Slides
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June 12, 2025 15th Annual East Coast Ideas Conference New York City
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Forward-looking statements and Non-GAAP information 2 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: the sensitivity of our business to economic and financial market conditions generally and economic conditions in our 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; 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, if any; our ability to successfully realize the expected benefits of our restructuring program; our ability to successfully identify and integrate acquired businesses and realize the synergies from strategic transactions; and the unpredictability and severity of catastrophic events, including cyber security 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 the 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.
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About CECO 3
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4 CECO Environmental Building The 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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CECO Environmental ... Mission Critical … 5 We Protect The Environment We minimize our environmental impact and help our global customers do the same We Protect People Solving customer challenges to ensure their employees work in a safe and productive work environment We Protect Industrial Equipment and Improve Processes We help maximize our customer’s investment in their operating systems and optimize their output
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6 Sales, Engineering & Admin Manufacturing & Assembly ❑ ~1,600 Employees worldwide Global HQ: Dallas, TX ❑ ~40% Sales Outside of US CECO Environmental ... Global Company To Serve Global Opportunities
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7 Organic Growth Programs / Investments • Sales Team, Engineers and Project Managers • CapEx: Biz. Growth, ERP Migration, Cybersecurity M&A Transactions • Active Pipeline … Air / Water / Energy Transition • Targeting ROIC > 25% Debt Management • Maintain a Healthy Balance Sheet • New Credit Facility Expands Capacity Stock Buybacks • $15M repurchased since 2021 (avg. price ~ $8.20) • $10M remaining on authorization Capital Allocation Strategy Investment Drivers CECO Environmental ... Focused Capital Deployment For Growth … Organic Growth & CapEx Up ~2X Since 2020 M&A Programs Remain Programmatic Stock Buybacks $15M Since 2021 Debt Management Maintaining Healthy Leverage
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8 CECO Environmental ... 100% Providing Environmental Solutions for Industry 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 Separators • Reverse Osmosis • Emission Management • Thermal & Acoustics Management • Gas & Liquid Separation/Filtration • Cyclonic Separation • Combustion Mgmt • Carbon Capture • Thermal Abatement • Silencers • Wet/Dry Scrubbers • Oil Mist & Smoke Removal • Odor Management • Dust Removal • Air Flow Management ~25% ~ 35% ~ 40% Energy Transition Industrial Water Industrial Air End-Market Solutions
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9 Balanced Revenue Model With $5B+ 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 > $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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CECO Environmental ... Delivering Strong Results While Transforming …. 10 $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% CECO Share Price up ~ 400% Since Mid-2020
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Recent Financials and Outlook 11
