Core Insights - CECO Environmental Corp. has announced its largest order to date, exceeding $135 million, which includes a comprehensive emissions management solution for a Texas-based natural gas power generation facility [1] - The company expects full-year 2025 bookings to surpass $1 billion, with a record backlog approaching or exceeding $800 million [1] - CECO's sales pipeline is projected to exceed $6 billion by the end of 2025, indicating strong future growth potential [2] Company Performance - CECO has been recognized in Newsweek's America's Greatest Companies 2025 list and Forbes' 2026 America's Most Successful Small-Cap Companies, highlighting its commitment to delivering world-class solutions and sustainable growth [3] - The CEO emphasized the company's strong performance in the energy transition and power generation sectors, as well as its emerging leadership in international industrial water treatment markets [2] Market Position - CECO operates in various industrial sectors, including air and water quality improvement, emissions management, and energy efficiency, serving markets such as power generation, semiconductor production, and electric vehicle manufacturing [5] - The company is well-positioned to benefit from ongoing trends in natural gas infrastructure expansions, industrial reshoring, and electrification [2]

CECO Environmental FY Conference Summary Company Overview - **Company**: CECO Environmental (NasdaqGS:CECO) - **Industry**: Environmental solutions focusing on air, water, and energy transition - **CEO**: Todd Gleason, who has been in position since 2020 and has driven growth through organic means and acquisitions [1][3][5] Key Points and Arguments Business Model and Strategy - CECO's products address environmental challenges, focusing on employee safety, industrial equipment protection, and environmental conservation [5][6][7] - The company emphasizes its commitment to creating value for customers, employees, and shareholders, with a long-term vision towards 2030 [10][11] - CECO has a diverse product offering and geographical presence, with approximately 45% of sales outside the U.S. [12][13] Financial Performance and Growth - CECO has achieved a significant increase in its sales pipeline, growing from $1.5 billion to nearly $6 billion over the past few years [25][26] - The company anticipates a book-to-bill ratio of 1.2 for the current year, indicating a growth in orders exceeding sales by 20-30% [27][28] - Revenue guidance for the upcoming year is projected between $7.25 billion and $7.75 billion, with adjusted EBITDA expected to be between $90 million and $100 million [28][29] Market Position and Opportunities - CECO is positioned to capitalize on strong market demand in power, natural gas, and industrial water sectors, with significant growth expected in nuclear applications [31][32][33] - The company has made strategic acquisitions to enhance its capabilities in industrial water, projecting $100 million in sales for the upcoming year [33][34] - CECO's industrial air segment has shown steady double-digit growth due to its ability to pivot resources to various industries based on market demand [35][36] M&A Strategy - CECO has a history of making accretive acquisitions, with over a dozen completed since Todd Gleason's tenure began [14][23][54] - The company focuses on acquiring businesses that can achieve 20-30% growth in their first few years post-acquisition [14][15] - Recent acquisitions include Transcend, which enhances CECO's capabilities in separation filtration [54][56] Financial Health and Cash Flow - CECO maintains a healthy balance sheet and aims for free cash flow to be around 50-60% of adjusted EBITDA [60] - The company is opportunistic in its use of cash, prioritizing acquisitions and debt repayment over stock buybacks [61][63] Market Dynamics - CECO operates in a diverse industrial landscape, with varying performance across sectors; however, the overall outlook remains positive due to strong demand in energy and industrial markets [66][68] - The company has not observed significant project cancellations, indicating a stable pipeline despite economic fluctuations [69][70] Additional Insights - CECO's leadership emphasizes a long-term growth strategy, focusing on sustainable value creation and market leadership in niche industrial sectors [48][49] - The company is exploring potential rebranding to better align with its market positioning in power [20] This summary encapsulates the key insights from CECO Environmental's FY conference, highlighting the company's strategic direction, financial performance, market opportunities, and operational strategies.

Dallas, TX 2025 Southwest IDEAS Conference November 20, 2025 Forward-looking statements and Non-GAAP information This presentation contains forward-looking statements with predictions, projections and other statements about future events. These statements are made on the basis of management's views and assumptions regarding future events and business performance. We use words such as "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," "will," "plan," "should" and similar express ...

