Core Viewpoint - CECO Environmental Corp. will report its first quarter financial results for 2025 on April 29, 2025, before the market opens, and will host an earnings call at 8:30 a.m. Eastern Time [1] Group 1: Financial Reporting - The earnings call will take place on April 29, 2025, at 8:30 a.m. Eastern Time [2] - Financial results and presentation will be available on the company's website [1] Group 2: Company Overview - CECO Environmental is a diversified industrial company focused on environmentally friendly solutions, serving industrial air, water, and energy transition markets globally [3] - The company operates through key business segments: Engineered Systems and Industrial Process Solutions, providing innovative technology and application expertise [3] - CECO's solutions aim to improve air quality, optimize energy value chains, and offer custom solutions across various industrial applications, including power generation and battery production [3]

Company Overview - May River Capital, a Chicago-based private equity firm, has acquired the Global Pump Solutions business of CECO Environmental Corp, including the Dean, Fybroc, and Sethco pump brands [1] - The acquired brands will be organized under a new parent company, Tusk Industrial, which focuses on high-performance pumping and fluid handling solutions for rugged environments [1][4] Tusk Industrial Details - Tusk Industrial designs, manufactures, and services pumps made from metallic, fiberglass, and thermoplastic materials for high-temperature, corrosive, and caustic industrial applications [2][4] - The company operates with over 100 employees and serves more than 1,500 customers globally from its locations in Telford, Pennsylvania, and Indianapolis, Indiana [2] Leadership and Growth Potential - Ming Cheung, President & GM of Tusk Industrial, emphasizes the partnership with May River as a significant opportunity for growth and enhanced capabilities [3] - May River's Managing Director, Pat St. John, highlights Tusk Industrial's substantial growth potential and the firm's commitment to investing in new products, market expansion, and strategic acquisitions [3]

Core Viewpoint - CECO Environmental Corp. has successfully completed the divestiture of its Fluid Handling business, known as Global Pump Solutions (GPS), to May River Capital for an enterprise value of approximately $110 million, effective March 31, 2025 [1][2][4]. Group 1: Transaction Details - The transaction was executed for a cash payment of approximately $110 million at closing [2]. - Proceeds from the divestiture will be utilized to pay down debt and fund future strategic growth investments [2]. Group 2: Business Overview - The GPS business includes three niche brands: Dean, Fybroc, and Sethco, specializing in severe service industrial pumps [3]. - GPS operates from locations in Indianapolis, Indiana, and Telford, Pennsylvania, serving over 1,500 customers globally [3]. Group 3: Strategic Implications - The divestiture allows CECO to better align its portfolio with high growth opportunities in energy and industrial markets [4]. - The sale follows recent acquisitions of Verantis Environmental and Profire Energy, creating additional capacity for further investments in CECO's growth and business expansion [4]. Group 4: Company Background - CECO Environmental is a diversified industrial company focused on environmentally friendly solutions across industrial air, water, and energy transition markets [5]. - The company provides innovative technology and application expertise to improve air quality and optimize the energy value chain [5]. Group 5: Buyer Information - May River Capital is a private equity firm based in Chicago, focusing on lower middle-market industrial growth businesses [6]. - The firm invests in advanced manufacturing, engineered products, specialized industrial services, and value-added industrial distribution services [6].

Core Insights - CECO Environmental Corp. is participating in the 37th Annual ROTH Conference on March 17, 2025, hosting one-on-one meetings throughout the day [1] - The company focuses on providing environmentally friendly solutions across various industrial sectors, including air and water quality improvement, emissions management, and energy efficiency [3] Company Overview - CECO Environmental is a diversified industrial company established in 1966, headquartered in Addison, Texas, and listed on Nasdaq under the ticker symbol "CECO" [3] - The company serves multiple markets, including power generation, hydrocarbon processing, electric vehicle production, semiconductor manufacturing, and water treatment [3] Investor Relations - The presentation from the investor conference will be accessible on CECO's Investor Relations website [1] - Key contacts for investor relations include Peter Johansson, Chief Financial and Strategy Officer, and the team at Three Part Advisors, LLC [4]