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Q1’25 Highlights Strong Start to the Year While Managing Through Uncertainty Demand in End Markets Continues to be Strong • 2nd consecutive quarter with orders >$200M • Book-to-Bill ~ 1.3x … Even with Record Revenues Strong Revenue and EBITDA Mostly As Expected • Revenue Ramping Up With Record Backlog • ESG&A Weighed (–) By Timing of Growth & Transaction Items Q1 Strategic Transactions Completed • Acquisition of Profire Energy • Divestiture of Global Pump Solutions Business Metric Result Performance Backlog $602 Record Orders $228 Record Revenue $177 Above Consensus Adj. EBITDA $14 Above Consensus Adj. EPS $0.10 Above Consensus 12 ($MM)
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Q1’25 and TTM Financial Performance 13 Q1’25 YoY Q1 TTM YoY Backlog $602M 55% $602M 55% Orders Book to Bill $228M 1.29x 57% $750M 1.23x 29% Revenue $177M 40% $608M 9% Adj. EBITDA Margin % $14.0M 7.9% 6% (250bps) $63.5M 10.4% 9% (60bps) Adj. EPS 0.10 (0.01) 0.71 (0.05) • Record Orders … up ~ $10M / 4% sequentially and ~ $82M YoY • 6-month bookings of ~$450M > TY2020 and TY2021 orders • Strong Gross Profit delivery … Margins within target range • Adj EBITDA lower reflecting higher sales, engineering and project expenses associated with record orders and backlog, certain period expenses. Highlights TTM = Trailing 12 Month • Record Revenue … up ~ $19M / 11% sequentially and ~ $51M YoY • ~28% from recent acquisitions … strong starts in Profire & Verantis • ~13% organic with strong backlog conversion, and contributions from 2024 delayed projects. • Adj EPS ~ Flat, negatively impacted by interest expense + share count • Record Backlog … Continued positive order trend trajectory; 9 out of 10 quarters of sequential growth
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Growing Gross Profit / Margin Improvements Sustained TTM basis 14 $128 $171 $181 $191 $193 $196 $214 30.3% 31.4% 32.4% 33.6% 34.8% 35.2% 35.2% 29. 0% 31. 0% 33. 0% 35. 0% 37. 0% 39. 0% 100 .0 120 .0 140 .0 160 .0 180 .0 200 .0 220 .0 Q4'22 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 ($MM) TTM = Trailing 12 Month FY’23 FY’22 FY’24 Past 18+ Months • ~ $10M of Sourcing • Pricing and Improved Business Mix • Strong Project Execution 2025+ Expectations • Continued Execution and Sourcing focus • Pricing to Mitigate Inflation • Focus on EBITDA Margin Ramps as Strong Gross Margins are Maintained Significant Progress With Productivity, Price/Mix, and Project Execution Company Record +67%
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Record Backlog Trend Continues 15 * Starting Backlog – Revenue + Net Orders +/- FX + Acquired Backlog = Ending Backlog ($MM) B2B = Book to Bill $214 $312 $371 $390 $391 $438 $541 $91 $151 $128 $145 $141 $162 $219 $228 $94 $116 $154 $126 $138 $136 $159 $177 0 40 80 120 160 200 240 280 320 -20 20 60 100 140 180 220 260 300 340 380 420 460 500 540 580 620 660 700 Q4'21 Q4'22 Q4'23 Q1'24 Q2'24 Q3'24 Q4'24 Q1'25 Backlog Orders Revenue $602 Book-to-Bill FY’22 FY’23 ~ 1.2x ~ 1.1x ~1.2x FY’21 ~ 1.1x FY’24 Company Record Backlog + Sales Opportunity Pipeline Supports Growth Outlook ~1.3x TTM’25 ~3x
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16 Continue 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* * Additional Information in Appendix Ind’l Air business Closed Jul ’24 Ind’l Air business Closed Oct ’24 Ind’l Air business Closed Dec ’24 Accretive Strategic Acquisitions to Advance Ind’l Air Leadership 2025 Portfolio Actions* • Closed Jan 3, 2025 • Public Company and Corporate Cost Synergies • Significant Growth: Ind’l Markets • Significant Growth: Int’l Markets • Significant Growth: Packaged Solutions • Announces intent to divest business by late Q1 • Process initiated in 2024 • Brands … Dean Pump, Mefiag, Fybroc and Sethco • Three locations: Indiana, Pennsylvania and Netherlands Fluid Handling
