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    CECO
    Earnings call· Mar 2026(Q1 FY26)

    CECO ENVIRONMENTAL Q1 FY26 earnings call CECO

    Apr 28, 2026 Source

    Executive summary

    CECO Environmental Q1 FY26 — Record Orders and Backlog Drive Raised Full-Year Outlook

    CECO Environmental delivered a strong Q1 FY26, marked by record orders and backlog, leading to a second full-year guidance raise. The company is benefiting from investments in diversified end markets like natural gas power generation, semiconductor, and industrial water, with significant order momentum continuing into Q2. The pending Thermon acquisition is on track for a Q2 close, expected to create a leading diversified global industrial company with substantial growth and synergy opportunities.

    Highlights

    5

    • Record orders of $449 million in Q1 FY26, a 97% increase year-over-year.

    • Backlog reached a record $1.035 billion, up 72% year-over-year.

    • Adjusted EBITDA grew 46% year-over-year to $20.4 million, with margin expanding by nearly 200 basis points.

    • Full-year 2026 revenue guidance raised to $940 million - $1 billion, with midpoint implying 25% organic growth.

    • Full-year 2026 adjusted EBITDA guidance raised to $120 million - $140 million, midpoint implying 44% growth and 170 bps margin expansion.

    Concerns

    3

    • Gross profit margins experienced contraction in Q1 FY26 due to the sale of the higher-margin Global Pump Solutions business and revenue timing of lower-margin jobs.

    • Q1 FY26 cash flow consumed approximately $16 million, impacted by working capital growth and Thermon transaction expenses, though a $20 million customer payment was delayed to Q2.

    • Uncertainty related to the Iran war and modestly higher inflation are noted headwinds, though accounted for in guidance.

    Guidance & targets

    10
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $940 million to $1 billion
    high materiality
    High
    Full-year 2026 Organic Sales Growth
    approximately 25%
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $120 million to $140 million
    high materiality
    High
    Full-year 2026 Adjusted EBITDA Growth
    approximately 44%
    medium materiality
    High
    Full-year 2026 Adjusted EBITDA Margin Expansion
    170 basis points
    medium materiality
    High
    Gross Profit Margin
    34% or greater
    medium materiality
    Medium
    Adjusted EBITDA Margin (stand-alone CECO)
    mid-teens
    high materiality
    High
    Adjusted EBITDA
    cross the $100 million level
    medium materiality
    High
    Cash Flow
    revert back to a positive state
    medium materiality
    High
    ERP Implementation
    essentially completed
    low materiality
    High

    Operational metrics

    15
    Adjusted EBITDA
    $20.4 millionup 46% YoY
    Q1 FY26

    Far surpassed any prior Q1 in company history.

    Adjusted EBITDA
    $96.7 million
    TTM

    Company record for trailing 12-month period, continuing steady expansion since 2022.

    Revenue
    $804 millionup 32% or $195 million
    TTM

    Record for any 12-month period in company history.

    Cash Flow
    consumed $16 millionin line with 2025
    Q1 FY26

    Seasonally down, impacted by working capital growth and Thermon transaction expenses. Would have been positive with a $20 million delayed customer payment received in Q2.

    Gross Debt
    $252 millionincreased by approximately $43 million from year-end 2025
    Q1 FY26 end

    Used revolver facility to finance working capital growth and Thermon transaction expenses.

    Leverage Ratio
    2.3xmodest increase of 1/10 of a turn from year-end 2025
    Q1 FY26 end

    Benefited from increase in trailing 12-month adjusted EBITDA.

    Committed Funds on Amended Credit Agreement
    $975 million
    Q1 FY26

    Provides $723 million in additional capacity for Thermon acquisition and future investments.

    Average Quarterly Orders
    $90 million
    2020

    Historical average when Todd Gleason joined CECO.

    Sales Pipeline
    over $7 billion
    Q1 FY26

    Represents actual job pursuits expected to book in the next 1-2 years (average 18 months).

    Sales Pipeline (historical)
    $1 billion to $1.5 billion
    2020

    Sales pipeline when Todd Gleason joined CECO.

    Industrial Water Pipeline
    approaching $1 billion
    Q1 FY26

    Significant growth from very little a few years ago.

    80/20 Implementation Coverage
    10%
    Q1 FY26

    Initial Wave 1 launched across two smaller, recently acquired businesses.

    80/20 Implementation Coverage Target
    20% to 25%
    End of Summer

    Expected expansion across the company.

    Thermon Cost Synergies
    $40 million
    Annual

    Highly confident in achieving previously outlined cost synergies from Thermon acquisition.

    Combined Company Run Rate Sales (estimated)
    $1.5 billion
    Current

    Estimated post-acquisition run rate sales for CECO and Thermon combined.

    Industry KPIs

    4
    MetricValueDetails
    Tariff cost impact—
    Data center prime power demand—
    Incremental margin operating leverage—%
    Order backlog order intake by segment$1.035 billionUSD

    Orderbook & backlog

    7
    Total Backlog$1.035 billionQ1 FY26 end

    up 72% YoY; up 31% or $242 million sequentially

    Increased for 11 consecutive quarters, surged in most recent 6 quarters with >$200 million in orders.

    Orders$449 millionQ1 FY26

    up 97% YoY (+$221 million vs Q1 FY25)

    Company record, driven by power generation, liquefied natural gas, midstream gas transport/treatment, hydrocarbon processing, semiconductor/electronics, and industrial water applications.

    Book-to-bill ratio2.2xQ1 FY26

    Resulted in a record for any quarter ending backlog.