Financial Performance - In 2024, the company reported net sales of $557.9 million, an increase of 2.8% from $544.8 million in 2023, and a significant rise of 32.0% from $422.6 million in 2022[186]. - Gross profit for 2024 was $196.1 million, representing 35.1% of sales, compared to 31.4% in 2023 and 30.3% in 2022, indicating improved profitability[186]. - Consolidated net sales for 2024 were $557.9 million, an increase of $13.1 million or 2.4% compared to 2023, driven by growth in industrial processing solutions segment[189]. - Gross profit increased by $25.1 million, or 14.7%, to $196.1 million in 2024, with gross profit as a percentage of sales rising to 35.1% from 31.4% in 2023[190]. - Non-GAAP net income attributable to CECO Environmental Corp. for 2024 was $13.0 million, slightly up from $12.9 million in 2023[186]. - Operating income for 2024 was $35.4 million, an increase of $0.8 million from 2023, with an operating margin of 6.3%[198]. - Non-GAAP operating income for 2024 was $49.4 million, up $1.3 million from 2023, with a non-GAAP operating margin of 8.9%[199]. Expenses and Costs - Selling and administrative expenses increased to $146.7 million in 2024, accounting for 26.3% of sales, up from 22.6% in 2023[186]. - Selling and administrative expenses rose to $146.7 million in 2024, an increase of $23.8 million or 19.4% compared to 2023[192]. - Corporate and Other segment operating expenses increased by $19.6 million to $66.5 million in 2024, primarily due to investments in growth and inflationary increases[212]. Market and Strategic Initiatives - The company aims to expand its product offerings in the air, water, and energy transition markets, driven by increasing demand for cleaner solutions[167]. - The Infrastructure Investment and Jobs Act, with $550 billion in federal spending, is expected to create opportunities for the company's pollution control equipment[170]. - The company is shifting its portfolio towards businesses with more recurring revenue and predictable cash flows[173]. Acquisitions - The company acquired Profire Energy, which had 2024 revenues of $63 million, focusing on emissions reduction and safety in the oil & gas sector[165]. Orders and Growth - Orders booked in 2024 were $667.3 million, an increase of $84.5 million or 14.5%, with $51.5 million attributed to organic growth[191]. - Engineered Systems segment net sales increased by $3.9 million to $384.0 million in 2024, while Industrial Process Solutions segment net sales increased by $9.2 million to $173.9 million[207][210]. Cash Flow and Liquidity - Operating cash flow decreased to $24.8 million in 2024 from $44.6 million in 2023, a decline of 44.4% primarily due to changes in net working capital[228]. - Cash used in investing activities rose to $105.3 million in 2024, up from $56.5 million in 2023, indicating a 86.3% increase driven by current year acquisitions[230]. - Financing activities provided cash of $65.9 million in 2024, significantly higher than $21.1 million in 2023, marking a 212.8% increase primarily from net borrowings under the Credit Facility[231]. Debt and Borrowings - As of December 31, 2024, total outstanding borrowings amounted to $218.9 million, an increase from $137.3 million in 2023, reflecting a growth of 59%[218]. - The Company made repayments of $112.4 million on the term loan and $1.6 million on the joint venture term debt in 2024, with net borrowings of $196.9 million on the revolving credit line[218]. - Total unused credit availability under the Credit Facility increased to $166.9 million in 2024 from $109.4 million in 2023, representing a 52.7% increase[226]. - The carrying value of the Company's total long-term debt and current maturities of long-term debt at December 31, 2024 was $221.5 million[258]. Tax and Regulatory Matters - The Company assesses the realizability of deferred tax assets, considering future taxable income and tax-planning strategies[252]. - Deferred tax liabilities are recognized for taxable temporary differences, while deferred tax assets are recognized for deductible temporary differences and operating loss carry-forwards[249]. - The Company has recorded a liability for deferred taxes on undistributed foreign earnings, primarily due to foreign withholding taxes[254]. - Management must analyze complex tax laws across multiple jurisdictions to assess uncertain tax positions[250]. - The Company has made an accounting policy election to record the U.S. income tax effect of future GILTI inclusions in the period they arise[253]. Risk Factors - The company is experiencing inflationary pressures and raw material shortages, which could adversely affect future financial results[174]. - A hypothetical 10% increase in the estimated weighted average borrowing rate at December 31, 2024 could result in an estimated annual impact of $1.6 million on future earnings and cash flows[258]. - The estimated market risk related to changes in interest rates is significant due to a substantial portion of borrowings being at variable rates[257]. - Transaction losses included in "Other (expense) income, net" were $(4.3) million in 2024, $1.2 million in 2023, and $6.3 million in 2022, indicating fluctuations in foreign currency exposure[259]. - The Company has not hedged its foreign currency exposure, which may impact revenues, operating expenses, and earnings due to future changes in exchange rates[259].

