CECO ENVIRONMENTAL CORP Quarterly Report Released - Here’s What You Should Know

CECO Environmental Corp. – Quarterly Summary for Q3 2025

Key Financial Metrics:

• Net Sales: $197.6 million for Q3 2025, up 45.8% from $135.5 million in Q3 2024. For the nine months ended September 30, 2025, net sales were $559.7 million, a 40.1% increase from $399.4 million in prior year.
• Gross Profit: Q3 2025 gross profit was $64.6 million (32.7% margin), up from $45.3 million (33.4%) in Q3 2024. For nine months, gross profit was $193.9 million (34.6% margin), compared to $139.5 million (34.9%).
• Operating Income: Q3 2025 operating income was $9.4 million (4.8% margin), compared to $7.2 million (5.3%) Q3 2024. For the nine months, operating income was $89.3 million (16.0% margin, including a $63.7 million gain on divestiture), versus $24.1 million (6.0%) in prior year.
• Net Income: Q3 2025 net income attributable to CECO was $1.5 million ($0.04/share), down from $2.1 million ($0.06/share) Q3 2024. Nine months net income was $47.0 million ($1.33/share), up from $8.1 million ($0.23/share), primarily due to the $63.7 million divestiture gain.
• Non-GAAP Operating Income: $17.5 million in Q3 2025 (8.9% margin) up from $11.0 million (8.1%) Q3 2024; $44.5 million for nine months (8.0%), up from $33.8 million (8.5%).
• Cash and Cash Equivalents: $32.8 million as of September 30, 2025 (down from $37.8 million at December 31, 2024).
• Outstanding Debt: $220.9 million as of September 30, 2025.
• Working Capital: $97.2 million at September 30, 2025, versus $86.3 million at year-end 2024.

Segment Performance:

• Engineered Systems: Q3 sales $143.7 million (up $52.4 million YoY), Q3 operating income $25.0 million (up $9.2 million YoY).
• Industrial Process Solutions: Q3 sales $53.9 million (up $9.7 million YoY), Q3 operating income $4.2 million (down $3.9 million YoY).
• Geographically: U.S. sales comprised $137.1 million of Q3 total; international revenue remains a strong contributor.

Acquisitions and Divestitures:

• Acquired Profire ($122.7 million purchase, $48.7 million YTD revenue), Verantis ($69.2 million), WK Group ($6.8 million), and EnviroCare ($16.7 million).
• Sold Global Pump Solutions business on March 31, 2025 for $107.8 million; gain of $63.7 million recognized.

Liquidity and Capital Resources:

• Cash used in operating activities was $4.1 million for the nine months, compared to net inflow of $23.0 million prior year.
• Net cash from investing activities was $1.5 million, supported by divestiture proceeds.
• $2.8 million net cash used in financing activities (lower share repurchases and decreased debt repayments).
• Total unused credit availability was $159.3 million.

Risks and Uncertainties:

• Debt: Company has $220.9 million in debt; interest expense increased to $16.2 million YTD (from $9.3 million prior year). A 10% increase in borrowing rates would have a material effect on expense.
• Fixed Price Contracts: Exposure to cost overruns and potential delays/cancellations that could affect profitability.
• Supply Chain and Inflation: Risks of higher costs and project delays due to supply chain or inflationary pressures.
• Integration Risk: Multiple recent acquisitions increase complexity and integration costs ($8.4 million YTD).
• Legal: Ongoing asbestos litigation risk and other routine contract-related exposure. The company believes current exposure is not material.
• No material changes in risk factors reported this quarter compared to earlier disclosures.

Other Notable Items:

• No share buybacks occurred in Q3 2025; the $20 million repurchase program expired April 2024.
• No changes in internal controls or accounting policy that would impact results.
• Strong order growth: $232.9 million booked in Q3 2025, up 44% year-over-year.

Investor Considerations:

CECO Environmental demonstrated strong revenue and gross profit growth in 2025, bolstered by strategic acquisitions and a major business divestiture. While debt levels and interest expense have increased, the company maintains ample liquidity. Investors should monitor integration of new acquisitions, discipline in managing fixed price contracts, ongoing legal matters, and macro pressures like inflation and supply chain risks. The non-GAAP results indicate improved operating performance, but gains are materially influenced by one-time events. Management continues to focus expansion in both the U.S. and international markets.

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