Hi, everyone. Welcome to the 2024 Jefferies Industrials Conference. My name is Emily Orscheln, and it's my great pleasure to introduce Todd Gleason, CEO of CECO Environmental Group. Great. Thank you. Appreciate the introduction. Also wanted to thank Jefferies, the firm, for hosting the conference, giving us an opportunity to meet with a lot of investors today, and of course, present the story a little bit here, answer some questions from folks in the audience, and then meet with some more folks later. So, a great afternoon for us, and I hope everyone else is getting a lot out of the conference. I'm sure you are. I'm gonna start. Again, Todd Gleason, CEO of CECO Environmental. With me here today is Peter Johansson, our Chief Financial and Strategy Officer, a nd so he is blending into the audience right behind folks. And, but we're both obviously available to answer questions, whether it's here in this venue or today at the conference in general. So let's dive into the material. I'll try to leave time for questions at the end, of course, and we're not gonna go into all the detail here, but happy to cover anything that you might be interested in. As always, we highlight that we have, we're gonna be making some forward-looking statements, non-GAAP financial information, so please be warned. That said, gonna just start with some overall high-level, you know, general overview of CECO Environmental. In no particular order, but I guess the way the slide is sort of cascades from top to bottom, for those of you that have been paying attention over the last few years, especially since I joined in mid-2020, we have had a, I think, a very steady, systematic transformation underway. You know, if you were familiar with the company before, many very important core pieces of the business still in place as are strategic and important to our organization, but we continue to transform the portfolio to be more global, to be more diversified. In Industrial Air, we've added Industrial Water, which was not a piece of our mix before. And then, of course, we're maintaining our leadership position in what had long been our core strategic thrust, which is energy, and I believe that we're also getting in very good position for where energy is trending over the long term with respect to the transition to a lot of different types of energy solutions. On the macro trend side, these themes have both been beneficial for the last more than year, couple years coming out of COVID. There has been a significant investment globally in reshoring of industrial, you know, capabilities, not just in North America, but other locations, and we feel well positioned to serve those industries as they face certain challenges in their industrial processes. No doubt there's billions, trillions of dollars being spent on a variety of infrastructure needs to, again, support that type of growth, as well as just expand with the global infrastructure investment. As I already mentioned, the energy transition, a tremendous amount of investment to sustain our energy infrastructure, to build new infrastructure related to energy. There's not a day goes by that there's not another headline associated with the needs of power, and how we're serving those power needs, or the needs to capture different forms of energy and grow new areas of energy, albeit could be hydrogen or other areas of future utilization of energy. So the macro trends for us, where we feel we're very well positioned for, and we'll come back to this in a second, continue to go well. And so as we have been diversifying our portfolio and transforming it, as we've been positioning and taking advantage of these favorable market trends, our capital allocation strategy has been very consistent. It's all about investing to expand our core organically. That's where we spend our first set of dollars, is on our own capital needs and on our own resources to grow organically. And then we've for the last few years, had a very systematic, programmatic M&A program, where we have, we believe, made accretive strategic acquisitions to advance our leadership position in air, build a niche leadership position in Industrial Water, and bolster our and maintain our leadership position in a variety of important energy markets. And we do that with small to medium-sized transactions, which fit our model over the last few years. And then we maintain a very healthy balance sheet. It's important to us, and we'll talk a little bit about some of our financial profile in a second. Along the way, we're pleased to have been recognized for our performance in the top right of the slide, you know, with respect to, you know, Forbes highlighting us for a couple of years in a row as being a leading smaller, industrial, you know, performer in the stock. Our enterprise value, when I joined in 2020, was about $300 million, so pleased to have, you know, risen above the $1 billion mark in market cap and enterprise value. Although today's stock performance may have taken us a hiccup, a whisper below, we'll be back. And so, along the way, we would say our performance isn't just because we tell a good story, it's because we deliver great financial results, and we'll go through some of those. But consistently driving very strong double-digit revenue, very expansive margins, and good EPS growth is important. And again, we've been growing significantly, even though we have done ten acquisitions in the last three years, 75% of our growth has been organic. And so again, it's important for us to continue to demonstrate that we grow, whether or not it's because of acquisition, what we do with those acquisitions post integration, or we grow because of the investments we're making for vertical market and global expansion. What do we do? Well, we're gonna go through some of our product categories and some of our positioning. But simply put, we think our mission and our purpose is an extremely important part of what we do, because our customers, which are all industrial, heavy industry oftentimes, they wanna maximize the production of automotive vehicles. They wanna maximize the production of steel. They wanna