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February 25, 2025 Q4 and FY 2024 Earnings Report
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Forward-looking statements and Non-GAAP information This presentation contains forward-looking statements with predictions, projections and other statements about future events. 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 December 31, 2024 and may be included in subsequently filed Quarterly Reports on Form 10-Q, and include, but are not limited to: our ability to consummate the planned divestiture of our Fluid Handling business, the effect of recently announced acquisitions and the planned divestiture of our Fluid Handling Business (together, the “transactions”) on business relationships, operating results, and business generally, disruption of current plans and operations and potential difficulties in employee retention as a result of the transactions, diversion of management’s attention from ongoing business operations in connection with the integration of recent acquisitions, the outcome of any legal proceedings that have been or may in the future be instituted related to the Profire Energy, Inc. ("Profire Energy") transaction or other transactions, the amount of the costs, fees, expenses and other charges related to the transactions, the achievement of the anticipated benefits of transactions, our ability to successfully integrate acquired businesses and realize the synergies from acquisitions, as well as a number of factors related to our business, including the sensitivity of our business to economic and financial market conditions generally and economic conditions in CECO’s service areas; dependence on fixed price contracts and the risks associated therewith, including actual costs exceeding estimates and method of accounting for revenue; the effect of growth on our infrastructure, resources, and existing sales; the ability to expand operations in both new and existing markets; the potential for contract delay or cancellation as a result of on-going or worsening supply chain challenges or other customer-driven project delays relating to supply chain challenges or other customer considerations; liabilities arising from faulty services or products that could result in significant professional or product liability, warranty, or other claims; changes in or developments with respect to any litigation or investigation; failure to meet timely completion or performance standards that could result in higher cost and reduced profits or, in some cases, losses on projects; the potential for fluctuations in prices for manufactured components and raw materials, including as a result of tariffs and surcharges, and rising energy costs; inflationary pressures relating to rising raw material costs and the cost of labor; the substantial amount of debt incurred in connection with our strategic transactions and our ability to repay or refinance it or incur additional debt in the future; the impact of federal, state or local government regulations; our ability to repurchase shares of our common stock and the amounts and timing of repurchases; our ability to successfully realize the expected benefits of our restructuring program; economic and political conditions generally; our ability to optimize our business portfolio by identifying acquisition targets, executing upon any strategic acquisitions or divestitures, integrating acquired businesses and realizing the synergies from strategic transactions; and the unpredictability and severity of catastrophic events, including cybersecurity threats, acts of terrorism or outbreak of war or hostilities or public health crises, as well as management’s response to any of the aforementioned factors. Many of these risks are beyond management’s ability to control or predict. Should one or more of these risks or uncertainties materialize, or should any related assumptions prove incorrect, actual results may vary in material aspects from those currently anticipated. Investors are cautioned not to place undue reliance on such forward-looking statements as they speak only to our views as of the date the statement is made. Except as required under the federal securities laws or the rules and regulations of the Securities and Exchange Commission, we undertake no obligation to update or review any forward-looking statements, whether as a result of new information, future events or otherwise. While we report