CECO Environmental (NASDAQ:CECO) reported record fourth-quarter and full-year 2025 results on its earnings call and also detailed a “transformational” merger agreement to combine with Thermon, a process heating and temperature management company with a large short-cycle aftermarket business.
Fourth-quarter and full-year 2025 results
CEO Todd Gleason said the company delivered “strong quarter and full-year results with many financial records,” while also raising standalone 2026 guidance (not including Thermon) based on what management described as record backlog and strong pipeline visibility.
Fourth-quarter orders were $329 million, up 50% from the prior-year period, with a book-to-bill of about 1.5x. For the full year, bookings were $1.064 billion, up 60% versus 2024, with book-to-bill of nearly 1.4x. Gleason highlighted CECO’s largest-ever project booking in the quarter—approximately $135 million for a large-scale natural gas power generation facility in Texas.
CECO posted record revenue of $215 million in the fourth quarter and $774 million for the full year. Johansson said full-year revenue was up 39%, including 25% organic growth, despite an approximately $25 million revenue headwind tied to the sale of the Global Pump Solutions business in late first quarter 2025. He added that second-half revenue was up about 40% versus 2024 as power generation project conversions accelerated.
Adjusted EBITDA in the fourth quarter was $29.8 million, up 57% year-over-year, with margin of 13.9%, representing a 180 basis point improvement. For the full year, adjusted EBITDA grew 44% to exceed $90 million for the first time, with 40 basis points of margin expansion. Johansson attributed improvement largely to a lower G&A expense rate, partially offset by about $0.8 million of costs tied to legal entity reductions supporting ERP migration and acquisition integration steps.
Margins, cash flow, and balance sheet commentary
Management discussed margin dynamics using trailing twelve-month gross profit margin charts tied to the company’s Operating Excellence Initiative launched in the fourth quarter of 2022. Johansson said fourth-quarter margins rebounded above the 35% target level, with a sequential improvement of about 240 basis points from the third quarter, which he described as a typical seasonal recovery driven by short-cycle volumes and project execution and closeouts.
On cash flow, Johansson characterized 2025 as “a tale of two halves,” with the first half consuming about $20 million of cash and the second half generating about $30 million, for full-year positive cash flow of approximately $10 million, up 30% year-over-year. He said second-half cash conversion was 52%, within CECO’s target range, and management expects to “remain there in 2026.”
Johansson said gross and net debt ended the year lower than at the start of the year, with a leverage ratio of about 2.2x and liquidity of $124 million. He also said CECO expects a 50 basis point step-down in interest rates following a 25 basis point step-down realized in the fourth quarter, resulting in about $1.1 million of annualized interest expense savings if gross debt remains at current levels.
Raised 2026 standalone guidance and early-year order momentum
Gleason said CECO raised its 2026 full-year guidance (excluding Thermon) to revenue of $925 million to $975 million (from the prior outlook of $850 million to $950 million) and adjusted EBITDA of $115 million to $135 million. Johansson added that the company’s opportunity pipeline exceeds $6.5 billion and is “converting quickly,” underpinning management’s expectation for more than 20% top-line growth in 2026.
Gleason said CECO continues to see a strong market backdrop across power generation, industrial reshoring, industrial water, and natural gas infrastructure. Through Feb. 24, CECO had booked a little over $270 million of orders quarter-to-date, and Gleason noted two large natural gas power generation orders exceeding $175 million in aggregate value had already been secured early in the first quarter.
On the call’s Q&A, management provided additional market detail:
- Power generation: Gleason said CECO’s current power-related pipeline is “well in excess of $1 billion,” potentially approaching $2 billion in what he described as a short- to medium-term pipeline. Johansson said CECO’s emissions treatment solutions can help customers obtain permits faster and called demand “exceeding supply” across equipment categories.
- Industrial water: Gleason said CECO is seeing opportunities—particularly internationally—for industrial water treatment and produced water, with potential project sizes of roughly $10 million to $50 million, including in the Middle East and other regions tied to energy and heavy industry.
- Revenue cadence: Gleason said 2026 revenue is expected to be weighted to the second half, with the company’s largest quarter typically in Q4. He suggested at least 55% of revenue may land in the second half as some larger projects convert later in the year.
Thermon merger: key terms and strategic rationale
CECO also announced an agreement to merge with Thermon in a stock-and-cash transaction with total consideration of approximately $2.2 billion. Under the terms described on the call, Thermon shareholders will receive $10 in cash and 0.684 shares of CECO common stock per Thermon share. The cash component is expected to be funded through existing credit facilities.
Management said the deal implies a value of about 17x adjusted EBITDA, or about 13x including synergies. The transaction has been unanimously approved by both boards and is expected to close in mid-2026. Upon close, CECO shareholders are expected to own approximately 62.5% of the combined company, with Thermon shareholders owning about 37.5%.
Gleason said he will remain CEO of the combined company, and Thermon will appoint two board members. Management teams will remain in place through the pre-closing process, and the combined company will continue to trade as CECO Environmental.
Pro forma profile, synergies, and business mix
On a pro forma basis, management cited combined revenue of approximately $1.5 billion and adjusted EBITDA of $295 million, assuming about $40 million of run-rate synergies, with margins “close to the low 20s.” The company expects pro forma net leverage of about 2.5x.
Gleason described Thermon as an end-to-end provider of process heating, heat tracing, temperature management, and asset protection, with a strong aftermarket presence. He said Thermon expects more than $520 million of revenue in its current fiscal year, with about 85% of sales considered OpEx/short-cycle. Management cited Thermon gross profit margin of about 45% and adjusted EBITDA margins of about 23%.
Thermon’s revenue mix was described as roughly:
- ~50% heat tracing
- ~35% heating systems
- ~15% transport heating, tubing, and digital solutions
Management framed the merger as combining CECO’s more project-driven profile (about 70% to 80% mid- to longer-cycle revenue) with Thermon’s short-cycle and recurring aftermarket orientation. The companies identified about $40 million of synergies targeted by year three, primarily from public company cost elimination, SG&A overlap, operational efficiencies, footprint rationalization, and supply chain leverage. Management said commercial synergies were not included in the current model but were viewed as an opportunity, given customer overlap and complementary offerings.
About CECO Environmental (NASDAQ:CECO)
CECO Environmental Corp. (NASDAQ: CECO) is a global technology provider specializing in engineered solutions that help industrial and commercial customers manage air emissions, process fluids and optimize energy use. The company develops custom-engineered systems and modular packages designed to meet evolving environmental regulations and improve operational efficiency across diverse production processes.
CECO’s core offerings include air pollution control equipment—such as scrubbers, cyclones, fabric and cartridge filters—and industrial process filtration systems for applications ranging from particulate removal to oil-water separation.