    Orders$1.286 billionTTM

    up 71% over prior TTM period

    Book-to-bill ratio1.6xTTM
    New Ordersover $400 millionApril (Q2 FY26 partial)

    almost $200 million more than all of Q2 FY25

    Includes largest-ever order in the range of $300 million for natural gas power generation emissions and noise abatement solutions.

    Orders$228 millionQ1 FY25

    up 50-60% YoY

    Derived from Q1 FY26 orders being $221 million more than Q1 FY25, and Q1 FY25 orders being up 50-60% YoY.

    Deals & partnerships

    2
    ThermonAcquisition of Thermon to extend leadership in industrial, environmental, and engineered solutions by adding process heating, heat tracing, and temperature management capabilities.

    Representatives from both companies are working on integration items. The Thermon operating culture is similar to CECO's. Bruce Thames, Thermon's CEO, and Todd Gleason are aligned on the future of the combined company.

    Global Pump Solutions businessSale of the Global Pump Solutions business.

    Sale closed at the end of Q1 FY25, creating a headwind for Q1 FY26 revenue comparison.

    Capital programs

    1
    ERP Implementation Initiativeunderway

    Largely driving capital expenditure in Q1 FY26.

    Risks & headwinds

    4
    Geopolitical uncertainty (Iran war)H2 FY26

    Some attractive programs in the Middle East pipeline paused until H2 FY26.

    Mitigation: Accounted for in full-year guidance; overall market strength in other regions offsets impact; opportunistic view on future rebuilds in the region.

    Modestly higher inflation

    Not quantified, but noted.

    Mitigation: Aggressively prebuy or lock in rates; include inflation estimates in pricing; contracts include escalators for excess inflation recovery; strong supply chain management for commodities like catalyst and specialty steels.

    Gross margin contractionQ1 FY26

    Experienced contraction in Q1 FY26.

    Mitigation: Anticipated; expected to improve in Q2 and trend towards 34%+ target throughout the year due to improving volume mix, higher-margin projects, and 80/20 initiatives.

    Working capital as cash flow headwindQ1 FY26

    Consumed approximately $16 million of cash in Q1 FY26.

    Mitigation: Expected to revert to positive cash flow in Q2 FY26, benefiting from Q1 billings and early Q2 cash receipts (e.g., $20 million delayed customer payment already received).

    What to watch in Q2 FY26

    5

    Thermon Acquisition Close

    Q2 FY26
    CurrentOn track for Q2 close
    TargetClosed (early June)

    Why it matters

    The acquisition is a historic transaction for CECO, creating a larger, diversified industrial company with significant synergy potential.

    We remain on track for a Q2 close, and our current expectation is sometime in early June.

    Q&A highlights

    6

    Can you discuss the drivers of the $7 billion+ sales pipeline, especially in Power Gen, and the delivery timelines/supply chain capacity for these large orders?

    The sales pipeline growth is due to intentional expansion into new markets and geographies, benefiting from rising tides in natural gas power and infrastructure, semiconductor, and industrial water. Power Gen has added about $1 billion to the pipeline. Supply chain is a key investment, with redundant capabilities and aggressive pre-buying to protect margins and ensure delivery.

    “When I joined CECO in 2020, our sales pipeline was closer to $1 billion, $1.5 billion. So to be at $7 billion, I think, really speaks to this intentional expansion of how we look at our markets geographically, how we look at our markets industrially, and that's going to continue.”

    asked by Aaron Spychalla · answered by Todd Gleason

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Order and Backlog Growth

    CECO achieved record orders of $449 million in Q1 FY26, a 97% increase year-over-year, and a book-to-bill ratio of 2.2x. This strong performance drove the backlog to an all-time high of $1.035 billion, representing a 72% increase from the prior year and a 31% sequential increase. The company noted that April alone saw over $400 million in new orders, including its largest-ever order of approximately $300 million for natural gas power generation.

    02

    Raised Full-Year Outlook and Margin Expansion

    The company raised its full-year 2026 revenue guidance to $940 million - $1 billion and adjusted EBITDA guidance to $120 million - $140 million, marking the second raise this year. The midpoint of the revenue guidance implies 25% organic sales growth, while adjusted EBITDA growth is projected at 44% with 170 basis points of margin expansion. Management expects gross margins to trend towards 34% or greater as the year progresses, driven by volume mix dynamics, higher-margin projects, and operational efficiencies from the 80/20 initiative.

    03

    Strategic Thermon Acquisition Update

    The acquisition of Thermon is on track for a Q2 close, expected in early June. The combination is anticipated to create a leading diversified global industrial company with an estimated $1.5 billion in current run rate sales. Management remains highly confident in achieving $40 million in cost synergies and is evaluating additional opportunities, including attractive commercial synergies, to potentially become a 'Rule of 30 or Rule of 40' company.

    04

    Diversified Market Strength and Pipeline

    CECO's sales pipeline has grown to over $7 billion, reflecting focused investments, expanded global reach, and strong market themes. Key drivers include the power super cycle (natural gas power generation, natural gas infrastructure), semiconductor sector, electronics, industrial water, and U.S. industrial reshoring. The company highlighted its strong positioning in semiconductor and industrial water markets, with the latter approaching $1 billion in pipeline opportunities.

    05

    Cash Flow and Liquidity Management

    Q1 FY26 cash flow consumed $16 million, primarily due to working capital growth and Thermon transaction expenses, consistent with seasonal trends. However, a nearly $20 million customer payment was delayed to Q2, and cash flow is expected to return to positive in Q2. The company amended its credit agreement, increasing committed funds to $975 million ($740 million revolver, $235 million delayed draw term loan), providing $723 million in additional capacity for the Thermon acquisition and future growth.

    AI-generated summary of the company’s earnings call. Not investment advice.