our results in accordance with generally accepted accounting principles in the U.S. ("GAAP"), comments made during this conference call and these materials may include the following "non-GAAP" financial measures: organic revenue, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, adjusted EBITDA, adjusted free cash flow, adjusted net free cash flow, non-GAAP gross profit margin, non-GAAP operating margin, non-GAAP earnings per basic and diluted share, adjusted EBITDA margin and selected measures expressed on a constant currency basis. These measures are included to provide additional useful information regarding our financial results and are not a substitute for their comparable GAAP measures. Management believes that these measures provide individuals with additional information to better compare the Company's results over multiple periods. Explanations of these non-GAAP measures and reconciliations of these non- GAAP measures to their directly comparable GAAP measures, to the extent the reconciliation be performed without unreasonable efforts, are included in the accompanying "Appendix." Descriptions of many of these non-GAAP measures are also included in our SEC reports. 2
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Q4 and Full Year 2024 Summary 3 Orders $541M Up 46% Q4 $219M +71% YoY FY $667M +14% YoY Q4 $159M +3% YoY FY $558M +2% YoY Q4 $19.1M YoY Flat | 12.0% FY $62.8M YoY +9% | 11.2% Y/E Backlog Revenue Adj. EBITDA • Delivered Record Full Year Revenue and Adjusted EBIDTA, But Below Original FY’24 Outlook As Q1 – Q3 Customer-Driven and General Market-Related Delays Impacted Results • Record Q4 and FY 2024 Orders Reflects Leadership Position(s) in Strong Markets … Which Has Continued into Early Q1 2025 • Entering 2025 with Record Backlog and The Added Benefits of Recently Completed Strategic Acquisitions … Supports Robust 2025 Outlook Record Full Year Sales, Adjusted EBITDA, Orders and Year-end Backlog
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Delivering Strong Results While Transforming CECO 4 $361 $527 $583 $667 B2B >1.0 2021 2022 2023 2024 2025 Orders $324 $423 $545 $558 2021 2022 2023 2024 2025 $26 $42 $58 $63 2021 2022 2023 2024 2025 $700 – $750 Revenue Adj. EBITDA YE ‘24 Backlog > $540M Backlog 3-year CAGR +36% B-2-B Consistently > 1.0x More Short-Cycle Business Mix Global Diversity Adds Balance Revenue at Higher Gross Margins ($MM) Margin Expansion 300+ bps More Productivity in 2024 and Growing Investments in Talent + Process + Footprint $90 – $100 3-Year CAGR +23% 3-Year CAGR +20% 3-Year CAGR +34%
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5 A Leading Global, Sustainable, Industrial Environmental Solutions Company Leading Businesses • Balanced, Niche Leadership Positions o Industrial Air o Industrial Water (new since 2020) o Energy Transition • Global: ~ 50% of Orders Outside U.S. • Strong Organic Growth o Averaged 10%+ Organic Since 2021 o Record Backlog Positions Us for Future Sustainable Value Creation • Focused Capital Allocation Model o Invest in Organic Growth / Expansion o Debt Management o Programmatic M&A o Stock Buybacks • Proven M&A Track Record o ~ 50% of Acquisitions Doubled Sales within 24 months of Deal • Management Aligned w/ Shareholders Programmatic M&A ~ Dozen Strategic Deals Since mid-2020
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6 Diversified Across Industrial Markets 100% Industrial Diversified Industrials Energy Transition / Power o Power Generation o Datacenter Power Management o Midstream Oil & Gas o Refining Processes o Petrochemical Processing o Nuclear & Geothermal o Carbon Capture o General Industrial o EV Production & Battery o Beverage Can Production o Food & Beverage Production o Metals o Water / Wastewater o Semiconductor 100% Environmental • Supply Water Treatment • Waste Water Treatment • Ultra - Pure Water Supply • Produced Water Treatment • Oily Water Separation • Reverse Osmosis • Emissions Management • Thermal & Acoustics Management • Gas & Liquid Separation/ Filtration • Cyclonic Separation • Combustion Management • Carbon Capture • Thermal Abatement • Silencers • Wet/Dry Scrubbers • Oil Mist & Smoke Removal • Odor Management • Dust Removal • Air Flow Management ~30% ~ 40% ~ 30% Energy Transition Industrial Water Industrial Air End-Market Solutions
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Key Financials 7
