Financial Performance - Third quarter revenue reached $197.6 million, an increase of 46% compared to $135.5 million in the same quarter of 2024[7] - Operating income for the third quarter was $9.4 million, up from $7.2 million in the third quarter of 2024, while adjusted non-GAAP operating income increased by 59% to $17.5 million[4] - Free cash flow for the quarter was $19.0 million, up 71% from $11.1 million in the third quarter of 2024[7] - Adjusted EBITDA for the third quarter was $23.2 million, reflecting a 62% increase from $14.3 million in the same quarter of 2024[4] - Net income for the nine months ended September 30, 2025, was $48.356 million, a significant increase from $9.561 million in 2024, representing a growth of 406%[20] - Operating income for the nine months ended September 30, 2025, was reported at $89.3 million, compared to $24.1 million in 2024, reflecting a year-over-year increase of 270%[22] - Non-GAAP operating income for the nine months ended September 30, 2025, was $44.5 million, up from $33.8 million in 2024, indicating a growth of 32%[22] - The operating margin in accordance with GAAP for the nine months ended September 30, 2025, was 16.0%, up from 6.0% in 2024[22] Revenue Outlook - The company maintains its 2025 revenue outlook of $725 to $775 million, which is approximately 35% higher at the midpoint compared to 2024[5] - For 2026, the company projects revenue between $850 and $950 million, indicating a 20% increase at the midpoint[8] Backlog and Sales Pipeline - The company reported a backlog of $719.6 million, representing a 64% increase year-over-year[7] - The sales pipeline now exceeds $5.8 billion, indicating strong future growth potential across business segments and geographies[4] Cash Flow and Financial Position - The company reported a net cash used in operating activities of $(4.1) million for the nine months ended September 30, 2025, compared to $23 million in 2024[23] - Cash flows from investing activities resulted in a net cash provided of $1.520 million for the nine months ended September 30, 2025, contrasting with $(26.191) million in 2024[20] - Free cash flow for the nine months ended September 30, 2025, was $0.9 million, compared to $11.8 million in 2024, showing a decline[23] - The company had cash, cash equivalents, and restricted cash of $32.873 million at the end of the period, down from $38.926 million at the end of the previous year[20] - Borrowings on revolving credit lines increased to $185.8 million in 2025 from $58.4 million in 2024, indicating a significant rise in financing activities[20] Strategic Actions and Challenges - The company successfully divested its Global Pumps business and integrated multiple acquisitions, enhancing its operational capabilities[6] - Management's focus on integrating acquired businesses and realizing synergies is critical for future performance[31] - The company is actively identifying acquisition targets to optimize its business portfolio[31] Risks and Uncertainties - Potential risks include the impact of divesting the Global Pump Solutions business on relationships and operating results[31] - The company faces challenges related to supply chain disruptions, which may lead to contract delays or cancellations[31] - Rising costs of raw materials and labor are contributing to inflationary pressures affecting the company's operations[31] - The company has incurred substantial debt from strategic transactions, raising concerns about its ability to repay or refinance[31] - Economic and political conditions, including government regulations, may impact the company's operations and profitability[31] - The unpredictability of catastrophic events, such as cyber threats or public health crises, poses additional risks[31] - Investors are advised not to place undue reliance on forward-looking statements as actual results may vary significantly[31]

Core Insights - CECO Environmental Corp. reported strong financial results for Q3 2025, achieving record revenues and backlog, with year-to-date revenue surpassing the total revenue of 2024 [4][5][10] Financial Performance - Q3 2025 operating income was $9.4 million, an increase of $2.2 million from $7.2 million in Q3 2024. Adjusted non-GAAP operating income rose to $17.5 million, up 59% from $11.0 million [4][8] - Net income for the quarter was $1.5 million, down from $2.1 million in Q3 2024, while non-GAAP net income increased to $9.3 million from $5.2 million [4][8] - Adjusted EBITDA reached $23.2 million, reflecting a 62% increase compared to $14.3 million in Q3 2024, with an adjusted EBITDA margin of 11.7% [4][8] - Free cash flow for the quarter was $19.0 million, up from $11.1 million in Q3 2024 [4][8] Guidance and Outlook - The company maintains its full-year 2025 revenue guidance of $725 to $775 million, representing a 35% increase at the midpoint, and expects adjusted EBITDA between $90 to $100 million, a 50% increase at the midpoint [5][9] - For 2026, CECO projects revenue between $850 and $950 million, a 20% increase at the midpoint, and adjusted EBITDA between $110 and $130 million, a 30% increase at the midpoint [9][10] Orders and Backlog - CECO booked over $232.9 million in new orders during the quarter, a 44% increase, and reported a backlog of $719.6 million, up 64% [8][10] - The sales pipeline now exceeds $5.8 billion, indicating strong future growth potential across various business segments and geographic areas [4][10] Strategic Initiatives - The company successfully divested its Global Pumps business and integrated multiple acquisitions, enhancing its operational capabilities and market position [6][10] - CECO continues to focus on operational excellence initiatives, contributing to margin expansion and overall business transformation [6][10]

Core Viewpoint - The market anticipates CECO Environmental (CECO) will report a year-over-year increase in earnings driven by higher revenues for the quarter ended September 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - CECO is expected to post quarterly earnings of $0.27 per share, reflecting a year-over-year increase of +92.9% [3]. - Revenues are projected to reach $189.52 million, representing a 39.9% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 20.62% over the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate aligns with the Zacks Consensus Estimate, resulting in an Earnings ESP of 0% [12]. Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10]. - CECO currently holds a Zacks Rank of 5, complicating predictions of an earnings beat [12]. Historical Performance - In the last reported quarter, CECO exceeded the expected earnings of $0.20 per share, achieving $0.24, which was a +20.00% surprise [13]. - Over the past four quarters, CECO has beaten consensus EPS estimates twice [14]. Conclusion - CECO does not appear to be a strong candidate for an earnings beat based on current estimates and rankings, but other factors should also be considered for investment decisions [17].

