Q2 2026 CECO Environmental Corp Earnings Call

August 10, 2026

Speaker #1: Hello, and thank you for standing by. My name is Glyza, and I will be your conference operator today. At this time, I would like to welcome everyone to the CECO Environmental Q2 2026 earnings call.

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. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask questions during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. 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.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you have if you would like to ask questions during this time, simply press * followed by the number 1 on your telephone keypad.

Operator: If you would like to ask questions during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. 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.

Speaker #1: If you would like to withdraw your question, press *1 again. Thank you. I would now like to turn the call over to Marcio Pinto, Vice President of Corporate Integration and Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you, Glyza. And thank you for joining us on the CECO ENVIRONMENTAL Q2 2026 earnings call. On the call with me today are Todd Gleason, Chairman and Chief Executive Officer; and Peter Johansson, Chief Financial Officer.

Marcio Pinto: Thank you, Glaiza, and thank you for joining us on the CECO Environmental Q2 2026 earnings call. On the call with me today are Todd Gleason, Chairman and Chief Executive Officer, and Peter Johansson, Chief Financial Officer. Our Q2 reported results include one full month of Thermon financial performance following the 1 June 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.

Speaker #2: Our second quarter reported results include one full month of thermal and financial performance, following the June 1 closing of the acquisition. Where appropriate today, we will distinguish between reported results and pro forma information.

Speaker #2: 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.

Marcio Pinto: 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.

Speaker #2: 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.

Speaker #2: 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.

Marcio Pinto: As always, we will leave time at the end of the call for analyst questions. With that, I will turn the call over to Todd.

Speaker #3: Thanks, Marcio, and good day, everyone. Before we begin, I want to thank Team CECO, including our new thermal colleagues, for delivering tremendous value to our customers and our teams which has enabled us to deliver outstanding quarter.

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.

Speaker #3: Let's review our Q2 performance integration activities, our full-year outlook, and our view of markets and opportunities. Please turn to slide number 3. Simply put, this was a record-setting quarter across the board.

Speaker #3: 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 was approximately $40 million.

Todd Gleason: 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.

Speaker #3: 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.

Speaker #3: We expect EBITDA margins to rise in coming quarters with the full positive impact of thermal, our integration synergies, and ongoing double-digit top-line growth. Additionally, we expect this high-performance growth and profitability to be largely sustainable.

Todd Gleason: 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 two, and we remain bullish on the order environment as we enter the H2. We have delivered double-digit revenue and earnings growth for many quarters in a row. 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.

Speaker #3: 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.

Speaker #3: 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.

Todd Gleason: We have delivered double-digit revenue and earnings growth for many quarters in a row. 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.

Speaker #3: The thermal 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.

Speaker #3: 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.

Todd Gleason: 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. Marcio Pinto, who is leading our integration program, will give additional color on this in a minute. Given our strong H1 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. Please turn to slide number 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.

Speaker #3: Marcio Pinto, who is leading our integration program, and I will give additional color on this in a minute. Given our strong first-half execution, record backlog, and accelerating order momentum, we are raising our full-year consolidated 2026 outlook.

Speaker #3: I will come back to guidance towards the end of the call. Now, please turn to slide number 4. This slide provides a good illustration of the consistent high-performance growth engine we have built.

Todd Gleason: Please turn to slide number 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.

Speaker #3: 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.

Speaker #3: First-quarter 2026 orders, as shown on the 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.

Todd Gleason: Q1 2026 orders, as shown on the slide, were $449 million, up 97% year over year. Q2 orders further accelerated to $799 million, up 191% year over year. For H1 2026, we have booked approximately $1.25 billion of new orders, up approximately 150% versus H1 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. As I already mentioned, but it is worth repeating, our trailing 12-month book-to-bill is over two. 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. With the addition of the thermal solutions to the portfolio, exciting opportunities within data centers.

Speaker #3: 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.

Todd Gleason: Our 2026 performance has driven backlog to more than $1.8 billion, up 164% over last year. As I already mentioned, but it is worth repeating, our trailing 12-month book-to-bill is over two. 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. With the addition of the thermal solutions to the portfolio, exciting opportunities within data centers.

Speaker #3: 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. With the addition of Thermal Solutions to the portfolio, we are also seeing exciting opportunities within data centers.

Speaker #3: 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.

Todd Gleason: 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 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?

Speaker #3: 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.

Todd Gleason: 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 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?

Speaker #3: It is also increasingly 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.

Speaker #3: Marcio and I will now review some additional materials related to the thermal integration, and then we will hand it over to Peter to cover additional insights on our financials.

Speaker #3: Marcio?

Speaker #2: Thank you, Todd. Please turn to slide 6. We closed the thermal acquisition on June 1, and I am very pleased with the engagement our teams have demonstrated in the first two months as a combined company.

Marcio Pinto: Thank you, Todd. Please turn to slide 6. We closed the Thermon acquisition on 1 June, and I am very pleased with the engagement our teams have demonstrated in the first two 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 a third of our $40 million target.

Speaker #2: All major workstreams spanning from corporate G&A to operations and commercial areas are active, and the teams are moving quickly from planning into execution mode.

Speaker #2: 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.

Marcio Pinto: 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 a third of our $40 million target.

Speaker #2: As Todd mentioned in our opening chart, in the first 60 days, we have captured approximately 13 million dollars of annualized net adjusted EBITDA savings.

Speaker #2: Already representing roughly a third 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.

Marcio Pinto: 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.

Speaker #2: We expect approximately $5 million of the annualized savings captured thus far to be realized in our 2026 adjusted EBITDA results, and these are also included in our current outlook.

Speaker #2: On a total cost synergy basis, we have captured about $19 million of annualized savings when adding back stock compensation and other items that are generally not included in CECO's adjusted EBITDA.

Marcio Pinto: 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.

Speaker #2: 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 thermal officers.

Speaker #2: Looking forward, we expect to have approximately $17 to $20 million of annualized net adjusted EBITDA savings captured by year 1 of the transaction. This 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 Thermal creates opportunity.

Marcio Pinto: 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. Based on the current pace of execution, we have increasing confidence in our ability to deliver it. With that, I'll turn it back to Todd to discuss the commercial side of the combination. Todd?

Speaker #2: 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 dollars in synergies remains firmly intact.

Marcio Pinto: 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. Based on the current pace of execution, we have increasing confidence in our ability to deliver it. With that, I'll turn it back to Todd to discuss the commercial side of the combination. Todd?

Speaker #2: 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.

Speaker #2: Todd?

Speaker #3: Thanks, Marcio. With a very well-organized integration process, thanks to Marcio and our Integration Management Office leaders and functional leaders. Thanks to each of them.

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 number 7. As we covered on our 9 June 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, an 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.

Speaker #3: Please turn to slide number 7. As we covered on our June 9th investor update call, which we held shortly after closing the acquisition of Thermal, we have a real opportunity to drive between 1 to 2 percentage points of additional organic growth across the Thermal portfolio of solutions.

Speaker #3: Approximately two months later, I feel even stronger about that statement. The combination provides more scale, a broader portfolio of solutions, an expanded international and customer footprint, additional product development, and an expanded global sourcing network.

Todd Gleason: The combination provides more scale, a broader portfolio of solutions, an 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.

Speaker #3: CECO brings niche leadership positions and environmental solutions for power generation and industrial water, food processing, LNG and gas infrastructure, semiconductor and electronics production, and materials processing markets.

Speaker #3: While thermal 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.

