CECO Environmental (CECO) Q1 2026 earnings summary

Executive summary

• Orders surged 97% year-over-year to $449.5 million, with backlog up 72% to $1.04 billion, surpassing $1 billion for the first time.

• Revenue increased 17% year-over-year to $205.9 million, with adjusted EBITDA up 46% to $20.4 million, reflecting strong operational momentum.

• Full-year 2026 guidance was raised for both revenue ($940 million–$1 billion) and adjusted EBITDA ($120 million–$140 million), marking the second guidance increase this year.

• Thermon acquisition is on track for a Q2 close, with $40 million+ in cost synergies identified and integration planning underway.

• Net loss attributable to shareholders was $0.4 million, primarily due to the absence of a prior year divestiture gain.

Financial highlights

• Gross profit increased 3% to $63.9 million, with gross margin at 31.0%, down from 35.2% due to divestiture and project mix.

• Adjusted EBITDA margin improved to 9.9% in Q1, with trailing 12-month margin at 12.0%.

• Book-to-bill ratio for Q1 was approximately 2.2x, indicating strong demand.

• Net debt increased to $253.2 million, with a leverage ratio of 2.3x.

• Free cash flow was negative in Q1 due to working capital needs, but is expected to turn positive in Q2 and exceed 50% of adjusted EBITDA for the full year.

Outlook and guidance

• Full-year 2026 revenue guidance raised to $940 million–$1 billion, with organic sales growth expected at 25%.

• Adjusted EBITDA guidance increased to $120 million–$140 million, targeting 44% growth and 170 basis points of margin expansion.

• Guidance excludes impact from the pending Thermon acquisition, which will be updated post-close.

• Confident in delivering sequential revenue increases throughout 2026, supported by a robust $7 billion+ sales pipeline.

• Management expects most backlog to be deliverable within 12–24 months.