CECO Environmental FY Conference Summary Company Overview - **Company**: CECO Environmental (NasdaqGS:CECO) - **Date of Conference**: January 14, 2026 - **Key Speakers**: Todd Gleason (CEO), Marcio Pinto (VP of P&A and Investor Relations) Key Themes and Transformations - **Transformation Journey**: CECO has undergone significant transformation since mid-2020, focusing on operational efficiency and market expansion. The initial step involved delayering the organization to enhance focus on individual markets [9][10]. - **Market Expansion**: Sales in emerging markets have increased from $30 million to nearly $150 million, with a notable expansion in the number of vertical markets pursued [10]. - **M&A Strategy**: CECO has engaged in approximately 14 acquisitions over the last three and a half years, maintaining a healthy balance sheet with an average acquisition multiple of 7-8 times [16]. Financial Performance - **Revenue Growth**: CECO reported a revenue of over $1 billion, with a strong pipeline of $6 billion, indicating significant growth potential in the next 18 months [44][66]. - **Bookings**: The company achieved $300 million in order intake for the quarter, with expectations for large projects in power and industrial water sectors [37][44]. Industry Dynamics - **Power Generation**: CECO has positioned itself to benefit from the resurgence in power generation, particularly in natural gas infrastructure and emissions management solutions [21][24]. - **Industrial Water Market**: The industrial water sector is highly fragmented, and CECO aims to build a $200 million to $300 million platform through organic growth and acquisitions [15][56]. Strategic Focus Areas - **AI and Electrification**: CECO recognizes the importance of AI and electrification trends, particularly in power generation and data centers, and is preparing to capitalize on these opportunities [49][50]. - **Global Presence**: Approximately 50% of CECO's revenue is generated outside North America, with significant growth expected in international markets, particularly in industrial water [57][58]. Challenges and Opportunities - **Margin Management**: CECO is focused on improving EBITDA margins, which have been impacted by investments in growth and lower-margin projects. The company aims for mid- to high-teens EBITDA margins in the future [59][61]. - **Visibility and Guidance**: The company has strong visibility into its pipeline, with a commitment to providing annual guidance based on its robust order book and market knowledge [66][68]. Conclusion CECO Environmental is on a transformative path, leveraging its strengths in industrial air and water solutions while expanding its market presence through strategic acquisitions and investments. The company is well-positioned to capitalize on emerging trends in power generation and industrial water, with a strong focus on maintaining financial health and improving margins.

Core Insights - The rise of artificial intelligence (AI) is leading to a significant increase in global energy demand, comparable to the industrial revolution [1] - Data center power demand is expected to grow by 160% by 2030, with data centers potentially consuming as much electricity as Japan does today [2] Energy Sector Overview - The AI boom is triggering a nuclear renaissance and a resurgence in natural gas infrastructure due to the need for baseload reliability [2] - Companies involved in nuclear energy, renewables, and natural gas are positioned to benefit from the increasing energy demands driven by AI [18] Key Companies - **Constellation Energy**: Owns the largest nuclear fleet in the U.S. and has a significant power deal with Microsoft, alongside a pending acquisition of Calpine for $26.6 billion [5] - **NextEra Energy**: The largest producer of wind and solar energy, now expanding into nuclear through a partnership with Alphabet to restart the Duane Arnold nuclear plant [7] - **Southern Company**: A major utility in Georgia, with over 50 GW of potential large-load growth, primarily tied to data centers [8] - **Dominion Energy**: Serves Northern Virginia, negotiating contracts for 40 GW to 47 GW of new data center capacity [9] - **Vistra**: Combines nuclear and gas generation, actively discussing co-locating data centers with its plants [10] - **Entergy**: Dominates the Gulf Coast region with a pipeline of 7 GW to 12 GW of data center projects [12] - **Williams Companies**: Controls 30% of U.S. natural gas volume and is developing co-located gas-fired generation for data centers [13] - **Kinder Morgan**: A major energy infrastructure company, crucial for supplying gas-fired power plants [14] - **GE Vernova**: Manufactures turbines and generators for various energy sources, experiencing a surge in gas turbine orders [15] - **Cameco**: The premier uranium supplier in the Western world, benefiting