opportunities and the challenges. So when you know whenever you make an acquisition and you bring in strong leadership, that's a that's a double plus.
Great. Thank you.
Thanks Bill.
Our next question is a follow up from Sydney here Josh.
H C. Wainwright. Please go ahead.
Yeah, Thanks, and sorry, if I missed this question earlier, but.
Just a quick.
Question on the short cycle margins and the sales cycle can you like I know the longer cycles, a nine to 18 months and maybe upwards of two years, but the.
Short cycle it should be considered in two to three months or less than six months of what we should we look at it and then are you a minute or so margins will be up because of the you can price Uh huh. It are not at historic lows, but that current levels are the margins are better, but how much better if you can quantify it.
And we would quantify short cycle sales in less than four months.
Typically right around one and a half to two.
So pumps filters aftermarket services, Paris rents going out and turning something we bill them.
As far as pricing goes and how we measure we've had multiple price.
The increases were we've sent letters to customers and we've seen anywhere from the range of 5% to 7% when.
When we actually look at realized probably around 3% to 4%. So it's been very strong on the short cycle acceptance of price increases.
Got it okay. Thanks.
Okay.
This concludes our question and answer session I would now.
I would like to turn the conference back over to Todd Gleason for any closing remarks.
Thanks, Sarah and thanks to everyone for the questions participation. This morning.
To our team at CECO are again as always we appreciate your focus and leadership to navigate a lot of the choppiness and challenges that continue to be in the marketplace. We've got a great organization of dedicated professionals here to serve our customers and our communities and each other and we look forward to continuing to share our progress as we.
Enter 2022, again like Matt and I have have articulated the pipeline remains really strong that coupled with the now are starting to be a little bit more active M&A. We think just continues to support a good growth trajectory for us for the short medium and hopefully longer term as well so with that well enter.
A day and we look forward to speaking with many of you throughout the next few days. Thanks a lot.
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