CECO ENVIRONMENTAL CORP Q2 FY2025 earnings call

• Backlog grew to a record $688 million, with Q2 new bookings at $274 million, up 95% year-over-year.
• Revenue of $185 million in Q2 was a new record, up 35% year-over-year.
• Adjusted EBITDA at over $23 million was up 45% year-over-year, driven by volume, strong gross margins, and improving SG&A cost profile.
• Profire acquisition closed in early January 2025, delivering on synergies, and the sales opportunity pipeline is over $5.5 billion.
• First half of 2025 bookings were over $500 million, up 76% compared to the first half of 2024, and book-to-bill was approximately 1.5.

In the second quarter, CECO Environmental achieved several record metrics. Revenue was $185 million, up 35% year-over-year. Backlog reached a new record of $688 million, up 76% year-over-year and up approximately $80 million sequentially. Q2 new bookings were $274 million, a 95% increase year-over-year. Adjusted EBITDA was over $23 million, up 45% year-over-year, and EPS was $0.24, up approximately 35% year-over-year. While specific revenue contribution % by product segment isn't detailed, key segments like power generation, semiconductor, industrial water, and natural gas infrastructure contributed to the overall performance.

• Raised 2025 full year orders guidance to exceed full year revenues, with bookings range $870 million to $930 million (1.2x revenue).
• Raised revenue outlook to $725 million to $775 million, up from previous $700 million to $750 million, reflecting strong first half performance and record sales pipeline.
• Maintained adjusted EBITDA range $90 million to $100 million and adjusted free cash flow outlook, expecting adjusted EPS range and margin expansion, including absorbing modest inflation in the second half and preparing for 2026 growth.

• Inflationary pressures in the second half, including potential cost increases in components and supply chain that may impact margins if not passed on or absorbed.
• Timing of order bookings, as orders can miss booking the quarter by days or weeks, affecting revenue recognition.
• Project execution dynamics, though project delays that hampered 2024 results have abated, but occasional project pauses still occur.

Q: Could you discuss deeper why project delays that hampered results in 2024 have abated?

A: A handful of larger projects had longer delays in 2024, but now those projects have turned to a normalized operational schedule. Customers have gotten their act together, and the dynamic of unique project delays in 2024 is no longer present. Projects are now back to normal, with no major anticipated delays in the second half affecting performance.