Todd Gleason: 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.

Speaker #3: And we are already experiencing early wins. For example, more than $500,000 worth of thermal solutions have already been incorporated into CECO Power Generation projects.

Speaker #3: 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.

Todd Gleason: 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.

Speaker #3: 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.

Speaker #3: We'll now hand it over to Peter who will go into more detail on our financial results. Peter?

Todd Gleason: We'll now hand it over to Peter, who will go into more detail on our financial results. Peter?

Speaker #4: Thank you, Todd. Good day, everyone. Thank you for joining Todd, Marcio, and me 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.

Peter Johansson: Thank you, Todd. Good day, everyone. Thank you for joining Todd, Marcio, and I for the CECO Q2 2026 earnings call. Please turn now to slide 9 for more color on CECO's financial results for the Q2. CECO followed up a good Q1 with a very good Q2, continuing the momentum we have built over the last five 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 Q1 of $1.035 billion. Backlog has now increased for 12 consecutive quarters, accelerating over the last seven quarters, each of which having delivered more than $200 million of orders. Q2 orders were $799 million, a new company record, and an increase of 191% over the prior year period.

Speaker #4: CECO followed up a good first quarter with a very good second quarter, continuing the momentum we have built over the last five quarters. We concluded the quarter with a record backlog of $1.82 billion.

Peter Johansson: 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 Q1 of $1.035 billion. Backlog has now increased for 12 consecutive quarters, accelerating over the last seven quarters, each of which having delivered more than $200 million of orders. Q2 orders were $799 million, a new company record, and an increase of 191% over the prior year period.

Speaker #4: Up 164 percent versus prior year, and up 76 percent sequentially from our previous high set at the end of the first quarter, of 1.035 billion dollars.

Speaker #4: Backlog has now increased for 12 consecutive quarters, accelerating over the last seven quarters, each of which has delivered more than $200 million of orders.

Speaker #4: Second quarter orders were $799 million, a new company record and an increase of 191 percent 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.

Peter Johansson: 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 two quarters of 2026, bookings have exceeded the full year 2025 bookings by 17%, a healthy $184 million increase. Revenue in the Q2 was $285 million, an increase of 54% year over year, inclusive of Thermon's June 2026 results. CECO standalone 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.

Speaker #4: 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 percent increase over the prior trailing 12-month period, with a book-to-bill ratio of 2.0.

Speaker #4: After the first two quarters of 2026, bookings have exceeded the full-year 2025 bookings by 17 percent, a healthy $184 million increase. Revenue in the second quarter was $285 million, an increase of 54 percent year over year, inclusive of Thermal's June 2026 results.

Peter Johansson: After the first two quarters of 2026, bookings have exceeded the full year 2025 bookings by 17%, a healthy $184 million increase. Revenue in the Q2 was $285 million, an increase of 54% year over year, inclusive of Thermon's June 2026 results. CECO standalone 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.

Speaker #4: CECO standalone 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.

Speaker #4: 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 exits the engineering phase.

Peter Johansson: We expect revenue growth to accelerate in the H2 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.

Speaker #4: 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 percent, or $247 million, over the prior 12-month period, reflecting strong backlog conversion.

Speaker #4: 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 percent and 30 percent, respectively, on higher volume.

Peter Johansson: 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.

Speaker #4: Sequentially, margins increased 264 basis points to 33.7 percent, approximately in line with the company's expectations of adjusted gross profit margin performance noted in our Q1 earnings call.

Speaker #4: 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 thermal margin profile.

Peter Johansson: We expect margins to trend higher in H2 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%. 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.

Speaker #4: 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 the prior year—delivering a margin of approximately 14.1%, a 154 basis point improvement over the prior year, and our first quarter with mid-teens EBITDA margins, a result we expect to consistently exceed in future periods.

Peter Johansson: 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.

Speaker #4: Over the trailing 12-month period, adjusted EBITDA was 113.4 million dollars, and a margin of 12.6 percent, representing an increase of nearly 180 basis points.

Peter Johansson: 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 Q2 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 standalone CECO and a high-teens margin for the consolidated business.

Speaker #4: 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.

Speaker #4: 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.

Peter Johansson: Adjusted EBITDA in Q2 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 standalone CECO and a high-teens margin for the consolidated business.

Speaker #4: Margins in the quarter and trailing 12 months were 14.1 percent and 12.6 percent, 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 standalone CECO and a high teens margin for the consolidated business.

Speaker #4: Our sales, engineering, and G&A spending in the quarter was 22.4 percent 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.

Peter Johansson: 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 Q3 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 Q3 and beyond from full quarters of Thermon revenue and income in the consolidated results.

Speaker #4: 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 and 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.

Peter Johansson: 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 Q3 and beyond from full quarters of Thermon revenue and income in the consolidated results.

Speaker #4: In addition, the consolidated margin profile will also benefit in the third quarter and beyond from full quarters of thermal revenue and income in the consolidated results.

Speaker #4: 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.

Peter Johansson: 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 2.8 times, resulting in another record quarter-ending backlog result. Book-to-bill for H1 2026 achieved 2.6 times, and our strong backlog over the TTM basis, book-to-bill is now 2.2. Backlog, which reflects future sales, has now increased approximately 8.5 times 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 Q3.

Speaker #4: With a book-to-bill in the quarter of approximately 2.8 times, resulting in another record quarter-ending backlog result. Book-to-bill for the first half of 2026 achieved 2.6 times, and our strong backlog over the TTM basis is now 2 times.

Speaker #4: Book-to-bill is now 2.2. Backlog, which reflects future sales, has now increased approximately 8.5 times 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 percent organic top line revenue growth for 2026.

Peter Johansson: 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 Q3.

Speaker #4: 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.

Speaker #4: Power generation related projects account for approximately one half of our second quarter ending backlog, with approximately 25 percent coming from industrial air and water projects, and the remaining 25 percent 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.

Peter Johansson: Power generation-related projects account for approximately one-half of our Q2 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. Please turn with me to slide 12 for an update on cash flow and our current debt position. Q2 adjusted free cash flow for CECO rebounded strongly after the Q1 cash outflows. In the Q2, 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.

Speaker #4: 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.

Peter Johansson: Please turn with me to slide 12 for an update on cash flow and our current debt position. Q2 adjusted free cash flow for CECO rebounded strongly after the Q1 cash outflows. In the Q2, 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.

Speaker #4: In the second quarter, we generated approximately $53 million of cash, a little over 132 percent 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 percent of adjusted EBITDA.

Speaker #4: On a trailing 12-month basis, cash flow as a percentage of EBITDA was approximately 58 percent, above our 55 percent or greater target for the full year of 2026.

Peter Johansson: 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 Q1 billings for large project milestones achieved in the period. Numerous large project milestones and subsequent billings were also realized in the Q2, which will create customer receivables that we expect to collect during the Q3, extending our trend of improving cash flow generation. Supplier payments offsetting customer collections were also made during the quarter, which will continue into the Q3 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.

Speaker #4: 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 create customer receivables that we expect to collect during the third quarter, extending our trend of improving cash flow generation.

Speaker #4: 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.

Peter Johansson: Supplier payments offsetting customer collections were also made during the quarter, which will continue into the Q3 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.

Speaker #4: 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.

Speaker #4: 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 Thermal acquisition and related transaction costs.

Peter Johansson: Gross debt at the end of the Q2 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 2.7 times our trailing 12-month bank EBITDA levels, near the high end of our previously communicated leverage range.

