• Record Bookings: Approximately $228 million, up 57% year over year.
• Backlog: $602 million, up 55% year over year and $60 million higher sequentially.
• Revenue: $177 million for the quarter, up 40% year over year.
• Adjusted EBITDA: $14 million, with gross margins in the mid-thirties.
• Adjusted EPS: $0.10, above consensus.
• Sales Pipeline: Exceeds $5 billion, with significant opportunities over $50 million each.
• Gross Margin: 35.2% for the quarter, within the 34%-36% range.
• Free Cash Flow: Impacted by higher integration and M&A expenses, with capital expenditures at $3.4 million.
• Net Debt: Approximately $190 million at quarter end, with plans to reduce further.
• Full Year 2025 Guidance: Revenue between $700 million to $750 million, adjusted EBITDA between $90 million to $100 million.

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

Release Date: April 29, 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 record bookings of approximately $228 million in Q1 2025, marking a 57% increase year over year.
• The company's sales pipeline has grown to over $5 billion, indicating strong future potential orders.
• CECO Environmental Corp (NASDAQ:CECO) maintained its full-year 2025 guidance, reflecting confidence in its business outlook.
• The company reported a record backlog of $602 million, up 55% year over year, setting a strong foundation for future growth.
• Recent acquisitions, including Profire Energy, have contributed significantly to revenue growth and integration synergies are being realized.

Negative Points

• Adjusted EBITDA margins were slightly below expectations due to higher selling, engineering, and project execution expenses.
• The company faces potential tariff-related inflation and costs, with estimated gross tariff exposure between $3 million to $10 million.
• CECO Environmental Corp (NASDAQ:CECO) experienced higher interest expenses and a higher share count, impacting adjusted EPS.
• There is uncertainty around the impact of tariffs and inflation on future supply chain costs and overall economic conditions.
• The company is in the process of integrating recent acquisitions, which may pose challenges in the short term.

Q & A Highlights

Q: How does the power-related pipeline look, and what is the timing and visibility for these projects? A: Todd Gleason, CEO, stated that the power-related pipeline remains strong, with over a billion dollars in potential projects. This includes emissions, thermal acoustics, gas infrastructure, nuclear, and alternative power sources like wind and solar. While no large power projects were booked in Q1, several awards are expected in the coming quarters.

Q: How does CECO manage cost changes and tariff impacts after booking a contract? A: Todd Gleason explained that most contracts allow for the pass-through of tariff-related cost increases. CECO works with suppliers to revisit quotes and ensure visibility. The company learned from past supply chain challenges and feels confident in managing these risks, although inflation in constant flow business remains uncertain.

Q: Can you discuss the mix of the $228 million in orders and any impact from upcoming tariffs? A: Todd Gleason noted that the orders were balanced across platforms, with no significant pull-forward due to tariffs. Strong areas included gas infrastructure and nuclear. The orders reflect steady demand across sectors, with no large power or water projects but many medium-sized ones.

Q: What are the areas of investment for CECO in 2025 and beyond, given the backlog and power super cycle? A: Peter Johansson, CFO, highlighted that the largest investment is in IT infrastructure, specifically moving to a single ERP system, Microsoft D365. Traditional capital expenditures remain modest, with some spending expected for capacity expansion and process automation in Houston.

Q: How does defense spending impact CECO's business? A: Peter Johansson mentioned that while CECO is not a direct defense contractor, they supply technology to the navy and expect benefits from increased factory construction for armament production. European investments in power infrastructure, driven by geopolitical factors, also present opportunities for CECO.

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