CECO ENVIRONMENTAL CORP Q4 FY2025 earnings call

• Delivered strong Q4 and full year 2025 results with many financial records, including new revenue and adjusted EBITDA records. • Announced transformational transaction with Thermon, a global leader in process heat, temperature management, and asset protection. • Strong market backdrop in power generation, industrial reshoring, industrial water, and natural gas infrastructure. Booked large orders in power generation, LNG, midstream gas transport, treatment, semiconductor, and international water. Quarter-to-date on Feb 24, booked over $270 million in orders. • CECO's operating excellence initiative launched in Q4 2022 has led to substantial improvement in gross profit margins. • Cash flow in 2025 was positive, with gross debt and net debt lower than start of year, leverage ratio at 2.2x, and liquidity at $124 million. • Thermon is a leading end-to-end solution provider in process heating, temperature management, and asset protection with a strong aftermarket presence, complementary to CECO's offerings.

For CECO Environmental, Q4 2025 had a record backlog of $793 million, up 47% year-over-year and 10% sequentially. Fourth quarter orders were $329 million, a 50% increase over prior year with a book-to-bill of ~1.5x. Full year 2025 bookings reached $1.064 billion, a 60% increase over 2024 with a book-to-bill of nearly 1.4x. Revenue in Q4 was $215 million and full year was $774 million, both company records. Adjusted EBITDA in Q4 was $29.8 million, up 57% with 13.9% margins. Full year adjusted EBITDA grew 44% to exceed $90 million. Thermon had over $520 million in revenue for current fiscal year, ~85% of sales as shorter cycle, gross profit margin of 45%, adjusted EBITDA margins of ~23%.

• Raised 2026 full year guidance for CECO, excluding Thermon. Full year revenue outlook between $925 million to $975 million (up from $850 million to $950 million), adjusted EBITDA outlook between $115 million to $135 million. • Combined pro forma financials for CECO and Thermon expected to have revenues of ~$1.5 billion, adjusted EBITDA of ~$295 million, with ~$40 million of run rate synergies, yielding margins close to low 20s. Pro forma net leverage expected to be 2.5x.

Q: Aaron Spychalla asked about industrial water business, pipeline size, timelines, and sizes.

A: Todd Gleason said CECO has a large pipeline of industrial water treatment and produced water opportunities in 2026, with opportunities between $10 million to $50 million in size, especially in international locations.

Q: Aaron Spychalla asked about Thermon acquisition low-hanging fruit.

A: Todd Gleason said there are low-hanging fruit like customer overlaps, advanced thermal applications in combined bids, and complementary relationships in geographies and end markets, including Thermon's Genesis controls platform.

Q: Robert Brown asked about Thermon's short-cycle business.

A: Todd Gleason said Thermon has 75 years of installed base, billions of installed base, thousands of monthly invoices, and new product launches like Liquid Load Bank.

Q: Robert Brown asked about power vertical pipeline.

A: Todd Gleason said power pipeline is well in excess of $1 billion, Peter Johansson added CECO is well-positioned for large gas turbine power jobs and has a unique emissions solution.

Q: Gerard Sweeney asked about Thermon's wallet share and aftermarket.

A: Todd Gleason said there are opportunities for wallet share and aftermarket expansion, with joint work on large projects, advanced controls, and customer needs.

Q: Gerard Sweeney asked about power pipeline timeline.

A: Todd Gleason said $1 billion to $2 billion pipeline is for next 12-18 months, Peter Johansson added demand exceeds supply and CECO is well-positioned to supply into the '30s.

Q: James Ricchiuti asked about CECO revenue guidance distribution.

A: Todd Gleason said second half likely has more revenue, Q4 is usually largest quarter.

Q: James Ricchiuti asked about Thermon's competitive landscape.

A: Todd Gleason said Thermon is a top 2 or 3 player in key markets, introducing new products into adjacent spaces.

Q: James Ricchiuti asked about Q4 organic growth rate.

A: Todd Gleason said around a little over 25%.

Q: Robert Brooks asked about Thermon's end markets and cross-selling.

A: Peter Johansson said Thermon has complementary end markets, cross-selling not fundamental driver, but they have similar end markets except rail and transit, and unique renewables capabilities.

Q: Robert Brooks asked about produced water opportunity.

A: Peter Johansson said solution set is for fixed installations, Permian is mobile equipment, so more internationally focused.

Q: Amit Dayal asked about CECO's 2026 stand-alone outlook and combined growth.

A: Todd Gleason said 2026 outlook is organic, combined entity has potential for strong growth with Thermon's rich opportunity set and innovations.