Hi, good morning. Welcome to the 27th annual Needham Growth Conference. Apologies for the slight delay. Our next session will be a fireside chat with the management of CECO Environmental. With us today is Todd Gleason, CEO, Peter Johansson, Chief Financial and Strategy Officer. My name's Jim Ricchiuti, Senior Analyst in the Equity Research Department at Needham, covering industrial technology stocks. Todd and Peter, welcome to the conference. [crosstalk]. Thanks for spending some time with us today. A lot of news from the company yesterday evening, which we'll attempt to parse through this morning. First, either of you, why don't you go through the press release issued by CECO after the close? Yeah, thanks, Jim. And start by saying I appreciate the opportunity to participate in the conference, of course, and to speak with you and certainly answer questions on the topics that you just raised and other items that are pretty exciting at CECO. Look, I'll start by saying our press release yesterday was designed to be very transparent about material news to the investment community, but also for us to dive in and have conversations with our organization because some of these items are unique to a publicly traded company. So in the order, I think, of relevance to what we're talking about here, we acknowledged in our release that, and pre-announced softness in the fourth quarter, which we had been experiencing throughout the year. And I'm going to dive into that a little bit. It's an interesting dynamic for CECO, at least, that when we say softness on the top line revenue that drove an earnings miss in top line and bottom line in the fourth quarter. It's unique in that that softness isn't a lack of sales. Those are sales on the P&L that are kind of being pushed around a little bit into 2025 now because we have booked the orders. Those are sales that are going to roll into 2025, and in our bookings in the fourth quarter of $210 million or higher, because we haven't given final numbers, but we've certainly given the range where it starts of at least $210 million. Those are interestingly sales. We have purchase orders. We have at times deposits and guarantees. Our orders do not debook. I mean, even during COVID, we had very little orders in our backlog that debooked. So the dynamic of the fourth quarter is an interesting one in that we had incredible record bookings of $210 million or more. Our previous record had been $165 million, give or take. So Jim, we wanted to be able to provide that incredible news to the investment community so they could understand how rich our pipeline is and how well positioned we are to capture that pipeline. And we don't think that was just a moment in time. It certainly represents a very healthy dynamic in multiple markets. However, we struggled a bit with our P&L revenue because we had three or four large projects that they did. Oh boy. They did get revenue. Did I get lost? You froze a little bit. You're back. Okay. The revenue in the fourth quarter, much like the third quarter, had been pushed around a little bit by several large projects that did start to activate. They were active in the fourth quarter, but just not enough for us to recognize the $15 million-$20 million worth of revenue that we expected to recognize from them, which now rolls over to the first half of 2025, maybe even the first quarter, but certainly the first half of 2025. So that incredibly strong bookings is exciting and I think reflects many of the markets we're in, especially in energy and power, where we had a $40 million order in the quarter. And we think that there's going to be many more opportunities in power for us of similar size in the coming years. But we had multiple jobs that maybe it was related to the election a little bit. Maybe it was related to economic factors regionally, maybe even interest rates a little bit. But we had a choppy year 2024. I would say some of it was when you're seeing the type of opportunities we were seeing early in 2024, we should have never raised guidance. I think I own that, that we were optimistic that these orders were going to happen earlier in the year and that we weren't going to continue to see project delays. So I will take ownership of the optimism. And the reason we raised guidance earlier in 2024 should have never happened. But we did get the bookings. Those bookings and the revenue, we believe, are reflected in our very attractive 2025 guidance, which shows 30% top line growth, half of which, give or take, is organic. Half is related to the acquisitions we've done already to start the year. About 50% EBITDA growth, again, half of which is at least half of which is organic, driven by good margins, good productivity, and good execution. The other half of our EBITDA lift is from acquisitions that we've made. So again, very excited about that. Then I'll stop here in a second, but we also announced our intent to sell our Fluid Handling business, largely a pump portfolio, very well positioned in the pump market. We made the decision after a lot of deliberation that while it's an attractive business and a very healthy business with a nice future, that the type of investment, especially in terms of programmatic M&A, would likely not be a space that we would see ourselves being aggressive, and therefore, as we balance out our focus on Industrial Air, Industrial Water, and Energy Transition, our pump portfolio didn't neatly fit in any of the three, and the fact that we're likely not going to be a large investor in future growth makes sense that there's a better owner out there, and then we expect a good transaction potentially to close at the end of the first quarter, which is our belief, and that's, we think, how things are trending. There's a lot of interest in this very good business. And then we'll use the proceeds to continue to keep a very healthy and good balance sheet so that we can invest in businesses that we think better fit our strategic profile. Okay, good. That was a good recap. There was one other development, and you may want to highlight the other acquisition you went after