Speaker #4: Year to date, use of our revolver for working capital is essentially flat. Net debt increased by 495 million dollars, as the quarter-end cash balance grew by approximately 28 million since year-end, resulting in a quarter-end leverage ratio of 2.7 times our trailing 12-month bank EBITDA levels.

Speaker #4: Near the high end of our previously communicated leverage range, the combination of Thermal and CECO's strong free cash flow generation allowed a substantial step-down from closing date leverage. 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 31st, moving CECO ever closer to its targeted leverage range of 2.0 to 2.5 times.

Peter Johansson: 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 Q3, allowing pay-down of an additional $39.5 million, lowering our gross debt position to $692 million as of 31 July, moving CECO ever closer to its targeted leverage range of 2.0 to 2.5 times. 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 30 June, CECO had approximately $220 million in additional capacity to fund working capital, CapEx or M&A. 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.

Speaker #4: 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.

Peter Johansson: 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 30 June, CECO had approximately $220 million in additional capacity to fund working capital, CapEx or M&A. 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.

Speaker #4: As of June 30th, CECO had approximately 220 million dollars in additional capacity to fund working capitals, 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.

Speaker #4: Overall, we are in a very comfortable position, one-plus month after the thermal acquisition, with sufficient capacity for working capital and foreseeable investment needs.

Peter Johansson: Overall, we are in a very comfortable position one-plus month after the Thermon acquisition, with sufficient capacity for our working capital and foreseeable investment needs. That concludes my review of CECO's Q2 financial results. I will now pass it back to Todd for a wrap-up.

Speaker #4: That concludes my review of CECO's second quarter financial results. I will now pass it back to Todd for a wrap-up.

Speaker #2: Thanks, Peter. Please turn to slide number 14. As I already mentioned, we are raising our full year outlook two months after providing our most recent 2026 guidance for the year.

Todd Gleason: Thanks, Peter. Please turn to slide number 14. As I already mentioned, we are raising our full year outlook two months after providing our most recent 2026 guidance for the year. Our strong H1 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.

Speaker #2: 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 dollars and 1.375 billion, increasing the low end of our prior range by 25 million.

Speaker #2: At the midpoint, this represents approximately 20 percent 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.

Todd Gleason: 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.

Speaker #2: This outlook includes approximately 5 million dollars of realized thermal cost energies 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 percent of adjusted EBITDA.

Todd Gleason: 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 to $1.6 billion and adjusted EBITDA of approximately $255 to $280 million. We also continue to expect full year orders to easily exceed $2 billion. The H2 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.

Speaker #2: On a pro forma calendar year basis, including Thermal for the full year, we estimate revenue of approximately $1.5 to $1.6 billion and adjusted EBITDA of approximately $255 to $280 million.

Speaker #2: 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 Thermal.

Speaker #2: Our backlog supports the higher revenue outlook, while our pipeline continues to expand across key markets and geographies. What we have ahead of us—the combination of record backlog, strong markets, improving margins, and early integration progress—gives us confidence in our continued growth.

Todd Gleason: 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.

Speaker #2: 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.

Todd Gleason: 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 one-third of our initial $40 million target, and our commercial teams are already generating cross-selling opportunities. As we just reviewed, we are raising our full-year outlook.

Speaker #2: 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.

Speaker #2: Second, our financial performance continues to demonstrate the strength of CECO's operating model. Backlog increased 164 percent, orders increased 191 percent, revenue increased 54 percent, and adjusted EBITDA increased 73 percent.

Todd Gleason: 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 one-third of our initial $40 million target, and our commercial teams are already generating cross-selling opportunities. As we just reviewed, we are raising our full-year outlook.

Speaker #2: With approximately 150 basis points of margin expansion. Third, the thermal integration is progressing well. We have already captured approximately $13 million of annualized net adjusted EBITDA savings, representing one-third of our initial $40 million target, and our commercial teams are already generating cross-selling opportunities.

Speaker #2: And as we just reviewed, we are raising our full-year outlook. Our record backlog and robust sales pipeline give us the visibility that I’ve already outlined, and we continue to expect strong execution, synergy capture, and cash generation.

Todd Gleason: 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?

Speaker #2: 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.

Speaker #2: With that, we'll now open up the line for questions. Operator?

Speaker #3: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, press star one on your telephone keypad to raise your hand and enter the queue.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, press star one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question, press star one again. Your first question comes from Aaron Spychala from Craig-Hallum. Please go ahead.

Speaker #3: If you would like to withdraw your question, press star one again. And your first question comes from Aaron Spicala from Craig Hellum. Please go ahead.

Speaker #4: Yeah. Good morning, Todd, Peter, and Marcio. Thanks for taking the questions. First, for us, on orders, it sounds like things have continued to be strong here to start the third quarter.

Aaron Spychala: Yeah. Good morning, Todd, Peter, and Marcio. Thanks for taking the questions. First for us on orders, sounds like things have continued to be strong here to start Q3. Can you just maybe talk about that a little bit? 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?

Aaron Spychalla: Yeah. Good morning, Todd, Peter, and Marcio. Thanks for taking the questions. First for us on orders, sounds like things have continued to be strong here to start Q3. Can you just maybe talk about that a little bit? 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?

Speaker #4: Can you just maybe talk about that a little bit? And then on power gen broadly, you know, any changes that you're seeing in the outlook there, you know, competitive dynamics and just how you're feeling for the supply chain given the growth you're expecting there?

Speaker #2: Yeah, strong start to the third quarter. You know, we continue 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.

Todd Gleason: Yeah. A strong start to Q3. 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 Q3. Look, I'm sort of joking here, but when you end the quarter with 799 million, you sort of say, "Jeez, couldn't we have found a way to get to 800 million?" So you know we didn't pull anything in if we ended up with 799. So I think we feel good about the second half of the year easily eclipsing 2 billion or more for the year. Our Q3 continues to point in that direction, gives us confidence in that. Nothing's changed in the dynamic of competition. I think all of our markets have good competition. The pricing dynamic is favorable.

Speaker #2: So we're not seeing any slowdown, Aaron, in the third quarter. You know, look, I'm sort of joking here, but you know, when you end the quarter with $799 million, you sort of say, geez, you know, couldn't we have found a way to get to $800 million?

Speaker #2: So, you know, we didn't pull anything in. If we ended up with 799, so I think we feel good about the second half of the year, easily eclipsing $2 billion or more for the year.

Todd Gleason: So I think we feel good about the second half of the year easily eclipsing 2 billion or more for the year. Our Q3 continues to point in that direction, gives us confidence in that. Nothing's changed in the dynamic of competition. I think all of our markets have good competition. The pricing dynamic is favorable.

Speaker #2: Our third quarter continues to point in that direction, gives us confidence in that. And nothing's changed in the dynamic of competition. You know, I think all of our markets have good competition.

Speaker #2: The pricing dynamic is favorable. Everyone I think, you know, understands it's a supply chains can be tricky. We have built an incredibly strong global supply chain.

Todd Gleason: Everyone, I think, understands that 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 are the right partner in any market, but especially a high-performance market where there is a lot of demands on delivery schedules, on timing. Last comment I will make, because I think it is important, is the orders we get in power generation, for example, are associated with our customers' orders from many quarters ago. As you think about the large power generation set of strategic leaders that we supply, they have talked about wins maybe in 2025 or certainly the very beginning of 2026. We are now associated with those jobs because when we are handed a PO, it is when they are ready for work to begin.

