Ceco Environmental Corp. ((CECO)) has held its Q1 earnings call. Read on for the main highlights of the call.
CECO Environmental Corp’s latest earnings call revealed a generally positive sentiment, showcasing the company’s strong financial performance. The management highlighted record bookings and significant backlog growth, supported by a robust sales pipeline. However, they also acknowledged challenges such as tariff-related costs and lower-than-expected EBITDA margins due to increased expenses.
Record Bookings Achieved
CECO Environmental reported an impressive achievement with record Q1 bookings of approximately $228 million. This marks a 57% increase year-over-year, achieved without any large orders in the power generation or produced water treatment markets, underscoring the company’s strong market presence and operational efficiency.
Strong Backlog Growth
The company ended the quarter with a backlog of $602 million, reflecting a 55% increase year-over-year and approximately $60 million higher sequentially. This growth was driven by another record quarter of new orders, highlighting CECO’s ability to secure and manage a growing volume of business.
Increased Sales Pipeline
CECO’s sales pipeline has expanded significantly, growing from $4.5 billion to over $5 billion for the first time. This includes nearly a dozen opportunities, each valued at over $50 million, indicating a strong future potential for revenue growth.
Revenue Growth
The company reported Q1 revenue of $177 million, up 40% year-over-year, with 28% of this growth attributed to recent acquisitions. This demonstrates CECO’s strategic approach to growth through acquisitions, contributing significantly to its revenue stream.
Positive Adjusted EPS
CECO’s adjusted EPS for the quarter was $0.10, surpassing consensus expectations. This positive performance reflects the company’s effective cost management and operational strategies.
Successful Acquisition Integration
The acquisition of Profire Energy has been successfully integrated, producing high levels of bookings and revenues, and delivering on identified synergies. This success highlights CECO’s capability in executing strategic acquisitions and realizing their potential benefits.
Tariff Challenges
The company discussed concerns about the potential impacts of tariffs on supply chain costs and the overall economy. The estimated gross tariff exposure is between $3 to $10 million, prompting CECO to implement measures to mitigate these risks.
Adjusted EBITDA Margins
Adjusted EBITDA margins for the quarter were approximately 8%, which fell short of expectations due to higher selling, engineering, and project execution expenses. This shortfall highlights the challenges CECO faces in managing operational costs.
Increased Interest Expense
Higher interest expenses were noted, impacting the adjusted EPS. This increase in expenses is a point of concern, affecting the company’s overall profitability.
Forward-Looking Guidance
CECO Environmental maintained its full-year 2025 guidance, forecasting revenues between $700 million and $750 million, with adjusted EBITDA projected at $90 million to $100 million. Despite uncertainties related to tariffs and supply chain costs, the company has initiated price and productivity measures to mitigate potential impacts while benefiting from a geographically aligned supply chain.
In summary, CECO Environmental’s earnings call reflected a strong financial performance with record bookings and backlog growth. While challenges such as tariff-related costs and increased expenses were acknowledged, the company’s strategic initiatives and robust sales pipeline position it well for future growth. Investors and stakeholders can remain optimistic about CECO’s ability to navigate challenges and capitalize on opportunities in the coming quarters.