Core Viewpoint - CECO Environmental Corp. will report its third quarter 2025 financial results on October 28, 2025, and will host an earnings call at 8:30 a.m. Eastern Time [1][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 applications across various industries, including power generation, petrochemical processing, and electric vehicle production [3] Investor Relations - Investor contact for CECO Environmental includes Marcio Pinto, Vice President of Financial Planning & Investor Relations, and additional contacts at Three Part Advisors [4]

CECO Environmental FY Conference Summary Company Overview - **Company Name**: CECO Environmental - **Stock Symbol**: CECO - **Headquarters**: Dallas, Texas - **Market Capitalization**: Approximately $1.7 billion - **Stock Performance**: Trading in the mid-$47 range, up from $6 per share 40 years ago [1][4] Industry Focus - **Core Business**: Environmental industrial services focused on protecting people, the environment, and industrial equipment - **Key Verticals**: - **Energy Transition**: Addressing power needs driven by data centers, IoT, and electrification - **Industrial Water**: Water reuse in industrial facilities and oil and gas extraction - **Industrial Air**: Removing volatile air compounds from manufacturing facilities [3][5][18] Strategic Growth Components - **Market Strength**: Strong underlying markets in energy, water, and air sectors [4][16] - **M&A Activity**: Acquired 12 companies in the last three years, with ongoing plans for further acquisitions [6][30] - **Geographical Expansion**: Approximately 50% of bookings are now international, compared to being primarily U.S.-focused in 2021 [7][12] Financial Performance and Guidance - **Pipeline**: Current pipeline valued at $5.5 billion, indicating significant future sales opportunities [14][15] - **Order Growth**: Projected to book $900 million to $1 billion in orders for the year, a substantial increase from previous years [24][26] - **Revenue Guidance**: Raised revenue guidance to $750 million for 2025, reflecting a 35% growth [24][26] - **EBITDA**: Expected to maintain between $90 million and $100 million, representing a 50% increase [24][26] - **Cash Flow**: Anticipated to be significantly higher than the previous year, recovering from a slow start in Q1 [25][26] Market Dynamics - **Demand Environment**: Strong demand in energy and water infrastructure projects, particularly internationally [27][28] - **Order Milestones**: Achieved the largest order in company history at $75 million [29] Portfolio Transformation - **Acquisition Strategy**: Focused on managing debt while exploring new acquisition opportunities [30] - **Cost Synergies**: Recent acquisitions, such as Profire Energy, are performing well and contributing to cost efficiencies [31] Operational Insights - **Revenue Types**: - Long-cycle revenue (30% of total) involves highly engineered projects lasting 9-18 months - Short-cycle revenue involves quicker, more standard projects with higher margins [20][21] - **Margin Improvement**: EBITDA margins improved from mid to high single digits to double digits since 2022 [35][36] Risk Management - **Project Financing**: Utilizes down payments and letters of credit to manage cash flow for large projects [41][42] - **Price Locking**: Prices are locked with customers and fabricators to mitigate supply chain inflation risks [47][48] Conclusion - CECO Environmental is positioned for continued growth in its core verticals of energy, water, and air, with a strong pipeline and strategic focus on M&A and geographical expansion. The company has demonstrated consistent financial performance and is well-prepared to navigate market dynamics and operational challenges [32][33]

Group 1 - CECO Environmental Corp. is a leading environmentally focused, diversified industrial company that provides solutions to protect people, the environment, and industrial equipment [2] - The company serves various industrial air, water, and energy transition markets globally through its key business segments: Engineered Systems and Industrial Process Solutions [2] - CECO's innovative technology and application expertise help companies improve air quality, optimize energy value chains, and provide custom solutions across multiple industries including power generation, petrochemical processing, and battery production [2] Group 2 - CECO management will participate in several upcoming investor conferences, including the 14th Annual Needham Virtual Industrial Tech, Robotics, & Clean Tech 1x1 Conference on August 18, 2025, and the Jefferies Industrials Conference on September 3, 2025 [3] - Presentations from these conferences will be available on the Investor Relations section of the company's website [1][3]