Speaker #2: 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 and timing.

Todd Gleason: Last comment I will make, because I think it is important, is the orders we get in power generation, for example, are associated with our customers' orders from many quarters ago. As you think about the large power generation set of strategic leaders that we supply, they have talked about wins maybe in 2025 or certainly the very beginning of 2026. We are now associated with those jobs because when we are handed a PO, it is when they are ready for work to begin.

Speaker #2: Last comment I'll make, because I think it's important, is that the orders we get in power generation, for example, are associated with our customers' orders from many quarters ago.

Speaker #2: 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.

Speaker #2: 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, you know, when we get our purchase orders, our end customers are already working on the projects, and it's not associated with just reserving opportunities.

Todd Gleason: It is 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 is not associated with just reserving opportunities, it is now executing on those opportunities. Oftentimes, they come with permits already in place. Certainly, the work to proceed is being authorized. Terms and conditions are binding and moving forward with large cancellation clauses. When we are booking orders, we are later innings, I guess I would say, than some of our customers, which have been talking about these large growth for quite some number of quarters.

Speaker #2: It is now executing on those opportunities. Oftentimes, they come with permits already in place. Certainly, the work to proceed is being authorized. Terms and conditions are binding, and we're moving forward with large cancellation clauses.

Todd Gleason: Certainly, the work to proceed is being authorized. Terms and conditions are binding and moving forward with large cancellation clauses. When we are booking orders, we are later innings, I guess I would say, than some of our customers, which have been talking about these large growth for quite some number of quarters.

Speaker #2: So when we're booking orders, we're sort of, you know, we're later endings, I guess I'd say than some of our customers, which have been talking about these large growth for quite some number of quarters.

Speaker #4: No, that's helpful. Thanks. And then maybe, you know, 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, you know, that business you think can be in a handful of years, you know, organically and inorganically?

Aaron Spychala: No, that is helpful. Thanks. Maybe on industrial water, were there any of the large orders that you have been talking about in Q2? Just can you talk a little bit about where that business, you think can be in a handful of years organically, inorganically? Just talk about some of the margin dynamics in that business over the last couple of years and how you are thinking those projects can contribute.

Aaron Spychalla: No, that is helpful. Thanks. Maybe on industrial water, were there any of the large orders that you have been talking about in Q2? Just can you talk a little bit about where that business, you think can be in a handful of years organically, inorganically? Just talk about some of the margin dynamics in that business over the last couple of years and how you are thinking those projects can contribute.

Speaker #4: 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.

Speaker #2: Yeah. So a lot there. But you know, so the industrial water business is moving along fine in terms of growth year over year, in terms of adding pipeline.

Todd Gleason: Yeah. A lot there. 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. We understand that. The dialogue with the customers remains very positive. I think we do not 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.

Speaker #2: 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.

Speaker #2: And so we're, you know, but we understand that. The dialogue with the customers remains very positive. So, you know, I think, you know, we don't have those baked in our outlook for the year.

Todd Gleason: I think we do not 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.

Speaker #2: We never did. I think, you know, as we head into next year, our anticipation would be some of those start to show up in our bookings.

Speaker #2: 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.

Speaker #2: 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, you know, we're excited about what the pipeline looks like for growth.

Todd Gleason: Our projects now are well over 30, quite oftentimes, and that EBITDA margins are above company average in terms of those industrial water jobs. Look, we are 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. Again, nothing in our outlook necessarily would be upside if things were to move in that direction in the H2 of the year. And they are some pretty significant projects.

Speaker #2: We understand why things are paused at the moment. As you know, supply chains and ability to do work in certain regions is a little bit compromised at the moment.

Speaker #2: 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 make.

Todd Gleason: 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. Again, nothing in our outlook necessarily would be upside if things were to move in that direction in the H2 of the year. And they are some pretty significant projects.

Speaker #2: So again, you know, nothing in our outlook necessarily would be upside. If things were to move in that direction at the second half of the year, and they are some pretty significant projects.

Speaker #2: So you know, look, we you know, we're pretty bullish that this is a business that can easily get to 2, 300 million dollars in revenue.

Todd Gleason: Look, we are 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 are able to execute on these larger jobs.

Speaker #2: And you know, in the next few years organically, as we as we're able to execute on these larger jobs.

Speaker #4: All right. Thanks for taking the questions. I'll turn it over.

Aaron Spychala: All right. Thanks for taking the questions. I will turn it over.

Aaron Spychalla: All right. Thanks for taking the questions. I will turn it over.

Speaker #2: Thanks, Aaron.

Todd Gleason: Thanks, Eric.

Speaker #1: Your next question comes from Jean McCutty from Needham and Company. Please go ahead.

Operator: Your next question comes from Jim Ricchiuti from Needham & Company. Please go ahead.

Jim Ricchiuti: Hi. Thank you. Good morning. Couple of questions. Maybe first question, the sequential improvement in gross margin in the quarter. Again, apologies if you may have covered this in your detailed presentation, but maybe talk a little bit about what drove that. I am wondering how we should be thinking about gross margins in the H2 with

James Ricchiuti: Hi. Thank you. Good morning. Couple of questions. Maybe first question, the sequential improvement in gross margin in the quarter. Again, apologies if you may have covered this in your detailed presentation, but maybe talk a little bit about what drove that. I am wondering how we should be thinking about gross margins in the H2 with

Speaker #4: Hi. Thank you. Good morning. 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.

Speaker #2: Yeah, it got cut off there a little bit, Jim. I'll start. I got the question though. Thank you. And Peter can certainly provide additional color on it.

Todd Gleason: Yeah, you got cut off there a little bit, Jim. I will start. I got the question, though. Thank you. 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 Q1 was a little bit lower than an ongoing gross margin quarter would be. The rebound in some aspects is just the return to normalcy, if you want to say, in terms of just gross margins. Adjusted gross margins being around 33.5%. We believe that it goes higher in the H2 of the year with the things that Peter outlined in terms of productivity, higher margins in our backlog, and similar. I will let Peter kind of provide additional color there. We are pleased to be back in the 33.5% range. Thermon gross margins are higher.

Speaker #2: 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 you know, was a little bit lower than an ongoing gross margin quarter would be.

Speaker #2: So you know, the rebound in some aspects is just the you know, the return to normalcy, if you want to say, in terms of know, adjusted gross margins being, you know, around 33 and a half percent.

Todd Gleason: The rebound in some aspects is just the return to normalcy, if you want to say, in terms of just gross margins. Adjusted gross margins being around 33.5%. We believe that it goes higher in the H2 of the year with the things that Peter outlined in terms of productivity, higher margins in our backlog, and similar. I will let Peter kind of provide additional color there. We are pleased to be back in the 33.5% range. Thermon gross margins are higher.

Speaker #2: 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 all that Peter kind of provide additional color there.

Speaker #2: But you know, we're pleased to be back in the 33.5% range. Thermond's gross margins are higher. We only had one month of their gross margins in our results.

Todd Gleason: We only had one month of their gross margins on our results. All indicators seem to lead towards a higher gross margin rate.

Speaker #2: So, all indicators seem to point towards a higher gross margin rate.

Peter Johansson: Nothing more to add.

Speaker #3: And nothing more to add.

Speaker #2: So comprehensive. So there you have it.

Todd Gleason: So comprehensive. So there you have it.

Speaker #1: Thank you. Your next question comes from Tomas Sano from JP Morgan. Please go ahead.

