CECO

As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the industrial & environmental services industry, including CECO Environmental (NASDAQ:CECO) and its peers. Growing regulatory pressure on environmental compliance and increasing corporate ESG commitments should buoy the sector for years to come. On the other hand, environmental regulations continue to evolve, and this may require costly upgrades, volatility in commodity waste and recycling markets, and labor shortages in industrial services. As for digitization, a theme that is impacting nearly every industry, the increasing use of data, analytics, and automation will give rise to improved efficiency of operations. Conversely, though, the benefits of digitization also come with challenges of integrating new technologies into legacy systems. The 7 industrial & environmental services stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was in line. In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results. With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ:CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors. CECO Environmental reported revenues of $285 million, up 53.7% year on year. This print exceeded analysts’ expectations by 2.2%. Overall, it was an exceptional quarter for the company with a beat of analysts’ EPS estimates and full-year revenue guidance topping analysts’ expectations. CECO Environmental scored the fastest revenue growth and highest full-year guidance raise among its peers. Unsurprisingly, the stock is up 8.1% since reporting and currently trades at $76.64. Read why we think that CECO Environmental is one of the best industrial & environmental services stocks, our full report is free. With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE:UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries. UniFirst reported revenues of $634.4 million, up 3.9% year on year, outperforming analysts’ expectations by 1%. The business had a strong quarter with a beat of analysts’ EPS estimates. The market seems happy with the results as the stock is up 8.3% since reporting. It currently trades at $286.50. Is now the time to buy UniFirst? Access our full analysis of the earnings results here, it’s free. With approximately 5,000 locations across 49 U.S. states and 13 other countries, Driven Brands (NASDAQ:DRVN) operates a network of automotive service centers offering maintenance, car washes, paint, collision repair, and glass services across North America. Driven Brands reported revenues of $507.4 million, up 6.8% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted a beat of analysts’ EPS estimates but a miss of analysts’ full-year EPS guidance estimates. As expected, the stock is down 11.7% since the results and currently trades at $12.90. Read our full analysis of Driven Brands’s results here. Starting as a family business collecting and cleaning shop rags in Cincinnati, Cintas (NASDAQ:CTAS) provides corporate identity uniforms, facility services, and safety products to over one million businesses across North America. Cintas reported revenues of $2.91 billion, up 8.9% year on year. This print beat analysts’ expectations by 1.1%. Zooming out, it was a satisfactory quarter as it also produced a beat of analysts’ EPS estimates but full-year EPS guidance in line with analysts’ estimates. The stock is up 8.2% since reporting and currently trades at $199.36. Read our full, actionable report on Cintas here, it’s free. With a century-long history dating back to 1920 and processing over 15 billion pieces of mail annually, Pitney Bowes (NYSE:PBI) provides shipping, mailing technology, logistics, and financial services to businesses of all sizes. Pitney Bowes reported revenues of $451.5 million, down 2.3% year on year. This number topped analysts’ expectations by 1.8%. It was a strong quarter as it also produced a beat of analysts’ EPS estimates and full-year EPS guidance in line with analysts’ estimates. Pitney Bowes had the weakest full-year guidance update of the whole group. The stock is down 9.6% since reporting and currently trades at $15.97. Read our full, actionable report on Pitney Bowes here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at CECO Environmental (NASDAQ:CECO) and its peers. Growing regulatory pressure on environmental compliance and increasing corporate ESG commitments should buoy the sector for years to come. On the other hand, environmental regulations continue to evolve, and this may require costly upgrades, volatility in commodity waste and recycling markets, and labor shortages in industrial services. As for digitization, a theme that is impacting nearly every industry, the increasing use of data, analytics, and automation will give rise to improved efficiency of operations. Conversely, though, the benefits of digitization also come with challenges of integrating new technologies into legacy systems. The 7 industrial & environmental services stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 1.1% while next quarter’s revenue guidance was in line. In light of this news, share prices of the companies have held steady as they are up 2.3% on average since the latest earnings results. With roots dating back to 1869 and a focus on creating cleaner industrial operations, CECO Environmental (NASDAQ:CECO) provides technology and expertise that helps industrial companies reduce emissions, treat water, and improve energy efficiency across various sectors. CECO Environmental reported revenues of $285 million, up 53.7% year on year. This print exceeded analysts’ expectations by 2.2%. Overall, it was an exceptional quarter for the company with a beat of analysts’ EPS estimates and full-year revenue guidance topping analysts’ expectations. CECO Environmental scored the fastest revenue growth and highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 18.7% since reporting and currently trades at $84.15. Read why we think that CECO Environmental is one of the best industrial & environmental services stocks, our full report is free. With a fleet of trucks making weekly deliveries to over 300,000 customer locations, UniFirst (NYSE:UNF) provides, rents, cleans, and maintains workplace uniforms and protective clothing for businesses across various industries. UniFirst reported revenues of $634.4 million, up 3.9% year on year, outperforming analysts’ expectations by 1%. The business had a strong quarter with a beat of analysts’ EPS estimates. The market seems happy with the results as the stock is up 8.3% since reporting. It currently trades at $286.47. Is now the time to buy UniFirst? Access our full analysis of the earnings results here, it’s free. With approximately 5,000 locations across 49 U.S. states and 13 other countries, Driven Brands (NASDAQ:DRVN) operates a network of automotive service centers offering maintenance, car washes, paint, collision repair, and glass services across North America. Driven Brands reported revenues of $507.4 million, up 6.8% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted a beat of analysts’ EPS estimates but a miss of analysts’ full-year EPS guidance estimates. As expected, the stock is down 12.7% since the results and currently trades at $12.75. Read our full analysis of Driven Brands’s results here. Operating a network of more than 350 facilities with 3,300 delivery routes serving customers weekly, Vestis (NYSE:VSTS) provides uniform rentals, workplace supplies, and facility services to over 300,000 business locations across the United States and Canada. Vestis reported revenues of $661.7 million, down 1.8% year on year. This number missed analysts’ expectations by 1.2%. In spite of that, it was a strong quarter as it put up a beat of analysts’ EPS estimates. Vestis had the weakest performance against analyst estimates among its peers. The stock is down 3.4% since reporting and currently trades at $13.41. Read our full, actionable report on Vestis here, it’s free. With a century-long history dating back to 1920 and processing over 15 billion pieces of mail annually, Pitney Bowes (NYSE:PBI) provides shipping, mailing technology, logistics, and financial services to businesses of all sizes. Pitney Bowes reported revenues of $451.5 million, down 2.3% year on year. This print surpassed analysts’ expectations by 1.8%. Overall, it was a strong quarter as it also recorded a beat of analysts’ EPS estimates and full-year EPS guidance in line with analysts’ estimates. Pitney Bowes had the weakest full-year guidance update in the group. The stock is down 8.3% since reporting and currently trades at $16.20. Read our full, actionable report on Pitney Bowes here, it’s free. Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership. Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products. By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals. Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

Image source: The Motley Fool. Monday, August 10, 2026 at 8:30 a.m. ET Chairman and Chief Executive Officer - Todd Gleason Chief Financial Officer - Peter Johansson Vice President of Corporate Integration and Investor Relations - Marcio Pinto Operator: Hello, and thank you for standing by. My name is Glaiza, and I will be your conference operator today. At this time, I would like to welcome everyone to CECO Environmental Second Quarter 2026 Earnings Call. [Operator Instructions] Thank you. I would now like to turn the call over to Marcio Pinto, Vice President of Corporate Integration and Investor Relations. Please go ahead. Marcio Pinto: Thank you, Glaiza, and thank you for joining us on the CECO Environmental Second Quarter 2026 Earnings Call. On the call with me today are Todd Gleason, Chairman and Chief Executive Officer; and Peter Johansson, Chief Financial Officer. Our second quarter reported results include 1 full month of Thermon financial performance following the June 1 closing of the acquisition. Where appropriate today, we will distinguish between reported results and pro forma information. This will also be addressed in our full year consolidated outlook by Todd. As a reminder, this quarter's webcast, earnings release and presentation, which include relevant disclosures and non-GAAP reconciliations are available on our website at www.cecoenviro.com. Today's discussion includes forward-looking statements that are subject to risks and uncertainties, including those described in our SEC filings and in the legal disclosures included in today's presentation. As always, we will leave time at the end of the call for analyst questions. And