Core Insights - CECO reported an EPS of $0.26 for Q3 2025, slightly below the Zacks Consensus Estimate of $0.27, indicating a negative surprise of 3.70%, but an improvement from $0.14 EPS in the same quarter last year [1][5] - The company's revenue for the quarter was $197.6 million, exceeding the Zacks Consensus Estimate by 4.26%, and significantly up from $135.51 million in the same period last year [2][5] - CECO's orders totaled $232.9 million, a 44% increase, with a backlog of $719.6 million, up by 64%, reflecting strong financial health and growth potential [3] - The gross profit margin was reported at 32.7%, with a gross profit of $64.6 million, up 43%, reinforcing a positive outlook for 2026 [3] - Financial metrics indicate a P/E ratio of 33.06, a price-to-sales ratio of 2.39, and a low debt-to-equity ratio of 0.08, demonstrating conservative debt usage [4] - CECO's current ratio of 1.33 indicates strong liquidity, ensuring the company can effectively meet short-term obligations [4]

Financial Performance - Net sales for Q3 2025 increased by $62.1 million, or 45.8%, to $197.6 million compared to Q3 2024, with organic growth of 35%[122] - Net sales for the nine months ended September 30, 2025 increased by $160.3 million, or 40.1%, to $559.7 million compared to the same period in 2024, with organic growth of 24%[123] - Orders booked increased by $70.6 million, or 44%, to $232.9 million in Q3 2025 compared to Q3 2024, with organic growth of 33%[120] - Gross profit for Q3 2025 increased by $19.3 million, or 42.6%, to $64.6 million, with a gross profit margin of 32.7%[124] - Operating income for Q3 2025 increased by $2.2 million to $9.4 million compared to Q3 2024, with an operating margin of 4.8%[130] - Non-GAAP operating income for Q3 2025 was $17.5 million, with a non-GAAP operating margin of 8.9%[132] - Total net sales for the three months ended September 30, 2025, were $197.6 million, a 46% increase from $135.5 million in 2024, and for the nine months ended September 30, 2025, net sales were $559.7 million, up 40% from $399.4 million in 2024[137] Expenses and Costs - Selling and administrative expenses for Q3 2025 were $47.0 million, up from $34.3 million in Q3 2024[126] - Amortization expense for Q3 2025 was $6.1 million, compared to $2.5 million in Q3 2024, due to increased intangible assets from acquisitions[128] - Interest expense increased to $5.1 million in Q3 2025 from $2.6 million in Q3 2024, primarily due to increased debt balances[134] - Interest expense increased to $16.2 million for the nine months ended September 30, 2025, compared to $9.3 million for the same period in 2024, primarily due to increased debt balances[135] - Income tax expense for the nine months ended September 30, 2025, was $23.6 million, up from $2.7 million in the same period in 2024, with an effective tax rate of 32.8% compared to 21.8% in 2024[136] Orders and Backlog - Engineered Systems segment orders booked increased by $239.9 million, or 74%, to $562.6 million for the nine months ended September 30, 2025, with organic growth of 73%[140] - Industrial Process Solutions segment orders booked increased by $46.7 million, or 37%, to $172.3 million for the nine months ended September 30, 2025, with organic growth of 7%[146] - Backlog increased to $719.6 million as of September 30, 2025, from $540.9 million as of December 31, 2024[151] Cash Flow and Debt - Cash and cash equivalents totaled $32.8 million as of September 30, 2025, down from $37.8 million at December 31, 2024[155] - Total outstanding borrowings increased to $220.9 million as of September 30, 2025, compared to $218.9 million at December 31, 2024[156] - Net cash used in operating activities was $4.1 million for the nine months ended September 30, 2025, compared to $23.0 million provided in the prior year period[162] - Net cash provided by investing activities was $1.5 million for the nine months ended September 30, 2025, compared to $26.2 million used in the prior year period, primarily due to the sale of the Global Pump Solutions business[163] - The carrying value of the Company's total long-term debt and current maturities of long-term debt at September 30, 2025, was $222.4 million[169] Market and Operational Risks - The company experienced shortages of raw materials and inflationary pressures, which could adversely affect future business results[115] - Market risk is primarily related to changes in interest rates, with no derivatives held for trading or speculative purposes[168] - The Company is exposed to risks associated with fixed price contracts, including actual costs exceeding estimates[169] - Future changes in foreign exchange rates may impact revenues, operating expenses, and earnings[171] - The Company faces potential challenges in expanding operations in new and existing markets due to supply chain issues[169] - The Company has incurred substantial debt related to strategic transactions, impacting its ability to repay or refinance[169] Transaction Gains and Losses - Transaction gains and losses included in "Other expense, net" were $2.0 million for the three months ended September 30, 2025, compared to $0.3 million for the same period in 2024[171] - For the nine months ended September 30, 2025, transaction gains and losses were $1.1 million, down from $1.9 million in the same period in 2024[171] Subsidiaries - The Company has wholly-owned subsidiaries in several countries, including the Netherlands, Canada, China, and the United Kingdom[171]