Core Insights - The earnings season reveals opportunities in lesser-known companies alongside major firms, highlighting the importance of broad market analysis [1] Modine Manufacturing - Modine Manufacturing Co. reported a 13-cent earnings per share beat and revenue exceeding analyst estimates in its recent earnings report for Q1 fiscal 2026 [2] - The company aims for $2 billion in data center revenue by fiscal 2028, with its climate solutions segment generating $1.4 billion in sales for fiscal 2025 [3] - Modine's strategic acquisitions contributed to a 11% year-over-year revenue growth, with a revised full-year fiscal 2026 outlook of 10-15% growth [4] - Modine shares increased by 28% in the last month, with an additional 7% upside potential projected [4] CECO Environmental - CECO Environmental Corp. exceeded analyst expectations, achieving a 35% year-over-year increase in EPS and a 45% rise in EBITDA [5] - The company anticipates $725–775 million in revenue for the full year, with shares up 50.4% in the last month and a potential 9% upside [8] - CECO's sales opportunity pipeline has grown to $5.5 billion, with a backlog of $688 million, reflecting a 274 million new bookings [7] Expro Group - Expro Group Holdings N.V. reported an 8% year-over-year revenue increase, surpassing predictions despite energy sector volatility [9] - The company expects about $1.7 billion in full-year revenue and plans a $40 million share buyback campaign [11] - Expro shares rose nearly 17% in the last month, with over 16% additional upside possible [11]

Part I [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents CECO Environmental Corp.'s unaudited condensed consolidated financial statements as of June 30, 2025, detailing assets, liabilities, equity, operating results, and cash flows [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change (%) | | :-------------------- | :------------ | :---------------- | :--------- | | Total Assets | $876,582 | $759,699 | 15.4% | | Total Liabilities | $573,363 | $507,806 | 12.9% | | Total Shareholders' Equity | $303,219 | $251,893 | 20.4% | | Cash and cash equivalents | $36,823 | $37,832 | -2.7% | | Accounts receivable, net | $161,498 | $159,572 | 1.2% | | Inventories | $59,792 | $42,624 | 40.3% | | Goodwill | $288,043 | $269,747 | 6.8% | | Intangible assets – finite life, net | $106,871 | $74,050 | 44.3% | | Total current liabilities | $285,035 | $244,662 | 16.5% | | Debt, less current portion | $236,877 | $217,230 | 9.0% | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net sales | $185,391 | $137,522 | 34.8% | $362,088 | $263,854 | 37.2% | | Gross profit | $67,108 | $49,047 | 36.8% | $129,270 | $94,179 | 37.3% | | Income from operations | $18,061 | $9,257 | 95.1% | $79,930 | $16,943 | 371.7% | | Net income attributable to CECO Environmental Corp. | $9,510 | $4,485 | 112.0% | $45,494 | $5,993 | 659.1% | | Basic EPS | $0.27 | $0.13 | 107.7% | $1.29 | $0.17 | 658.8% | | Diluted EPS | $0.26 | $0.12 | 116.7% | $1.24 | $0.17 | 629.4% | - Significant growth in operating income and net income for the six months ended June 30, 2025, was primarily driven by a **$64.5 million gain** from the sale of the Global Pump Solutions business[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net income | $10,106 | $4,930 | 105.0% | $46,549 | $7,022 | 562.9% | | Foreign currency translation gain (loss) | $404 | $(856) | N/A | $1,923 | $(202) | N/A | | Comprehensive income | $10,510 | $4,074 | 158.0% | $48,472 | $6,820 | 610.7% | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) | Metric (in thousands) | December 31, 2024 | June 30, 2025 | Change | | :-------------------- | :---------------- | :------------ | :----- | | Total CECO shareholders' equity | $247,689 | $298,364 | $50,675 | | Noncontrolling interest | $4,204 | $4,855 | $651 | | Total shareholders' equity | $251,893 | $303,219 | $51,326 | - Net income of **$45.5 million** for the six months ended June 30, 2025, increased retained earnings[14](index=14&type=chunk) - Share-based compensation increased capital in excess of par value by **$6.5 million** for the six months ended June 30, 2025[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash (used in) provided by operating activities | $(19,363) | $7,891 | $(27,254) | | Net cash provided by (used in) investing activities | $3,813 | $(6,811) | $10,624 | | Net cash provided by (used in) financing activities | $14,197 | $(16,565) | $30,762 | | Net decrease in cash, cash equivalents and restricted cash | $(1,292) | $(18,534) | $17,242 | - Cash flow from investing activities in 2025 was primarily impacted by **$105.9 million** in proceeds from the sale of the Global Pump Solutions business and **$97.6 million** paid for the Profire acquisition[17](index=17&type=chunk) - Financing activities in 2025 were primarily driven by **$19.7 million** in net borrowings for the Profire acquisition[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Basis of Reporting for Consolidated Financial Statements](index=8&type=section&id=Note%201.%20Basis%20of%20Reporting%20for%20Consolidated%20Financial%20Statements) - Financial statements are unaudited and include only normal recurring adjustments[19](index=19&type=chunk) - Management's estimates and assumptions are integral to financial statement preparation, and actual results may differ[20](index=20&type=chunk) [Note 2. Recent Financial Accounting Pronouncements](index=8&type=section&id=Note%202.