as well. Yes. Yeah. So we acquired a very strong and a great fit for us industrial air business called Verantis, named Verantis, based just outside of Cleveland, global business, approximately $45 million in revenue. So [it] would be one of our larger acquisitions we've made. In the year 2024, we acquired three businesses in industrial air, EnviroCare, WK Group out of. It's an international business out of Germany and Singapore, and now Verantis. We are very excited about those acquisitions. The positive impact of that acquisition, Verantis, to our 2025 guidance is offset by the sale of Fluid Handling. They're kind of a net net. That's why we didn't increase guidance for 2025 because we know and we anticipate the divestiture of Fluid Handling just offsets that. Now, I will say this. As we entered 2024, we had those transactions very much in our M&A playbook or pipeline. We expected maybe more than one, but at least one to close in the first half of the year. Those dynamics just didn't happen. Us acquiring a business at the end of the third quarter, at the beginning of the fourth quarter, and at the end of the fourth quarter are great, and they really position us well. We thought maybe we would have more of those acquisitions earlier in the year. That benefit could have been interesting in our financials. Wasn't necessarily in our guidance to start the year, but you always sort of think that if things go better or worse, then you potentially are going to be bringing in some of these acquisitions earlier in the year. So the timing of those was also a little disruptive, but not necessarily to our guidance. But I would just say it took us longer to close on some of the transactions, but that's the nature of the beast. Okay, and thanks for helping also with. Jim, regarding Verantis, I might add that back in 2019, CECO was close to an acquisition of the same business, different perimeter, a little smaller. And that didn't come to pass. So they've been on our radar screen now five plus years. So it was a natural outcome for us to acquire this business. And I would argue it's actually a healthier business than when we looked at it five years ago. Great. Thank you, Peter. I want to go back to the shortfall and the customer delays. Help us with understanding the nature of these delays. Are we talking about multiple customers, different end markets? And I guess the question I'm getting to is, as we look forward, is there something about the size or the complexity of these projects that raises the potential that we could see rolling delays? That's where I'm going with this. Yeah, of course. I would be asking that. And I think that it's certainly a fair consideration from any investor. And certainly we've asked similar questions ourselves, right? Look, there are always going to be moving timeframes, timelines. And we have the last few years, I would say we offset negatives with projects that are moving faster. And 2024 was an interesting dynamic. We saw it in our bookings. The first and the second quarter were good bookings, but not great. Our third and fourth quarter were great. That we believe when we entered the year, those opportunities were going to be more balanced throughout the year. And so the good news is they did book. And now we're seeing a more balanced booking activity level as we enter 2025. So in large part, whatever was creating those booking delays has abated. We feel that we're on a very good trajectory with our customers and our markets. Similarly, we entered 2024 with a handful of fairly large projects, one which we've mentioned, a large metals partner, which is a significant project, about $30 million, $20 million of revenue, very well could have happened in 2024 for us. The customer had a couple of reasons that they wanted to delay the project from starting in the first half. We were working under the strong understanding that it was going to start in the third quarter. It didn't. It was going to then restart in the beginning of the fourth quarter. It got pushed to the end of the fourth quarter, but is now active. We understand the reasons for that from our customer. It's not a financial or economic reason. They had a staged process that they needed to get things in order. Sometimes it's other suppliers and supply chain issues. In this case, about $20 million of revenue in 2024 has now sort of slid, give or take, into 2025. That gives us more upside or conservatism potentially for 2025. We had already booked some in our guidance, and we've incurred several projects like that, Jim, not of that size, but another $15 million project internationally that was a slower start. It's unfortunate because I feel like we could have just been a little bit more conservative with our guidance to reflect some of these larger projects had we known that they were going to have slower starts, and each of them have a different reason a little bit, and so I don't know that I feel it was a market. It was a handful of customers and a handful of projects that were large enough to matter for us. Now we continue to diversify our portfolio, take Profire, a $60 million revenue business, going to grow to $70 million plus in 2025. That is a very steady business with very few projects. We need to continue to balance out our portfolio with more short- cycle business as we continue to do that. But I think the dynamic of about $30 million or $40 million of revenue in 2024 was unique to a handful of projects. Okay. And you bring up Profire. And I do want to turn to that as well, largest deal that you guys have completed since the current management came on back in 2020. Why don't you tell us a little bit about what Profire does and maybe some details, Peter, on the financials and just how it fits with the overall company strategy? Yeah. Look, in no particular order, a very well-run company with a very strong leadership team and culture. That's attractive to us. In a market that we understand, energy and sort of energy solutions that wants to and is diversifying into more industrial applications, an area that we know a lot about, businesses that want to