Financial Data and Key Metrics Changes - The company reported a record backlog of $720 million, up 64% year-over-year and 5% sequentially [14][15] - Quarterly revenue reached $198 million, marking a 46% increase year-over-year [15][16] - Adjusted EBITDA increased by 62% to $23.2 million, with adjusted EPS rising 86% to $0.26 [9][16] Business Line Data and Key Metrics Changes - The company achieved $233 million in new bookings, a 44% increase compared to Q3 2024, with a book-to-bill ratio of approximately 1.2 times [14][15] - The backlog has more than tripled since the end of 2021, with a year-to-date book-to-bill ratio of approximately 1.3 times [18][19] Market Data and Key Metrics Changes - The sales pipeline now exceeds $5.8 billion, indicating strong future growth potential [8][35] - The company is well-positioned in sectors such as power generation, industrial water, and natural gas infrastructure, with substantial orders expected in the coming quarters [11][12] Company Strategy and Development Direction - The company aims to exceed $1 billion in orders for 2026, with projected revenue between $850 million and $950 million, reflecting a year-over-year increase of 15% to 25% [30][31] - Continued focus on operational excellence and cost management initiatives, including the implementation of the 80/20 model, to enhance efficiency and margins [22][54] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about market dynamics, particularly in energy transition investments and industrial reshoring [28][29] - The company is closely monitoring potential challenges such as tariffs and inflation but believes it is well-prepared to navigate these issues [14][29] Other Important Information - The company has not announced any new M&A transactions since the sale of its global pump business and the acquisition of Profire Energy, but it is actively building its M&A pipeline [13][27] - Free cash flow for the quarter was approximately $19 million, with a year-to-date capital expenditure of about $8.7 million [23][24] Q&A Session Summary Question: Update on large projects in industrial water and power generation - Management indicated strong positioning for large projects, particularly in the Middle East and Asia, focusing on produced water and water reuse applications [39][40] Question: Visibility on 2026 outlook and potential for upward adjustments - Management expressed confidence in the $5.8 billion sales pipeline and noted that winning additional large projects could enhance the 2026 outlook [41][43] Question: Update on the power generation pipeline - Management reported a robust pipeline exceeding $1 billion, with ongoing positive discussions with major OEMs [47][48] Question: Confidence in targeted adjusted EBITDA margin expansion - Management outlined a three-pronged approach to margin expansion, focusing on volume growth, operational investments, and cost management initiatives [52][54] Question: Opportunities in disaggregated power solutions - Management noted limited opportunities depending on the type of power solutions being implemented, with potential for small format gas turbines [61] Question: Macroeconomic backdrop for 2026 guidance - Management indicated a stable macroeconomic environment, with no significant changes expected to impact the company's outlook [69][71] Question: Cross-selling opportunities with Profire Energy - Management highlighted ongoing discussions and initiatives to leverage Profire's offerings across a broader industrial customer base [72][75] Question: Confidence in Q4 bookings potentially being the largest ever - Management cited strong order performance and a record backlog as reasons for confidence in achieving significant bookings in Q4 [76][77]

