CECO Environmental — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the third quarter of 2026 was $404.4 million, a 105% increase compared to the prior-year period.
• GAAP gross profit was $130.1 million (32.2% margin), up 101% year-over-year; non-GAAP gross profit was $146.8 million (36.3% margin), up 127%.
• GAAP net loss was $(2.0) million, compared to net income of $1.5 million in the prior year; non-GAAP net income was $34.3 million, up 269% from $9.3 million.
• GAAP diluted EPS was $(0.03); non-GAAP diluted EPS was $0.60.
• Adjusted EBITDA was $70.1 million (17.3% margin), up 202% from $23.2 million in the prior year.
• Free cash flow was $148.4 million, a $137.3 million improvement; adjusted free cash flow was $154.4 million, a $135.4 million improvement.
• Leverage ratio was 2.0X, a reduction of 0.7X from the closing date of the Thermon acquisition.
• Nine-month revenue was $895.3 million; nine-month GAAP net loss was $(37.2) million compared to net income of $47.0 million in the prior year.
• Nine-month Adjusted EBITDA was $130.6 million, up 116% from $60.5 million.

Guidance and Future Outlook:

• Updated 2026 full-year orders guidance to exceed $2.5 billion, raised from a previous outlook of at least $2.0 billion.
• Updated 2026 full-year free cash flow conversion guidance to approximately 100% of Adjusted EBITDA, raised from at least 55%.
• Maintained 2026 full-year revenue guidance between $1.300 billion and $1.375 billion.
• Maintained 2026 full-year Adjusted EBITDA guidance between $200 million and $225 million.
• Introduced 2027 full-year revenue outlook between $2.1 billion and $2.3 billion, representing over 60% growth at the midpoint versus 2026.
• Introduced 2027 full-year Adjusted EBITDA outlook between $475 million and $525 million, representing over 130% growth at the midpoint versus 2026.
• Expects 2027 full-year free cash flow to be between 50% and 60% of Adjusted EBITDA.
• Management cites a $2.2 billion backlog (vast majority permitted and underway) and a $9 billion sales pipeline as drivers for future confidence.

Business Segments and Product Lines:

• The quarter marked the second quarter as a combined company following the June 1, 2026 acquisition of Thermon.
• Orders reached $777.6 million, up 234% year-over-year; backlog reached $2,193.5 million, up 205%.
• Key integration initiatives for Thermon have been substantially completed, with the company ahead of schedule on cost and revenue synergies.
• The company serves industrial air, industrial water, and energy transition markets, including power generation, hydrocarbon processing, EV production, and semiconductor manufacturing.
• Demand remains robust across environmental, industrial, and thermal solutions, with projects in the backlog largely on schedule.

Market and Competitive Landscape:

• CECO operates in attractive and growing niche markets across resilient industrial end markets.
• The company reports strong momentum driven by growth across diverse end markets and increasing customer demand.
• Management notes that while U.S. election developments created equity market volatility, the company remains focused on factors within its control.
• The company emphasizes that demand for its solutions often represents funded, active projects rather than speculative demand.

Risks and Challenges:

• Risks include the ability to successfully integrate the Thermon business and retain customers, key personnel, and supplier relationships.
• Potential for integration problems, failure to achieve anticipated synergies, or delays in realizing synergies.
• Dependence on fixed-price contracts and risks associated with actual costs exceeding estimates.
• Concentration of orders and backlog in large-scale power generation projects.
• Risks related to supply chain challenges, contract delays, or cancellations due to customer considerations or geopolitical conflicts (e.g., Middle East).
• Substantial debt incurred in connection with the Thermon acquisition and the ability to service, repay, or refinance that debt.
• Potential for fluctuations in raw material prices, tariffs, inflationary pressures, and foreign currency exchange rates.
• Risks associated with material weaknesses in internal controls and the ability to remediate them.

Management Commentary and Tone:

• CEO Todd Gleason described the results as a reflection of leadership in niche markets and the strength of the portfolio.
• Management expressed confidence in the strategy, citing the backlog visibility, sales pipeline growth, and productivity initiatives.
• Gleason noted the combination with Thermon is an "excellent cultural fit" and that the company expects to deliver significant long-term value creation.
• Management highlighted a proven track record of meeting or exceeding outlook since Q3 2021, incorporating conservative assumptions on inflation and market dynamics.
• The tone is confident and optimistic regarding 2027 performance and the ability to deliver double-digit growth and margin expansion.

Other Key Points:

• The company acquired Thermon Group Holdings, Inc. on June 1, 2026.
• The company transferred its primary listing to the Texas Stock Exchange (TXSE) under the ticker symbol "CECO."
• Acquisition and integration expenses for the nine months ended September 30, 2026, were $68.2 million.
• The company sold the Global Pump Solutions business in the prior year, generating a gain of $63.7 million in the nine-month period of 2025.
• Cash paid for acquisitions, net of cash acquired, was $437.971 million for the nine months ended September 30, 2026.
• Borrowings on long-term debt were $235 million for the nine months ended September 30, 2026.
• A conference call was scheduled for November 9, 2026, at 8:30 a.m. ET to discuss results.