maximize the production of semiconductors, and the list goes on. Along the way, everything they do in their processes can create airborne or waterborne pollutants and contaminants, and those can be dangerous to their employees, so we protect them. We help remediate, eliminate, remove, those contaminants. It's also can be very hazardous to the environment. Whether it's regulated or not, you can't just protect your employees and then flush it out the top of a chimney and let the community deal with it, and so we help to capture, remediate, and so on and so forth, those contaminants. So we're protecting their people, we're protecting the communities and the environments in which they live, and we're protecting their significant investment in their industrial equipment. So we would say, and we believe strongly, that our customers demand a solution like ours on their site because their people are valuable, their position in the communities and the environment is valuable, and their investment, certainly in their industrial facility, is extremely valuable, and we help them to maximize their purpose and their goals and objectives. One example is, since we're talking about a little bit of M&A, and we usually highlight our most recent acquisition whenever we're having a chance to see investors, you know, for the first time since we last did a deal. This is the last transaction that we completed, just completed it about a month ago. Like most of our acquisitions, this is something that we found through our network, through our platform businesses, where we had a relationship, very understanding with our customers. For us, it was an opportunity to continue to establish more of an advanced Industrial Air leadership position. EnviroCare International is the name of the firm. They've been around since 1981. Relatively small, with $13 million of revenue, domestically focused on the U.S. This acquisition fits our model of a very strong, capable leadership team that wants investment for growth, wants to grow internationally, wants to go and advance their position in new vertical markets. And very similar to the other nine acquisitions, we heavily incentivize the management team to stick around, be part of our growth program, invest, whether it's capital, resources, or just the network for them to go and leverage our already existing team in the Middle East or in East Asia or in Europe or in other vertical markets where they might not have access to in the United States, and help them get from what we think is, you know, $13 million. You know, why not help them double in the next few years, and do so, which creates a tremendous return on invested capital? EnviroCare is another niche leadership business that we're adding to our already strong Industrial Air portfolio, and they provide, we think, just a tremendous additional growth vehicle for that platform. And so speaking of other product categories, from left to right, we highlight just a few of the either standard or custom-built products that we make for Industrial Air. In the middle of the slide, it's only larger because the pictures are bigger. It's not trying to represent that Industrial Water is a bigger piece of our portfolio. It's about a third, maybe a little bit less. But Industrial Water, we highlight, again, some examples of the types of systems that we build to solve complex problems that our customers might have. On the far right, these are just, again, a few examples of where we provide gas separation or exhaust system solutions, and processing complexities that are associated with energy. For us, if you think about our portfolio, besides all the things that are highlighted on this slide, which I'm not gonna read, about a third of our revenue is driven by very standard products that either are short cycle, aftermarket parts, replacement filtration and membranes, smaller pumps that go through distribution. So when I wake up in the morning, I like to say, "If I'm shooting for $100 of sales today, the first $30 is gonna come in in a way like clockwork because we're selling it through distribution, it's aftermarket parts and services," and so that's the first approximately third of our revenue, and that's spread between air, water, and energy somewhat. The next third, it's actually a little bit larger than that, is the fact that we have over a $10 billion installed base. And when our products serve the purpose for a decade or two or three decades, we're gonna get that phone call from the customer when it's actually finally time for them to replace it. And so that repair and replacement cycle is very important to our sales, and one of the things that I think sets us apart is that large installed base of high-quality products that have lasted for a significant, maybe even outlasted, most of our competitors in the marketplace. So we're gonna get a high win rate when we get an opportunity to replace a product that they've been satisfied with for a decade or more. The last third are where we go when we bid on specialized application engineer-specific custom products that not everyone in the world can do, trust me. And we can design solutions for air, water, and energy that meet their, our customers' specific needs. And so that's the way that you can think about our portfolio as well. If you're thinking about rotating the Rubik's Cube, there's a suite of diversified solutions for air, water, and energy, but across all of them, they have a similar profile in either short cycle, repeatable sales, getting calls to replace our already existing equipment in their facility, if it's a brownfield facility, or of course, if it's a new facility or a renovation or whatnot, then we're bidding on a set of very important solutions for them to expand their capabilities. A look back at our mix in 2020, as I already highlighted, we were about $300 million in revenue. We expect to end the year based on our forecast, a little over $600 million. So in the last four years, we've doubled. 