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Q4 and FY 2024 Financial Performance 8 Q4’24 YoY Q4 TTM YoY Backlog $541M 46% $541M 46% Orders Book to Bill $219M 1.38x 71% $667M 1.20x 14% Revenue $159M 3% $558M 2% Adj. EBITDA Margin % $19.1M 12.0% (2%) (60bps) $62.8M 11.2% 9% + ~70bps Adj. EPS 0.27 (0.01) 0.73 (0.02) Free Cash Flow ($4.4M) ($17M) $7.4M ($30M) Choppier Year Than Expected … Record 2H’24 Bookings Provides Momentum Into 2025 • Full Year Record Backlog – largely organic (M&A a modest add) • Record Q4 and FY Orders – strong finish to the year, with 2H’24 orders up ~ $100M sequentially vs. 1H’24 • Continued improvement in productivity, mix, and execution • TTM Adj EBITDA with strong incremental margins of ~ 40% • FY Adj EPS ~ Flat as Modest Growth Offset By Tax & Other Items • Approx. $15M of cash received in early January (see appendix) • FCF Shortfall = 2025 FCF Upside / Opportunity Highlights • Q4 Revenue up Modestly • Full Year Revenue up Low Single Digits • Q4 Sequentially up $23M | 17% TTM = Trailing 12 Month Negatively Impacted By Customer-Driven Project Delays and Order Timing Weighted to 2H’24
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Consistent Gross Profit / Margin Improvements Continued TTM basis 9 $128.2 $171.0 $181.3 $190.5 $192.6 $196.1 30.3% 31.4% 32.4% 33.6% 34.8% 35.2% 29. 0% 31. 0% 33. 0% 35. 0% 37. 0% 39. 0% 100 .0 110 .0 120 .0 130 .0 140 .0 150 .0 160 .0 170 .0 180 .0 190 .0 200 .0 Q4'22 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 ($MM) TTM = Trailing 12 Month FY’23 FY’22 FY’24 Past 12 – 18 Months • Approx. $10M of Sourcing and Efficiency • Pricing and Business Mix • Strong Project Execution • Acquisitions = Accretive Margins 2025+ Expectations • Continued Execution, Sourcing and Productivity benefits • Focus on EBITDA Margin Ramps as Strong Gross Margins are Maintained Significant Progress With Productivity, Price/Mix, and Project Execution
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Q4 2024 Cash Position and Liquidity Update 10 Free Cash Flow ($MM) YTD 2023 YTD 2024 YoY Gaap Net Income (incl. NCI) $14.5 $14.4 $(0.1) D&A $12.5 $14.5 Working Capital $16.7 $(13.6) Other Net Operating Assets $2.4 $9.4 Operating Cash Flow $46.1 $24.8 $(21.3) CapEx $(8.3) $(17.4) $(9.1) Free Cash Flow $37.8 $7.4 $(30.4) Gross Debt Position Dec 31, 2023 133.2 Cash Used / (Generated) from Ops ($24.8) M&A + CapEx Investments $105.3 Bank Debt Repayments $0.0 Other Cash Used / (Generated) $3.2 Dec 31, 2024 216.9 2024 2025 • Met all funding and investment obligations • Upsized Credit Agreement; access to unsecured facility and accordion to further expand • Leverage peaked in Q4; ~3.0x post-WK & Verantis • Funded Profire acquisition • Blended borrowing rate at ~7.0% • Fluids sale late Q1; proceeds will paydown revolver • Capacity increases as TTM EBITDA grows and expected strong FCF pays down debt Note: “Borrowing Capacity” is the lower of 1) EBITDA x Sr. Lev Ratio Cap less Revolver Debt or 2) Total Revolver less Revolver Debt and Letters of Credit.
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2025 and Advancing Market Leadership 11
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Record Orders Establishes New Record Backlog 12 * Starting Backlog – Revenue + Net Orders +/- FX + Acquired Backlog = Ending Backlog ($MM) B2B = Book to Bill $214 $312 $356 $391 $394 $371 $390 $391 $438 $91 $151 $146 $163 $146 $128 $145 $141 $162 $94 $116 $113 $129 $149 $154 $126 $138 $136 $159 -10 30 70 110 150 190 230 270 310 350 390 430 470 510 550 Q4'21 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Backlog Orders RevenueBook-to-Bill FY’22 FY’23 ~ 1.2x ~ 1.1x ~1.2x FY’21 ~ 1.1x YTD’24 Company Record $219M $541M Backlog and Sales Pipeline Supports Growth Outlook
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13 Balanced Revenue Model With $4B+ Sales Pipeline 30% Mix of Revenue Of Sales from Aftermarket, Services and Standard Product / Quick Shipment Sales 25% Of Sales from Repeat, Standard or Lightly Configured Engineered Solutions 45% Of Sales from Customized / Highly Engineered Solutions & Services Sales Pipeline 1) Mix of revenue below is in approximate terms and may fluctuate quarter over quarter 2) Pipeline is defined as Total Active Order Pursuits for Next ~ 18 Months > $4.5B Current Pipeline Up From $1.5B in 2021 ~ 40% of Sales Pipeline: • Opportunity to Replace ~ $10B Installed Base ~ 20% of Sales Pipeline: • New Markets From Innovation, M&A and Int’l Expansion ~ 40% of Sales Pipeline: • Industrial & Energy Markets Growing and New Facilities or Infrastructure / Capabilities 1) 2)
