Aug 10, 2026 earnings call — Thermon integration and record orders
CECO reported record orders of $799 million and raised full year revenue outlook to between $1.3 billion and $1.375 billion.
Revenue $0.3B (est $0.3B) · EPS $-0.80 (est $0.27) · Next-quarter revenue outlook $1.3B–$1.4B
Key quotes
"As Todd mentioned in our opening chart, in the first 60 days, we have captured approximately $13 million of annualized net adjusted EBITDA savings, already representing roughly 1/3 of our $40 million target."
"Our sales pipeline has expanded from approximately $1.5 billion in 2021 to the more than $8.5 billion that I just mentioned."
"We continue to expect mid-teens adjusted EBITDA margins and adjusted free cash flow conversion of at least 55% of adjusted EBITDA."
Analyst Q&A 7
orders and power generation outlook
Q (Aaron Spychalla · Craig-Hallum): Analyst asked if orders stayed strong into Q3 and about power generation competitive dynamics and supply chain. He also asked if any large industrial water orders hit in Q2 and how that business can grow and affect margins.
A: Management said the third quarter started strong and they see steady opportunities across power, water and industrial air. They feel confident about the second half and expect the year to easily eclipse $2 billion. For industrial water, many large orders remain delayed by Middle East conflicts, margins on projects are now often over 30% and they see potential to grow the business to $200 million to $300 million in revenue in coming years.
"So I think we feel good about the second half of the year, easily eclipsing $2 billion or more for the year." — Todd Gleason (CEO·CHAIR)
gross margin drivers and outlook
Q (James Ricchiuti · Needham & Company): Analyst asked what drove the sequential gross margin improvement and how to think about gross margins in the second half.
A: Management said Q1 was unusually low and the rebound is partly a return to normal. Adjusted gross margins were around 33.5% and they expect margins to go higher in the second half due to productivity and higher-margin backlog. They also noted Thermon adds to gross margin but only one month of Thermon results were included.
"We believe that, that's -- it goes higher in the second half of the year with the things that Peter outlined in terms of productivity, higher margins in our backlog." — Todd Gleason (CEO·CHAIR)
SG&A improvement and cross-selling
Q (Tomohiko Sano · JPMorgan): Analyst asked how much of SG&A improvement was structural versus volume leverage and whether SG&A could drift up. He also asked about early cross-selling wins and how to make them repeatable.
A: Management said they do not expect SG&A rates to drift back up; most prior investments are complete except for ERP migration. About two-thirds of the SG&A improvement came from holding or reducing expenses versus volume, and some Thermon synergies will appear there. On commercial synergies, they described partner selling rather than simple cross-selling: CECO has visibility into large projects and can bring Thermon products into those projects, starting with power generation and expanding across regions and channels.
"When I break it into the 2 halves, what was performance versus leverage, the majority, probably 2/3 of that number, was a result of those expenses being held flat or coming down relative to volume." — Peter Johansson (CFO)
pipeline mix and industrial water bookings
Q (James Ricchiuti · Needham & Company): Analyst asked whether the pipeline increase since June was mainly power generation related. He also asked for color on bookings in industrial water excluding delayed Middle East projects.
A: Management said the pipeline increase is largely power generation related and also includes semiconductor and some Thermon opportunities; Thermon has about a $1 billion to $1.5 billion sales pipeline. For industrial water, several acquired brands are doing work outside the Middle East and are seeing nice double-digit orders growth and good returns on investments.
"Yes. We haven't covered that, Jim, largely power gen related, but semiconductor as well." — Todd Gleason (CEO·CHAIR)
gas/LNG demand and Thermon data center products
Q (Robert Brown · Lake Street): Analyst asked about demand in gas infrastructure and energy and the outlook in that vertical. He also asked what Thermon supplies to data centers and how big that opportunity is.
A: Management said demand including LNG is extraordinarily strong and they booked two largest Peerless projects recently for gas pipelines and new LNG projects. Investment in gas transport and processing is elevated and should continue for many quarters, with several FIDs expected. For data centers, Thermon offers liquid load bank products and heat trace solutions; load banks are relatively new, big for Thermon, and heat trace is used in novel ways to maintain building stability, both attractive because they are full margin and quick to turn.
"The demand -- if we include LNG in that topic, and we're tending to now because we're looking across the full value chain is extraordinarily strong." — Peter Johansson (CFO)
Thermon uplift and cross-sell lessons
Q (Robert Brooks · Northland): Analyst asked if the $0.5 million Thermon uplift will apply to every project and whether that is net. He also asked what learnings from past cross-sell efforts (like Profire) will apply to Thermon.
A: Management said the $0.5 million was not one project and it's not automatic on every project; these were existing projects where Thermon now supplies heat trace instead of competitors. Value varies by project from tens of thousands up to about $100,000, with examples like $70,000 noted, and there is also retrofit and aftermarket potential. On acquisitions and cross-selling, they said many past acquisitions have been leveraged to share leads, enter new markets and sell products across businesses, and that visibility in their sales CRM helps the teams work together.
"These are all variable based on where you put the plant, the size of the plant and the duty cycle of the plant." — Peter Johansson (CFO)
market stability and execution capacity
Q (Joseph Giordano · TD Cowen): Analyst asked how the current market compares to mid-2010s boom-and-bust underwriting and how CECO assesses its capacity to deliver as orders grow larger and extend further out.
A: Management said the market today has much more long-term visibility, with customers' pipelines stretching into 2027–2030, so dynamics differ from past short bursts. Their booked orders are firm and their backlog debooking rate is far less, under half of 1%, and they have been selective in pursuing work. They said their global outsourcing model, investments in engineering and supply chain since 2022–2025 position them to handle large volumes, and large projects are often designed once and executed sequentially with a steady delivery rhythm.
"So for us to book $799 million of purchase orders, putting it in backlog, our backlog debooking rate is far less, but it's less than half of 1%." — Todd Gleason (CEO·CHAIR)