Core Viewpoint - The revised "Encouraged Import Service Catalog" for 2026 emphasizes the inclusion of "technical testing and analysis services" and "inspection, testing, and maintenance services for machinery and equipment," which opens up new market opportunities for related service providers and promotes the demand for high-end testing instruments and specialized maintenance tools [1][4]. Group 1: R&D and Design Services - The new catalog encourages the import of R&D services in foundational and cutting-edge disciplines such as mechanics, mechanical engineering, optical engineering, instrument science, materials science, and environmental engineering [4][6]. - It highlights the importance of integrating advanced technology services in high-tech fields like life sciences, medical health, chips, and aviation [4][12]. Group 2: Technical Testing and Analysis Services - The catalog specifies that technical testing and analysis services will include professional technical inspections, measurements, and analyses related to various sectors, including life sciences and aviation [12][13]. - It also covers inspection and maintenance services for major machinery, including aircraft engines and transportation equipment, which are crucial for ensuring operational efficiency [12][14]. Group 3: Intellectual Property Services - The catalog outlines services related to intellectual property, including legal, consulting, and operational services for patents, trademarks, and copyrights, which are essential for protecting innovations in various industries [15]. Group 4: Energy Conservation and Environmental Services - The catalog includes energy-saving services aimed at reducing energy consumption and carbon emissions throughout the lifecycle of products, which is increasingly important in the context of global sustainability efforts [17][19]. - It also emphasizes resource recycling services that focus on reusing industrial waste and urban garbage, contributing to a circular economy [19][20]. Group 5: Healthcare Services - The catalog encourages the import of medical services related to major diseases, including diagnostic reagents and drug development, which are vital for enhancing healthcare capabilities [33]. - It also promotes health management and rehabilitation services utilizing smart technologies, which are essential for improving the quality of care for the elderly and patients [34].

Financial Data and Key Metrics Changes - CECO Environmental reported a record backlog of approximately $800 million, up nearly 50% year-over-year [5][10] - Revenue for Q4 was $215 million, and for the full year, it reached $774 million, representing a 39% increase, with 25% of this growth being organic [11][12] - Adjusted EBITDA for Q4 was $29.8 million, a 57% increase year-over-year, with full-year adjusted EBITDA exceeding $90 million for the first time, growing 44% [12][16] - The company raised its 2026 revenue guidance to between $925 million and $975 million, up from a previous outlook of $850 million to $950 million [7][18] Business Line Data and Key Metrics Changes - Orders in Q4 reached $329 million, a record increase of 50% over the prior year, with a book-to-bill ratio of approximately 1.5 times [11] - Full-year bookings surpassed $1 billion for the first time, marking a 60% increase over 2024 levels [11][12] - The company continues to see strong demand in power generation, natural gas infrastructure, semiconductor, and industrial water applications [12][18] Market Data and Key Metrics Changes - CECO has secured two large natural gas power generation orders exceeding $175 million in aggregate value in Q1 2026 [9] - The company is optimistic about the industrial water and wastewater treatment sector, particularly in international water infrastructure projects [9][12] - The pipeline for power generation projects is well in excess of $1 billion, with potential opportunities approaching $2 billion in the short to medium term [50][51] Company Strategy and Development Direction - The merger with Thermon is expected to create a stronger global leader in industrial, environmental, and thermal solutions, enhancing financial agility and strategic capabilities [4][20] - The combination aims to leverage both companies' strengths to accelerate growth through expanded customer relationships and global reach [20][26] - CECO plans to deepen its focus on sourcing and productivity while managing price and cost amid an uncertain economic backdrop [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong market backdrop for power generation, industrial reshoring, and natural gas infrastructure [8][9] - The company anticipates continued strong performance in 2026, supported by a record backlog and growing sales pipeline [18][32] - Management highlighted the importance of emissions treatment solutions in securing projects and maintaining a competitive edge [53] Other Important Information - CECO's cash flow for 2025 was positive at approximately $10 million, with a significant improvement in cash conversion in the second half of the year [16] - The company expects to realize a 50 basis point step down in interest rates, leading to annualized interest expense savings of approximately $1.1 million [17] Q&A Session Summary Question: Can you frame the industrial water business and its opportunities? - Management highlighted a large pipeline of activity in industrial water treatment, particularly in international markets, with opportunities ranging from $10 million to $50 million [34] Question: What are the low-hanging fruit opportunities in the Thermon acquisition? - Management noted customer overlap and potential for combined bids in advanced thermal applications as key opportunities [36][38] Question: How does Thermon's short cycle business work? - Thermon has a long-established installed base and provides ongoing product updates, with a strong aftermarket presence [46] Question: What is the current pipeline activity in the power vertical? - The power segmentation pipeline is well in excess of $1 billion, with significant visibility on upcoming projects [50][51] Question: What is the organic growth rate for Q4? - The organic growth rate for Q4 was reported to be a little over 25% [85]