with that, I'll turn the call over to Todd. Todd Gleason: Thanks, Marcio, and good day, everyone. Before we begin, I want to thank Team CECO, including our new Thermon colleagues for delivering tremendous value to our customers and our teams, which has enabled us to deliver outstanding quarter. Let's review our Q2 performance, integration activities, our full year outlook and our view of markets and opportunities. Please turn to Slide #3. Simply put, this was a record-setting quarter across the board. We delivered record orders of $799 million. Our quarter ending backlog is over $1.8 billion. We generated revenue of $285 million and our adjusted EBITDA of approximately $40 million. Our reported revenue increased 54% year-over-year with continued strong double-digit organic revenue growth. Adjusted EBITDA increased 73% and margins expanded approximately 150 basis points to 14.1%, marking CECO's first quarter with mid-teen EBITDA margins. We expect EBITDA margins to rise in coming quarters with the full positive impact of Thermon, our integration synergies and ongoing double-digit top line growth. Additionally, we expect this high-performance growth and profitability to be largely sustainable. Our sales pipeline now exceeds $8.5 billion. Our trailing 12-month book-to-bill is over 2, and we remain bullish on the order environment as we enter the second half. We have delivered double-digit revenue and earnings growth for many quarters in a row. And with our year-to-date bookings, we have high confidence and visibility that this trend will continue into the foreseeable future. The Thermon integration is well underway and going extremely well. Culturally, it is a great fit. While work remains, we continue to advance the integration program and have a solid start on our synergies. We have already captured approximately $13 million of annualized EBITDA savings in just the first 60 days and have identified early commercial wins across the combined portfolio. I and Marcio Pinto, who is leading our integration program, will give additional color on this in a minute. And given our strong first half execution, record backlog and accelerating order momentum, we are raising our full year consolidated 2026 outlook. I will come back to guidance towards the end of the call. Now please turn to Slide #4. This slide provides a good illustration of the consistent high-performance growth engine we have built. Our sales pipeline has expanded from approximately $1.5 billion in 2021 to the more than $8.5 billion that I just mentioned. The strategic investments we made in markets, talent, solutions and commercial presence are translating directly into sustained strong order levels and growing backlog. First quarter 2026 orders as shown on this slide, were $449 million, up 97% year-over-year. Second quarter orders further accelerated to $799 million, up 191% year-over-year. For the first half of 2026, we have booked approximately $1.25 billion of new orders, up approximately 150% versus the first half of last year, which had been a record set of quarters at the time. Our 2026 performance has driven backlog to more than $1.8 billion, up 164% over last year. And as I already mentioned, but it is worth repeating, our trailing 12-month book-to-bill is over 2. We continue to see strong demand and customer activity across a broad range of end markets globally, including power generation, semiconductor and electronics, natural gas processing and infrastructure, industrial water and industrial reshoring-related projects and with the addition of the Thermon solutions to the portfolio, exciting opportunities within data centers. The power generation opportunity remains particularly robust, but what gives us confidence is the breadth of the pipeline across our end markets and geographies. It is always good to remind everyone that our backlog is firm and supported by legally binding purchase orders and project commitments with permits already obtained by our customers. As we mentioned in the slide, these are not speculative opportunities or reservations for future projects, but instead ongoing programs. This backlog gives us substantial visibility to continued revenue growth. It is also -- it also increasingly contains higher-margin projects that we have discussed over the past few quarters, which supports the expectation for continued margin expansion as we convert on this backlog. Marcio and I will now review some additional materials related to the Thermon integration, and then we will hand it over to Peter to cover additional insights on our financials. Marcio? Marcio Pinto: Thank you, Todd. Please turn to Slide 6. We closed the Thermon acquisition on June 1, and I am very pleased with the engagement our teams have demonstrated in the first 2 months as a combined company. All major work streams spanning from corporate G&A to operations and commercial areas are active, and the teams are moving quickly from planning into execution mode. Our integration management office has been established and our governance program is now in place to act as an accelerator of value creation. As a result, we are progressing ahead of our synergy expectations. As Todd mentioned in our opening chart, in the first 60 days, we have captured approximately $13 million of annualized net adjusted EBITDA savings, already representing roughly 1/3 of our $40 million target. These savings are driven primarily by public company cost reductions around headcount, board and public company-related services as well as incremental actions across the organization, touching a number of sites and departments. We expect approximately $5 million of the annualized savings captured thus far to be realized in our 2026 adjusted EBITDA results and are also included in our current outlook. On a total cost synergy basis, we have captured about $19 million of annualized savings when added for stock compensation and other items that are generally not included in CECO's adjusted EBITDA. Also noted on the slide, we have incurred about $21 million of year-to-date costs to achieve these savings, primarily related to change in control provisions and accelerated equity vesting for former Thermon officers. Looking forward, we expect to have approximately $17 million to $20 million of annualized net adjusted EBITDA savings captured by year 1 of the transaction, which would represent about 45% to 50% of our total target as we continue to work towards the full opportunity set and deliver incremental value in all areas where the combined scale of CECO and Thermon creates opportunity. To conclude, after 60 days working with a talented team across multiple functions and geographies, the key takeaway is clear. The original target of $40 million in synergies remains firmly intact. And based on the current pace of execution, we have increasing confidence in our ability to deliver it. And with that, I'll turn it back to Todd to discuss the commercial side of the combination. Todd? Todd Gleason: Thanks, Marcio. We have a very well-organized integration process, thanks to Marcio and our integration management office leaders and functional leaders. Thanks to each of them. Please turn to Slide #7. As we covered on our June 9 investor update call, which we held shortly after closing the acquisition of Thermon, we have a real opportunity to drive between 1 to 2 percentage points of additional organic growth across the Thermon portfolio of solutions. Approximately 2 months later, I feel even stronger about that statement. The combination provides more scale, a broader portfolio of solutions and expanded international and customer footprint, additional product development and an expanded global sourcing network. CECO brings niche leadership positions in environmental solutions for power generation, industrial water, food processing, LNG and gas infrastructure, semiconductor and electronics production and materials processing markets, while Thermon has significant presence in midstream and downstream oil and gas, nuclear, gas infrastructure and rail and transit for thermal management applications. The teams have already identified more than 100 commercial opportunities where we see an opportunity to bring the combined portfolio to customers, and we are already experiencing early wins. For example, more than $500,000 worth of Thermon solutions have already been incorporated into CECO power generation projects. When you consider that our power generation sales pipeline alone is measured in the billions of dollars, that opportunity to attach thermal solutions to CECO projects could become a very meaningful number over time. Our objective is to add several points of organic growth by maximizing these commercial opportunities. While it is still early, the level of engagement between commercial teams and the number of opportunities already identified reinforce our confidence in the commercial rationale for this combination. We'll now hand it over to Peter, who will go into more detail on our financial results. Peter? Peter Johansson: Thank you, Todd. Good day, everyone. Thank you for joining Todd, Marcio and I for the CECO Second Quarter 2026 Earnings Call. Please turn now to Slide 9 for more color on CECO's financial results for the second quarter. CECO followed up a good first quarter with a very good second quarter, continuing the momentum we have built over the last 5 quarters. We concluded the quarter with a record backlog of $1.82 billion, up 164% versus prior year and up 76% sequentially from our previous high set at the end of the first quarter of $1.035 billion. Backlog has now increased for 12 consecutive quarters, accelerating over the last 7 quarters, each of which having delivered more than $200 million of orders. Second quarter orders were $799 million, a new company record and an increase of 191% over the prior year period. We booked significant orders across a range of end markets, including power generation, LNG, semiconductor production and industrial water treatment. Our book-to-bill in the quarter was approximately 2.8, an outstanding result. On a trailing 12-month basis, our bookings reached $1.81 billion, a 105% increase over the prior trailing 12-month period, with a book-to-bill ratio of 2.0. After the first 2 quarters of 2026, bookings have exceeded the full year 2025 bookings by 17%, a healthy $184 million increase. Revenue in the second quarter was $285 million, an increase of 54% year-over-year, inclusive of Thermon's June 2026 results. CECO's stand-alone revenue was a