%20Recent%20Financial%20Accounting%20Pronouncements) - The company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures) on consolidated financial statements, effective for fiscal years after December 15, 2024[25](index=25&type=chunk) - The company is evaluating the impact of ASU 2024-03 (Income Statement Expense Disaggregation Disclosures) on consolidated financial statements, effective for fiscal years after December 15, 2026[26](index=26&type=chunk) [Note 3. Accounts Receivable](index=9&type=section&id=Note%203.%20Accounts%20Receivable) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Accounts receivable | $170,491 | $168,435 | $2,056 | | Provision for credit losses | $(8,993) | $(8,863) | $(130) | | Total accounts receivable, net | $161,498 | $159,572 | $1,926 | | Provision for Credit Losses (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :--------------------------- | :--------------------------- | | Balance at beginning of period | $8,863 | $6,460 | | Write-offs | $(1,167) | $(14) | | Changes to the provision | $1,297 | $787 | | Recoveries | — | $(651) | | Balance at end of period | $8,993 | $6,582 | [Note 4. Contract Assets and Liabilities](index=9&type=section&id=Note%204.%20Contract%20Assets%20and%20Liabilities) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Costs and estimated earnings in excess of billings on uncompleted contracts | $91,262 | $69,889 | $21,373 | | Billings in excess of costs and estimated earnings on uncompleted contracts | $93,045 | $81,501 | $11,544 | - Approximately **50%** of contract liabilities as of December 31, 2024, were recognized as revenue during the six months ended June 30, 2025[30](index=30&type=chunk) [Note 5. Inventories](index=9&type=section&id=Note%205.%20Inventories) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Raw materials | $21,461 | $24,803 | $(3,342) | | Work in process | $17,691 | $14,532 | $3,159 | | Finished goods | $20,640 | $3,289 | $17,351 | | Total inventories | $59,792 | $42,624 | $17,168 | - Provision for obsolete inventory charged to cost of sales decreased to **$0.2 million** for the six months ended June 30, 2025, compared to **$0.7 million** in the prior year period[31](index=31&type=chunk) [Note 6. Goodwill and Intangible Assets](index=11&type=section&id=Note%206.%20Goodwill%20and%20Intangible%20Assets) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Goodwill | $288,043 | $269,747 | $18,296 | | Tradename (indefinite life) | $9,666 | $9,466 | $200 | - Goodwill increased due to acquisitions of Profire, WK Group, and Verantis, and foreign currency translation, partially offset by the divestiture of the Fluid Handling business[33](index=33&type=chunk) | Finite Life Intangible Assets (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :----------------------------------------- | :------------ | :---------------- | :----- | | Intangible assets – finite life, net | $106,871 | $74,050 | $32,821 | | Amortization expense (6 months) | $(6,033) | $(4,315) | $(1,718) | | Acquisitions (6 months) | $41,810 | — | $41,810 | - No triggering events for interim impairment assessments were identified, and no impairment charges for goodwill or intangible assets were recorded for the three or six months ended June 30, 2025[37](index=37&type=chunk) [Note 7. Accrued Expenses](index=13&type=section&id=Note%207.%20Accrued%20Expenses) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Compensation and related benefits | $12,695 | $12,274 | $421 | | Accrued warranty | $5,274 | $4,558 | $716 | | Contract liability | $15,976 | $9,746 | $6,230 | | Short-term operating lease liability | $4,536 | $4,262 | $274 | | Other | $15,469 | $16,688 | $(1,219) | | Total accrued expenses | $53,950 | $47,528 | $6,422 | [Note 8. Senior Debt](index=13&type=section&id=Note%208.%20Senior%20Debt) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | Change | | :-------------------- | :------------ | :---------------- | :----- | | Revolving credit facility | $233,900 | $214,200 | $19,700 | | Joint venture term debt | $6,472 | $7,297 | $(825) | | Total outstanding borrowings | $238,734 | $218,880 | $19,854 | | Total debt, less current portion | $236,877 | $217,230 | $19,647 | - The weighted-average interest rate on outstanding borrowings was **7.27%** as of June 30, 2025, up from **7.07%** as of December 31, 2024[44](index=44&type=chunk) - The company was in compliance with all relevant financial and other restrictive covenants under its credit facility and joint venture debt as of June 30, 2025[48](index=48&type=chunk)[49](index=49&type=chunk) - Unused credit availability under the company's credit facility was **$104.3 million** as of June 30, 2025, compared to **$1.0 million** as of December 31, 2024[42](index=42&type=chunk) [Note 9. Earnings per Share](index=15&type=section&id=Note%209.%20Earnings%20per%20Share) | Metric (in thousands, except per share) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income attributable to CECO Environmental Corp. | $9,510 | $4,485 | $45,494 | $5,993 | | Basic EPS | $0.27 | $0.13 | $1.29 | $0.17 | | Diluted EPS | $0.26 | $0.12 | $1.24 | $0.17 | | Basic weighted-average shares outstanding | 35,286 | 34,918 | 35,158 | 34,882 | | Diluted weighted-average shares outstanding | 36,558 | 36,303 | 36,625 | 36,239 | - The stock repurchase program expired on April 30, 2025, with no share repurchases made during the three or six months ended June 30, 2025[54](index=54&type=chunk) [Note 10. Share-Based Compensation](index=17&type=section&id=Note%2010.