75% of that growth, again, has been organic. About 25% has been inorganic. You look at the business mix, heavy energy, which is an interesting opportunity for a significant amount of investment, but too weighted on energy was, I would say, a criticism of CECO in the past, and what we've done now is we've really balanced the portfolio, again, through a series of investments to create a more diverse portfolio. And so you can see in the middle of the slide here, how we've sort of shown our year-to-date, you know, 12-month financials, and, you know, and what our backlog looks like, and of course, you know, the share price from just a few days ago. It moves around as everyone else's does, but a tremendous amount of value that we believe we've created for our shareholders while we've been operating our model very systematically. Again, not gonna read this slide, but here's a little bit more detail. Again, the diversity does come through with our brands, our products, and the reason I'm gonna repeat the word niche leadership is because it might look like a lot to you, but most of our customers are buying a niche Industrial Air solution, and they know our HEE-Duall brand. They know our Adwest brand very well. Somebody else might be buying a Industrial Water solution. Tyson Foods is looking for a solution. They know the Kemco brand very well. So what else can we help Kemco do in food processing? What else can we help Kemco do in industrial laundry, which also knows them very well? What other acquisitions might we wanna do to double or triple down on that leadership position in those niche industries? So while it might look like a busy series of brands and solutions, I can assure you that the swim lanes that these participate in, that they're a fast swimmer in those swim lanes, and there's room for us to continue to grow. We're global. A lot of little dots on the screen here, you know, just demonstrate that we have either sales and engineering, manufacturing, project management, or other service locations. We're headquartered in Dallas, Texas. For those of you that don't wanna miss the opportunity to come down, it's still 100 degrees outside. Welcome to hang out with us for a few more weeks before it gets cooler. But, you know, we're very global, and, we're proud of the investment that we've made to serve our global customers. I think that investment continues to pay off, with respect to not only our growth, but really just our understanding of the market opportunities. We probably spend more time talking about this than most companies. We have, over the last four years, really driven a model within the organization of opportunity, pipeline, market growth. So when Peter and I are doing operating reviews every month or every quarter with our, eight or nine operating platforms, one of the questions we ask repeatedly in those is: What's your pipeline look like? What do you see coming down the pike, you know, what do you see on the horizon? We've grown our pipeline from $1.5 billion- $4.5 billion, again, over that four-year period. A third of that has come from the acquisitions that we've added, roughly, right? Because we've made 10 acquisitions, they all come with very attractive pipeline opportunities that has helped us. You know, a third of that is our ability to move into more vertical markets and to go and approach more vertical markets because we've made organic and inorganic investments. Now we're qualified to go after those vertical markets and to have even more of a bid opportunity. The last third is our global expansion, our ability to go after more geographies and even more opportunities to smooth out our growth. We raised the guidance, not just because of the acquisition that we did, that I just mentioned in EnviroCare, but because of the pipeline that we see, because of the second half opportunities that we believe are in front of us, that are gonna yield the right sales, margin, and EBITDA, and free cash flow growth. So we were confident enough to raise guidance for the second time, I think, this calendar year. You know, we introduced guidance, annual guidance, for the first time about three years ago, and we're proud that our view of our annual performance has proven to be something that has been very transparent with investors, so we can help them understand our expectations for growth. And then, as we've met or exceeded our guidance, we think that has given people the confidence that we're not only growing organically, expanding our margins now very attractively, but we're finding smart acquisitions, and we're using our capital wisely to create that sustainable performance. Again, you might have had a chance to listen to or read the transcript or see our slides on our most recent quarter, being the second quarter of the year. From left to right, 6% sales growth, about 20-plus% gross profit growth. Our gross profit margins or our gross margins were up not quite 500 basis points. That's a combination of improving our productivity, improving our execution and our business mix. Then I think, you know, also just the acquisitions have been adding to a better business mix overall. So we believe that. We talked about coming into the year that gross margins and EBITDA margins were probably our top financial goals and objectives. Not that growth wasn't, but we knew that we were gonna have a little bit of a reset in terms of getting after-margin opportunity for ourselves here, and we've invested in an operating excellence organization, project management, to prove to the organization and, of course, to our investment community, that we can get sustainable margin expansion to a level that we're going to, we're gonna be able to continue to support and leverage. leverage. First half, again, the, you know, the only thing that I want to highlight here, because there's a lot of very positive indicators in terms of growth, top line, EBITDA margins, EPS, et cetera, is that our orders are down 7%. Now, here's the interesting thing: if you were to remove a couple of large orders that booked last year, we are up double digit. So at our core, the sort of small, medium to medium large-sized jobs, chugging along. Or had we booked some of the medium to larger jobs that we believe we're going to book in the second half of the