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ADDISON, Texas - CECO Environmental Corp. (NASDAQ:CECO), a diversified industrial company focusing on environmental solutions with a market capitalization of approximately $798 million, has completed the divestiture of its Fluid Handling business to private equity firm May River Capital. According to InvestingPro analysis, CECO currently appears overvalued compared to its Fair Value. The transaction, which closed on Thursday, was valued at approximately $110 million in cash.
The divested unit, known as Global Pump Solutions (GPS), operates within CECO’s Industrial Process Solutions segment and includes the Dean, Fybroc, and Sethco pump brands. These brands are recognized for their severe service industrial pumps made of metallic, fiberglass, and thermoplastic materials. GPS has a global customer base of over 1,500 and maintains operations in Indianapolis, Indiana, and Telford, Pennsylvania.
Todd Gleason, CEO of CECO, expressed satisfaction with the divestiture, stating that it aligns the company’s portfolio with its growth opportunities in energy and industrial markets. The company’s growth prospects look promising, with InvestingPro data showing analysts expect 25% revenue growth in FY2025. The sale follows CECO’s recent acquisitions of Verantis Environmental and Profire Energy and is expected to create additional capacity for investment and business expansion. The company maintains a healthy current ratio of 1.35x and generated $558 million in revenue over the last twelve months.
CECO plans to utilize the proceeds from the GPS sale to reduce its debt and fund strategic growth investments. The company serves a wide range of markets, including industrial air and water treatment and energy transition, by providing technology and expertise aimed at enhancing safety, efficiency, and environmental protection.
May River Capital, the acquirer, is a Chicago-based firm that focuses on investments in lower middle-market industrial growth companies. The firm’s interests span advanced manufacturing, engineered products, specialized industrial services, and industrial distribution services.
The financial and legal advisors for CECO in the transaction were EC M&A and Koley Jessen, while Paul Hastings and TD Securities provided counsel to May River Capital.
This news is based on a press release statement from CECO Environmental Corp. For deeper insights into CECO’s financial health, growth prospects, and comprehensive analysis, investors can access the detailed Pro Research Report available exclusively on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
In other recent news, CECO Environmental has announced a reduction in its full-year 2024 revenue guidance due to customer-driven project delays, with expected revenues now between $555 to $558 million, down from the previous range of $575 to $600 million. Adjusted EBITDA is also anticipated to be lower, estimated at $62 to $63 million compared to the initial forecast of $65 to $70 million. Despite these challenges, CECO achieved over $210 million in bookings for Q4 2024, marking a record for the company. In strategic developments, CECO completed the acquisition of Profire Energy for $123 million, which is expected to enhance margins and align with its expansion strategy in the Energy and Industrial sectors. Craig-Hallum analyst Aaron Spychalla has raised the company’s price target to $40, maintaining a Buy rating, following this acquisition. Additionally, CECO plans to divest its Fluid Handling business by late Q1 2025 to reduce debt and support future growth investments. The company maintains a positive outlook for 2025, projecting revenues of $700 to $750 million and Adjusted EBITDA of $90 to $100 million. Furthermore, CECO has appointed Deloitte as its new auditor, effective February 28, 2025, as part of its efforts to strengthen financial reporting processes.
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