Financial Data and Key Metrics Changes - The company reported a record backlog of $720 million, up approximately 64% year-over-year and 5% sequentially [6][14] - Quarterly revenue reached an all-time high of $198 million, representing a 46% increase year-over-year [8][15] - Adjusted EBITDA increased by 62% to $23.2 million, with adjusted EPS rising 86% to $0.26 [9][16] - Free cash flow for the quarter was approximately $19 million, showing a strong rebound from the first half of 2025 [9][23] Business Line Data and Key Metrics Changes - The company achieved new bookings of $233 million in Q3 2025, a 44% increase compared to Q3 2024, with a book-to-bill ratio of approximately 1.2x [7][14] - Approximately 30% of the year-over-year revenue increase was attributed to recent acquisitions, with the remainder from organic growth [16] - The sales pipeline now exceeds $5.8 billion, indicating strong future growth potential [8][34] Market Data and Key Metrics Changes - The company is well-positioned in sectors such as power generation, industrial water, and natural gas infrastructure, with substantial order growth expected in these areas [11][12] - The company anticipates significant orders in the next four to six quarters, particularly in international water infrastructure projects [12][28] Company Strategy and Development Direction - The company aims to maintain a strong market presence by optimizing project pricing and margin levels while expanding into new geographies [12][13] - The focus remains on building a world-class industrial company through strategic M&A activities and enhancing operational excellence [13][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate potential challenges such as tariffs and inflation while maintaining a strong growth trajectory [14][28] - The outlook for 2026 includes projected revenue between $850 million and $950 million, reflecting a year-over-year increase of 15%-25% [29][30] Other Important Information - The company has not announced any new M&A transactions since the sale of its global pump business and the acquisition of Profire Energy, but remains active in building its M&A pipeline [13][26] - The company expects to achieve a net debt to EBITDA leverage ratio of approximately 2.3x, improving its financial flexibility [25] Q&A Session Summary Question: Update on project pipeline in industrial water and power generation - Management highlighted strong positioning in large projects, particularly in the Middle East and Asia, focusing on produced water and water reuse applications [38][39] Question: 2026 outlook and potential for upward adjustments - Management indicated that the $5.8 billion sales pipeline provides high confidence for future bookings, with potential for exceeding current guidance based on project wins [40][42] Question: Activity levels in power generation and data center connections - Management noted robust activity in the power generation sector, with a well over $1 billion pipeline, but cautioned against over-expectation due to the multi-year nature of these projects [46][48] Question: Confidence in adjusted EBITDA margin expansion - Management expressed confidence in achieving 100-150 basis points of margin expansion through volume growth, operational excellence initiatives, and cost management [51][53] Question: Opportunities in disaggregated power solutions - Management acknowledged potential opportunities depending on the type of power solutions chosen, with a focus on small format gas turbines [60] Question: Macroeconomic backdrop for 2026 guidance - Management indicated a stable macroeconomic environment is assumed, with no significant positive or negative changes expected [68][70] Question: Cross-selling opportunities with Profire - Management confirmed ongoing discussions and initiatives to leverage Profire's offerings across CECO's broader industrial customer base [71][74] Question: Confidence in Q4 bookings potentially being the largest ever - Management cited strong order performance and ongoing dialogues with customers as reasons for confidence in achieving record bookings in Q4 [75][77]