company record at $235 million, approximately $20 million higher than the company's previous quarterly high in the final quarter of 2025. We expect revenue growth to accelerate in the second half of 2026, tracking the significant expansion of our backlog as project execution against recently booked projects exit the engineering phase. This is most notable in our portfolio of power generation projects. Trailing 12-month revenue of $903 million, a record for any 12-month period in company history, was up 38% or $247 million over the prior 12-month period, reflecting strong backlog conversion, which will only get better. We are confident that our sequential revenue growth will continue given our backlog position and demonstrated execution. Adjusted gross profit for the quarter and for the trailing 12 months increased 43% and 30%, respectively, on higher volume. Sequentially, margins increased 264 basis points to 33.7%, approximately in line with the company's expectations of adjusted gross profit margin performance noted in our Q1 earnings call. We expect margins to trend higher in the second half of 2026 with improving volume mix dynamics on larger projects, newer higher-margin projects with faster revenue recognition profiles, improving execution and operating excellence efforts and the benefits from blending of the Thermon margin profile. Our trailing 12-month gross profit margins were 33.2%. Now I'd like to talk about adjusted EBITDA, which was $40.2 million in the quarter, an increase of 73% versus prior year delivering a margin of approximately 14.1%, a 154 basis point improvement over prior year and our first quarter with mid-teens EBITDA margins, a result we expect to consistently exceed in future periods. Over the trailing 12-month period, adjusted EBITDA was $113.4 million and a margin of 12.6%, representing an increase of nearly 180 basis points. A large part of the improvement came from lower operating expenses on increasing volumes, benefits from complexity reduction efforts, including those realized in our 80/20 efforts and lower corporate G&A spending. Please turn to Page 10 with me now, and we'll look more in depth at adjusted EBITDA and our margin trends. Adjusted EBITDA in the second quarter was $40.2 million, with the trailing 12-month period reaching $113.4 million, both company records. Margins in the quarter and trailing 12 months were 14.1% and 12.6%, respectively, also company records for the period. We have expanded TTM and full year EBITDA margins steadily since 2022, a trend that we expect to continue and to reach and exceed a mid-teens adjusted EBITDA margin for stand-alone CECO and a high teens margin for the consolidated business. Our sales, engineering and G&A spending in the quarter was 22.4% of revenue, lower by approximately 400 basis points on a year-over-year basis. To solidify our margin improvement journey since the third quarter of 2025 through the current quarter, adjusted EBITDA margins have expanded on a year-over-year basis by 130 basis points, 190 basis points, 200 basis points and now 150 basis points in the recently concluded quarter. This is a very strong trend that I expect will continue for the remainder of 2026, which is supported by the resources of our newly formed business transformation office, our operating excellence teams, which are extending the deployment of our 80/20 program across more of CECO and will deliver additional sourcing and project execution benefits. In addition, the consolidated margin profile will also benefit in the third quarter and beyond from full quarters of Thermon revenue and income in the consolidated results. Please now turn to Page 11 for a quick look at how our backlog is trending. Backlog growth continues to accelerate on a sequential basis with a book-to-bill in the quarter of approximately 2.8x, resulting in another record quarter ending backlog result. Book-to-bill for the first half of 2026 achieved 2.6x and our strong backlog over the TTM basis was now -- book-to-bill is now 2.2. Backlog, which reflects future sales, has now increased approximately 8.5x since the end of 2021. This sustained orders performance and our continued success in converting our greater than $8.5 billion opportunity pipeline underpins our expectation of extending the trend of greater than 25% organic top line revenue growth for 2026. Orders in the quarter benefited from projects and strong momentum in natural gas power generation, semiconductor, water and gas infrastructure, and this trend has continued into the third quarter. Power generation-related projects account for approximately 1/2 of our second quarter ending backlog with approximately 25% coming from industrial air and water projects and the remaining 25% of the backlog consisting of work in the natural gas and natural gas liquids infrastructure sector, hydrocarbon and chemical processing and other energy sector activities. Now please turn with me to Slide 12 for an update on cash flow and our current debt position. Second quarter adjusted free cash flow for CECO rebounded strongly after the first quarter's cash outflows. In the second quarter, we generated approximately $53 million of cash, a little over 132% of adjusted EBITDA. Year-to-date, the company delivered approximately $38 million of adjusted free cash flow, an increase of approximately $56 million year-over-year, representing 63% of adjusted EBITDA. On a trailing 12-month basis, cash flow as a percentage of EBITDA was approximately 58%, above our 55% or greater target for the full year of 2026. The company generated strong collections activity in the quarter against the first quarter billings for large project milestones achieved in the period. Numerous large project milestones and subsequent billings were also realized in the second quarter, which will -- creating customer receivables that we expect to collect during the third quarter, extending our trend of improving cash flow generation. Supplier payments offsetting customer collections were also made during the quarter, which will continue into the third quarter as we accelerate the conversion of backlog into recognized progress and subsequent billings and payments. Capital expenditures in the quarter were modest and largely driven by our ongoing ERP migration and consolidation initiative, which we expect will be essentially completed for CECO entities in early 2027. Gross debt at the end of the second quarter increased by approximately $523 million since the 2025 year-end period as we utilized our delayed draw Term Loan A and our upsized revolver to finance the cash portion of the Thermon acquisition and related transaction costs. Year-to-date, use of our revolver for working capital is essentially flat. Net debt increased by $495 million as the quarter end cash balance grew by approximately $28 million since year-end, resulting in a quarter end leverage ratio of 2.7x our trailing 12-month bank EBITDA levels, near the high end of our previously communicated leverage range. The combination of Thermon and CECO's strong free cash flow generation allowed a substantial step down from closing date leverage, and strong cash flow generation has continued into the third quarter, allowing paydown of an additional $39.5 million, lowering our gross debt position to $692 million as of July 31, moving CECO ever closer to its targeted leverage range of 2.0 to 2.5x. Cash generation and improving our working capital position will continue to be a key area of focus for CECO as we continue to reduce our leverage and fund our growth. As of June 30, CECO had approximately $220 million in additional capacity to fund working capital, CapEx or M&A, and with further capacity built into our credit agreement for additional borrowings, we will be able to advance CECO's strategic growth should additional funds be required. Overall, we are in a very comfortable position 1-plus month after the Thermon acquisition with sufficient capacity for our working capital and foreseeable investment needs. That concludes my review of CECO's second quarter financial results. I will now pass it back to Todd for a wrap-up. Todd Gleason: Thanks, Peter. Please turn to Slide #14. As I already mentioned, we are raising our full year outlook 2 months after providing our most recent 2026 guidance for the year. Our strong first half performance, record backlog levels and accelerating order momentum provides visibility and confidence to raise our numbers. We now expect full year revenue between $1.3 billion and $1.375 billion, increasing the low end of our prior range by $25 million. At the midpoint, this represents approximately 20% year-over-year growth on the reported basis reflected in our outlook. We are also raising the low end of our adjusted EBITDA outlook by $5 million and now expect between $200 million and $225 million for the full year. This outlook includes approximately $5 million of realized Thermon cost synergies in 2026, which was also in our previous outlook. We continue to expect mid-teens adjusted EBITDA margins and adjusted free cash flow conversion of at least 55% of adjusted EBITDA. On a pro forma calendar year basis, including Thermon for the full year, we estimate revenue of approximately $1.5 billion to $1.6 billion and adjusted EBITDA of approximately $255 million to $280 million. We also continue to expect full year orders to easily exceed $2 billion. The second half should benefit from accelerating backlog conversion, improving working capital execution and the full quarter contributions from Thermon. Our backlog supports the higher revenue outlook, while our pipeline continues to expand across key markets and geographies. While we have work ahead of us, the combination of record backlog, strong markets, improving margins and early integration progress gives us confidence in our continued growth. Before we open up the call for questions, let me conclude here on Slide 15. First, CECO is exceptionally well positioned in very robust, large and diverse end markets. Our opportunity pipeline now exceeds $8.5 billion and continues to grow across our key end markets and geographies. Power generation remains a major driver. But again, our growth is balanced across our diverse portfolio. Second, our financial performance continues to demonstrate the strength of CECO's operating model. Backlog increased 164%, orders increased 191%, revenue increased 54%, and adjusted EBITDA increased 73% with approximately 150 basis points of margin expansion. Third, the Thermon integration is progressing