CECO Environmental(US:CECO)2025-10-28 16:24Financial 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]