Operator: Thank you. Your next question comes from Toma Sano from JP Morgan. Please go ahead.

Speaker #5: Hi. Good morning, everyone. Good morning. Thank you for taking my questions. On issue on day 22.4%, about 400 basis point improvement. Could you talk about decomposing structural actions versus volume levelage and under what conditions would issue on day rate drift back up?

Toma Sano: Hi. Good morning, everyone.

Tomohiko Sano: Hi. Good morning, everyone.

Peter Johansson: Hi, Toma.

Todd Gleason: Morning.

Toma Sano: Thank you for taking my questions. On SG&A at 22.4%, about 400 basis point improvement, could you talk about decomposing structural actions versus volume leverage? Under what conditions would SG&A rate drift back up? Thank you.

Tomohiko Sano: Thank you for taking my questions. On SG&A at 22.4%, about 400 basis point improvement, could you talk about decomposing structural actions versus volume leverage? Under what conditions would SG&A rate drift back up? Thank you.

Speaker #5: Thank you.

Speaker #3: Yeah. I'll take the second half of the question first, Toma. 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.

Peter Johansson: Yeah. I will take the second half of the question first, Toma. We do not 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 are undertaking is the migration of all of our businesses to a single ERP platform. So structurally, we do not anticipate that rate going up. When I break it into the two halves, what was performance versus leverage? The majority, probably two-thirds of that number, was a result of those expenses being held flat or coming down relative to volume. 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.

Speaker #3: And adding capabilities and 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.

Peter Johansson: The last remaining investment we are undertaking is the migration of all of our businesses to a single ERP platform. So structurally, we do not anticipate that rate going up. When I break it into the two halves, what was performance versus leverage? The majority, probably two-thirds of that number, was a result of those expenses being held flat or coming down relative to volume. 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.

Speaker #3: So structurally, and we don't anticipate that rate going up. When I break it into the two halves, what was performance versus leverage? The majority, probably two thirds of that number was a result of those expenses being held flat or coming down relative to volume.

Speaker #3: And we would expect that to continue to trend. Part of the synergies that Marcio discussed from the combination with Thermond will appear in that line.

Speaker #5: Thank you. And if I may follow up on cross-selling opportunities, Todd, if you could talk about the early win of the cross-selling.

Toma Sano: Thank you. 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?

Tomohiko Sano: Thank you. 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?

Speaker #5: And how should we think about making this repeatable, rather than just focusing on opportunities? How are you designing the operating model across selling motions, solution, pricing, and channels?

Todd Gleason: Okay.

Toma Sano: How are you designing the operating model across selling motions, solution, pricing, and channels? Thank you.

Tomohiko Sano: How are you designing the operating model across selling motions, solution, pricing, and channels? Thank you.

Speaker #5: Thank you.

Speaker #3: Yeah.

Todd Gleason: Yeah. We have a very focused cross-selling, maybe, I guess I would say, but it is also just, we call it commercial synergies. It is really partner selling, versus what I would say is cross-selling. Let me tell you why there is a difference. Cross-selling means we are typically 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 us say, to hundreds of millions of dollars, if not more than billions of dollars of, let us 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's sales go through distribution or sales channels or channel partners, and sales agents.

Speaker #2: Well, 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.

Speaker #2: Versus what I would say is cross selling. And let me tell you why there's a difference. Cross selling means, you know, we're sort of typically means you're training other businesses on how to sell your product.

Speaker #2: And you know, and then they go and sell across channels. That does happen. At SECO. But partner selling is we have visibility. At SECO, let's say, to, you know, 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.

Todd Gleason: That does happen at CECO. But partner selling is we have visibility at CECO, let us say, to hundreds of millions of dollars, if not more than billions of dollars of, let us 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's sales go through distribution or sales channels or channel partners, and sales agents.

Speaker #2: That Thermond, for example, would have never had visibility to. Not suggesting that all of Thermond sales go through distribution or sales channels or channel partners.

Speaker #2: And sales agents. But a significant portion do. And therefore, you know, they get an order because, you know, the channel has determined what it needs from a heat trace perspective.

Todd Gleason: But a significant portion do. Therefore, they get an order because the channel has determined what it needs from a heat trace perspective, and they are going to go with the leader. They are going to go with Thermon. We have visibility to actual heat trace in the projects, more so than most companies because we are managing the installation of these tens, twenties, hundreds of millions of dollars worth of full systems and solutions. So the USD 500,000 in power generation orders is we knew that in these projects that we have already booked and started to execute against, that we need heat trace that can be a leading product line, that can withstand incredible temperatures. Thermon products are the best. So our ability to now bring Thermon products into solving heat trace complexities in large power jobs is just the beginning.

Speaker #2: And they're going to go with the leader. They're going to go with Thermond. 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.

Speaker #2: So the half a million dollars 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.

Todd Gleason: So the USD 500,000 in power generation orders is we knew that in these projects that we have already booked and started to execute against, that we need heat trace that can be a leading product line, that can withstand incredible temperatures. Thermon products are the best. So our ability to now bring Thermon products into solving heat trace complexities in large power jobs is just the beginning.

Speaker #2: 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.

Speaker #2: You know, anywhere where you're going to need heat trace and we can bring the Thermond product line through our projects, we're going to. As we should.

Todd Gleason: Anywhere where you are going to need heat trace and we can bring the Thermon product line through our projects, we are going to, as we should. So with our backlog at USD 1.8 billion, our sales pipeline at USD 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 are bidding on in a collaborative way, is a win-win. So it is really about visibility. Yes, there are many other things we are 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 are 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.

Speaker #2: And so, with our backlog at $1.8 billion, our sales pipeline at $8.5 billion, the ability for us to do partner selling and start to model in, inspect in the Thermond products into our projects that we're bidding on in a collaborative way is a win-win.

Speaker #2: So it's really about visibility. Yes, there are many other things we're going to do to cross sell and partner sell in various regions. Our teams are working together in all of our offices already, whether it be in Korea or Singapore.

Todd Gleason: Yes, there are many other things we are 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 are 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.

Speaker #2: 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 Thermond bundle of products into our solutions.

Todd Gleason: Let's now include the Thermon bundle of products into our solutions.

Speaker #5: Thank you, that's helpful. Thank you, and congrats.

Toma Sano: Thank you. That's helpful. Thank you, and congrats.

Tomohiko Sano: Thank you. That's helpful. Thank you, and congrats.

Speaker #2: Thank you. Thank you, Tomo.

Todd Gleason: Thank you. Thank you, Tomo.

Speaker #3: Thank you.

Toma Sano: Thank you.

Tomohiko Sano: Thank you.

Speaker #1: Your next question comes from Jim Riccudi from Needham & Company. Please go ahead.

Operator: Your next question comes from Jim Ricchiuti from Needham & Company. Please go ahead.

Jim Ricchiuti: Hi. Thanks. Again, apologies if I am going to ask something that has 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?

James Ricchiuti: Hi. Thanks. Again, apologies if I am going to ask something that has 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?

Speaker #3: Hi. Thanks. Again, apologies if I'm going to ask something that's been asked already. My connection's been breaking up. But maybe this has been covered, but talk if you could about the pipeline increase since the beginning of June that increased in the pipeline.

Speaker #3: Is that mainly power gen related?

Speaker #2: Yeah. We haven't covered that, Jim. Largely power gen related, but semiconductor as well. I would also add a little bit of Thermond to the sales pipeline because they have a sales pipeline.

Todd Gleason: Yeah. We have not 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 a real number, even though it is nowhere near the size because it is a different type of product solution selling, as we have already covered. It is not a project. They do have projects. But it is 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 USD 1 billion to USD 1.5 billion of sales pipeline, Jim. So we are blending that in now with ours.

Speaker #2: That is, you know, 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.

Speaker #2: It's not a project. They do have projects, but really, Power Gen is probably the leader as we now continue to see bigger and bigger projects—data centers on the Thermond side, projects related to Thermond.

Todd Gleason: It is not a project. They do have projects. But it is 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 USD 1 billion to USD 1.5 billion of sales pipeline, Jim. So we are blending that in now with ours.

Speaker #2: And then, you know, look, semiconductor is starting to really find a nice you know, a nice you know, trajectory. Look, Thermond has at least a billion to a billion and a half of sales pipeline, Jim.

Speaker #2: So we're blending that in now with ours.

Speaker #3: Okay, got it. And Todd, I think we all appreciate the delays in industrial orders in the Mideast. But it sounds like, even excluding that, you're seeing good activity there.

Jim 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 are seeing good activity there. Can you give us some color on just the level of bookings or the increase you are seeing, excluding the delayed projects?

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 are seeing good activity there. Can you give us some color on just the level of bookings or the increase you are seeing, excluding the delayed projects?

Speaker #3: Can you give us some color on just the level of bookings or the increase you're seeing excluding the delayed projects?

Speaker #2: Yeah, look, I mean, you know, again, in a lot of our industrial water businesses, we have great leading brands—businesses like Chemco, Compass, you know, DS21.

Todd Gleason: Yeah, look, again, in a lot of our industrial water businesses, we have great leading brands. Businesses like Kemco, Compass, DS21, and they are doing work outside of, and Peerless' industrial water solutions. They are doing work outside of the Middle East. Where that is the case, we are seeing nice double-digit orders growth, right? We are 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.

Speaker #2: And they're doing work outside of and Peerless is, you know, 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?

Speaker #2: We're seeing nice returns on our resources and investment. These are businesses that at times have had, you know, cyclicality in their end markets, like Chemco with food and beverage, or the food service side, or food manufacturing.

Speaker #2: And those markets are strong at the moment.

Speaker #3: Got it. Thanks a lot.

Jim Ricchiuti: Got it. Thanks a lot.

James Ricchiuti: Got it. Thanks a lot.

Speaker #2: Thanks, Jim.

Todd Gleason: Thanks, Jim.

Speaker #1: Your next question comes from Rob Brown from Lake Street Capital Markets. Please go ahead.

Operator: Your next question comes from Rob Brown from Lake Street Capital Markets. Please go ahead.

Speaker #4: Good morning. Congratulations on the strong quarter. You talked about the pipeline breadth a little bit, but just wanted to ask about the gas infrastructure and energy part of the pipeline.

Rob Brown: Good morning. Congratulations on the strong quarter. You talked about the pipeline breadth a little bit, but just wanted to ask about the gas infrastructure and energy part of the pipeline. How is the demand environment there, and what is the sort of outlook in the vertical?

Speaker #4: 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 are tending to now because we are looking across the full value chain, is extraordinarily strong. We will book or have booked the two largest projects in the history of the Peerless brand in the last two months related to the gas pipelines bringing new gas to the Gulf and two new LNG projects. The amount of investment that is 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 are seeing two other trends that are very interesting. One is, in the gas side is drilling actually, while not having picked up, is becoming much more productive. So the volumes of gas that is coming out of existing plays now needs a route to market.

Speaker #2: 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.

Speaker #2: We will book, or have booked, the two largest projects in the history of the Peerless brand in the last two months, related to the gas pipelines bringing new gas to the Gulf and to new LNG projects.

Speaker #2: 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.

Peter Johansson: The amount of investment that is 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 are seeing two other trends that are very interesting. One is, in the gas side is drilling actually, while not having picked up, is becoming much more productive. So the volumes of gas that is coming out of existing plays now needs a route to market.

Speaker #2: We're seeing two other trends that are very interesting. One is that, on the gas side, drilling, while not having picked up, is becoming much more productive.

Speaker #2: So the volumes of gas that are coming out of existing plays now need a route to market. So it's no longer a supply-driven market.

Peter Johansson: It is no longer a supply-driven market, it is a demand-driven market, which is very interesting. It has been some time since we were in that situation. Then finally, what is, to me, very interesting is the export market for LNG continues to be very strong with at least three or four FIDs remaining through the year that we have high degree of confidence will occur and we will be awarded work.

Speaker #2: It's a demand-driven market, which is very interesting, and it's been some time since we were 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 three or four FIDs remaining through the year.

Speaker #2: That we have a high degree of confidence will occur, and that we'll be awarded work.

Rob Brown: Great. Thank you. Then on the Thermon data center vertical, you talked about that as an opportunity. Could you just characterize the sort of products you provide and what that opportunity looks like?

Speaker #4: Great. Thank you. And then on the Thermond 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?

Speaker #2: Yeah, happy to do that, Rob. Unlike the CECO portfolio, where our exposure to data centers is indirect, tied to the power that is produced and supplied to the data centers, Thermond has two distinct product offerings that are actually procured by the data center developers and installed directly into the data center.

Peter Johansson: Yeah, 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 two 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 is an adaptation of a very sophisticated and 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 are left in situ and are operated daily and weekly to ensure the cooling system's performance. They are big orders relative to Thermon's historical order sizes.

Speaker #2: The first is the liquid load bank product, which is relatively new to Thermon, and it's an adaptation of a very sophisticated and high-performance boiler solution.

Peter Johansson: The first is the liquid load bank product, which is relatively new to Thermon, and it is an adaptation of a very sophisticated and 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 are left in situ and are operated daily and weekly to ensure the cooling system's performance. They are big orders relative to Thermon's historical order sizes.

Speaker #2: 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.

Speaker #2: 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's performance.

Speaker #2: They're big orders relative to Thermond'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, and to eliminate the effects of thermal expansion and contraction with seasons.

Peter Johansson: 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. It is ways that heat trace has not historically been applied. Those are very interesting opportunities, and they continue to add up. They are not big by CECO standards, but they are very attractive because they are full margin and they are quick to turn.

Speaker #2: 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.

Speaker #2: And they're quick to turn.

Speaker #4: Thank you. I'll turn it over.

Rob Brown: Thank you. I will turn it over.

Speaker #1: Your next question comes from Bobby Brooks from Northland Capital Markets. Please go ahead.

Operator: Your next question comes from Bobby Brooks from Northland Capital Markets. Please go ahead.

Bobby Brooks: Hey, good morning to you. Thank you for taking my question. 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. Going forward, is every project now getting this $500,000 uplift, or is the projects going to be booked?

Speaker #5: Hey, good morning, Tim. Thank you for taking my question. When you guys spoke to the 500,000 dollar uplift of Thermond 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 dollar uplift or is it projects going to be booked or is it the projects that are sitting in backlog?

Peter Johansson: No

Bobby Brooks: The projects that are sitting in backlog? Okay. Is that on like an annual basis? Yeah.

Speaker #5: Okay. And then just is that on like a level up basis? Yeah.

Peter Johansson: No. Bobby, you do this every time we talk about power gen. You want to figure out how to better model the business. I will 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 warm, dry air in order to perform at their highest level. That is 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. 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.

Speaker #2: 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.