diversify into new end markets where we're already strong, industrial production, industrial management, etc. So their growth strategies and dynamics very much line up with our strengths. They also want to expand internationally, but haven't made the investment in key international markets. We've already made that investment. So the first thing to look at Profire is it's a well-run business that has very smart growth goals and objectives around industrial and international expansion. And we have that infrastructure in place. So there's a lot to like about us accelerating their growth plans, which are already, I think, smartly laid out. What Profire does is they provide, we believe, a very attractive series of products and services for combustion management, which is an application that's used broadly in energy, broadly in industrial, everything from boilers, you name it, to energy applications. And so they're a niche leader, which is, again, something we're attracted to, where they may only be a $60 million company, but in their leadership space, they're very large and important, and they can continue to grow in industrial markets and international markets. So here's a business that really has a series of standard products and services all around combustion management. They have a growing industrial presence that we can accelerate. And they have a goal and objective to go grow outside of North America, which has been 100% of their revenue. And with our international exposure and infrastructure in the Middle East, in Southeast Asia, in Europe, we believe that this is a business that over the next three years, we can take from a roughly $60 million company to a $120 million company. And I think that we're already off and running on a whole bunch of different growth and productivity initiatives to really hit this out of the park. Peter, maybe just a couple of highlights on any of the financials that are worth noting on this. Margin profile is a little better than we normally see. Yeah, certainly happy to do that. This is a business that, due to the specialist nature of what it sells and its leadership position in North American markets and a high content of intelligence in its control system products, generates gross margins north of 50%. And that is with essentially all domestic production, majority of its Canadian and some in the U.S. And we translate that through a very large service and sales team network that provide great customer coverage and rolls down to high teens-low 20s EBITDA margin. And on an adjusted basis, as we look at this business after we take out the public company expenses and overlapping corporate costs and begin to look at some of the streamlining and productivity opportunities Todd alluded to, we think this is mid-20s EBITDA business as it scales. It converts cash very rapidly. Book- to- ship in this business is four to six weeks. A long cycle for them is 12, where they're acquiring some additional componentry that they don't supply or some racking or skidding capacity so they can put multiple units on a single box or in a single package. That'd be 12 weeks. And so for us, this is a very nice blend into our portfolio, giving us predictable revenue that turns fast, that generates cash quickly at high margins. This is also a business. Yeah, this is also a business with an outstanding service footprint, six locations in North America, one in Canada, five in the U.S. that we'll leverage through our SepFil business. We'll take advantage of those locations and people in the field to continue to work on our service and installed base model. That's an opportunity for existing CECO businesses to spend more time in front of customers that are operating our equipment, which is part of our strategy to grow in our installed base. And flipping back to the bookings, which again had been just robust. Help us understand, either of you, what we're seeing out there in terms of the business environment. But I also wanted to touch on the fact that the size of these projects. Look, CECO historically has been involved with large projects. I think we've seen that in the past. But is there something about the business today where you're seeing a shift toward higher value projects? And is that more in the energy area, or is it all? You alluded to one also on the metal side in the industrial area. Help us understand what you're seeing. Yeah. Yeah. You know, interestingly, over the last few years, we've actually been shifting or investing for smaller revenue projects as well as more book- to- ship or short cycle and product and services, so actually, our growth in smaller projects and in sort of short cycle book and ship business has been very good and will continue to be. Look, we have had over the last year larger projects than we've historically booked, including that $30 million aluminum job and some other large projects in the industrial air space, and look, it wasn't our execution. It was just the project starting later, so we're talking about it more. Had that project not started later, we wouldn't be talking about a $30 million aluminum job. We would have just kind of made the year and moved on. I will say that in certain markets, including each of our air, water, and energy businesses, there are some very large projects, so in air, other, I guess, just sort of investments in industrial production that are interesting and attractive. In water, there are some very complex water projects that we are being asked to participate in and look at that are tens of millions of dollars and attractive, and in energy, we have a very balanced portfolio in separation filtration that does a range of project sizes, but nothing huge. We have a range of projects in other parts of our energy business, but in power generation between emissions management and Thermal Acoustics, which is noise abatement, we're looking at instead of one to two $10-$30 million projects a year, we might be looking at multiples of that, as well as now one to two $50 million-$100 million projects a year. Natural gas power, for example, we believe and we understand from GE