well. We have already captured approximately $13 million of annualized net adjusted EBITDA savings, representing 1/3 of our initial $40 million target, and our commercial teams are already generating cross-selling opportunities. And as we just reviewed, we are raising our full year outlook. Our record backlog and robust sales pipeline gives us the visibility that I've already outlined, and we continue to expect strong execution, synergy capture and cash generation. We have built a larger, more diversified and more profitable CECO with leading positions across attractive industrial markets. I am pleased with the start of the combination and very confident in the opportunities ahead. With that, we'll now open up the line for questions. Operator? Operator: [Operator Instructions] And your first question comes from Aaron Spychalla from Craig-Hallum. Aaron Spychalla: First for us on orders. It sounds like things have continued to be strong here to start the third quarter. Can you just maybe talk about that a little bit? And then on power gen broadly, any changes that you're seeing in the outlook there, competitive dynamics and just how you're feeling for the supply chain given the growth you're expecting there? Todd Gleason: Yes. Strong start to the third quarter. We're continuing to see a very steady cadence of opportunities come through our power, our water, our industrial air across all the markets that we've talked about. So we're not seeing any slowdown, Aaron, in the third quarter. Look, I'm sort of joking here, but when you end the quarter with $799 million, you sort of say, geez, couldn't we have found a way to get to $800 million? So we didn't pull anything in if we ended up with $799 million. So I think we feel good about the second half of the year, easily eclipsing $2 billion or more for the year. Our third quarter continues to point in that direction, gives us confidence in that. And nothing's changed in the dynamic of competition. I think all of our markets have good competition. The pricing dynamic is favorable. Everyone, I think, understands that the supply chains can be tricky. We have built an incredibly strong global supply chain. I think it gives us that advantage. Our ability to take large complex projects with our decades of experience gives the customers confidence that we're the right partner in any market, but especially a high-performance market where there's a lot of demands on delivery schedules, on timing. Last comment I'll make because I think it's important, is the orders we get in power generation, for example, are associated with our customers' orders from many quarters ago. So as you think about the large power generation set of strategic leaders that we supply, they've talked about wins maybe in 2025 or certainly the very beginning of 2026. We're now associated with those jobs because when we're handed a PO, it is when they're ready for work to begin. And again, it's just a comment to really sort of drive home the point that when we get our purchase orders, our end customers are already working on the projects. And it's not associated with just reserving opportunities. It is now executing on those opportunities. Oftentimes, they come with permits are already in place. Certainly, the work to proceed is being authorized. Terms and conditions are binding and moving forward with large cancellation clauses. So when we're booking orders, we're sort of -- we're later innings, I guess, I'd say, than some of our customers, which have been talking about these large growth for quite some number of quarters. Aaron Spychalla: No, that's helpful. And then maybe on industrial water, were there any of the large orders that you've been talking about in the second quarter? And then just can you talk a little bit about where that business you think can be in a handful of years organically, inorganically? And then just talk about some of the margin dynamics in that business over the last couple of years and how you're thinking those projects can contribute. Todd Gleason: Yes. So a lot there. But -- so the industrial water business is moving along fine in terms of growth year-over-year, in terms of adding pipeline. The bigger orders that we pointed to earlier this year, majority of those continue to be delayed because of the conflicts in the Middle East. And so we're -- but we understand that. The dialogue with the customers remains very positive. So I think we don't have those baked in our outlook for the year. We never did. I think as we head into next year, our anticipation would be some of those start to show up in our bookings at very good margins over the years to establish a foundation and a series of reference jobs in industrial water. Our margin profile has typically been in the lower 20% gross margins. Our projects now are well over 30% quite oftentimes, and that EBITDA margins are above company average in terms of those industrial water jobs. So look, we're excited about what the pipeline looks like for growth. We understand why things are paused at the moment as supply chains and ability to do work in certain regions is a little bit compromised at the moment. But the projects are even more valuable, I think, going forward because of the infrastructure rebuild and the investment that the customers are ready to do. So again, nothing in our outlook necessarily. It would be upside if things were to move in that direction in the second half of the year. And they are some pretty significant projects. So look, we're pretty bullish that this is a business that can easily get to $200 million, $300 million in revenue in the next few years organically as we're able to execute on these larger jobs. Operator: Your next question comes from Jim Ricchiuti from Needham & Company. James Ricchiuti: A couple of questions. Maybe first question, the improvement -- sequential improvement in gross margin in the quarter. And again, apologies if you may have covered this in your detailed presentation, but maybe talk a little bit about what drove that. And I'm wondering how we should be thinking about gross margins in the second half with... Todd Gleason: Yes. You got cut off there a little bit, Jim. I'll start -- but got the question, though. Thank you. And Peter can certainly provide additional color on it. Nice improvement in gross margins versus Q1. Part of that, I would suggest, is to remind everyone that we knew Q1 was a little bit lower than an ongoing gross margin quarter would be. So the rebound in some aspects is just the return to normalcy, if you want to say, in terms of just gross margins. So adjusted gross margins being around 33.5%. We believe that, that's -- it goes higher in the second half of the year with the things that Peter outlined in terms of productivity, higher margins in our backlog. And similar, I'll let Peter kind of provide additional color there. But we're pleased to be back in the 33.5% range. Thermon gross margins are higher. We only had 1 month of their gross margins in our results. So all indicators seem to lead towards a higher gross margin rate. Peter Johansson: Nothing more to add. Todd Gleason: So comprehensive. So there you have it. Operator: Your next question comes from Tomo Sano from JPMorgan. Tomohiko Sano: On SG&A at 22.4%, about 400 basis point improvement. Could you talk about decomposing structural actions versus volume leverage? And under what conditions would SG&A rate drift back up? Peter Johansson: Yes. I'll take the second half of the question first, Tomo. We don't anticipate the rate drifting back up. We felt we had elevated rates in prior quarters as we invested in putting in commercial infrastructure, expanding office and footprint in high-growth regions and adding capabilities in acquired businesses. Those investments, by and large, are concluded. The last remaining investment we're undertaking is the migration of all of our businesses to a single ERP platform. So structurally, and we don't anticipate that rate going up. When I break it into the 2 halves, what was performance versus leverage, the majority, probably 2/3 of that number, was a result of those expenses being held flat or coming down relative to volume. And we would expect that to continue to trend. Part of the synergies that Marcio discussed from the combination with Thermon will appear in that line. Tomohiko Sano: And if I may follow up on cross-selling opportunities, Todd. If you could talk about the [ early ] win of the cross-selling? And how should we think about to make this repeatable rather than opportunistic? How are you designing the operating model across selling motions, solution, pricing and channels? Todd Gleason: Yes. Well, the -- so we have a very focused cross-selling maybe, I guess I'd say, but it's also just -- we call it commercial synergies because it's really partner selling versus what I would say is cross-selling. And let me tell you why there's a difference. Cross-selling means we're sort of -- typically means you're training other businesses on how to sell your product and then they go and sell across channels. That does happen at CECO. But partner selling is we have visibility at CECO, let's say, to hundreds of millions of dollars, if not more than billions of dollars of, let's say, semiconductor and power generation and other very, very large detailed projects in our pipeline and in our backlog that Thermon, for example, would have never had visibility to, not suggesting that all of Thermon sales go through distribution or sales channels or channel partners and sales agents, but a significant portion do. And therefore, they get an order because the channel has determined what it needs from a heat trace perspective, and they're going to go with the leader. They're going to go with Thermon. We have visibility to actual heat trace in the projects more so than most companies because we're managing the installation of these 10s, 20s, hundreds of millions of dollars worth of full systems and solutions. So the $0.5 million in power generation orders is we knew that in these projects that we've already booked and started to execute against that we need heat trace that can be a leading product line that can withstand incredible temperatures and Thermon products are the best. And so our ability to now bring Thermon products into solving heat trace complexities in large power jobs is just the beginning. Anywhere where you're going to need heat trace and we can bring the Thermon product line through our projects, we're going to as we should. And