Speaker #2: But I'll tell you what this was. These were existing projects where the customer specified a heat trace solution or a thermal management solution that we historically would have purchased from a competitor of Thermon.

Speaker #2: Now, with the Thermond portfolio, we can add their technology to inlet air conditioning. Gas turbines like to have warm, dry air in order to perform at their highest level.

Speaker #2: 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.

Peter Johansson: 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. 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.

Speaker #2: 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.

Rob Brown: At the bottom of the stack.

Peter Johansson: At the bottom of the bypass stack. That is correct. These are all very interesting applications. The value and the scope vary by project and location. You can imagine in a very warm climate, you are 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. 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 is also the retrofit and aftermarket story here. It is not just a first-fit story. This is just an example of the commercial opportunities that our teams are exploring.

Speaker #2: At the bottom of the bypass stack, that's correct. These are all very interesting applications. The value and the scope vary by project and location.

Speaker #2: You can imagine, in a very warm climate, you're probably going to have fewer de-icing or anti-freeze applications. But you still need to keep the ammonia circulating at the right temperature and viscosity.

Speaker #2: 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.

Peter Johansson: 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 is also the retrofit and aftermarket story here. It is not just a first-fit story. This is just an example of the commercial opportunities that our teams are exploring.

Speaker #2: 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.

Speaker #2: We found a really interesting one in the area of food processing that we're exploring. And if you think about our Chemco business and the part of the Thermond business that is in hot water generation and supply, there are good technical and customer overlaps that we'll endeavor to explore both in the channel as well as directly with the installed base.

Peter Johansson: We found a really interesting one in the area of food processing that we are exploring. If you think about our Kemco business and the part of the Thermon business that is in hot water generation and supply, there is good technical and customer overlaps that we will endeavor to explore both in the channel as well as directly with the installed base.

Speaker #3: And just Peter, thank you. And you covered it, but Bobby, just to make sure you captured this—and I suppose for all of our audience members—this wasn't one project that we booked at half a million dollars.

Todd Gleason: Peter, thank you, and covered it, but Bobby, just to make sure you captured this, and I suppose all of our audience members, this was not one project that we booked $500,000.

Peter Johansson: Yeah.

Speaker #3: 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.

Todd Gleason: This was a collection of projects that probably any project could have.

Peter Johansson: Yes

Todd Gleason: to tens of thousands of dollars worth of solutions, up to $100,000 worth of solutions. Maybe more. But one that I know of was $70,000 worth of heat trace for one of those categories that Peter mentioned. 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.

Speaker #3: And maybe more. I mean, but you know, this one that I know of was $70,000 worth of heat trace for one of those categories that Peter mentioned.

Speaker #3: So the point of it is, you know, quickly, in 60 days now, we've generated a real number and, you know, 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.

Speaker #4: Thank you, guys. That was really helpful, Caller, to help break that down. And then just as we think of the cross-selling, right, if we go back, what, 18 months ago, the Profire acquisition—and that was a really interesting opportunity to cross-sell their solutions into your customer base.

Bobby Brooks: Thank you, guys. That was a really helpful call there to help break that down. Just as we think of the cross-selling rate, if we go back to, what, 18 months ago, the Profire acquisition, 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 both the Profire products into your legacy customer base and how you might leverage that new experience into the Thermon. Thank you.

Speaker #4: I just wanted to give you the floor to maybe share any learnings you've had as you've integrated and tried to cross-sell those Profire products into your legacy customer base, and how you might leverage that new experience with Thermond.

Speaker #4: Thank you.

Speaker #3: Yeah, 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.

Todd Gleason: Yeah. 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. 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 five-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 in that case was on approved vendor lists with the Korean EPC firms. Versus you look at what we're doing potentially with Thermon and Kemco. Those are two acquisitions, obviously, Kemco being an acquisition from about four years ago or so, three or four years ago.

Speaker #3: And because it was a publicly traded company like Thermond, there was knowledge in the market that maybe didn't exist in some of our other dozen or so acquisitions.

Speaker #3: But you know, you're looking at 13 or 14 acquisitions—or more—over the last five-plus years. And all of them have received commercial opportunities that we leverage.

Speaker #3: DS21 has allowed us to expand into industrial water in a coordinated way with resources and capabilities, and in that case, with unapproved vendor lists with the Korean EPC firms.

Todd Gleason: DS21 has allowed us to expand into industrial water in a coordinated way with resources and capabilities, and in that case was on approved vendor lists with the Korean EPC firms. Versus you look at what we're doing potentially with Thermon and Kemco. Those are two acquisitions, obviously, Kemco being an acquisition from about four years ago or so, three or four years ago.

Speaker #3: Versus you look at, you know, what we're doing potentially with Thermond and Chemco. Those are two acquisitions, obviously—Chemco being an acquisition from about four years ago or so, three or four years ago.

Speaker #3: And now Thermon and Chemco 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.

Todd Gleason: 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. 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. 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 lead. It's Glengarry Glen Ross sales leads galore for our sales force.

Speaker #3: 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, and seeing those leads.

Speaker #3: 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. The visibility around those projects is really exciting for our sales teams.

Todd Gleason: There's just a lot more visibility. 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 lead. It's Glengarry Glen Ross sales leads galore for our sales force.

Speaker #3: It's like a whole new sales lead. It's Glengarry Glen Ross sales leads galore for our sales force.

Bobby Brooks: You definitely have displayed that. Congrats on the strong quarter.

Speaker #4: You have definitely demonstrated that. Congratulations on a strong quarter.

Speaker #3: Thank you.

Todd Gleason: Thank you.

Operator: Your next question comes from Joe Giordano from TD Cowen. Please go ahead.

Speaker #1: Your next question comes from Jojo Dado from TD Cohen. Please go ahead.

Speaker #5: Hey, good morning, guys. Excited to be here for the first time officially, so thanks for taking my questions.

Joe Giordano: Hey, good morning, guys. Excited to be here for the first time officially.

Joseph Giordano: Hey, good morning, guys. Excited to be here for the first time officially.

Todd Gleason: Good job.

Joe Giordano: Thanks for taking my questions.

Joseph Giordano: Thanks for taking my questions.

Speaker #3: Welcome on board.

Todd Gleason: Welcome on board.

Speaker #5: Two for me. You know, one, I remember back, like, you know, mid-2010s when we had the energy crisis. Until that period, until things kind of broke, you saw these projects happening like crazy.

Joe Giordano: Two for me. One, I remember back like mid-2010s when we had the energy crisis. Until that period, until things kind of broke, you saw these projects happening crazy. Everyone is getting big orders. But 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 talk about this kind of world that we are in today kind of contrasted against what we had back then?

Joseph Giordano: Two for me. One, I remember back like mid-2010s when we had the energy crisis. Until that period, until things kind of broke, you saw these projects happening crazy. Everyone is getting big orders. But 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 talk about this kind of world that we are in today kind of contrasted against what we had back then?

Speaker #5: Everyone's getting big orders, but, like, you know, the likelihood factor, I guess, of those projects got worse and worse, and they got more aggressive and more aggressive.

Speaker #5: And based on that, the underwriting was more aggressive. Can you talk about the kind of world that we're in today, contrasted against what we had back then?

Speaker #3: Yeah, 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.

Todd Gleason: Yeah. Look, it is a very demanding market. There is a lot of volume and a lot of visibility to that volume. 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 have booked that are associated with reservations for 2027, 2028, 2029, 2030. We have visibility to this much longer-term project location opportunity set than we have ever had. In the past, it was a burst of activity that felt maybe a little bit more opportunistic to the markets and to our competitors. Therefore, the dynamic became a bit more aggressive.

