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• Revenue: $136 million, down 9% year-over-year.

• New Orders: Over $160 million, a record for Q3.

• Backlog: Reached a record level of $438 million, up 11% year-over-year and 12% sequentially.

• Adjusted EBITDA: $14.3 million, down 5% year-over-year.

• Gross Profit Margin: 33.4%, up 450 basis points from the same period in 2023.

• Adjusted EBITDA Margin: 10.6%, up 50 basis points year-over-year.

• Adjusted EPS: Down $0.08 due to lower adjusted EBITDA and tax items.

• Net Debt: Approximately $90 million, with a leverage ratio of 1.6 times bank EBITDA.

• 2024 Revenue Guidance: $575 million to $600 million, up approximately 10% year-over-year at the midpoint.

• 2024 Adjusted EBITDA Guidance: $65 million to $70 million, up approximately 17% year-over-year at the midpoint.

• 2025 Revenue Guidance: $700 million to $750 million, a 25% year-over-year increase at the midpoint.

• 2025 Adjusted EBITDA Guidance: $90 million to $100 million, representing a 40% increase year-over-year.

• Warning! GuruFocus has detected 4 Warning Signs with CECO.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CECO Environmental Corp (NASDAQ:CECO) achieved record bookings of over $160 million in Q3, marking the highest for any Q3 in company history.

• The company's backlog reached a new record level of $438 million, surpassing the $400 million mark for the first time.

• CECO Environmental Corp (NASDAQ:CECO) announced two strategic acquisitions, WK Group and Profire Energy, which are expected to expand their portfolio and unlock new industrial and geographic markets.

• The company is forecasting a strong finish for 2024 with October expected to be a record month for orders, setting up a positive outlook for 2025.

• CECO Environmental Corp (NASDAQ:CECO) is projecting significant growth for 2025, with revenue expected to increase by 25% and adjusted EBITDA by 40% year-over-year.

Negative Points

• CECO Environmental Corp (NASDAQ:CECO) experienced softer than expected Q3 revenues due to customer-driven delays in large projects.

• The company had to adjust its 2024 revenue and EBITDA guidance back to original levels due to these delays.

• There is a wider range in the 2025 guidance due to uncertainties in project execution and timing.

• The company faced challenges with working capital timing and higher capital expenses, impacting cash flow.

• Supply chain and resource availability issues continue to pose challenges, affecting project timelines and execution.

Q & A Highlights

Q: Can you clarify the opportunity set in large power plant projects and what has been booked versus what is still outstanding? A: Todd Gleason, CEO, explained that there is a significant need for additional power and energy transition projects, such as converting coal to natural gas-fired power plants. CECO has booked a natural gas-fired power plant project and similar projects in October. These projects range from $25 million to over $50 million, and the company expects more efficient movement in this area. Peter Johansson, CFO, added that there are 15 to 20 active opportunities with a potential value of $450 million over the next eight quarters.