so with our backlog at $1.8 billion, our sales pipeline at $8.5 billion, the ability for us to do partner selling, start to model in and spec in the Thermon products into our projects that we're bidding on in a collaborative way is a win-win. So it's really about visibility. Yes, there are many other things we're going to do to cross-sell and partner sell into various regions. Our teams are working together in all of our offices already, whether it be in Korea or Singapore, between Dubai and Abu Dhabi, they're starting to really partner and understand these opportunities. But power generation is the best example I can give where we literally can just go, okay, let's now include the Thermon bundle of products into our solutions. Tomohiko Sano: That's helpful. Congrats. Operator: Your next question comes from Jim Ricchiuti from Needham & Company. James Ricchiuti: Apologies if I'm going to ask something that's been asked already. My connection has been breaking up. But maybe this has been covered, but talk, if you could, about the pipeline increase since the beginning of June, that increase in the pipeline, is that mainly power gen related? Todd Gleason: Yes. We haven't covered that, Jim, largely power gen related, but semiconductor as well. I would also add a little bit of Thermon to the sales pipeline because they have a sales pipeline that is -- that's a real number, even though it's nowhere near the size because it's a different type of product solution selling as we've already covered. It's not a project. It's -- they do have projects. But it's really power gen is probably the leader as we now continue to see bigger and bigger projects, data centers on the Thermon side, projects related to Thermon. And then look, semiconductor is starting to really find a nice trajectory. Look, Thermon has at least $1 billion to $1.5 billion of sales pipeline, Jim. So we're blending that in now with ours. James Ricchiuti: Okay. Got it. And Todd, I think we all appreciate the delays in industrial water in the Mid East. But it sounds like even excluding that, you're seeing good activity there. Can you give us some color on just the level of bookings or the increase you're seeing, excluding the delayed projects? Todd Gleason: Yes. Look, I mean, again, in a lot of our industrial water businesses, we have great leading brands, businesses like Kemco, Compass, DS21, and they're doing work outside of -- and Peerless' industrial water solutions. They're doing work outside of the Middle East. Where that's the case, we're seeing nice double-digit orders growth, right? We're seeing nice returns on our resources and investment. These are businesses that at times have had cyclicality in their end markets like Kemco with food and beverage or food service side or food manufacturing. And those markets are strong at the moment. Operator: Your next question comes from Rob Brown from Lake Street Capital Markets. Robert Brown: Congratulations on the strong quarter. You talked about the pipeline breadth a little bit, but I just wanted to ask about the gas infrastructure and energy part of the pipeline. How is the demand environment there? And what's the sort of outlook in that vertical? Peter Johansson: The demand -- if we include LNG in that topic, and we're tending to now because we're looking across the full value chain is extraordinarily strong. We will book or have booked the 2 largest projects in the history of the Peerless brand in the last 2 months related to the gas pipelines bringing new gas to the Gulf and to new LNG projects. The amount of investment that's going into gas transport and gas processing to deliver the fuel to these many gas-fired generation projects is very elevated and will continue to be for a number of quarters. We're seeing 2 other trends that are very interesting. One is the -- in the gas side is drilling actually, while not having picked up, is becoming much more productive. So the volumes of gas that's coming out of existing plays now needs a route to market. So it's no longer a supply-driven market. It's a demand-driven market, which is very interesting. And it's been some time since we're in that situation. And then finally, what is, to me, very interesting is the export market for LNG continues to be very strong with at least 3 or 4 FIDs remaining through the year that we have a high degree of confidence will occur and we will be awarded work. Robert Brown: Great. And then on the Thermon data center vertical, you talked about that as an opportunity. Could you just kind of characterize the sort of the products you provide and what that opportunity looks like? Peter Johansson: Yes, happy to do that, Rob. Unlike the CECO portfolio where our exposure to data centers is indirect to the power that is produced and supplied to the data centers, Thermon has 2 distinct product offerings that are actually procured by the data center developers and installed directly into the data center. The first is the liquid load bank product, which is relatively new to Thermon, and it's an adaptation of a very sophisticated high-performance boiler solution. These are purchased in large numbers and installed in data centers so they can test the cooling system against a simulated load rather than having to test it against a fully operated server rack set. They are installed not just at commissioning of the data center, but they're left in situ, and are operated daily and weekly to ensure the cooling system performance. They're big orders relative to Thermon's historical order sizes. And then second is the traditional heat trace product. In order to maintain stability in the building itself, they use the heat trace technology in a number of areas to keep the foundation at a consistent temperature, to keep joints in the building at a consistent temperature to eliminate the effects of thermal expansion and contraction with seasons and it's ways that heat trace hasn't historically been applied. And those are very interesting opportunities, and they continue to add up. They're not big by CECO standards, but they're very attractive because they're full margin and they're quick to turn. Operator: Your next question comes from Bobby Brooks from Northland Capital Markets. Robert Brooks: When you guys spoke to the $500,000 uplift of Thermon products added to your power gen projects. Just wanted to unpack that a little more. Like going forward, is every project now getting this $500,000 uplift? Or is the projects going to be booked and the projects that are sitting in backlog? Peter Johansson: No. Robert Brooks: Okay. And then just that [indiscernible] on a net basis? Peter Johansson: No, Bobby, you're trying to -- you do this every time we talk about power gen. You want to figure out how to better model the business. But I'll tell you what this was. This was existing projects where a customer specified a heat trace solution or a thermal management solution that we historically would have purchased from a competitor of Thermon. Now with the Thermon portfolio, we can add their technology to inlet air conditioning. Gas turbines like to have a warm dry air in order to perform at their highest level. So that's one application. Another application is to ensure that the ammonia that we inject into the SCR package is maintained at an appropriate temperature to optimize injection and conversion. And then there is opportunities to keep valve and other components in the diverter and damper system on the exhaust bypass dry and warm so that they do not corrode or freeze up -- at the bottom of the bypass stack. That's correct. These are all very interesting applications. They vary -- the value and the scope vary by project and location. You can imagine in a very warm climate, you're probably going to have less de-icing or anti-freeze applications, but you still need to keep the ammonia circulating at the right temperature and viscosity. So these are all variable based on where you put the plant, the size of the plant and the duty cycle of the plant. We just like the fact that these are great additions to what we already bring to our customers, and they add a lot of value. There's also the retrofit and aftermarket story here. It's not just a first-fit story. And this is just an example of the commercial opportunities that our teams are exploring. We found a really interesting one in the area of food processing that we're exploring. And if you think about our Kemco business and the part of the Thermon business that is in hot water generation and supply, there's good technical and customer overlaps that we'll endeavor to explore both in the channel as well as directly with the installed base. Todd Gleason: And just -- Peter, thank you and you covered it. But Bobby, just to make sure you captured this, and I suppose all of our audience members. This wasn't one project that we booked $0.5 million. This was a collection of projects that probably any project could have tens of thousands of dollars worth of solutions up to $100,000 worth of solutions and maybe more. I mean -- but this -- in one that I know of was $70,000 worth of heat trace for one of those categories that Peter mentioned. So the point of it is quickly in 60 days now, we've generated a real number. And with the amount of projects that are just coming through the pipeline now and our backlog now, we certainly can go and make these procurements happen. Robert Brooks: That was really helpful color to help break that down. And then just as we think of the cross-selling rate, if we go back to, what, 18 months ago, the Profire acquisition, and that was a really interesting opportunity to cross-sell their solutions into your customer base. Just wanted to give you a floor of maybe taking any learnings that you've had as you've integrated and try to cross-sell those -- the Profire products into your legacy customer base and how you might leverage that new experience into the Thermon? Todd Gleason: Yes, I don't think of it as new. I think it's a good question because Profire was a fairly large acquisition at the time for CECO. And because it was a publicly traded company like Thermon, there was knowledge in the market that maybe didn't exist in some of our other dozen or so acquisitions. But you're looking at 13, 14 acquisitions or more over the last 5-plus years, and all of them have received commercial opportunities that we leverage. DS21 has allowed us to expand into industrial water in a coordinated way with resources and capabilities and -- and in that case, was an approved vendor