Vernova, Siemens, and others that have made a lot of public comments that the natural gas power market to support not just baseload power, but peaker power associated with wind and solar and backup power and things of that nature. Power writ large for digitization, electrification, for alternative energy backup and peaker, etc., is likely already started and is going to start and going to continue a multi-year, three- to five- to longer-year power supercycle. And we have a seat at the table, literally. We're meeting with these companies recently, talking about the dynamic, the projects, how can we be a good partner and supply chain partner. So look, in our $210 million of bookings, and it might be higher, but at least that in the fourth quarter, we had a $40 million power job. That is a large power job for us, but not the first time we've ever booked a $40 million job in power. We're looking at instead of doing one to two a year over the next few years, potentially doing multiples of that, including jobs that could be multiple sizes of that. So we are growing our smaller, shorter cycle business. We are growing our mid-cycle, medium-sized project business very nicely. But there will be, we expect more big projects for us over the next few years, and it started this past year. That actually segues into the next question I have. It's something we get asked a lot from investors. CECO has had a large installed base, for sure. The question that comes up, especially as you highlight some of these larger projects, are you the incumbent? What is differentiating you from the competition? Why are you winning? Are these a function of the long relationships you've had, or is there some share gain here? At least 40% of our sales on project side, where we're being asked to bid on a $1 million or larger piece of equipment, at least 40% of those sales, those projects, we're the incumbent, we're the installed base. Or we're being asked to replace maybe a company that is either no longer around or sort of been part of an acquisition, or they didn't have a good experience, whatever. It is absolutely us being asked to replace or a large win rate. So if it's our piece of equipment, it's very, very large a win rate. If it's even replacing somebody else's piece of equipment out there, it's greater than 50% win rate. So at least 40% of our sales on the project side. So 30% of our sales is repeatable aftermarket services, short cycle, parts and products and pumps and filters and things that we just sell every day. Profire fits that dynamic, where they're just selling Profire combustion management systems every day. So that 30% continues to grow. The other 70%, about half of it, is we're the incumbent, and we're going to be getting these bids regularly to go and replace equipment that's been in the market for 10, 15, 20, 30 years, and we're going to replace that industrial air product or that energy product. Okay? Of the large projects we're talking about here, it is longevity in the market, its reputation, relationship with the customer. And frankly, only a handful of us are really qualified at this point to do it. And there won't be a new competitive entrant to separation filtration for gas in our space. Years of qualification. And same thing with emissions management or Thermal Acoustics. No one's going to roll the dice to save 10% with a new entrant. It's just there's a real moat around these businesses, I would say. And look, the dynamic of these businesses is attractive. Now, there's competition, but we're probably considered to be a number one or two player in these markets. Okay. Thank you. Hey, Peter, help us with maybe how to think about the margin profile, because you've got a lot of moving parts here. You're adding some higher margin business. You're divesting a Fluid Handling business. I think the margins in that business were pretty healthy. But just how do we think about that, the margin profile, gross margins, and EBITDA margins? Yeah. So as we look forward, well, let's take a step back. Because we saw the revenue push out this year, we invested in additional resources and project execution, thinking that we were going to recognize revenue over that. So we have additional costs in our business to support multiples of revenue than what we delivered. So as I think about 2024 margins, they're probably 30 basis points-50 basis points lower than they should be, possibly greater than that when we finalize our view, because we added costs in project engineering, project management, those sorts of execution skills as we were booking orders. Those jobs and those resources now don't need to be added into next year. So we think that's a 30-50, possibly higher just lift right out of the gate. So that puts us close to 12% coming out of the year. We also see now continued productivity opportunities in the business that give us another, over the next two years, 100 basis points to 150 basis points of improvement. We see scale leverage on our corporate expenses providing a similar 100 points to 150 points. So we're well on track to that 15% or mid-teens target. Now, the impact of the mix. When I think about replacing approximately $45 million, taking $45 million of Verantis in at high teens margins, that will be approximately an even revenue offset to fluids at slightly lower margins. But I'm bringing in on top of that a Profire business at $70+ million of revenue doing 20s adjusted EBITDA margin. So as I look at the mixed benefits, our underlying productivity, and sort of the rollover revenue benefits, I think we're looking at 12.5%-13.5% as a range in the year. Okay. Two final questions because we're coming in on the time deadline. Maybe Todd, one for you, and then we'll flip back to the balance sheet and M&A for you, Peter. Todd, just in terms of the environment, so we've got a changing political leadership in Washington, a lot of talk about industrial production and maybe insourcing. How are you thinking about the overall business environment? What are you hearing from customers you're talking to? I think customers are really excited about the business