%20Share-Based%20Compensation) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Share-based compensation expense | $2,900 | $2,200 | $6,200 | $3,800 | - Approximately **203,000** restricted stock units were granted in Q2 2025, up from **57,000** in Q2 2024[56](index=56&type=chunk) - **67,000** stock options were granted in the first half of 2025, compared to **25,000** in the first half of 2024[56](index=56&type=chunk) [Note 11. Pension and Employee Benefit Plans](index=17&type=section&id=Note%2011.%20Pension%20and%20Employee%20Benefit%20Plans) - The company's non-contributory defined benefit pension plan was transferred to the purchaser of the Global Pump Solutions business on March 31, 2025[59](index=59&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net periodic benefit cost | $0 | $57 | $(8) | $113 | [Note 12. Income Taxes](index=18&type=section&id=Note%2012.%20Income%20Taxes) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income tax expense | $4,511 | $394 | $23,127 | $1,062 | | Effective income tax rate | 30.9% | 7.4% | 33.2% | 13.1% | - The effective tax rate is influenced by the gain on the sale of the Global Pump Solutions business, state income taxes, non-deductible share-based compensation, and varying tax rates across jurisdictions[63](index=63&type=chunk) - The company is not currently subject to Pillar Two taxation as its revenue does not meet the relevant thresholds[64](index=64&type=chunk) - The company is evaluating the impact of the recently enacted "A Big, Beautiful Bill" (HR-1) on its consolidated financial statements[65](index=65&type=chunk) [Note 13. Financial Instruments](index=20&type=section&id=Note%2013.%20Financial%20Instruments) - The fair value of debt under the credit facility and joint venture term loan was **$240.4 million** as of June 30, 2025[67](index=67&type=chunk) - **$26.2 million** in cash and cash equivalents were held outside the U.S. as of June 30, 2025[68](index=68&type=chunk) [Note 14. Commitments and Contingencies](index=20&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) - The company retained historical asbestos liabilities and related legacy insurance policies following the divestiture of its Fluid Handling business[69](index=69&type=chunk) - Accrued amount for asbestos-related litigation was **$1.5 million** as of June 30, 2025[69](index=69&type=chunk) - Management believes that pending asbestos cases will not materially adversely affect the company's operating results, liquidity, or financial condition[70](index=70&type=chunk) [Note 15. Acquisitions](index=20&type=section&id=Note%2015.%20Acquisitions) - On January 3, 2025, the company acquired Profire Energy, Inc., a provider of intelligent control solutions for industrial combustion equipment, for **$122.7 million** in cash[74](index=74&type=chunk) - Profire contributed **$31.3 million** in revenue and **$3.6 million** in net income to the company for the six months ended June 30, 2025[77](index=77&type=chunk) - A fair value adjustment to the WK Group contingent consideration liability resulted in a **$7.4 million** gain recognized in "Other operating (income) expense, net" during Q2 2025[81](index=81&type=chunk) - Goodwill recognized from acquisitions represents the value expected from combining acquired businesses with the company's operations, including market expansion, new customer acquisition, and potential cost savings and synergies, and is not deductible for tax purposes[86](index=86&type=chunk) [Note 16. Divestiture](index=26&type=section&id=Note%2016.%20Divestiture) - The Global Pump Solutions business was sold on March 31, 2025, for a purchase price of **$109.5 million**[90](index=90&type=chunk) - The company received **$105.9 million** in cash proceeds from the sale[90](index=90&type=chunk) - A pre-tax gain on the sale of the business of **$64.5 million** was recognized from this divestiture[90](index=90&type=chunk)[91](index=91&type=chunk) [Note 17. Business Segment Information](index=26&type=section&id=Note%2017.%20Business%20Segment%20Information) - The company operates in two reportable business segments: Engineered Systems and Industrial Process Solutions[94](index=94&type=chunk)[95](index=95&type=chunk) | Segment Financials (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | **Engineered Systems Segment** | | | | | | Net Sales | $128,460 | $97,392 | $248,893 | $186,741 | | Income from Operations | $25,194 | $19,330 | $43,934 | $35,607 | | **Industrial Process Solutions Segment** | | | | | | Net Sales | $56,931 | $40,130 | $113,195 | $77,113 | | Income from Operations | $15,110 | $5,669 | $84,760 | $12,769 | - Operating income for the Industrial Process Solutions segment significantly increased for the six months ended June 30, 2025, primarily due to the gain from the sale of the Global Pump Solutions business and the fair value adjustment of the WK Group contingent consideration liability[149](index=149&type=chunk) | Geographic Net Sales (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | United States | $120,204 | $90,450 | $230,875 | $168,238 | | United Kingdom | $12,470 | $14,353 | $32,027 | $26,555 | | Netherlands | $15,763 | $13,496 | $26,989 | $30,308 | | China | $13,563 | $8,883 | $28,357 | $13,213 | | Other | $23,391 | $10,340 | $43,840 | $25,540 | | Total net sales | $185,391 | $137,522 | $362,088 | $263,854 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition and operating results for the three and six months ended June 30, 2025, highlighting significant growth driven by acquisitions and divestiture gains, non-GAAP metrics, market pressures, liquidity, and capital resources [Consolidated Results](index=34&type=section&id=Consolidated%20Results) | Metric (in millions, except ratios) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | Net sales | $185.4 | $137.5 | 34.8% | $362.1 | $263.9 | 37.2% | | Gross profit | $67.1 | $49.0 | 36.9% | $129.3 | $94.2 | 37.3% | | Operating income (GAAP) | $18.1 | $9.3 | 94.6% | $79.9 | $16.9 | 373.0% | | Operating margin (GAAP) | 9.8% | 6.8% | 3.0 pp | 22.1% | 6.4% | 15.7 pp | | Non-GAAP operating income | $18.3 | $12.6 | 45.2% | $26.9 | $22.8 | 18.0% | | Non-GAAP operating margin | 9.9% | 9.2% | 0.7 pp | 7.4% | 8.6% | -1.2 pp | - Significant GAAP operating income growth for the six months ended June 30, 2025, was primarily attributed to a **$64.5 million** gain from the Global Pump Solutions business sale and a fair value adjustment to the WK Group contingent consideration liability[129](index=129&type=chunk) - Orders booked increased **95%** to **$274.1 million** for the three months ended June 30, 2025, and **75%** to **$502.1 million** for the six months ended June 30, 2025, driven by energy and power technologies and recent acquisitions[117](index=117&type=chunk)[119](index=119&type=chunk) [Business Segments](index=38&type=section&id=Business%20Segments) | Segment Performance (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | YoY Change (%) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | YoY Change (%) | | :--------------------------------- | :--------------------------- | :--------------------------- | :------------- | :--------------------------- | :--------------------------- | :------------- | | **Engineered Systems** | | | | | | | | Orders booked | $224,200 | $100,500 | 123.1% | $387,100 | $200,000 | 93.6% | | Net sales | $128,460 | $97,392 | 31.9% | $248,893 | $186,741 | 33.3% | | Operating income | $25,194 | $19,330 | 30.3% | $43,934 | $35,607 | 23.4% | | **Industrial Process Solutions** | | | | | | | | Orders booked | $49,900 | $40,200 | 24.1% | $114,900 | $85,500 | 34.4% | | Net sales | $56,931 | $40,130 | 41.9% | $113,195 | $77,113 | 46.8% | | Operating income | $15,110 | $5,669 | 166.5% | $84,760 | $12,769 | 563.8% | [Engineered Systems Segment](index=38&type=section&id=Engineered%20Systems%20Segment) - Q2 2025 orders booked increased **123%**, with **94%** attributed to organic orders, driven by energy and power technologies and the Profire acquisition[136](index=136&type=chunk)[137](index=137&type=chunk) - Q2 2025 net sales grew **31.9%**, with **87%** from organic revenue, benefiting from backlog execution on large power projects and inorganic growth from Profire[139](index=139&type=chunk) [Industrial Process Solutions Segment](index=40&type=section&id=Industrial%20Process%20Solutions%20Segment) - Q2 2025 orders booked increased **24%**, with **70%** from organic orders, driven by recent industrial air handling acquisitions and increased demand for scrubber technologies[143](index=143&type=chunk) - Q2 2025 net sales grew **41.9%**, with **59%** from organic revenue, primarily from recent acquisitions, partially offset by the Global Pump Solutions divestiture[145](index=145&type=chunk) - Q2 2025 segment operating income increased by **$9.4 million**, primarily due to a fair value adjustment to the WK Group contingent consideration liability and higher gross profit from increased net sales[147](index=147&type=chunk) [Backlog](index=42&type=section&id=Backlog) | Metric (in millions) | June 30, 2025 | December 31, 2024 | Change | | :------------------- | :------------ | :---------------- | :----- | | Backlog | $688.1 | $540.9 | $147.2 | - The vast majority of the backlog is expected to be delivered within **18 to 24 months**[150](index=150&type=chunk) [Recent Accounting Pronouncements](index=42&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2 to the Condensed Consolidated Financial Statements for detailed information on recent accounting pronouncements[151](index=151&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) | Metric (in millions) | June 30, 2025 | December 31, 2024 | Change | | :------------------- | :------------ | :---------------- | :----- | | Working capital | $98.0 | $86.3 | $11.7 | | Cash and cash equivalents | $36.8 | $37.8 | $(1.0) | | Total outstanding borrowings | $238.7 | $218.9 | $19.8 | | Unused credit availability | $104.3 | $1.0 | $103.3 | [Credit Facility](index=42&type=section&id=Credit%20Facility) - The credit facility provides a senior secured revolving credit line of up to **$400 million**[41](index=41&type=chunk) - Outstanding borrowings under the revolving credit facility were **$233.9 million** as of June 30, 