list with the Korean EPC firms versus you look at what we're doing potentially with Thermon and Kemco. Those are 2 acquisitions, obviously, Kemco being an acquisition from about 4 years ago or so, 3 or 4 years ago. And now Thermon and Kemco are looking at ways to sell heat trace solutions into their heat applications and similar solutions. We're going to be selling Thermon solutions into industrial water, piping and infrastructure. So I think all of our acquisitions do a great job of leveraging geographic resources, entering new markets, buying products from each other, sharing leads in our sales CRM system, seeing those leads. There's just a lot more visibility. So I think the lesson learned for us is how well we play together in the sandbox and how we share project data and the visibility around those projects is really exciting for our sales teams. It's like a whole new sales -- it's Glengarry Glen Ross sales leads, galore for our sales force. Robert Brooks: You definitely have displayed that. Congrats on a strong quarter. Operator: Your next question comes from Joe Giordano from TD Cowen. Joseph Giordano: Two for me. One, I remember back like mid-2010s when we had the energy crisis, like until that period, until things kind of broke, you saw like these projects happening crazy, everyone is getting big orders, but like the likelihood factor, I guess, of those projects got worse and worse, and they got more aggressive and more aggressive and based on the underwriting was more aggressive. Can you like talk about this kind of world that we're in today kind of contrasted against what we had back then? Todd Gleason: Yes. Look, it's a very demanding market. There is a lot of volume and a lot of visibility to that volume. So we are in very regular, maybe even constant, dialogue with our power gen customers. We understand what their pipeline looks like. We understand what orders that maybe they've booked that are associated with reservations for '27, '28, '29, '30. So we have visibility to this much longer-term project location opportunity set than we've ever had. So in the past, it was a burst of activity that felt maybe a little bit more opportunistic to the markets and to our competitors. And therefore, the dynamic became a bit more aggressive. This, you have a much longer series of visibilities. And these are mega projects now where really you start to rule out a lot of smaller competitors that don't have the scale, the financial strength, the global supply chain, the engineers to do and don't have the reference sites, which are important because the customer isn't here rolling the dice on these things. So I think the dynamic feels it's graduated to a whole another level. So we've all been on the sort of rides before. This one feels different. And I think it is why we've really tried to articulate that our purchase orders that we put into our order bookings and our backlog are firm. And I'm not suggesting that the market isn't firm, but ours are. So for us to book $799 million of purchase orders, putting it in backlog, our backlog debooking rate is far less, but it's less than half of 1%. So it's like 0.3%, 0.4%, 0.5%. And I would say this is because we have so much visibility to what's coming. Even if we've been given verbal awards ourselves, we're not booking those. It's a different dynamic now than it's probably been in -- since maybe 25 years ago. Joseph Giordano: Yes. That's a fair answer. And then last for me, how do you think about your own capacity, your ability to deliver on time for customers as these orders get larger and larger and the commitments that you're signing up for get further and further out? Like how do you -- how are you like dynamically assessing your ability to source all this stuff and the ability to kind of execute on it? Todd Gleason: We're very focused on that, Joe. As you can imagine, booking big orders means you have to deliver big orders. In fact, we have decided against pursuing certain projects because we felt that we had great capacity for better projects in the future. But we didn't -- so therefore, we didn't want to -- we can be a bit selective here, but we can also realize when we have -- we're going to run up against any constraints. And I would say, so far, we have done a great job because of our outsourcing model globally with partners, fabricators, supply chain, number one. Number two, we talked about SEG&A investment now moderating or normalizing for 5 years now. We've invested heavily in project engineering, application engineering, systems capabilities, building a team in India, building a team in Asia, building a global supply chain. These were expenses that we put in, in 2022, 2023, ramped up in 2024 and throughout '25, seeing this power super cycle. Maybe we underestimated it, but we were ahead of it. And that investment now is really going to pay dividends and our ability to handle about as much volume as we want at the right margins in the right locations with the right partners. So for us, we can be selective. I think we can be thoughtful and our ability to execute has probably never been better. Peter Johansson: Joe, let me share kind of a typical large project that we've seen recently. It's really design once, build many times. So for instance, the largest job we booked in power was exactly that. Our teams will engineer it and build the supply chain to deliver it once, and then that supply chain just continues to execute, delivering sequentially over a number of quarters that equipment to the job site in synchronicity with the customers' ability to receive it, install it and test it. And so these larger power gen opportunities aren't a lot of design complexity. It's really managing through materials availability, labor and executing with quality, and we have a very good model there. In semiconductor, it's not much different. It's just a different technology. In a large fab, it might be somewhere between 24 and 48 scrubber packages. We'll design it once. Maybe there's 2, a small and a large. So we'll have 2 designs. We'll source it through value-added fabricators, and then we'll do a little addition on our own and have it delivered to the job site, but in a very consistent manner with a drumbeat on delivery. So it helps us manage these larger projects. They're actually, I would say, not complex, but they are nowhere near as complex as the number or the headline might suggest. Operator: That will conclude our question-and-answer session. And I will now turn the call over to Todd, Chief Executive Officer, for the closing remarks. Please go ahead. Todd Gleason: Thank you very much. I'd like to thank all of our participants and audience for their questions and interest in our information today. We're going to be participating at several investor events throughout the remainder of the quarter, including those hosted by Jefferies, Lake Street and Morgan Stanley. And last, I would also like to always thank our global teams that are delivering incredible value to our customers as well as continuing to protect people, protect the environment and protect our customers' investment in their industrial equipment. With that, we'd like to thank everybody, and have a great day. Thank you. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends CECO Environmental. The Motley Fool has a disclosure policy. CECO (CECO) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

CECO Environmental delivered a strong second quarter, with management attributing performance to robust demand across power generation, semiconductor, and industrial water markets, as well as the first month of Thermon’s contribution following its acquisition. CEO Todd Gleason emphasized that “backlog has now increased for 12 consecutive quarters,” citing record orders and a sales pipeline exceeding $8.5 billion. The company’s focus on large-scale, higher-margin projects and the early realization of cost synergies from the Thermon deal played a significant role in driving top-line growth and expanding adjusted EBITDA margins. Is now the time to buy CECO? Find out in our full research report (it’s free). Revenue: $285 million vs analyst estimates of $278.9 million (53.7% year-on-year growth, 2.2% beat) Adjusted EPS: $0.47 vs analyst estimates of $0.33 (41.6% beat) Adjusted EBITDA: $40.2 million vs analyst estimates of $38.72 million (14.1% margin, 3.8% beat) The company lifted its revenue guidance for the full year to $1.34 billion at the midpoint from $970 million, a 37.9% increase EBITDA guidance for the full year is $212.5 million at the midpoint, above analyst estimates of $208.2 million Operating Margin: -11.6%, down from 9.7% in the same quarter last year Market Capitalization: $4.66 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Aaron Spychalla (Craig-Hallum) asked about ongoing order momentum and the outlook for power generation demand. CEO Todd Gleason confirmed strong order flow into Q3 and cited favorable competitive dynamics and a robust supply chain as key advantages. James Ricchiuti (Needham & Company) queried about the improvement in gross margins and expectations for the second half. Gleason attributed margin improvements to a return to normalized levels, with CFO Peter Johansson expecting further gains as higher-margin projects and Thermon’s contribution increase. Tomohiko Sano (JPMorgan) questioned the sustainability of SG&A expense reductions and the structure of cross-selling opportunities. Johansson noted that most SG&A investments are complete, with future rates expected to remain stable. Gleason explained the company’s focus on “partner selling” to maximize Thermon’s reach. Robert Brown (Lake Street Capital Markets) inquired about demand trends in the gas infrastructure and energy pipeline. Johansson described the environment as “extraordinarily strong,” especially for LNG, with several large project awards expected in coming quarters. Joseph Giordano (TD Cowen) pressed for clarity on CECO’s capacity to deliver on large, long-term orders. Gleason emphasized selective project pursuit and prior investments in global engineering and supply chain functions to support execution. Looking ahead, the StockStory team will watch (1) the pace of Thermon integration and realization of synergy targets, (2) the conversion of record backlog into revenue—particularly in power generation and semiconductor projects, and (3) the resolution of delayed industrial water orders, especially in the Middle East. Sustained order momentum and effective execution on large-scale contracts will also be critical markers of ongoing operational discipline. CECO Environmental currently trades at $79.71, up from $70.92 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members). ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time. Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