year, timing, I would say, then we would be up double digits. So I don't think that our orders being down 7% is an indicator of some sort of interesting economic phenomena, although we appreciate that numbers are numbers, and you're going to take a look at that, and you're going to have questions about that. But we feel very good about the pipeline that we've built and what we think are going to happen in the second half of the year with an orders perspective. So for us, you know, we're pleased at our performance for the year, but we know that orders is going to be a stronger indicator as we exit 2024. We've been maintaining near-record backlog levels. When I started, we were about half of this backlog. This slide goes back to Q4 of 2021. You just have to take my word for it, that when I started, we were about $170 million of backlog, give or take. And so we've more than doubled our backlog, which obviously gives us a lot of visibility and confidence for future revenue growth. And again, this is with orders being kind of flat year- to- date. So again, we expect that as we grow our order book in the second half, that backlog will likely potentially get up above $400 million, maybe higher, which will be exciting. And then I'm going to wrap up here pretty quickly with just a couple of slides. You know, our quarterly results reflect, I think, our ongoing commitment to articulate what we're going to do and deliver on it. As we said when we started the year, we gave guidance that we've now increased. We talked about the fact that we felt that we had strong gross margin expansion and EBITDA margin expansion in the year, and we've been delivering that. We have been highlighting huge opportunities in energy related to power. We have been highlighting significant growth and opportunities in data center expansion that we invested about 18 months ago to get in position for buying a relatively small U.K. based genset enclosure provider, which has now driven a growth within that business of 250% in about two years. So the types of acquisitions we look for in high growth market opportunities where we can invest either capital or resources to help unlock their growth, coupled with our commitment to expanding our margins to demonstrate that it's not just about top-line growth, it's also about margin expansion, but for the last few years, we've been articulating to the investment community that we're investing heavily in global expansion. We've gone from 25 resources in India to 125. We went from, you know, a small but nimble commercial team in the Middle East to a large, capable project management, application engineering, and commercial team in the Middle East. We went from not having a facility in East Asia and South Korea to now having a growth model in Korea, as well as a manufacturing assembly facility in Korea. So those are just some examples of the type of investments that we've been making. We're also now making more investments in operating excellence and lean enterprise, and it's showing, right? It's showing in our 480 basis points of gross margin expansion or a 150 basis points of EBITDA margin expansion. So again, our financial commitment to the investment community, which is the same one that I make to myself, is, you know, when we give guidance, we're going to show exactly what we think is our best case. But the things that are important to us this year, which is second half of the year, showing strong orders growth, starting to head into 2025 with a lot of momentum back on the top line, and then sustaining those 34%-35% gross margins and getting EBITDA margins up even higher. And in fact, if you want to know what our stated goals are, which we're pretty consistent about, when it comes to that, this is what we've stated, not yet as guidance for any particular point in time, although we give a range here, of 25%-26% on the far right side of the slide. But for reference, we say where we started in 2020 was a $325 million, approximately 9% EBITDA margin company. Where we are at the end of last year was a $545 million revenue company with margins that were up 160 basis points in that time. While we were doing those investments, as I said, not to limit our margin expansion, to position ourselves, we think, for even more growth and then significant conversion on that growth. And that conversion is really sort of highlighted here in these next three boxes of margin expansion. How do we go from $540 million of revenue to $700 million of revenue? That's going to be a combination of double-digit organic growth with additive associated with our programmatic M&A, right? How do we go from 10.5% EBITDA margins to 15%? It's the things that are highlighted here. About a third are going to be the gross margin enhancements that we're already showing you. So where we were last year at 10.6% EBITDA margins, we're already showing you 100 basis points of expansion from that, in large part because our gross margin expansion is coming through. The next 150 basis points also blends in a little bit to our gross margins, and that's our lean deployment, supply chain, operating excellence to give us that really combination of just gross margin lift from better projects, better business mix, acquisitions, coupled with 150 basis points of gross margin lift associated with lean enterprise and productivity, t hat gets you 300 basis points, almost two-thirds of the way there. The last one-third that will get us to that mid-teen EBITDA margin, whether that happens to be before $700 million or slightly after $700 million of revenue, is because we know we're gonna get significant conversion on our investment that we already have in place in SG&A. So the way we see it is every $10 million dollars or $50 million dollars or $100 million dollars of growth over a core platform from a starting point, needs to deliver 20% to 25% of EBITDA margin. And that math is exactly how we're going to get to these mid-teen EBITDA margins, and we think we're well on the way. So with that, I'm gonna stop. You know, we think the power of CECO is the operating model that we've put in place, the fact that to our customers, these