Financial Data and Key Metrics Changes - Full-year revenue reached $558 million, marking a record year for the company, with a year-over-year growth rate of only 2% due to customer-driven project delays [9][10] - Adjusted EBITDA for the year was $62.8 million, an increase of approximately 9% compared to the previous year, with adjusted EBITDA margins expanding by approximately 70 basis points [10][38] - The company reported a record backlog of $541 million, up 46% from the previous year [32] Business Line Data and Key Metrics Changes - Fourth-quarter orders totaled $219 million, representing a 71% increase year-over-year, contributing to full-year orders of $667 million, which were up mid-teens year-over-year [12][33] - Gross profit margin for the fourth quarter was 35.8%, an increase of 120 basis points year-over-year, driven by productivity and project execution initiatives [36] Market Data and Key Metrics Changes - The company identified strong opportunities in markets such as power generation, natural gas infrastructure, and industrial air, contributing to the robust order growth [14][15] - The sales pipeline grew from approximately $1.5 billion at the end of 2021 to $4.5 billion at the end of 2024, indicating significant market expansion [22][57] Company Strategy and Development Direction - The company is focused on niche leadership in industrial markets, with a balanced portfolio across industrial air, industrial water, and energy transition businesses [27][28] - The management emphasized the importance of a multi-year perspective and a focused value creation strategy, despite not meeting all performance metrics in 2024 [18][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the 2025 outlook, expecting revenue between $700 million to $750 million, which represents a 30% growth rate year-over-year [58] - The company is monitoring potential impacts from tariffs and economic uncertainties but believes the financial impact will be minimal due to established business relationships [90][92] Other Important Information - The company experienced a free cash flow outflow of $4 million in the fourth quarter due to working capital timing, but expects a turnaround in 2025 [39][40] - The integration of recent acquisitions, including Profire, is progressing well, with expectations for significant growth and synergies [75][78] Q&A Session Summary Question: Order momentum and pipeline strength for 2025 - Management noted strong order momentum in power generation and industrial infrastructure markets, with a vibrant orders market continuing into 2025 [72] Question: Opportunities and integration of Profire - The integration of Profire is going well, with expectations for growth and collaboration across markets, particularly in energy [75][78] Question: Backlog visibility and guidance confidence - Management indicated that a higher backlog entering 2025 provides greater confidence in achieving revenue guidance compared to previous years [82][85] Question: Margin outlook and tariff impacts - Margins are expected to improve, with operational efficiencies offsetting potential tariff impacts, which are currently uncertain [88][90] Question: Tracking larger, complex projects in backlog - The company is implementing standardized ERP systems for better visibility and tracking of project costs and progress [99][102] Question: Activity levels in short-cycle versus long-cycle business - Management reported stable activity levels in both short-cycle and long-cycle businesses, with consistent growth in short-cycle sales [112][116] Question: LNG market interest and urgency - There has been increased interest in LNG projects, with expectations for robust project work in 2025 and 2026 as previously deferred projects resume [120][123]