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2025 Outlook – Maintaining Strong Outlook 14 Full Year 2025 Orders B - 2 - B: 1.0 – 1.1x YoY midpoint 15% Revenue 700 – 750 YoY midpoint 30% Organic 15% Inorganic 15% Adj EBITDA 90 – 100 YoY midpoint 50% 12.8% - 13.3% YoY midpoint margin +180bps Free Cash Flow % of Adj. EBITDA 60% – 75% YoY +$45 - $65M Tailwinds Monitoring • Record Y/E 2024 Backlog • 2H’24 and Early 2025 Orders Momentum • Strong End Markets: Power, Gas, Diversified Industrials • Record Sales Pipeline > $4.5B • Recently Completed M&A Transactions • Tariffs / Other Trade and Tax Legislation • Interest Rates / Inflation • Economic Impact of Policies ($MM)
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Earnings Summary 15 Thank You For Your Interest and Thank You Team CECO • 2024 = Mixed Results. Overcame Challenging Market Dynamics Around Customer Delays While Driving Record Orders • Programmatic M&A = Completed 4 Strategic / Accretive Transactions in the Past 6 Months • Organic Growth = Balanced Across All Sectors with Energy-Power and Data Centers Booming • Margin Expansion = Increased EBITDA Margins 300bp+ Since ‘21 … Expecting Strong 2025 Margins • Balance Sheet Health = In Great Position Entering 2025 and Sale of Fluid Handling Expected Late Q1 • Shareholder Value = 2025 Outlook and Longer-term Growth Plans Expect to Support Value Creation
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Appendix Non - GAAP Reconciliation Tables AND Supplemental Materials
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Revenue Excluding Acquisitions NOTE: Amounts are computed independently each quarter. Accordingly, the sum of each quarter’s amounts may not equal the total amounts for the respective year. 17
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Non-GAAP Operating Income and Margin NOTE: Amounts are computed independently each quarter. Accordingly, the sum of each quarter’s amounts may not equal the total amounts for the respective year. 18
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Non-GAAP Net Income, Adjusted EBITDA, and Margin NOTE: Amounts are computed independently each quarter. Accordingly, the sum of each quarter’ s amounts may not equal the total amounts for the respective year. 19
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Adjusted Free Cash Flow NOTE: Amounts are computed independently each quarter. Accordingly, the sum of each quarter’s amounts may not equal the total amounts for the respective year. 20
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2024 Cash Flow 21 $33 $38 $7 $5 $5 $13 $30 2022 2023 2024 Project Delays Booking Timing January Week #1 24 Adjusted '25 Cash Timing % Adj. EBITDA 77% 62% 8% 50% FCF / Adj* NI 111% 119% 27% 110% Downpayment Dec’ bookings Free Cash Flow net headwind driven by project execution delays, driving lower billings Late Bookings in the quarter, with advances being paid throughout January (usual 30-45 days DSO) 1st week of January: customer collections driven by Oct/Nov bookings downpayment and project execution milestones 2022 -2023 FCF conversion very strong, with cash flow conversion consistently above 100% of Adjusted NI. Cumulative Reported FCF 2022-2024 yields ~ 80% of FCF/Adj. Net Income ‘24 P&L and Bookings YTD performance drivers * Gaap Net Income, excluding amortization and depreciation expenses (non-cash). ($MM) ~ ~
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22 Continuing to Execute On Portfolio Transformation 2020 – 2025 Programmatic M&A • Completed ~ Dozen Transactions ‘20 - ‘25 • Doubled Size in 50% of Acquired Companies Within ~ 24 Months • “Walked Away” From Many Transactions Not Meeting Screening Criteria • Built Ind’l Water … Added Key Ind’l Air … Expanded Energy Transition 2024 Completed Portfolio Actions Ind’l Air business Closed Jul ’24 Ind’l Air business Closed Oct ’24 Ind’l Air business Closed Dec ’24 2025 Portfolio Actions • Closed Jan 3, 2025 • Public Company and Corporate Cost Synergies • Locations: Utah, Alberta, Texas • Significant Growth: Industrial and International Markets • Significant Growth: Packaged Solutions • Announced intent to divest business during Q1 • Process initiated in 2024 • Brands … Dean Pump, Fybroc, Sethco and Mefiag • Locations: Indiana, Pennsylvania and Netherlands Fluid Handling Accretive Strategic Acquisitions to Advance Ind’l Air Leadership