from commitments to restart or build nuclear reactors [16]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $30.5 million, doubling from Q2 2025, indicating a significant acceleration in production and sales [38] - Gross loss for the quarter was $33.9 million, slightly higher than the previous quarter, but gross margin improved by 92 points, demonstrating scalability in operations [39] - The company ended the quarter with a net loss of $641.1 million, primarily due to non-cash fair value adjustments related to warrants and derivatives [41] Business Line Data and Key Metrics Changes - The automated battery line operated at 15% capacity utilization in Q3, with expectations to triple output in Q4 [27] - The company expects to achieve gross margin positivity by the end of Q1 2026, driven by increased production and cost efficiencies [39][40] - Bipolar battery defects decreased by 45% from Q2 to Q3, with further reductions expected as production becomes fully automated [25] Market Data and Key Metrics Changes - The commercial pipeline grew to $22.6 billion, a 21% increase quarter-over-quarter, with data centers now representing 22% of the volume [34] - The company secured a 750 megawatt-hour supply contract with M8 Energy, indicating strong demand for long-duration storage solutions [33] - The backlog at the end of the quarter was $644 million, with 2.5 gigawatt-hours of storage, slightly down as backlog was converted into revenue [36] Company Strategy and Development Direction - The company is focused on scaling operations efficiently, with plans to utilize a new building designed for single-piece flow to reduce costs and increase throughput [29] - Eos aims to position itself as a leader in energy storage by leveraging its technology to meet the growing demand for efficient power solutions [12][14] - The strategy includes enhancing manufacturing capabilities and expanding partnerships to support large-scale energy storage projects [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to meet increasing power demands and emphasized the importance of energy storage in the current energy supercycle [11][12] - The team is focused on operational excellence and is optimistic about achieving positive contribution margins in the near term [39][40] - Management highlighted the importance of building strong relationships with customers and adapting to market needs for long-duration storage solutions [32][35] Other Important Information - The company achieved all 16 milestones related to customer cash receipts under its term loan, indicating strong financial management [41] - A recent short report alleging issues with the company was dismissed by management, who emphasized the support received from various stakeholders [44][45] Q&A Session Summary Question: Update on Factory 2 timeline and Project Amaze - Management confirmed that building and automation partners can deliver a line every 90 days, allowing simultaneous progress on multiple projects [46] Question: Balancing fresh funding needs with shareholder dilution - The company is committed to delivering orders and capital in a cost-effective manner while navigating the capital-intensive scale-up phase [46] Question: Long-term vision and competition strategy - Management aims to add capacity quickly and efficiently while ensuring the technology is user-friendly in the field [48] Question: Revenue trajectory into 2026 - The company expects to exit Q4 with over 90% capacity utilization and consistent revenue growth driven by a strong pipeline [50][52] Question: ASP dynamics and customer concentration - The average selling price has improved, and the customer base in Q3 was more diversified compared to previous quarters [58][60]

Financial Performance - Q3 2025 revenue reached $305 million, a 100% increase compared to Q2 2025's $152 million[11] - The company's gross margin improved by 92 percentage points, reaching -111% in Q3 2025[25] - Adjusted EBITDA margin improved by 166 percentage points[26], reaching -173% in Q3 2025[25] - The company anticipates full year 2025 revenue to be in the range of $150 million to $160 million[28] Commercial & Operational Highlights - The commercial pipeline stands at $226 billion, representing approximately 91 GWh[11] - Orders backlog is $6444 million, representing approximately 25 GWh[11] - The company received approximately 1 GWh in new orders after September 30, 2025[11] - The company's total cash is $1268 million, including approximately $43 million in customer receipts in October[11] Facility Expansion - The company is expanding its U S manufacturing facility to 432k sq ft with up to 8 GWh of capacity, with Line 2 production expected in mid-2026[15] - The company is developing a U S Software Hub with 41k sq ft in Pittsburgh's technology hub for DawnOSTM software & analytics development[15]