CECO Environmental Q1 Earnings Call Highlights

Key Points

• CECO booked a record Q1 with $449 million of orders (up 97% YoY), a book-to-bill of ~2.2, and a record backlog of $1.035 billion; April bookings exceeded Q1 and included the company’s largest-ever order of about $300 million.
• Revenue rose to $206 million (up 17% YoY) and adjusted EBITDA was $20.4 million (up 46%, ~10% margin), and management raised full-year 2026 guidance to $940M–$1.0B revenue and $120M–$140M adjusted EBITDA.
• CECO expects to close the Thermon acquisition in early June, targeting $40 million of cost synergies and a combined ~$1.5 billion run-rate; the company finished the quarter with $252 million gross debt (net leverage ~2.3x) and up to $975 million of committed financing capacity.

CECO Environmental NASDAQ: CECO opened fiscal 2026 with what executives called a record-setting first quarter, driven by sharply higher orders that pushed backlog above $1 billion and supported a second increase to the company’s full-year outlook. Management also provided updates on its planned acquisition of Thermon, which it expects to close in the second quarter, currently targeted for early June.

Record bookings lift backlog above $1 billion

Chief Executive Officer Todd Gleason said the company delivered “another strong quarter with numerous financial records,” highlighting record orders and a record backlog. CFO Peter Johansson reported first-quarter orders of $449 million, up 97% year-over-year, representing a book-to-bill ratio of approximately 2.2. Ending backlog reached a record $1.035 billion, up 72% from the prior year and up $242 million sequentially.

Johansson said backlog has increased for 11 consecutive quarters and has accelerated in recent periods, with each of the last six quarters delivering more than $200 million in orders across a diversified end-market set that includes power generation, liquefied natural gas, midstream gas transport and treatment, hydrocarbon processing, semiconductor and electronics, and industrial water applications.

Gleason emphasized that order momentum carried into the second quarter. He said CECO booked more than $400 million in orders in April alone, including what he described as the company’s largest-ever order, “in the range of $300 million,” tied to natural gas power generation and involving emissions and noise abatement solutions. He added that April bookings already exceeded the first-quarter record.

Revenue up 17% as profitability accelerates

For the quarter, Johansson said revenue was $206 million, up 17% year-over-year, following a record fourth-quarter 2025 revenue of $215 million. He noted that first-quarter results overcame the impact of the previously sold Global Pump Solutions business, which contributed $14 million of revenue in the year-ago quarter.

Adjusted EBITDA increased to $20.4 million, up 46% year-over-year, for an adjusted EBITDA margin of approximately 10%, nearly 200 basis points higher than the prior year period. Johansson said this was the strongest first-quarter adjusted EBITDA in company history. On a trailing twelve-month basis, adjusted EBITDA was $96.7 million with a 12% margin, which he described as a company record, as CECO continues toward its long-term goal of a mid-teens adjusted EBITDA margin.

Gross margins declined in the quarter, which Johansson said was anticipated due to the sale of the higher-margin Global Pump business and the timing of lower-margin jobs booked in early 2025. He said management expects margins to improve in the second quarter and “trend back towards” a gross profit margin target of 34% or greater as newer, larger projects with improved economics move through execution and revenue recognition.

On cost controls, Johansson said SG&A spending declined 14%, or $7.5 million, year-over-year, reflecting an “800 basis point improvement as a % of revenue,” despite seasonal items such as cash bonuses and sales incentives. He cited lower operating G&A as project volume increases and initial benefits from “wave one” of CECO’s 80/20 initiatives, along with lower corporate G&A tied to cost actions taken in mid-2025.

Guidance raised again as pipeline expands

Gleason said CECO raised its full-year 2026 outlook for a second time this year, on a standalone basis “non-inclusive of Thermon.” The company now expects full-year revenue of $940 million to $1.0 billion and adjusted EBITDA of $120 million to $140 million. Gleason said the midpoint implies approximately 25% organic revenue growth and roughly 44% adjusted EBITDA growth, along with about 170 basis points of margin expansion.

