CECO Environmental (CECO) 2024 Southwest IDEAS Conference summary

Strategic Positioning and Business Model

• Focused on becoming a leading global provider of sustainable industrial environmental solutions, serving industrial air, water, and energy transition sectors.

• Achieved a balanced portfolio by 2024: ~30% of sales from energy transition, ~30% from industrial water, and ~40% from industrial air, up from no industrial water presence in 2020.

• Approximately 50% of sales are international, up from 35% four years ago, with a global footprint of ~1,300 employees.

• Growth strategy combines organic initiatives and targeted acquisitions, with two-thirds of recent growth organic and one-third from acquisitions.

• Capital allocation prioritizes organic growth, followed by acquisitions, debt repayment, and selective share buybacks, with over $100M in M&A dry powder and $15M in buybacks since 2021.

Market and Operational Highlights

• Serves a diversified industrial customer base, with no single industry accounting for more than 10% of sales.

• Key markets include power, data centers, and midstream oil and gas, with 30%-40% of revenue from energy-related sectors.

• Products and services address regulatory compliance, workplace safety, and asset longevity, with a strong emphasis on environmental solutions.

• Global footprint includes facilities in South Korea and China, supporting regional sales and manufacturing.

• Record sales pipeline exceeding $4B, up from $1.5B in 2020, driven by acquisitions, expanded market focus, and increased engineering resources in India.

Financial Performance and Outlook

• Nearly doubled revenues and more than doubled earnings over the past three years.

• Q3 2024 backlog reached a record $438M, up 11% YoY, with bookings at record levels despite a 9% YoY revenue decline due to project delays.

• Gross profit margin expanded to 34.8% TTM in Q3 2024, up ~500bps since Q3 2022, attributed to productivity, improved business mix, and higher volumes.

• 2025 guidance projects $700–$750M in revenue (up ~25% YoY) and adjusted EBITDA of $90–$100M (up ~40% YoY), with growth split between organic initiatives and recent M&A.

• Updated 2024 guidance: revenue $575–$600M (up ~10% YoY), adjusted EBITDA $65–$70M (up ~17% YoY), book-to-bill ratio 1.20x+.