CECO Environmental (CECO) came out with quarterly earnings of $0.47 per share, beating the Zacks Consensus Estimate of $0.24 per share. This compares to earnings of $0.24 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +95.83%. A quarter ago, it was expected that this maker of air pollution controls and industrial ventilation systems would post earnings of $0.12 per share when it actually produced earnings of $0.36, delivering a surprise of +200%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. CECO, which belongs to the Zacks Pollution Control industry, posted revenues of $284.96 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.97%. This compares to year-ago revenues of $185.39 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. CECO shares have added about 18.5% since the beginning of the year versus the S&P 500's gain of 13.3%. While CECO has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for CECO was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #1 (Strong Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.59 on $378.34 million in revenues for the coming quarter and $2.09 on $1.3 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Pollution Control is currently in the top 27% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, LiqTech International, Inc. (LIQT), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 12. This company is expected to post quarterly loss of $0.19 per share in its upcoming report, which represents a year-over-year change of +13.6%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. LiqTech International, Inc.'s revenues are expected to be $6 million, up 21% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CECO Environmental Corp. (CECO) : Free Stock Analysis Report LiqTech International, Inc. (LIQT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Release Date: August 10, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record Q2 orders of $799 million, up 191% year-over-year, and backlog of $1.8 billion, up 164%. Revenue increased 54% year-over-year to $285 million, with adjusted EBITDA up 73% to $40.2 million. Adjusted EBITDA margin expanded 150 basis points to 14.1%, marking the first quarter with mid-teen margins. Thermon integration is ahead of schedule, capturing $13 million of annualized EBITDA savings in the first 60 days. Raised full-year 2026 revenue and adjusted EBITDA guidance, reflecting strong visibility from a record backlog and $8.5 billion pipeline. Leverage ratio at 2.7x is near the high end of the target range, though expected to decline with cash flow. Industrial water orders in the Middle East continue to be delayed due to regional conflicts, impacting potential upside. Integration costs of $21 million year-to-date have been incurred, primarily from change-in-control provisions and equity vesting. Gross margin improvement was partly a rebound from a lower Q1, with sustainability dependent on execution. SG&A rate improvement may be challenged by ongoing ERP migration and integration investments. Warning! GuruFocus has detected 2 Warning Signs with CEVA. Is CECO fairly valued? Test your thesis with our free DCF calculator. Q: Can you talk about the strength of orders entering the third quarter, any changes in the PowerGen outlook, competitive dynamics, and how you feel about the supply chain given the growth you're expecting? A: Todd Gleeson (CEO): We're seeing a very steady cadence of opportunities across power, water, and industrial markets with no slowdown in Q3. We ended Q2 with record orders of $799 million and feel confident in easily exceeding $2 billion in orders for the full year. The competitive dynamics are favorable, and our strong global supply chain gives us an advantage in taking on large, complex projects. Importantly, the orders we book are firm, with permits already obtained by customers, and are not speculativethey represent projects already in execution. Q: Can you decompose the 400 basis point improvement in SG&A as a percentage of revenue (22.4%) into structural actions versus volume leverage, and under what conditions would that rate drift back up? A: Todd Gleeson (CEO): We don't anticipate the rate drifting back up. The elevated rates in prior quarters were due to investments in commercial infrastructure, expanding our footprint in high-growth regions, and adding capabilities. Those investments are largely concluded, with the last remaining being the migration to a single ERP platform. The majority of the improvement is from holding expenses flat or reducing them relative to volume, and we expect this trend to continue, with Thermon synergies also contributing to that line. Q: Regarding the $500,000 uplift of Thermon products added to PowerGen projects, is this a per-project uplift, and can you unpack how this cross-selling opportunity scales? A: Todd Gleeson (CEO): This was a collection of existing projects where customers specified thermal management solutions that we historically would have purchased from a competitor. Now, with Thermon, we can add their technology for applications like inlet air conditioning for gas turbines, maintaining ammonia temperature in SCR packages, and de-icing valves in exhaust bypass systems. The value varies by project and location, ranging from tens of thousands to over $100,000 per project. With our $1.8 billion backlog and $8.5 billion pipeline, this represents a significant and repeatable opportunity. Q: Can you talk about the pipeline increase since the beginning of Juneis that mainly PowerGen related? A: Todd Gleeson (CEO): The pipeline increase is largely PowerGen related, but semiconductor is also starting to gain a nice trajectory. We've also added Thermon's sales pipeline, which is a real number of about $1 billion to $1.5 billion, including data center projects related to thermal management. We're blending that into our overall $8.5 billion pipeline. Q: How is the demand environment in the gas infrastructure and energy part of the pipeline, and what is the outlook for that vertical? A: Todd Gleeson (CEO): The demand, including LNG, is extraordinarily strong. We booked the two largest projects in the history of the Peerless brand in the last two months, related to gas pipelines bringing new gas to the Gulf and two new LNG projects. Investment in gas transport and processing to fuel gas-fired generation is very elevated. We're also seeing a shift to a demand-driven market for gas, and the export market for LNG remains strong with at least 3-4 FIDs expected through the year. Q: Can you characterize the products and opportunity for the data center vertical? A: Todd Gleeson (CEO): Thermon has two distinct product offerings procured directly by data center developers. The first is a liquid load bank product, an adaptation of a high-performance boiler solution, used to test cooling systems against simulated loads. These are large orders relative to Thermon's historical sizes and are left in situ for daily and weekly testing. The second is traditional heat trace technology used to maintain consistent temperatures in the building's foundation and joints to eliminate thermal expansion effects. These are attractive, full-margin opportunities that are quick to turn. Q: How do you think about your own capacity and ability to deliver on time as orders get larger and commitments extend further out? A: Todd Gleeson (CEO): We are very focused on this and have even decided against pursuing certain projects to maintain capacity for better ones. Our global outsourcing model with partners and fabricators is a key advantage. We've invested heavily over the past five years in project engineering, systems capabilities, and building teams in India and Asia, which is now paying dividends. For large projects, it's a "design once, build many times" model, allowing us to manage materials, labor, and execution efficiently. Our ability to execute has probably never been better. Q: Were there any large industrial water orders booked in Q2, and where do you see that business in a few years, including margin dynamics? A: Todd Gleeson (CEO): The industrial water business is growing year-over-year, but the larger orders we pointed to earlier this year continue to be delayed due to conflicts in the Middle East. We don't have those baked into our outlook, but they could be upside if they materialize. Historically, our industrial water margins were in the low 20% gross margin range, but our projects now are well over 30%, with EBITDA margins above company average. We're bullish this business can easily reach $200-300 million in revenue in the next few years organically. Q: What drove the sequential improvement in gross margin in Q2, and how should we think about gross margins in the second half? A: Todd Gleeson (CEO): The improvement to 33.7% was partly a return to normalcy after a lower Q1. We expect margins to trend higher in the second half, driven by productivity improvements, higher-margin backlog, and the blending of Thermon's higher margin profile. Peter Johansson (CFO) added that newer, higher-margin projects with faster revenue recognition profiles and operating excellence efforts will also contribute. Q: How are you leveraging learnings from the Profire acquisition to cross-sell Thermon products into your legacy customer base? A: Todd Gleeson (CEO): All our acquisitions, including Profire, have provided commercial opportunities we've leveraged. The key lesson is how well we play together and share project data and visibility. For example, we're exploring opportunities between Thermon and our Kemco business in food processing and hot water generation. The visibility across our sales CRM system and the ability to share leads is exciting for our sales teamit's like a whole new set of sales leads. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in CECO Environmental Corp.? Here are five stocks we like better. CECO reported record Q2 performance, with orders of $799 million, revenue of $285 million, adjusted EBITDA of about $40 million and backlog exceeding $1.8 billion. Revenue increased 54% year over year, while adjusted EBITDA rose 73% and margins expanded to 14.1%. The Thermon acquisition is generating early benefits, including approximately $13 million in annualized net adjusted EBITDA savings within its first 60 days. CECO also identified more than 100 cross-selling opportunities across the combined businesses. CECO raised its 2026 outlook to $1.3 billion–$1.375 billion in revenue and $200 million–$225 million in adjusted EBITDA, while continuing to target more than $2 billion in annual orders and at least 55% adjusted free-cash-flow conversion. Ride the Rally: 3 Earnings Winners With More Upside Ahead CECO Environmental (NASDAQ:CECO) reported record second-quarter results for 2026, citing accelerating orders, a growing backlog and early cost savings from its acquisition of Thermon, which closed June 1. Chairman and Chief Executive Officer Todd Gleason said second-quarter orders reached a record $799 million, while quarter-end backlog exceeded $1.8 billion. Revenue totaled $285 million and adjusted EBITDA was approximately $40 million. Reported revenue rose 54% from a year earlier, while adjusted EBITDA increased 73% and adjusted EBITDA margin expanded about 150 basis points to 14.1%. → MarketBeat Week in Review – 08/03 - 08/07 The reported quarterly results included one month of Thermon financial performance. CECO said it expects margins to improve further as it receives a full contribution from Thermon, realizes integration synergies and converts a growing proportion of its backlog into revenue. CECO booked approximately $1.25 billion in new orders during the first half of 2026, up about 150% from the prior-year period. Second-quarter orders increased 191% year over year, while the company’s quarterly book-to-bill ratio was approximately 2.8. On a trailing 12-month basis, book-to-bill exceeded 2. → Quantum Earnings Week: Winners and Losers Are Finally Emerging Chief Financial Officer Peter Johansson said backlog reached $1.82 billion at June 30, up 164% from the prior year and 76% sequentially from the prior quarterly record of $1.035 billion. Backlog has increased for 12 consecutive quarters, according to the company. The company said power-generation-related projects accounted for approximately half of its second-quarter-ending backlog. Industrial air and water projects represented roughly 25%, with the remainder tied to natural gas and natural gas liquids infrastructure, hydrocarbon and chemical processing, and other energy-sector activity. → Take-Two’s Q1 Results Leave GTA 6 Bulls Stuck in the Fog of War Gleason said CECO’s sales pipeline now exceeds $8.5 billion, compared with about $1.5 billion in 2021. He cited demand across power generation, semiconductor and electronics production, natural gas processing and infrastructure, industrial water, industrial reshoring projects and data centers. Management emphasized that its backlog is supported by binding purchase orders and customer project commitments. Gleason said the company’s orders typically arrive after customers have progressed projects further through development, often with permits in place and authorization to begin work. Vice President of Corporate Integration and Investor Relations Marcio Pinto said CECO had captured approximately $13 million in annualized net adjusted EBITDA savings during the first 60 days following the Thermon acquisition. That represents roughly one-third of CECO’s $40 million synergy target. The early savings were driven primarily by reductions in public-company costs, including headcount, board and public-company-related services, along with additional actions across facilities and departments. CECO expects about $5 million of the annualized savings captured so far to be realized in 2026 adjusted EBITDA. On a total cost-synergy basis, including stock compensation and other items not generally included in CECO’s adjusted EBITDA, the company said it captured about $19 million in annualized savings. It incurred about $21 million in year-to-date costs to achieve those savings, mainly related to change-in-control provisions and accelerated equity vesting for former Thermon officers. CECO expects to capture $17 million to $20 million in annualized net adjusted EBITDA savings by the first anniversary of the transaction, or about 45% to 50% of the total target. Pinto said the original $40 million synergy objective “remains firmly intact.” The companies have also identified more than 100 commercial opportunities across the combined portfolio. Gleason said more than $500,000 of Thermon products had already been included in CECO power-generation projects. He characterized the amount as a collection of opportunities across projects rather than one contract. Management said Thermon’s thermal-management products can be used in CECO projects for applications including heat tracing, maintaining ammonia at appropriate temperatures in selective catalytic reduction systems, and helping protect components from freezing or corrosion. The company also cited data-center opportunities for Thermon’s liquid load-bank and heat-tracing products. CECO’s adjusted gross margin rose sequentially by 264 basis points to 33.7% in the second quarter. Johansson said management expects higher gross margins in the second half, supported by larger projects, higher-margin backlog, operational-improvement efforts and Thermon’s margin profile. Sales engineering and general and administrative expense was 22.4% of revenue, down about 400 basis points year over year. Gleason said roughly two-thirds of that improvement resulted from expenses being held flat or declining relative to revenue growth. He said CECO does not anticipate the expense rate increasing, apart from its ongoing migration to a single ERP platform. Adjusted free cash flow was approximately $53 million in the second quarter, or more than 132% of adjusted EBITDA. Year-to-date adjusted free cash flow was about $38 million, compared with a year-over-year increase of approximately $56 million, according to the company. Gross debt rose approximately $523 million from year-end following financing for the Thermon acquisition and related costs. Net debt increased $495 million, and CECO ended the quarter with a leverage ratio of 2.7 times trailing-12-month bank EBITDA. The company said it paid down an additional $39.5 million of gross debt by July 31, reducing gross debt to $692 million and moving toward its targeted leverage range of 2.0 to 2.5 times. CECO raised its full-year 2026 outlook, projecting revenue of $1.3 billion to $1.375 billion, increasing the low end of its prior range by $25 million. The company now expects adjusted EBITDA of $200 million to $225 million, lifting the low end by $5 million. The outlook includes approximately $5 million of realized Thermon cost synergies during 2026. CECO continues to expect mid-teens adjusted EBITDA margins, adjusted free cash flow conversion of at least 55% of adjusted EBITDA, and full-year orders to exceed $2 billion. On a pro forma calendar-year basis that includes Thermon for the full year, CECO estimated revenue of approximately $1.5 billion to $1.6 billion and adjusted EBITDA of approximately $255 million to $280 million. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "CECO Environmental Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Finalization of CECO and Thermon Combined Q2 Financials Requires Additional Time ADDISON, Texas, Aug. 05, 2026 (GLOBE NEWSWIRE) -- CECO Environmental Corp. (Nasdaq: CECO), a leading environmentally focused, diversified industrial company whose solutions protect people, the environment and industrial equipment, today announced that it has rescheduled its second quarter 2026 earnings call from August 6, 2026, to August 10, 2026. The Company anticipates it will need additional time to complete its financial reporting and review processes following the acquisition of Thermon Group Holdings, Inc., which closed on June 1, 2026. The second quarter represents CECO’s first reporting period as a combined company. “We look forward to reporting our second quarter earnings on Monday, August 10th. The integration with Thermon continues to go very well as we remain on-or-ahead of schedule with synergy capture. Additionally, our growth programs and markets remain strong. The need for additional time to complete our financial consolidation and review process dictated the decision to push back our earnings release by a few days to ensure accuracy,” commented Todd Gleason, Chief Executive Officer. CECO expects to release its second quarter 2026 financial results premarket on Monday, August 10, 2026, and will host an earnings conference call that morning starting at 8:30 a.m. Eastern Time. The Company continues to expect to timely file its Quarterly Report on Form 10-Q. The Company’s financial results and presentation will be posted on its website at www.cecoenviro.com. The details for the webcast are: When: Monday, August 10 at 8:30 a.m. EDT Where: https://edge.media-server.com/mmc/p/zdq77qcb How: Live over the internet – Simply log on to the web at the address above Participant Dial-in:   USA - Toll-Free (800) 715-9871USA / International Toll +1 (646) 307-1963Passcode: 1634646 A replay to the conference call will be available on the Company's website shortly after the live webcast has concluded. ABOUT CECO ENVIRONMENTALCECO Environmental is a leading environmentally focused, diversified industrial company, serving a broad landscape of industrial air, industrial water, and energy transition markets globally through its key business segments: Engineered Systems and Industrial Process Solutions. Providing innovative technology and application expertise, CECO helps companies grow their business with safe, clean, and more efficient solutions that help protect people, the environment and industrial equipment. In regions around the world, CECO works to improve air quality, optimize the energy value chain, and provide custom solutions for applications in power generation, petrochemical processing, refining, midstream gas transport and treatment, electric vehicle and battery production, metals and mineral processing, polysilicon production, battery recycling, beverage can production, and produced and oily water/wastewater treatment along with a wide range of other industrial applications. CECO is listed on Nasdaq under the ticker symbol "CECO." Incorporated in 1966, CECO’s global headquarters is in Addison, Texas. For more information, please visit www.cecoenviro.com. CECO Environmental Investor Contact:Marcio PintoVice President – Integration and Investor [email protected]         Steven Hooser and Jean Marie YoungThree Part [email protected]