Management also highlighted a growing opportunity funnel. Gleason said the sales pipeline has expanded to over $7 billion, and in response to an analyst question he specified it was around $7.3 billion, representing job pursuits expected to book over roughly the next 12 to 24 months. He attributed the increase to investments in talent, expanded geographic reach, new commercial programs, and participation in markets such as natural gas power, infrastructure, semiconductors/electronics, and industrial water. He also noted that CECO’s power-generation involvement is now reaching “its stride,” with larger order sizes emerging.

Asked about project timing in the power market, Gleason said CECO often works with gas turbine OEMs and engineering firms years ahead of orders and is currently negotiating configurations for orders that will deliver in 2029 and 2030, with 2027 and 2028 installs essentially filled. He also pointed to “repowering” work as a faster-cycle opportunity that can unfold within months.

Cash flow seasonality, leverage, and supply chain investments

Johansson said CECO consumed about $16 million of cash in the quarter, consistent with the prior year and typical seasonal patterns. Working capital was a headwind as contract assets and accounts receivable grew, alongside billings tied to milestones expected to be collected in the second quarter. He said cash flow would have been positive but for a delayed customer payment of nearly $20 million that was received early in the second quarter, and he expects second-quarter cash flow to return to positive territory as collections arrive and payments began coming in during April.

Gross debt increased about $43 million from year-end 2025 to $252 million, reflecting revolver use to fund working capital growth and Thermon-related expenses. Net debt rose by $31 million, and Johansson said the leverage ratio ended the quarter at a “comfortable” 2.3x.

Johansson also detailed an amended credit agreement intended to increase liquidity and improve covenants. He said CECO now has up to $975 million in committed funds, including $740 million of revolver capacity and a $235 million delayed draw term loan. With quarter-end gross debt of $252 million, he said the company has $723 million of additional capacity for the cash portion of the Thermon acquisition and other needs.

On execution capacity, Gleason said CECO has invested in supply chain visibility and redundancy in fabrication and sourcing, which he described as important in securing larger orders. He said the company actively validates supply chain partners across regions and uses pre-buys and rate locks to manage inflation, even if that can pressure near-term cash flow. In response to a question on tariffs, Johansson said CECO had not identified a material impact from changes in the tariff posture, citing a model of sourcing and fabricating in-region and noting that most cross-border flows in North America are covered under USMCA exemptions.

Thermon deal targeted for early June close; synergy focus continues

Gleason said CECO remains on track to close the Thermon transaction in the second quarter, with a current expectation of “sometime in early June.” He reiterated confidence in previously outlined $40 million of cost synergies and said the company is also evaluating additional opportunities and “attractive commercial synergies,” though executives did not provide a quantified estimate for revenue synergies.

In prepared remarks, Gleason said the combined company would create a diversified global industrial company with an estimated $1.5 billion current run-rate sales and the potential to be a “rule of 30 or rule of 40” performer through double-digit growth and improved margins. In Q&A, he said CECO is already identifying situations where Thermon products could be included in project bids once permitted, and that the two companies’ solutions often sit within “the exact same footprint” of industrial projects.

Gleason also addressed uncertainty in the Middle East related to the Iran war, saying some projects in the region have been paused, particularly within the pipeline, but that CECO did not have a large amount of 2026 performance tied to the region and had already accounted for related impacts in guidance.

Closing the call, Gleason thanked employees for execution and reiterated enthusiasm for the pending Thermon combination, saying CECO would continue updating investors as the closing approaches.

About CECO Environmental NASDAQ: CECO

CECO Environmental Corp. NASDAQ: CECO is a global technology provider specializing in engineered solutions that help industrial and commercial customers manage air emissions, process fluids and optimize energy use. The company develops custom-engineered systems and modular packages designed to meet evolving environmental regulations and improve operational efficiency across diverse production processes.

CECO's core offerings include air pollution control equipment—such as scrubbers, cyclones, fabric and cartridge filters—and industrial process filtration systems for applications ranging from particulate removal to oil-water separation.

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