2025[40](index=40&type=chunk) - The company entered an "Increased Ratio Period" in Q1 2025, allowing a maximum consolidated net leverage ratio of **4.50** and consolidated secured net leverage ratio of **3.50** for up to four quarters[45](index=45&type=chunk) [Overview of Cash Flows and Liquidity](index=44&type=section&id=Overview%20of%20Cash%20Flows%20and%20Liquidity) | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change | | :-------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash (used in) provided by operating activities | $(19,363) | $7,891 | $(27,254) | | Net cash provided by (used in) investing activities | $3,813 | $(6,811) | $10,624 | | Net cash provided by (used in) financing activities | $14,197 | $(16,565) | $30,762 | | Net decrease in cash | $(1,292) | $(18,534) | $17,242 | [Operating Activities](index=44&type=section&id=Operating%20Activities) - Cash used in operating activities for the six months ended June 30, 2025, was **$19.4 million**, a **$27.3 million** decrease year-over-year, primarily due to the timing of project-related payments[161](index=161&type=chunk) [Investing Activities](index=44&type=section&id=Investing%20Activities) - Net cash provided by investing activities was **$3.8 million** in the first half of 2025, compared to net cash used of **$6.8 million** in the first half of 2024[162](index=162&type=chunk) - This was primarily due to **$105.9 million** in proceeds from the sale of the Global Pump Solutions business, partially offset by **$97.6 million** paid for the Profire acquisition[162](index=162&type=chunk) [Financing Activities](index=44&type=section&id=Financing%20Activities) - Net cash provided by financing activities was **$14.2 million** in the first half of 2025, compared to net cash used of **$16.6 million** in the first half of 2024[163](index=163&type=chunk) - The increase was primarily driven by **$19.7 million** in net borrowings for the Profire acquisition[163](index=163&type=chunk) [Critical Accounting Estimates](index=44&type=section&id=Critical%20Accounting%20Estimates) - No significant changes occurred in the company's critical accounting policies and estimates disclosed for the six months ended June 30, 2025[164](index=164&type=chunk) [Forward-Looking Statements](index=44&type=section&id=Forward-Looking%20Statements) - This report contains forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from any future results, performance, or achievements expressed or implied by such statements[165](index=165&type=chunk) - Key risks include those related to acquisitions and divestitures, fixed-price contracts, supply chain challenges, litigation, and general economic conditions[166](index=166&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company primarily faces market risks from changes in interest rates and foreign currency exchange rates, with hypothetical interest rate changes impacting earnings and cash flows - The company primarily faces market risks from changes in interest rates and foreign currency exchange rates[167](index=167&type=chunk)[168](index=168&type=chunk) - A hypothetical **10%** change in the weighted-average borrowing rate is estimated to impact future earnings and cash flows by **$1.7 million** annually[169](index=169&type=chunk) - Foreign currency transaction gains (losses) were **-$1.4 million** for the three months ended June 30, 2025, and **-$0.9 million** for the six months ended June 30, 2025[170](index=170&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management assessed disclosure controls and procedures as effective as of June 30, 2025, with no significant changes to internal financial reporting controls during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[171](index=171&type=chunk) - No significant changes occurred in internal financial reporting controls during the quarter ended June 30, 2025[173](index=173&type=chunk) - Control systems provide reasonable, not absolute, assurance due to inherent limitations and resource constraints[174](index=174&type=chunk) Part II – Other Information [Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is detailed in Note 14 to the condensed consolidated financial statements - Legal proceedings information is detailed in Note 14 to the financial statements[175](index=175&type=chunk) [Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the Form 10-K annual report as of December 31, 2024 - No material changes to risk factors have occurred since the 2024 annual report on Form 10-K[176](index=176&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's $20 million stock repurchase program expired on April 30, 2025, with no repurchases made during the three months ended June 30, 2025 - The company did not repurchase any shares under the plan during the three months ended June 30, 2025[177](index=177&type=chunk) - The **$20 million** stock repurchase program expired on April 30, 2025[177](index=177&type=chunk) [Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This report discloses no defaults upon senior securities - No defaults upon senior securities occurred[178](index=178&type=chunk) [Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[179](index=179&type=chunk) [Other Information](index=49&type=section&id=Item%205.%20Other%20Information) No directors or Section 16 officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No directors or Section 16 officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q2 2025[180](index=180&type=chunk) [Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including equity award agreements, CEO and CFO certifications, and XBRL documents - Exhibits include equity award agreements, CEO/CFO certifications, and XBRL documents[182](index=182&type=chunk) Signatures - This report was signed by Kiril Kovachev, Chief Accounting Officer, on behalf of CECO Environmental Corp. on July 29, 2025[186](index=186&type=chunk)

