Strong First Quarter Results Highlighted by Orders up 97 Percent and Backlog Eclipsing
Largest Natural Gas Power Order in Company History Booked in
Company Raises Full Year 2026 Guidance
Highlights for the Quarter(1)
- Orders of
$449.5 million , up 97 percent - Backlog of
$1,035.1 million , up 72 percent - Revenue of
$205.9 million , up 17 percent - Gross profit of
$63.9 million , up 3 percent; Gross margin of 31.0 percent - Net loss of
$(0.4) million , down 101 percent; non-GAAP net income of$13.9 million , up 297 percent - GAAP EPS (diluted) of
$(0.01) ; non-GAAP EPS (diluted) of$0.36 - Adjusted EBITDA of
$20.4 million , up 46 percent - Free cash flow of
$(15.7) million , down 4 percent
(1) All comparisons are versus the comparable prior year period, unless otherwise stated.
Reconciliations of GAAP (reported) to non-GAAP measures are in the attached financial tables.
First quarter operating income was
“Our adjusted EBITDA margin expansion of almost 200 basis points reflects our improving volume conversion and the early, positive results of early implementation of our 80/20 programs – which are designed to improve efficiencies and provide operating benefits from commercial and operational simplification. While gross margins did experience contraction in Q1, this was anticipated given last year’s sale of the higher margin but non-strategic global pump business combined with the timing of lower margin jobs booked in early 2025. As we progress throughout 2026 our backlog profile reflects higher margin projects, thus we expect higher gross margins in Q2 and throughout the remainder of the year. Currently, we see no material impact from the Iran War or higher inflation, but we are monitoring the situation and are strategically prepared with additional price and cost actions, if appropriate,” added Gleason.
2026 Full Year Guidance Update
The Company raises its full year outlook for 2026 to reflect revenue between $940 million and $1 billion, up approximately 25 percent at the midpoint of the range when compared to 2025 and increases full year Adjusted EBITDA between $120 and $140 million, up approximately 45 percent at the midpoint of the range. This compares to the previous guidance range of revenue between
"Given another strong start to the year with our record backlog and accelerating orders pace, we are raising our full year 2026 outlook. We now expect organic revenues to grow 25 percent, and adjusted EBITDA to grow almost 45 percent. Separately, the acquisition of Thermon remains very much on track for a second quarter close. Just a few weeks ago, Thermon issued a press release highlighting exciting orders with their liquid load bank solution, which is a new product for data center markets. The combination of CECO and Thermon will yield a double-digit growth company with attractive margins and operating cash flows. We remain confident the combination will also unlock at least
Thermon Transaction Update
CECO and Thermon continue to progress toward completion of the previously announced merger. The registration statement on Form S-4 has been declared effective by the
EARNINGS CONFERENCE CALL
A conference call is scheduled for today at
A replay of the conference call will be available on the Company’s website for a period of one year. The replay may also be accessed by visiting https://edge.media-server.com/mmc/p/o4vmw7mt.
ABOUT
Company Contact:
Vice President - Corporate Integration and Investor Relations
888-990-6670
investor.relations@onececo.com
Investor Relations Contact:
Three
214-872-2710
investor.relations@onececo.com
No Offer or Solicitation
This communication is for informational purposes only and is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made, except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Additional Information and Where to Find It
This communication relates to the proposed merger transaction (the “Proposed Transaction”) involving Thermon and CECO, among other things. The issuance of shares of CECO common stock in connection with the Proposed Transaction is being submitted to the stockholders of CECO for their consideration, and the Proposed Transaction is being submitted to the stockholders of Thermon for their consideration. In connection therewith, CECO filed with the
Participants in the Solicitation
CECO, Thermon and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the Proposed Transaction.
Information about the directors and executive officers of CECO, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in (i) the definitive Joint Proxy Statement/Prospectus filed by CECO (and which is available at https://www.sec.gov/Archives/edgar/data/3197/000110465926047714/tm2611145-7_424b3.htm) and (ii) to the extent holdings of CECO’s securities by the directors or executive officers of CECO have changed since the amounts set forth in the definitive Joint Proxy Statement/Prospectus, such changes have been or will be reflected on Initial Statement of Beneficial Ownership of Securities on Form 3, Statement of Changes in Beneficial Ownership on Form 4, or Annual Statement of Changes in Beneficial Ownership on Form 5 filed with the
Information about the directors and executive officers of Thermon, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in (i) Thermon’s proxy statement for its 2025 Annual Meeting of Stockholders, which was filed with the
Investors should read the Joint Proxy Statement/Prospectus carefully before making any voting or investment decisions. You may obtain free copies of these documents from CECO and Thermon using the sources indicated above.
Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical fact, included in this Form 8-K that address events, or developments that CECO and Thermon expect, believe, or anticipate will or may occur in the future are forward-looking statements. The words “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements in this communication, but are not limited to, statements regarding the Proposed Transaction, pro forma descriptions of the combined company and its operations, integration and transition plans, synergies, opportunities and anticipated future performance. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.
There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this communication. These include the expected timing and likelihood of completion of the Proposed Transaction, including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the Proposed Transaction that could reduce anticipated benefits or cause the parties to abandon the Proposed Transaction, the ability to successfully integrate the businesses, the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, the possibility that stockholders of CECO or Thermon may not approve the Proposed Transaction, the risk that the parties may not be able to satisfy the conditions to the Proposed Transaction in a timely manner or at all, risks related to disruption of management time from ongoing business operations due to the Proposed Transaction, the risk that any announcements relating to the Proposed Transaction could have adverse effects on the market price of CECO’s common stock or Thermon’s common stock, the risk that the Proposed Transaction and its announcement could have an adverse effect on the ability of CECO and Thermon to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers and on their operating results and businesses generally, the risk the pending Proposed Transaction could distract management of both entities and they will incur substantial costs, the risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected, the risk that the combined company may be unable to achieve synergies or it may take longer than expected to achieve those synergies and other important factors that could cause actual results to differ materially from those projected. All such factors are difficult to predict and are beyond CECO’s or Thermon’s control, including those detailed in CECO’s annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K that are available on its website at https://investors.cecoenviro.com and on the SEC’s website at https://www.sec.gov, and those detailed in Thermon’s annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K that are available on Thermon’s website at https://ir.thermon.com and on the SEC’s website at https://www.sec.gov.
All forward-looking statements are based on assumptions that CECO or Thermon believe to be reasonable but that may not prove to be accurate. Such forward-looking statements are based on assumptions and analyses made by CECO and Thermon in light of their perceptions of current conditions, expected future developments, and other factors that CECO and Thermon believe are appropriate under the circumstances. These statements are subject to a number of known and unknown risks and uncertainties. Forward-looking statements are not guarantees of future performance and actual events may be materially different from those expressed or implied in the forward-looking statements. The forward-looking statements in this communication speak as of the date of this communication.
Neither CECO nor Thermon undertakes, and each of them expressly disclaims, any duty to update any forward-looking statement whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as the date hereof.
CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except per share data) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 45,411 | $ | 33,144 | ||||
| Restricted cash | 96 | 83 | ||||||
| Accounts receivable, net of allowances of | 278,528 | 172,909 | ||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 103,720 | 115,614 | ||||||
| Inventories | 60,175 | 53,996 | ||||||
| Prepaid expenses and other current assets | 40,739 | 29,450 | ||||||
| Prepaid income taxes | 10,564 | 4,986 | ||||||
| Total current assets | 539,233 | 410,182 | ||||||
| Property, plant and equipment, net | 48,092 | 47,808 | ||||||
| Right-of-use assets from operating leases | 29,181 | 28,251 | ||||||
| 291,128 | 288,163 | |||||||
| Intangible assets – finite life, net | 99,167 | 96,966 | ||||||
| Intangible assets – indefinite life | 9,678 | 9,705 | ||||||
| Deferred income taxes | — | 449 | ||||||
| Deferred charges and other assets | 10,896 | 12,245 | ||||||
| Total assets | $ | 1,027,375 | $ | 893,769 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of debt | $ | 5,340 | $ | 1,879 | ||||
| Accounts payable | 137,594 | 117,848 | ||||||
| Accrued expenses | 71,212 | 57,639 | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 184,223 | 123,726 | ||||||
| Income taxes payable | 7,424 | 4,738 | ||||||
| Total current liabilities | 405,793 | 305,830 | ||||||
| Other liabilities | 7,033 | 3,317 | ||||||
| Debt, less current portion | 247,907 | 210,559 | ||||||
| Deferred income tax liability, net | 26,336 | 27,920 | ||||||
| Operating lease liabilities | 23,106 | 22,961 | ||||||
| Total liabilities | 710,175 | 570,587 | ||||||
