• Full Year Revenue: $558 million, a record year with a 2% year-over-year growth.
• Adjusted EBITDA: $62.8 million, a 9% increase from the prior year, with margins expanding by approximately 70 basis points.
• Gross Margin: Expanded by 500 basis points over two years, with a gross profit dollar growth of approximately 53%.
• Q4 Orders: $219 million, a 71% increase year-over-year, with a book-to-bill ratio of 1.4.
• Full Year Orders: $667 million, up mid-teens year-over-year.
• Backlog: $541 million, a 46% increase from the previous year-end.
• Free Cash Flow: Outflow of $4 million in Q4 due to working capital timing, with delayed cash receipts of approximately $15 million.
• Net Debt: Approximately $180 million, with leverage at the end of the period reaching approximately 3 times bank EBITDA.
• 2025 Revenue Outlook: $700 million to $750 million, a 30% growth rate year-over-year at the midpoint.
• 2025 Adjusted EBITDA Outlook: $90 million to $100 million, a 50% increase versus 2024 at the midpoint.
• 2025 Free Cash Flow Guidance: 60% to 75% of full-year adjusted EBITDA.

• Warning! GuruFocus has detected 5 Warning Signs with CECO.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CECO Environmental Corp (NASDAQ:CECO) achieved a record full-year revenue of $558 million in 2024, despite only a 2% year-over-year growth.
• The company reported a record adjusted EBITDA of $62.8 million for 2024, marking a 9% increase from the previous year.
• CECO Environmental Corp (NASDAQ:CECO) set new records for both quarterly and full-year orders, with Q4 orders reaching $219 million, a 71% increase year-over-year.
• The backlog at the end of 2024 was $541 million, a 46% increase from the previous year, providing strong visibility into 2025 revenue.
• The company is well-positioned to benefit from a multi-year capital investment super cycle in the power generation market and other industrial sectors.

Negative Points

• CECO Environmental Corp (NASDAQ:CECO) experienced customer-driven project delays throughout 2024, impacting revenue recognition.
• Free cash flow was negatively impacted by approximately $30 million due to working capital timing and delayed customer payments.
• The company fell short of its revenue expectations for the fourth quarter of 2024, despite a sequential increase.
• Adjusted EBITDA margin for Q4 2024 was down 54 basis points year-over-year due to timing of investments and delayed revenue.
• There is uncertainty regarding potential impacts from tariffs and other legislative items, which could affect future financial performance.

Q & A Highlights

Q: Can you provide insights into the order pipeline momentum for 2025 and where you're seeing strength? A: The momentum seen in the third and fourth quarter orders continues to be strong, particularly in power generation markets and industrial infrastructure. As of mid-Q1 2025, the orders market remains vibrant, and we expect this trend to continue given the advanced stages of our pipeline discussions. - Todd Gleason, CEO

Q: How is the integration of Profire Energy progressing, and what growth opportunities do you see? A: The integration of Profire Energy is progressing well, with significant opportunities identified in energy markets and industrial sectors. The acquisition is the largest since I joined CECO, and we are optimistic about doubling its size in three years. The integration is efficient due to Profire's established processes. - Todd Gleason, CEO

Q: Can you discuss the visibility provided by the backlog entering 2025 and how it compares to past years? A: The backlog entering 2025 is 40% higher than the previous year, providing strong visibility and confidence in achieving a 30% top-line revenue projection. We have better visibility into shorter, mid, and longer cycle projects, which gives us confidence in our 2025 guidance. - Todd Gleason, CEO

Q: What are your expectations for margin progress in 2025, and how are you addressing potential tariff impacts? A: We expect gross margins to continue expanding, albeit at a moderated rate, with accelerated improvement at the EBITDA level due to functional productivity and scale benefits. Tariff impacts are uncertain, but we are prepared to be nimble and flexible in response. - Peter Johansson, CFO

Q: How are you managing the transition to larger, more complex projects in your backlog? A: We are improving our forecasting tools and processes, including consolidating businesses into a standard ERP and standardizing revenue recognition models. While we have experience with large projects, we are learning from past dynamics to better manage project-based revenue models. - Todd Gleason, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.