names matter. To our customers, this is how they know us, right? And so how we leverage what looks complex, but to us is niche leadership, right? And the companies that I think we not saying we model after, but that in our 30-year industrial career, whether we worked there and we helped companies leverage this type of diversity, or whether we know whether it's our board members or our network, that they worked there, and we obviously understand the success model that Roper drove, AMETEK drove, and, and others that kind of came before us. To us, that's a bit a big part of the strategy that we have been taking on over the last few years, and we feel well positioned to continue to demonstrate our leadership position in those sectors that I just mentioned. With that, I'll see if there's any questions from the audience, and we'll let you have the rest of your day back. I probably answered everything, but just in case there's one. We got one up here. Thanks, Todd. Hey, Keith. Could you talk a little bit about the IP portfolio? Yeah T hat I guess can serve or does not serve, but I think it does serve as a moat f or what you guys are doing? Yeah, it's a good. So the IP portfolio. So look, there's pieces of our business where that's extremely important, right? It is defensible. You know, it's, you know, whether it's separation, filtration in gas, where we have patents, and we have, you know, PhDs that are constantly working on advancing it, or even some of the acquisitions we've made, where they, again, have a unique portfolio. Kemco is an example where, you know, it would be hard to penetrate some of the things that they've put in place if you're a competitor, right? And how we protect that. I will say, interesting, equally, if not more so of value, is our application engineering knowledge, the tremendous amount of installed base and experience we have. So our customers, they might not be only buying us because we might have an IP that we can defend. There might even be ways that they can think about working around that, right? But they appreciate that we have certain IP that is hard for them to get an advanced solution like ours, but more importantly, they would struggle, I think. You know, we typically ricochet against one or two really good, strong competitors like us, that they sort of come up with their own mousetrap, and they have a similar profile to us around their ability to do application engineering and design work, and it's a relatively small market. So it might look very fragmented, and how many competitors can you have? Of course, there are a number of competitors in every, you know, geography or in every vertical market, but we feel that in every one of our swim lanes, we're going up against one or two formidable competitors that represent the type of solutions we do, but our ability to be more global, our ability to be more diverse, is what sets us apart. I'm just curious, the range of the replacement cycle across all those different brands you have on the slide there, you know, how quickly, you know, the low end and high end, is it five years for something and 20 years for something else? I'm very unfamiliar with the equipment, but is there service opportunity on this stuff, and do you guys capture that? Does the channel capture that? Like, how does that work, if it exists? These products last for a long time. By and large, historically, most of our pieces of equipment don't have a lot of rotating equipment and haven't historically had a lot of aftermarket service or, you know, or replacement membranes, et cetera. but we have been building a profile to have a lot more of that with our acquisitions, like Transcend's a great example, a $20 million company, or at least an acquisition about $15 million of revenue. About half of it is replacement, you know, aftermarket membranes and filter media, et cetera. and so we continue to build a portfolio that looks like that. but for us, these products really help to be leaders in this space because of their durability. Hey, Todd. Hey. If you can comment on your competitive positions in each of your major segments. I understand that you have many segments, so maybe we don't have enough time to go into all the details. But do you have some kind of a summary conclusion you can share with us? For example, I mean, if I were to borrow, let's say, GE's Jack Welch's way of thinking, what percentage of your revenue are from the top three positions or whatever other metrics that you like to use? Thank you. If one of our businesses is not in a top three position, we're not gonna own it in three years. And there's very little things that I need to sell because of that. So of our eight or nine platforms that comprise of these brands, each of them, in the geographies or the markets that they currently serve, are a top one, two, or three. Several are clearly number one. Several are not, but they're close. None of them. We're not in these niche markets because we're scrapping to get in. There are a few, like Industrial Water, where we've been very organic and very selective by helping to break in some new markets and learning from those. But then we went out and made acquisitions to really bolster our leadership position and to establish a good sort of foundation or a toe in the water, so to speak. So other than Industrial Water, our Industrial Air and our energy businesses are well established as a top three player. Industrial Water, Kemco, very strong in the markets that they're in. And now, you know, other, you know, DS 21, with their approved vendor list relationships with South Korean EPC firms, have allowed us to start to really establish an even stronger position in a space where nobody knows who has a leadership position. Very fragmented. So for us, I think it's a great question. And if there's businesses of ours that we don't feel are either an opportunity for us to invest for a top leadership position, then that's not a business that we'll own. I think we're out of time. Thank you. Again, thank you, Jefferies, for today, and look forward to catching up with anyone that has any additional questions. Take care.