| Commitments and contingencies (See Note 14) | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred stock, | — | — | ||||||
| Common stock, 35,644,537 shares issued and outstanding at | 357 | 355 | ||||||
| Capital in excess of par value | 264,595 | 269,453 | ||||||
| Retained earnings | 56,223 | 56,621 | ||||||
| Accumulated other comprehensive loss | (8,976 | ) | (8,901 | ) | ||||
| Total CECO shareholders' equity | 312,199 | 317,528 | ||||||
| Noncontrolling interest | 5,001 | 5,654 | ||||||
| Total shareholders' equity | 317,200 | 323,182 | ||||||
| Total liabilities and shareholders' equity | $ | 1,027,375 | $ | 893,769 | ||||
CONSOLIDATED STATEMENTS OF INCOME (unaudited) | ||||||||
| Three months ended | ||||||||
| (in thousands, except share and per share data) | 2026 | 2025 | ||||||
| Net sales | $ | 205,919 | $ | 176,697 | ||||
| Cost of sales | 142,000 | 114,535 | ||||||
| Gross profit | 63,919 | 62,162 | ||||||
| Selling and administrative expense | 46,091 | 53,542 | ||||||
| Amortization expense | 4,003 | 3,096 | ||||||
| Acquisition and integration expense | 10,280 | 8,143 | ||||||
| Gain on sale of Global Pump Solutions business | — | (64,502 | ) | |||||
| Other operating expense | 1,670 | 13 | ||||||
| Income from operations | 1,875 | 61,870 | ||||||
| Other expense | 1,392 | 594 | ||||||
| Interest expense | 4,230 | 6,217 | ||||||
| (Loss) income before income taxes | (3,747 | ) | 55,059 | |||||
| Income tax (benefit) expense | (3,499 | ) | 18,617 | |||||
| Net (loss) income | (248 | ) | 36,442 | |||||
| Noncontrolling interest | 150 | 458 | ||||||
| Net (loss) income attributable to | $ | (398 | ) | $ | 35,984 | |||
| Loss (earnings) per share: | ||||||||
| Basic | $ | (0.01 | ) | $ | 1.03 | |||
| Diluted | $ | (0.01 | ) | $ | 0.98 | |||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | 35,690,813 | 35,028,301 | ||||||
| Diluted | 35,690,813 | 36,689,320 | ||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| Three months ended | ||||||||
| (in thousands) | 2026 | 2025 | ||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) income | $ | (248 | ) | $ | 36,442 | |||
| Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 6,104 | 5,115 | ||||||
| Unrealized foreign currency loss (gain) | 624 | (1,142 | ) | |||||
| Gain on sale of Global Pump Solutions business | — | (64,502 | ) | |||||
| Loss on sale of property and equipment | (219 | ) | (15 | ) | ||||
| Debt discount amortization | 199 | 206 | ||||||
| Share-based compensation expense | 440 | 3,356 | ||||||
| (Recovery) allowance for credit loss | (1,517 | ) | 819 | |||||
| Inventory obsolescence expense | 1,082 | 92 | ||||||
| Deferred income tax (benefit) expense | (1,152 | ) | 166 | |||||
| Changes in operating assets and liabilities, net of acquisitions and divestiture: | ||||||||
| Accounts receivable | (103,137 | ) | 16,215 | |||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | 11,612 | (12,270 | ) | |||||
| Inventories | (6,851 | ) | (2,416 | ) | ||||
| Prepaid expense and other current assets | (17,016 | ) | (17,652 | ) | ||||
| Deferred charges and other assets | 1,534 | (971 | ) | |||||
| Accounts payable | 19,649 | (3,633 | ) | |||||
| Accrued expenses | 12,681 | 8,865 | ||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts | 60,667 | 5,933 | ||||||
| Income taxes payable | 2,700 | 17,220 | ||||||
| Other liabilities | (252 | ) | (3,524 | ) | ||||
| Net cash used in operating activities | (13,100 | ) | (11,696 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Acquisitions of property and equipment | (2,589 | ) | (3,385 | ) | ||||
| Net cash proceeds for sale of Global Pump Solutions business | — | 105,860 | ||||||
| Cash paid for acquisitions, net of cash acquired | (6,616 | ) | (97,646 | ) | ||||
| Net cash (used in) provided by investing activities | (9,205 | ) | 4,829 | |||||
| Cash flows from financing activities: | ||||||||
| Borrowings on revolving credit lines | 57,700 | 148,100 | ||||||
| Repayments on revolving credit lines | (14,500 | ) | (27,600 | ) | ||||
| Repayments of long-term debt | (435 | ) | (420 | ) | ||||
| Payments on finance leases and financing liability | — | (234 | ) | |||||
| Deferred financing fees paid | (2,156 | ) | — | |||||
| Deferred consideration paid for acquisitions | — | (1,000 | ) | |||||
| Equity awards surrendered by employees for tax liability, net of proceeds from employee stock purchase plan and exercise of stock options | (5,166 | ) | (2,688 | ) | ||||
| Noncontrolling interest distributions | (803 | ) | (402 | ) | ||||
| Net cash provided by financing activities | 34,640 | 115,756 | ||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (56 | ) | (414 | ) | ||||
| Net increase in cash, cash equivalents and restricted cash | 12,280 | 108,475 | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | 33,227 | 38,201 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 45,507 | $ | 146,676 | ||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 4,037 | $ | 3,987 | ||||
| Income taxes | $ | 486 | $ | 2,405 | ||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES | ||||||||
| Three months ended | ||||||||
| (in millions, except share data) | 2026 | 2025 | ||||||
| Net (loss) income as reported in accordance with GAAP | $ | (0.4 | ) | $ | 36.0 | |||
| Amortization expenses | 4.0 | 3.1 | ||||||
