CECO ENVIRONMENTAL (CECO)·Q4 2025 Earnings Summary

CECO Environmental Posts Record Orders, Raises 2026 Outlook Amid Thermon Merger

February 24, 2026 · by Fintool AI Agent

CECO Environmental (NASDAQ: CECO) delivered record quarterly orders of $329 million and full-year orders surpassing $1 billion for the first time in company history. Revenue beat consensus by 4.5%, though adjusted EPS missed expectations. The company raised 2026 guidance and announced a transformative $2.2 billion merger with Thermon Group Holdings.

Did CECO Beat Earnings?

Revenue beat, EPS missed, EBITDA margin hit a record.

The revenue beat was driven by a large domestic gas-fired power generation project worth approximately $135 million—a company record in project value. Adjusted EBITDA margin of 13.9% represents a 180bps improvement YoY and a quarterly record. Organic revenue growth in Q4 was over 25%.

The EPS miss relative to consensus appears driven by higher operating expenses as the company scaled to meet demand, along with acquisition and integration expenses of $1.1 million in the quarter.

What Did Management Guide?

2026 guidance raised significantly—excluding Thermon deal impact.

Q1 2026 is already off to a record start (as of Feb 24):

• Orders QTD: $270M+ — well on pace for another record quarter
• Two large natural gas power generation orders exceeding $175M in aggregate already secured
• Numerous similarly sized and larger opportunities in current pipeline

Key guidance drivers:

• Record backlog of $793 million (+47% YoY)
• Pipeline of ~$6.5 billion (+45% YoY)
• Continued momentum in power generation markets
• Strong demand in data centers, semiconductor, and reshoring activities

"We entered 2026 with a record sales pipeline, our largest ever backlog and tremendous bookings momentum. We expect our largest markets will remain strong and we have confidence in our proven operating model that we will execute at a high level." — Todd Gleason, CEO

2026+ margin initiatives:

• Sustained execution and sourcing focus
• Price and cost actions to mitigate inflation
• Focus on EBITDA margin expansion
• Wave 1 of "80/20" simplification improvements

The updated outlook excludes the impact of the proposed Thermon merger, which is expected to close mid-2026.

What Changed From Last Quarter?

Q4 marked a significant acceleration from Q3's seasonal softness.

The sequential improvement was driven by:

1. Gross margin recovery from Q3's seasonal headwinds
2. Record project win — $135M gas-fired power generation project
3. Fifth consecutive quarter with orders above $200 million

Where Is Order Momentum Coming From?

Strength across all three segments:

Book-to-bill ratios continue to expand: 1.5x in Q4 2025, up from 1.4x in 1H 2025 and well above historical 1.1-1.2x range.

Power Generation Pipeline Depth:

Management disclosed a $1-2 billion power generation pipeline of opportunities expected to convert to bookings over the next 12-18 months. Key dynamics:

• CECO is one of only 3 companies globally that can deliver end-to-end emissions treatment for gas turbines and large gas engine fleets
• Emissions treatment solutions accelerate permitting—critical for utilities and OEMs
• Pipeline extends into 2028-2030 as turbine manufacturers are sold out through 2028

"It feels like POs are falling from the sky... The demand is exceeding supply in all categories of equipment, and there's no shortage of consumer for this equipment." — Peter Johansson, CFO

Thermon Merger: What You Need to Know

CECO announced a strategic transaction to combine with Thermon Group Holdings, a global leader in industrial process heating solutions.

Deal Terms:

Synergies:

• Target: ~$40 million annualized run rate by Year 3
• Bucket 1: Public company redundancies, SG&A overlap, efficiency savings
• Bucket 2: Operational efficiencies, footprint rationalization, supply chain leverage
• Bucket 3: Commercial synergies (not yet modeled—upside opportunity)

Thermon at a Glance:

Revenue Mix: Heat tracing ~50%, Heating systems ~35%, Transport/digital solutions ~15%

Pro Forma Combined Company:

Strategic Rationale:

• Thermon's short-cycle model (85% OpEx) balances CECO's longer-cycle project business
• Combined addressable market >$30 billion across electrification, energy transition, data centers, water megatrends
• Thermon typically specified late in projects; CECO specified early—extends customer touchpoints
• Accretive in Year 1 even before synergies

"We both have a business and culture grounded in disciplined execution and innovative thinking... Two winning Texas-headquartered companies, two great operating organizations with shared values." — Todd Gleason, CEO

Q&A Highlights

On Industrial Water Opportunity:

• Largest and most active pipeline ever for industrial water treatment and produced water
• Expects to announce projects of $10-50 million each throughout 2026, potentially each quarter
• Focus on international markets: Middle East, energy & heavy industry applications
• Solution set designed for large fixed installations (not mobile Permian-style operations)

On Thermon Cross-Selling Potential:

• Both companies share many customers across energy and industrial markets
• Thermon's GenesisTM Network controls platform is a key opportunity CECO will evaluate
• Thermon specified late in projects, CECO early—extends customer engagement window
• Commercial synergies not yet modeled but "definitely a low-hanging fruit conversation"

On Revenue Seasonality for 2026:

• Q1 typically smallest quarter, Q2 ramps, Q4 is largest
• Second half expected to account for at least 55% of full-year revenue
• Backlog is "tightest ever" with minimal timing risk—projects are funded with firm deadlines

On Organic Growth:

• Q4 2025 organic revenue growth: ~26% (a little over 25%)
• Full-year 2025 organic growth: 27%
• 2026 standalone guidance of 20%+ growth is 100% organic (no M&A assumed)

Full Year 2025 Highlights

Multiple financial records including first-ever $1B+ in orders.

Organic revenue growth of 27% excludes $130.8M in acquisition contribution and accounts for a $24.5M headwind from divestitures.

"We delivered another year of outstanding growth with multiple financial records, highlighted by order bookings of approximately $1.1 billion, up 59% year over year. This performance demonstrates the strength of our opportunity pipeline, which now totals approximately $6.5 billion, an increase of 45 percent from year-end 2024." — Todd Gleason, CEO

How Did the Stock React?

The modest pullback (-1.4%) on earnings day likely reflects:

• EPS miss vs. consensus despite revenue beat
• Stock already near all-time highs
• Market digesting Thermon merger implications

The aftermarket uptick to $77.99 suggests investors view the raised guidance and strategic transaction favorably.

What To Watch Going Forward

Key catalysts:

1. Thermon merger progress — Shareholder votes, regulatory approvals, expected mid-2026 close
2. Q1 2026 execution — Can CECO maintain momentum with $793M backlog?
3. Power generation demand — Continued strength in gas-fired projects
4. Data center/AI infrastructure — Growing end-market exposure

Risks:

• Integration execution on Thermon merger
• Project timing and backlog conversion
• Supply chain and tariff exposure

Balance Sheet Snapshot

Leverage improved to 2.2x Net Debt / TTM Bank EBITDA, down from 2.6x a year ago—well below the company's covenant cap. The company maintains a manageable debt profile with total debt of $212 million against $323 million in equity. The expanded $700 million credit facility provides flexibility for growth initiatives and potential acquisitions.

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Related Links:

• CECO Company Profile
• Q4 2025 Earnings Call Transcript
• Q3 2025 Earnings Review