Financial Data and Key Metrics Changes - The company reported a record revenue of $185 million for Q2 2025, representing a 35% year-over-year increase [9][24] - Adjusted EBITDA reached over $23 million, up 45% year-over-year, driven by volume and strong gross margins [9][25] - The earnings per share (EPS) was 24 cents, reflecting a 35% increase year-over-year [10] Business Line Data and Key Metrics Changes - The backlog grew to a record $688 million, up 76% year-over-year, with approximately $70 million attributed to recent acquisitions [6][21] - New bookings for Q2 totaled $274 million, a 95% increase compared to the same quarter last year [7][22] - The company achieved a book-to-bill ratio of approximately 1.5 for the first half of 2025 [8][22] Market Data and Key Metrics Changes - Strong demand was noted in power generation, semiconductor inquiries, and natural gas infrastructure, with steady demand in most regions except for some softness in Europe [12][13] - The sales opportunity pipeline has grown to over $5.5 billion, indicating robust future growth potential [12][35] Company Strategy and Development Direction - The company is focused on diversifying its portfolio and expanding into new vertical markets and geographies [8][19] - The integration of recent acquisitions is expected to generate additional synergies and access to new markets [37] - The company is raising its 2025 annual guidance for orders and revenue, reflecting strong performance and a robust sales pipeline [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate modest inflation and supply chain challenges while maintaining strong order bookings [13][73] - The outlook for 2025 includes expectations for continued strong growth, with a focus on operational excellence and project execution [15][31] Other Important Information - The company is maintaining its previous outlook for adjusted EBITDA and free cash flow, expecting growth of approximately 50% year-over-year [15] - The gross profit margin improved to slightly over 36%, up 50 basis points year-over-year [25][30] Q&A Session Summary Question: What is the pipeline like in the power generation market? - Management indicated that the pipeline remains strong, with over a billion dollars in power generation-related projects expected to come to decision in the next 24 months [44][46] Question: What is the environment like in other verticals? - Management noted strength in semiconductor, natural gas infrastructure, and industrial water markets, with a positive outlook for industrial reshoring in North America [49][51] Question: How does the recent legislation impact project timelines? - Management stated that orders have been growing even before the passage of recent legislation, indicating a strong demand environment [59][64] Question: What is the guidance for second half bookings? - Management suggested that the guidance does not capture the maximum potential for large orders, indicating a healthy level of expected bookings [68][70] Question: How does the company plan to manage inflationary pressures? - Management acknowledged the challenges of passing on costs in fixed-price contracts but expressed confidence in their ability to manage inflation through productivity initiatives [71][73] Question: What are the expectations for EBITDA margins? - Management indicated a commitment to achieving mid-teens EBITDA margins over time, balancing growth investments with margin expansion [84][86]

Company Performance - CECO Environmental reported quarterly earnings of $0.24 per share, exceeding the Zacks Consensus Estimate of $0.20 per share, and up from $0.20 per share a year ago, adjusted for non-recurring items [1] - The earnings surprise for this quarter was +20.00%, and the company has surpassed consensus EPS estimates two times over the last four quarters [2] - Revenues for the quarter ended June 2025 were $185.39 million, surpassing the Zacks Consensus Estimate by 3.41%, and up from $137.52 million year-over-year [3] Market Performance - CECO shares have increased approximately 14.8% since the beginning of the year, compared to the S&P 500's gain of 8.6% [4] - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $176.61 million, and for the current fiscal year, it is $0.97 on revenues of $733.6 million [8] Industry Outlook - The Pollution Control industry, to which CECO belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook [9] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact CECO's stock performance [6]