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Maintaining FY2025 Outlook … Managing Tariff / Inflation Situation Initial: Oct’24 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 Adj. Free Cash Flow* % of Adj. EBITDA 60% – 75% YoY +$45 - $65 ($MM) Maintaining B - 2 - B: 1.0 – 1.1x YoY midpoint 15%+ 700 – 750 YoY midpoint 30% Organic 15% Inorganic 15% 90 – 100 YoY midpoint 50% 12.8% - 13.3% YoY midpoint margin +180bps 60% – 75% YoY +$40 - $65 Guidance Assumptions Orders • Maintaining Strong Outlook • Encouraging Start to Year and Past 3 quarters Revenue • Maintaining Robust Growth • Very Few Project Delays or Postponements Adjusted EBITDA • Maintaining Outlook • Reflects Known Tariff Analytics Offset by Actions • Potential Risk with Add’l Tariffs / Other Inflation o Hard to quantify but $0-10M potential Adj. Free Cash Flow • Maintaining 17*Adj. FCF excludes interest and cash items in adjusted EBITDA
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Focused On Strong Growth and Sustainable Shareholder Value Creation Thank You For Your Interest and Thank You Team CECO 18 ▪ Recent Performance: Back-to-Back Quarters with Record Orders Demonstrates Well- Positioned Portfolio In Growth Markets ▪ Maintaining Multi-Year Track Record: Ongoing Transformational Journey Continues to Produce Record Financials, Top Quartile Stock Performance ▪ 2025 Outlook Very Strong: Solid Growth and Working to Offset Tariffs / Inflation ▪ Well Positioned Portfolio: Leadership Position in Industrial Reshoring, Power Generation, Infrastructure Investments and Diversified Industrial Growth
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Appendix Supplemental Data and Non - GAAP Reconciliation Tables
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Tariff Environment – Current State and Mitigation Actions Mexico / Canada China / Asia U.S. Capacity EU / ME / India ‒ Majority of supply is USMCA qualified or exempt ‒ Capacity to support additional demand ‒ Limited-to-No China exposure (importing to U.S.) ‒ Vietnam and Korea exposure limited to power and energy projects with exemptions ‒ Asia-for-Asia supply and project execution ‒ Internal capacity for fabrication in China and Korea ‒ Targeting 100% USMCA qualification or exemption ‒ EU for EU supply and project execution ‒ Internal capacity for fabrication in UK and Germany ‒ Securing customer deviation for US supply ‒ Customer-specified German tech for select projects ‒ Manufacture in-region, for region General • Working with our customers to ensure contractual language and protections are sufficient, secure favorable INCO terms • Anticipating and working to mitigate inflationary impact on raw materials • Resiliency and diversification of our operations and supply chain supportive of mitigation of tariff impacts * Assumes tariff rates and imposition on April 28, 2025 are maintained for the remainder of 2025 Better Positioned Than “Covid Supply Chain Shock Quarter(s)” to Handle External Disruptions … Rapid Mitigation Actions Underway to Largely Offset Anticipated Cost Risks* 20 ‒ Existing U.S. supply capacity addresses meaningful portion of U.S. demand ‒ Continuing to develop new sources of U.S. capacity and strengthen supply chain capabilities ‒ Selective insourcing to existing CECO facility
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Tariff Outlook for the Remainder of 2025 Category Gross Impact * Materials $1 – 2 Components (1) $1 – 3 Fabrications $1 – 5 Total $3 – 10 Ongoing Mitigations Key Assumptions • Canadian & Mexican imports retain USMCA compliance/exemptions • 25% tariff rates on “raw” steel and aluminum remain in place • 10% reciprocal tariffs remain in place • Tariff rates as of April 28 remain effective through the rest of the year 21 * Estimated impacts as of April 28, 2025 (1) Finished items including pumps, valves, filters, sensors, control panels Headcount & Process Optimization ~ $3 Supply Chain Efficiencies $0 – 2 Other Actions $0 – 1 Pricing Pass Thru Cost TBD Total Actions Identified $3 – 6 • We buy in-region, for-region. Cost and revenue bases are largely aligned • We are a portfolio of agile, niche businesses with adaptable supply chains • Surcharges/inflation triggers in contract T&C language • Use free trade zones, when possible, to defer duty payment • Canadian & Mexican imports are exempted by USMCA ($MM)
