CECO ENVIRONMENTAL CORP Q4 FY2024 earnings call

Key Points

• Todd Gleason noted full-year 2024 revenue was in line with the revised outlook, with adjusted EBITDA a record. Fourth quarter orders were a company record, and full-year orders were up mid-teens. The backlog was $541 million, up 46% from prior year.
• Peter Johansson discussed financial results: Q4 revenue was $159 million, up 3% year-over-year; adjusted EBITDA in Q4 was $19.1 million, down slightly year-over-year but up sequentially. Full-year adjusted EBITDA was $62.8 million, near the high end of guidance.
• Emphasized the company's transformation with balanced industrial air, water, and energy transition businesses, and a sales pipeline that grew from $1.5 billion in 2021 to $4.5 billion in 2024.

Full-year 2024 revenue was $558 million, a 2% year-over-year increase. Adjusted EBITDA was a record $62.8 million, up approximately 9% versus prior year with adjusted EBITDA margins expanding approximately 70 basis points. Fourth quarter orders were a company record at $219 million, representing a 70%+ growth year-over-year, and full-year orders totaled $667 million, up mid-teens year-over-year. The backlog closed at $541 million, an increase of 46% from the prior year end.

2025 Guidance

• Revenue range: $700 million to $750 million (30% year-over-year growth).
• Adjusted EBITDA range: $90 million to $100 million.
• Free cash flow range: 60% to 75% of full-year adjusted EBITDA.
• Expect margin expansion, benefits from acquisitions, and continued operating excellence efforts to drive results.

Risks

• Uncertainty around tariffs and legislative/administrative items, which could create market dynamics. However, CECO believes financial impact will be minimal due to business relationships and contract setups.
• Economic uncertainty related to tariffs is still to be determined, but no significant impact seen to date.

Q: Rob Brown asked about order momentum in 2025 and Profire integration.

A: Todd Gleason mentioned strong orders in power generation, reshoring, infrastructure, etc., and Profire integration is going well with collaboration on opportunities in energy markets and international growth.

Q: Aaron Spychalla asked about backlog visibility and margins.

A: Todd and Peter discussed backlog providing visibility to 2025 guidance, margins expected to expand but at a moderated rate, and tariffs impact is uncertain but manageable through business relationships and contract setups.

Q: Bobby Brooks asked about backlog forecasting and LNG vertical.

A: Todd discussed improved processes and systems for backlog forecasting, and LNG vertical is seeing increased dialogue with customers as projects resume post-pauses.

Q: Chris Grenga asked about short-cycle vs longer-cycle business and LNG end market.

A: Todd mentioned short-cycle business is stable, and LNG vertical is seeing order activity with projects resuming in Louisiana, Texas, and internationally.