| Acquisition and integration expenses | 10.3 | 8.1 | ||||||
| Gain on sale of Global Pump Solutions business | — | (64.5 | ) | |||||
| Other operating expense | 1.7 | — | ||||||
| Foreign currency remeasurement | 1.6 | 0.6 | ||||||
| Tax (benefit) expense of adjustments | (3.3 | ) | 20.2 | |||||
| Non-GAAP net income | $ | 13.9 | $ | 3.5 | ||||
| Depreciation | 2.2 | 2.0 | ||||||
| Non-cash stock compensation | 0.4 | 3.4 | ||||||
| Other income | (0.3 | ) | — | |||||
| Interest expense | 4.2 | 6.2 | ||||||
| Income tax benefit | (0.2 | ) | (1.6 | ) | ||||
| Noncontrolling interest | 0.2 | 0.5 | ||||||
| Adjusted EBITDA | $ | 20.4 | $ | 14.0 | ||||
| Earnings per share: | ||||||||
| Basic | $ | (0.01 | ) | $ | 1.03 | |||
| Diluted | $ | (0.01 | ) | $ | 0.98 | |||
| Non-GAAP net income per share: | ||||||||
| Basic | $ | 0.39 | $ | 0.10 | ||||
| Diluted | $ | 0.36 | $ | 0.10 | ||||
| Three months ended | |||||||
| (in millions) | 2026 | 2025 | |||||
| Net cash used in operating activities | $ | (13.1 | ) | $ | (11.7 | ) | |
| Acquisitions of property and equipment | (2.6 | ) | (3.4 | ) | |||
| Free cash flow | $ | (15.7 | ) | $ | (15.1 | ) | |
NOTE REGARDING NON-GAAP FINANCIAL MEASURES
CECO is providing certain non-GAAP historical financial measures as presented above as we believe that these figures are useful to investors and management in evaluating the Company's ongoing financial performance, and we believe that they provide greater transparency to investors as supplemental information to its GAAP results. A "non-GAAP financial measure" is a numerical measure of a company's historical financial performance that excludes amounts that are included in the most directly comparable measure calculated and presented in accordance with GAAP.
Non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, non-GAAP earnings per basic and diluted share, adjusted EBITDA, and free cash flow, as presented in the financial data included in this press release, have been adjusted to exclude the effects of acquisition and integration expenses; divestiture gains and expenses; amortization expenses for acquisition-related intangible assets; earn-out expenses (income); restructuring expenses; executive transition expenses; asbestos and other legal matter expenses; foreign currency remeasurement; and the associated tax benefit or cost of these items. Management believes that these items are not necessarily indicative of the Company’s ongoing operations and their exclusion provides individuals with additional information to better compare the Company's results over multiple periods. Management utilizes this information to evaluate its ongoing financial performance. Our financial statements may continue to be affected by items similar to those excluded in the non-GAAP adjustments described above, and exclusion of these items from our non-GAAP financial measures should not be construed as an inference that all such costs are unusual or infrequent.
Non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, Adjusted EBITDA and free cash flow are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. As a result, you should not consider these measures in isolation or as a substitute for analysis of CECO’s results as reported under GAAP. Additionally, CECO cautions investors that non-GAAP financial measures used by the Company may not be comparable to similarly titled measures of other companies.
In accordance with the requirements of Regulation G issued by the Securities and Exchange Commission, non-GAAP operating income, non-GAAP net income, non-GAAP operating margin, non-GAAP earnings per basic and diluted share, adjusted EBITDA and free cash flow stated in the tables above are reconciled to the most directly comparable GAAP financial measures.
Non-GAAP measures presented on a forward-looking basis were not reconciled to the comparable GAAP financial measures because the reconciliation could not be performed without unreasonable efforts. The GAAP measures are not accessible on a forward-looking basis because we are currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include acquisition and integration expenses; divestiture gains and expenses; amortization expenses for acquisition-related intangible assets; earn-out expenses (income); restructuring expenses; executive transition expenses; asbestos and other legal matter expenses; foreign currency remeasurement; and the associated tax benefit or cost of these items.
SAFE HARBOR
Any statements contained in this Press Release, other than statements of historical fact, including statements about management’s beliefs and expectations, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, both as amended, and should be evaluated as such. These statements are made on the basis of management’s views and assumptions regarding future events and business performance. We use words such as “believe,” “expect,” “anticipate,” “intends,” “estimate,” “forecast,” “project,” “will,” “plan,” “should” and similar expressions to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from any future results, performance or achievements expressed or implied by such statements. Potential risks and uncertainties, among others, that could cause actual results to differ materially are discussed under “Part I – Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended