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Revenue Excluding Acquisitions 22 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. (dollars in millions) Annual Q1 Q2 Q3 Q4 Annual Q1 Annual 2023 2024 2024 2024 2024 2024 2025 2025 TTM 544.9$ 126.3$ 137.5$ 135.5$ 158.6$ 558.0$ 176.7$ 176.7$ 608.3$ (51.1) (10.0) (4.7) (7.9) (10.6) (33.2) (34.3) (34.3) (19.8) 493.8$ 116.3$ 132.8$ 127.6$ 148.0$ 524.8$ 142.4$ 142.4$ 588.5$ Organic Revenue Revenue as reported in accordance with GAAP Less revenue attributable to acquisitions
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Non-GAAP Operating Income and Margin 23 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. (dollars in millions) Annual Q1 Q2 Q3 Q4 Annual Q1 Annual 2023 2024 2024 2024 2024 2024 2025 2025 TTM 34.7$ 7.7$ 9.3$ 7.2$ 11.3$ 35.4$ 61.9$ 61.9$ 89.6$ Operating Margin in accordance with GAAP 6.4% 6.1% 6.8% 5.3% 7.1% 6.3% 35.0% 35.0% 14.7% Acquisition and integration expense 2.5 0.2 0.5 1.2 2.3 4.2 8.1$ 8.1$ 12.1$ Amortization expense 7.5 2.2 2.2 2.2 2.2 8.8 3.1$ 3.1$ 9.7$ Earn-out and retention expense (income) 0.7 - - 0.5 (0.2) 0.3 -$ -$ 0.3$ Intangible asset impairment - - - - - - -$ -$ -$ (Gain) Loss on divestitures, net of selling costs - - - - - - (64.5)$ (64.5)$ (64.5)$ Restructuring expense 1.3 0.1 0.4 (0.1) - 0.5 -$ -$ 0.3$ Executive transition expense 1.4 - - - - - - -$ -$ Asbestos litigation expense - - 0.2 - - 0.2 - -$ 0.2$ 48.1$ 10.2$ 12.6$ 11.0$ 15.6$ 49.4$ 8.6$ 8.6$ 47.7$ 8.8% 8.1% 9.2% 8.1% 9.8% 8.9% 4.9% 4.9% 7.8%Non-GAAP Operating Margin Operating Income as reported in accordance with GAAP Non-GAAP Operating Income
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Non-GAAP Net Income, Adjusted EBITDA, and Margin 24 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. (dollars in millions) Annual Q1 Q2 Q3 Q4 Annual Q1 Annual 2023 2024 2024 2024 2024 2024 2025 2025 TTM 12.9$ 1.5$ 4.5$ 2.1$ 4.9$ 13.0$ 36.0$ 36.0$ 47.4$ Acquisition and integration expense 2.5 0.2 0.5 1.2 2.3 4.2 8.1 8.1 12.1 Amortization expense 7.5 2.2 2.2 2.2 2.2 8.8 3.1 3.1 9.7 Earn-out and retention expense (income) 0.7 - - 0.5 (0.2) 0.3 - - 0.3 Intangible asset impairment - - - - - - - - - (Gain) Loss on divestitures, net of selling costs - - - - - - (64.5) (64.5) (64.5) Restructuring expense 1.3 0.1 0.4 (0.1) - 0.5 - - 0.3 Executive transition expense 1.4 - - - - - - - - Asbestos litigation expense - - 0.2 0.2 - - 0.2 Foreign currency remeasurement (1.0) 0.9 0.6 0.3 2.4 4.2 0.6 0.6 0.6 Tax benefit (cost) of expenses 1.3 (0.9) (1.0) (1.0) (1.7) (4.6) 20.2 20.2 20.2 Non-GAAP Net Income 26.6$ 4.0$ 7.4$ 5.2$ 9.9$ 26.7$ 3.5$ 3.5$ 26.3$ Depreciation expense 5.1 1.3 1.3 1.4 1.8 5.8 2.0 2.0 6.5 Non-cash stock compensation 4.5 1.7 2.2 1.9 1.7 7.5 3.4 3.4 9.2 Other (income) / expense 0.8 0.6 0.1 0.1 (0.3) 0.5 0.0 0.0 3.2 Interest expense 13.4 3.4 3.3 2.6 3.7 13.0 6.2 6.2 15.8 Income tax expense 5.7 1.6 1.4 2.6 2.3 7.9 (1.6) (1.6) 1.8 Non-Controlling Interest 1.6 0.6 0.4 0.5 - 1.5 0.5 0.5 0.5 Adjusted EBITDA 57.7$ 13.2$ 16.1$ 14.3$ 19.1$ 62.8$ 14.0$ 14.0$ 63.3$ 10.6% 10.5% 11.7% 10.6% 12.0% 11.3% 7.9% 7.9% 10.4% Basic Shares Outstanding 34,665,473 34,844,838 34,918,412 34,966,625 34,978,382 34,927,313 35,028,301 35,028,301 34,972,930 Diluted Shares Outstanding 35,334,090 36,175,998 36,302,664 36,488,788 36,559,198 36,381,910 36,689,320 36,689,320 36,509,993 Earnings per share: Basic 0.37$ 0.04$ 0.13$ 0.06$ 0.14$ 0.37$ 1.03$ 1.03$ 1.36$ Diluted 0.37$ 0.04$ 0.12$ 0.06$ 0.13$ 0.36$ 0.98$ 0.98$ 1.30$ Non-GAAP earnings per share: Basic 0.77$ 0.11$ 0.21$ 0.15$ 0.28$ 0.76$ 0.10$ 0.10$ 0.75$ Diluted 0.75$ 0.11$ 0.20$ 0.14$ 0.27$ 0.73$ 0.10$ 0.10$ 0.72$ Non-GAAP Operating Margin Net Income as reported in accordance with GAAP