Group 1: Earnings Performance - CECO Environmental reported quarterly earnings of $0.27 per share, exceeding the Zacks Consensus Estimate of $0.22 per share, but down from $0.28 per share a year ago [1] - The earnings surprise for this quarter was 22.73%, while the previous quarter saw a negative surprise of -36.36% with actual earnings of $0.14 per share against an expectation of $0.22 [2] - Over the last four quarters, CECO has surpassed consensus EPS estimates two times [2] Group 2: Revenue Performance - CECO posted revenues of $158.57 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.59% and up from $153.71 million year-over-year [3] - The company has topped consensus revenue estimates only once over the last four quarters [3] Group 3: Stock Performance and Outlook - CECO shares have declined approximately 25.1% since the beginning of the year, contrasting with the S&P 500's gain of 1.7% [4] - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $149.33 million, and for the current fiscal year, it is $1.16 on revenues of $692.09 million [8] - The Zacks Rank for CECO is currently 3 (Hold), indicating expected performance in line with the market in the near future [7] Group 4: Industry Context - The Pollution Control industry, to which CECO belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, suggesting potential challenges for stock performance [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact CECO's stock performance [6]

Financial Results - CECO Environmental Corp. announced preliminary financial results for Q4 and full year 2024 on January 16, 2025[5]. - The report does not specify detailed financial metrics or performance indicators in the provided content[5]. - The financial results are not deemed "filed" under the Securities Exchange Act of 1934[6]. Company Information - The company is listed on NASDAQ under the trading symbol CECO[4]. - The report was signed by Kiril Kovachev, Chief Accounting Officer, on January 17, 2025[11]. Strategic Outlook - No information on user data, future outlook, or new product developments is available in the current documents[5]. - The company has not indicated any strategic transactions or market expansions in the provided content[7]. - There is no mention of mergers or acquisitions in the current report[5]. - The report does not classify CECO as an emerging growth company[4]. Documentation - The press release detailing the financial results is included as Exhibit 99.1[7].

Core Viewpoint - CECO Environmental Corp. reported record bookings of $219 million in Q4 2024, leading to a year-end backlog of $541 million, and reaffirmed its full-year 2025 outlook with expected revenue growth of approximately 30% year-over-year [1][9][10]. Summary by Relevant Sections Highlights for the Quarter - Fourth quarter operating income was $11.3 million, down 11% from $12.7 million in Q4 2023. Adjusted non-GAAP operating income was $15.6 million, down 4% from $16.3 million [5]. - Net income for the quarter was $4.9 million, an increase of 26% compared to $3.9 million in Q4 2023. Non-GAAP net income was $9.9 million, down 2% from $10.1 million [5]. - Adjusted EBITDA was $19.0 million, reflecting a margin of 12.0%, down 2% from $19.4 million in Q4 2023 [5]. Highlights for the Year - Full year operating income was $35.4 million, up from $34.6 million in 2023. Adjusted non-GAAP operating income increased to $49.4 million from $48.1 million [6]. - Total revenue for the year was $557.9 million, a 2% increase from $544.8 million in 2023. Gross profit rose to $196.1 million, up 15% from $171.0 million [6]. - The company completed three acquisitions, enhancing its market leadership in the Industrial Air sector [6]. 2025 Full Year Guidance - CECO maintains its 2025 revenue outlook of $700 to $750 million, representing a year-over-year increase of approximately 30% at the midpoint. Adjusted EBITDA is expected to be between $90 to $100 million, up approximately 50% at the midpoint compared to 2024 [9][10]. - The guidance reflects strong visibility from the record backlog and robust bookings, alongside the impact of recent acquisitions [10]. Strategic Initiatives - The company has completed four strategic acquisitions in the past six months, including Profire Energy, which are expected to enhance growth markets and service capabilities [8]. - CECO upgraded its credit facility to include a $400 million revolver and anticipates finalizing the sale of its Fluid Handling Business in late Q1 2025 [8].

Group 1 - CECO Environmental Corp. will report its fourth quarter 2024 financial results on February 25, 2025, premarket [1] - The earnings call will start at 8:30 a.m. Eastern Time on the same day [2] - Financial results and presentation will be available on the company's website [1] Group 2 - CECO Environmental is a diversified industrial company focused on environmentally friendly solutions [3] - The company serves various industrial markets including air, water, and energy transition through its Engineered Systems and Industrial Process Solutions segments [3] - CECO aims to improve air quality and provide custom solutions for multiple applications such as power generation, petrochemical processing, and battery recycling [3]