environment. I think there's a lot of investment that they feel is now confirmed to be happening or they expect to be happening. I think that regulation, and it's not just maybe what everyone jumps to when they think of regulation. It's things like permitting and just business environment moving faster, getting things approved budgetarily and of those natures, more spending in key areas of defense and, like I said, power that have just been sort of paused. So there's just, for us, what we're hearing from our customers, many of which I already mentioned, but because I mentioned defense, even the naval budget, it seems to be moving faster with them going and starting to retrofit their destroyers for new equipment where we are fundamental and have a very strong position. A lot of people really, I think, are just relieved to know where we're heading with the new administration. So there's also that just relief that, okay, it's behind us now. Regardless of who won, we just now know, and we can start to work on things. So on the big, big pluses, the investment that we think is going to be moving, that has long, that has been moving, kind of paused, going to be moving again, we believe. It seems like a good, solid economic environment, which had, again, been happening. No criticism to the economy in my mind. There's things to be critical of, but we had a strong economy in many pockets and many areas, and I think that's going to continue, and again, we believe that the fluidity of things just starts to pick up a little bit now that it's behind us. Certainly, the Trump administration is making very clear decisions on areas of energy which are beneficial to companies that we support. There's a lot of pluses. If there are minuses, there's still a fair amount of uncertainty. I think that this is going to be a critical topic around tariffs. There's a lot of uncertainty around what does it mean to potentially be looking at deportations. There's just uncertainty. Uncertainty is a tricky dynamic for companies. We're doing a lot of work on what ramifications we might see or our customers might see. We think it's balanced to the positive. We do think that there's some work to be done on cost impact if tariffs become a bit of an action that is put in place. Our largest exposure, just to kind of touch on that, would be our great relationships that we have in Canada and more North American relationships, mostly Canada, a little bit Mexico, with fabricators and manufacturing partners that we work with, that we look forward to continuing to work with. And we don't know what impact that could have with costs and tariffs. There's other options, but we don't have a lot of other tariff exposure per se. We're not importing much from Asia. We're not importing much from other countries for us. But that's probably the balance of it all, Jim, is that we don't know what we don't know, but we're keenly interested in those dynamics. Peter, go ahead and jump on the balance sheet. Jim, do you have a specific question for the balance sheet? We do have some moving parts here. You're going to be selling a business, which probably gets a decent price. We'll see. But just in general, how we're thinking about leverage and with all the maybe the potential to do additional M&A, or do we digest at this point for a little bit? Well, Jim, we've definitely put the expanded credit facility to work. We've drawn on the revolver. Our lenders are pleased we have. They're also pleased that in the transactions we've executed, the multiples have been very reasonable. And so it's kept leverage below 3.0, probably in the mid-twos. Right now, we're comfortable with that. And with the cash generation capability of the businesses we've acquired, Verantis and Profire, we'll continue to focus on paying down that revolver to continue to keep flexibility. A majority of the proceeds from the sale of the fluids business we intend to use to reduce debt further, to build more flexibility into the balance sheet, give ourselves opportunities for further M&A. We continue to have an active pipeline, Jim. I would say we're not pausing. It's just we have nothing that is progressing quickly through to transaction. And we continue to develop our ideas. We continue to talk with potential available assets. We're refining our strategies. We're working on integration, so it's very much a continuation of our playbook with programmatic M&A supporting the organic growth. As Todd mentioned earlier, we did not anticipate a bunch-up of all these transactions in the last half of the year, part of the last four months of the year, so there is some digestion that we have to undertake, but I will tell you, the integration of Profire will be relatively straightforward. It's a standalone business. It'll be operated as a standalone platform in our portfolio. It's a company that understands being public. They understand the operating model of CECO. They understand the needs. They need very little, I would say, updating. What they need is just to be plugged into our administrative systems and tools, and they're off and running. So that integration is going to be more straightforward than a $20 million, 50-person private company that doesn't have infrastructure, that doesn't understand what it's like to be part of a public company, that doesn't understand monthly forecasting and quarterly reporting. And we don't have much to teach them at Profire. You have a lot to teach or to share and update in a private acquisition. So from that standpoint, we're very pleased with the progress we've made, and we see a very straightforward path to getting through it quickly. And we see the realization of cost synergies, which is a first, really, for us in a deal being material in the first half of this year. Okay. Hey, gentlemen, thank you. Thanks for spending some time with us and going over a lot of news today. Yeah. Thank you, Jim. My pleasure, Jim. Thanks for the opportunity to be at the conference, like I said. Good luck to everyone. I know it's going to be an interesting year. Okay. We'll speak soon. Thank you. Thanks. Bye-bye. Bye-bye.