Financial Data and Key Metrics Changes - The company reported a record backlog of $720 million, up 64% year-over-year and 5% sequentially [15][19] - Quarterly revenue reached $198 million, marking a 46% increase year-over-year [16][17] - Adjusted EBITDA increased by 62% to $23.2 million, with adjusted EPS rising 86% to $0.26 [9][17] Business Line Data and Key Metrics Changes - The company achieved $233 million in new bookings, a 44% increase compared to Q3 2024, with a book-to-bill ratio of approximately 1.2 [6][15] - The backlog growth was driven by strong demand in power generation, natural gas infrastructure, and industrial water applications [16][19] Market Data and Key Metrics Changes - The sales pipeline now exceeds $5.8 billion, indicating strong future growth potential [8][35] - The company is well-positioned to benefit from market dynamics in power, industrial reshoring, and water infrastructure sectors [11][12] Company Strategy and Development Direction - The company is focused on expanding its capabilities in industrial air and energy applications while optimizing project pricing and margins [12][50] - There is an ongoing emphasis on M&A opportunities to enhance the sustainability of the company's portfolio [13][27] Management's Comments on Operating Environment and Future Outlook - Management remains bullish about the market dynamics and has reaffirmed the full-year 2025 outlook while providing an optimistic initial outlook for 2026 [5][31] - The company is monitoring potential challenges such as tariffs and inflation but believes it is well-prepared to navigate these issues [14][30] Other Important Information - The company expects Q4 bookings to exceed $250 million, with the potential for a record quarter above $300 million depending on project timing [10][68] - The company has made significant investments in operational excellence and cost management initiatives to drive future profitability [23][50] Q&A Session Summary Question: Update on project pipeline in industrial water and power generation - Management indicated strong positioning in large projects, particularly in the Middle East and Asia, focusing on produced water and water reuse applications [38] Question: Visibility on 2026 outlook and potential for upward adjustments - Management expressed confidence in the $5.8 billion sales pipeline and noted that winning additional large projects could enhance the 2026 outlook [39][40] Question: Update on power generation pipeline and activity levels - Management noted robust activity in the power generation sector, with a pipeline exceeding $1 billion, and emphasized the multi-year nature of these projects [44][46] Question: Confidence in targeted adjusted EBITDA margin expansion - Management outlined a three-pronged approach to margin expansion, focusing on volume growth, operational efficiencies, and cost management initiatives [48][50] Question: Cross-selling opportunities with Profire Energy - Management highlighted ongoing discussions and initiatives to leverage Profire's offerings across CECO's broader industrial customer base [63][66] Question: Macroeconomic backdrop for 2026 guidance - Management indicated a stable macroeconomic environment, with no significant changes expected to impact the company's outlook [60][62]

Core Insights - CECO Environmental reported quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.27 per share, but showing an increase from $0.14 per share a year ago [1] - The company posted revenues of $197.6 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 4.26% and up from $135.51 million year-over-year [3] Earnings Performance - The earnings surprise for the quarter was -3.70%, following a previous quarter where the company had a positive surprise of +20% [2] - Over the last four quarters, CECO has surpassed consensus EPS estimates two times [2] Revenue Performance - CECO has topped consensus revenue estimates four times over the last four quarters [3] - The current consensus EPS estimate for the upcoming quarter is $0.39 on revenues of $207.03 million, and for the current fiscal year, it is $0.99 on revenues of $762.31 million [8] Stock Performance - CECO shares have increased approximately 76.5% since the beginning of the year, significantly outperforming the S&P 500's gain of 16.9% [4] Industry Outlook - The Pollution Control industry, to which CECO belongs, is currently ranked in the bottom 26% of over 250 Zacks industries, indicating potential challenges ahead [9] - The performance of CECO's stock may be influenced by the overall outlook for the industry [9]

Q3 2025 Performance Highlights - Backlog reached a record level of $720 million, a 64% increase year-over-year[13, 20] - Orders increased by 44% year-over-year to $233 million, resulting in a book-to-bill ratio of approximately 1.2x[12, 13] - Revenue grew by 46% year-over-year to $198 million, driven by market position, M&A, and growth investments[12, 13] - Adjusted EBITDA increased by 62% year-over-year to $23.2 million, with margin expansion of 120 bps[12, 13, 20] - Adjusted EPS increased by 86% year-over-year to $0.26[13, 20] Full Year 2025 Outlook (Reaffirmed) - Revenue is projected to be between $725 million and $775 million, representing approximately 35% year-over-year growth, with 20% organic growth[15] - Adjusted EBITDA is expected to be between $90 million and $100 million, up approximately 50% year-over-year, with margins in the range of 12.5% - 13.0%[12, 15] - Expect Q4 bookings to be greater than $250 million[15] 2026 Outlook (Introducing) - Revenue is projected to be between $850 million and $950 million, representing a 15% to 25% year-over-year increase[10, 36, 38] - Orders are expected to exceed $1 billion[10, 36, 38] - Adjusted EBITDA is projected to be between $110 million and $130 million, representing a 20% to 40% year-over-year increase[10, 36, 38]