Speaker #3: 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.

Speaker #3: So, we have visibility into this much longer-term project location opportunity set than we've ever had. In the past, it was a burst of activity.

Todd Gleason: We have visibility to this much longer-term project location opportunity set than we have ever had. In the past, it was a burst of activity that felt maybe a little bit more opportunistic to the markets and to our competitors. Therefore, the dynamic became a bit more aggressive.

Speaker #3: That felt maybe a little bit more opportunistic to the markets and to our competitors, and therefore, the dynamic became a bit more aggressive. With this, you have a much longer series of visibilities, and these are mega-projects now, where you really start to rule out a lot of smaller competitors that don't have the scale, the financial strength, the global supply chain, the engineers, or the reference sites to do it.

Todd Gleason: 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 do not have the scale, the financial strength, the global supply chain, the engineers to do, and do not have the reference sites, which are important because the customer is not here rolling the dice on these things. I think the dynamic feels it has graduated to a whole another level. We have all been on these sort of rides before. This one feels different, and I think it is why we have really tried to articulate that our purchase orders that we put into our order bookings and our backlog are firm. I am not suggesting that the market is not firm, but ours are.

Speaker #3: Which are important, because the customer isn't here rolling the dice on these things. So I think the dynamic feels like it's graduated to a whole new level.

Todd Gleason: I think the dynamic feels it has graduated to a whole another level. We have all been on these sort of rides before. This one feels different, and I think it is why we have really tried to articulate that our purchase orders that we put into our order bookings and our backlog are firm. I am not suggesting that the market is not firm, but ours are.

Speaker #3: So we've all been on these sorts of, you know, rides before. This one feels different, and I think that's why we've really tried to articulate that our purchase orders, which we put into our order bookings and our backlog, are firm.

Speaker #3: You know, 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; it's less than half of 1%.

Todd Gleason: For us to book 799 million of purchase orders, putting it in backlog, our backlog de-booking rate is far less, but it is less than half of 1%, so it is like 0.3%, 0.4%, 0.5%. I would say, this is because we have so much visibility to what is coming. Even if we have been given verbal awards ourselves, we are not booking those. It is a different dynamic now than it has probably been since maybe 25 years ago.

Speaker #3: So it's like 0.3, 0.4, 0.5. And I would say, you know, 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.

Speaker #3: It's a different dynamic now than it's probably been in, since maybe 25 years ago.

Speaker #5: Yes, no, 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?

Joe Giordano: Yeah. No, that is a fair answer. Last from 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 are signing up for get further and further out? How are you dynamically assessing your ability to source all this stuff and ability to execute on it?

Joseph Giordano: Yeah. No, that is a fair answer. Last from 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 are signing up for get further and further out? How are you dynamically assessing your ability to source all this stuff and ability to execute on it?

Speaker #5: How do you, or how are you dynamically assessing your ability to source all this stuff and your ability to execute on it?

Speaker #3: Very, we're very focused on that, Joe, as you can imagine. You know, booking big orders means you have to deliver big orders. In fact, we have you know, we have decided against pursuing certain projects.

Todd Gleason: We are 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. Therefore we did not want to. We can be a bit selective here, but we can also realize when we are going to run up against any constraints. 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 SG&A investment now moderating or normalizing. For five years now, we have invested heavily in project engineering, application engineering, systems capabilities, building a team in India, building a team in Asia, building a global supply chain.

Speaker #3: 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 you know, we're going to run up against any constraints.

Speaker #3: 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.

Todd Gleason: 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 SG&A investment now moderating or normalizing. For five years now, we have invested heavily in project engineering, application engineering, systems capabilities, building a team in India, building a team in Asia, building a global supply chain.

Speaker #3: Number two, we talked about SG&A investment now moderating or normalizing. For five 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.

Todd Gleason: These were expenses that we put in in 2022, 2023, ramped up in 2024 and throughout 2025, seeing this power super cycle. Maybe we underestimated it, but we were ahead of it. 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. For us, we can be selective. I think we can be thoughtful. Our ability to execute has probably never been better.

Speaker #3: These were expenses that we put in in 2022, 2023, ramped up in 2024, and throughout '25, seeing this power supercycle. Maybe we underestimated it, but we were ahead of it.

Speaker #3: And that investment now is really going to pay dividends—in our ability to handle about as much volume as we want, at the right margins, in the right locations, with the right partners.

Speaker #3: 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.

Speaker #2: Joe, let me share kind of a typical large project that we've seen recently. It's really design-wants-build many times. So, for instance, the largest job we've booked in power was exactly that.

Joe Giordano: Okay

Joseph Giordano: Okay

Peter Johansson: Kind of a typical large project that we have seen recently. It is really design once, build many times. For instance, the largest job we have 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 customer's ability to receive it, install it, and test it. These larger power gen opportunities are not a lot of design complexity. It is really managing through materials availability, labor, and executing with quality. We have a very good model there. In semiconductor, it is not much different. It is just a different technology. In a large fab, it might be somewhere between 24 and 48 scrubber packages. We will design it once. Maybe there is two, a small and a large.

Speaker #2: 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.

Speaker #2: That equipment to the job site, in synchronicity with the customer's ability to receive it, install it, and test it. And so these larger power gen opportunities aren't a lot of design complexity.

Peter Johansson: These larger power gen opportunities are not a lot of design complexity. It is really managing through materials availability, labor, and executing with quality. We have a very good model there. In semiconductor, it is not much different. It is just a different technology. In a large fab, it might be somewhere between 24 and 48 scrubber packages. We will design it once. Maybe there is two, a small and a large.

Speaker #2: 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.

Speaker #2: It's just a different technology. In a large fab, it might be somewhere between 24 and 48 square meter packages. We'll design it once—maybe there's two, or small and large.

Speaker #2: And so we'll have two 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.

Peter Johansson: We will have two designs. We will source it through value-added fabricators, and then we will 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. It helps us manage these larger projects. They are actually, I would say, not complex, but they are nowhere near as complex as the number or the headline might suggest.

Speaker #2: But in a very consistent manner, with a drumbeat on delivery. So it helps us manage these larger projects that, I would say, are not actually complex, but they are nowhere near as complex as the number or the headline might suggest.

Speaker #5: And you guys appreciate it.

Joe Giordano: Thank you, guys. Appreciate it.

Joseph Giordano: Thank you, guys. Appreciate it.

Speaker #3: Thanks, Joe.

Todd Gleason: Thanks, Joe.

Speaker #1: Thank you. That will conclude our question and answer session. I will now turn the call over to Todd, Chief Executive Officer, for the closing remarks.

Operator: Thank you. That will conclude our question and answer session, and I will now turn the call over to Todd Gleason, Chief Executive Officer, for the closing remarks. Please go ahead.

Speaker #1: Please go ahead.

Speaker #2: 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.

Todd Gleason: Thank you very much. I would like to thank all of our participants and audience for their questions and interest in our information today. We are going to be participating in several investor events throughout the remainder of the quarter, including those hosted by Jefferies, Lake Street, and Morgan Stanley. 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 would like to thank everybody and have a great day. Thank you.

Speaker #2: 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.

Speaker #2: 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.

Q2 2026 CECO Environmental Corp Earnings Call

Request DemoDemo

CECO Environmental

Earnings