CECO Environmental and Thermon executives used a conference fireside chat to outline the strategic rationale behind their recently announced combination, emphasizing complementary end-market exposure, cross-selling opportunities in power and industrial projects, and a balance sheet they described as positioned for continued investment.
How the deal came together
Todd Gleason, CEO of CECO, said the transaction was built on a long period of familiarity and “mutual respect” between the companies, noting CECO had been “monitoring and admiring” what Thermon Group (NYSE:THR) has been doing in its niche markets. Gleason described both companies as serving heavy industrial customers with engineered solutions tied to process management and environmental needs, arguing the overlap creates a stronger platform when combined.
Thermon executive Bruce Thames said he and Gleason have stayed connected since shortly after Gleason became CEO, comparing notes over time. Thames highlighted CECO’s work repositioning its portfolio, including expansion into water globally and opportunities in the power sector, as areas that became more strategically relevant as discussions progressed.
Commercial synergies: controls, cross-selling, and power projects
Asked to go deeper on commercial opportunities, Gleason pointed to Thermon’s investment in its controls platform—also called “Genesis”—as an area of strategic interest for CECO. He said CECO has been evaluating investments in controls and monitoring “organically and inorganically,” and believes combining capabilities could expand product offerings for customers, including in “air and water.”
Gleason also described how the companies see pull-through opportunities tied to CECO’s large-project activity. He said CECO is winning “very large multi-hundred-million-dollar power jobs” where Thermon’s products—such as heat tracing, heat process equipment, and immersion heaters—could be specified rather than sourced from third parties. Gleason said CECO’s sales pipeline is now “$6.5 billion,” with visibility into project requirements over the next two years because CECO is “70% long cycle.”
Thames added that once the deal was announced and teams were able to engage, Thermon began bidding immersion heaters for fuel conditioning systems tied to large turbines. He also cited early examples where Thermon’s heat tracing is being specified in applications where a third-party supplier had previously been used, calling these “low-hanging fruit” that emerged within “the last three to four weeks.”
Thermon’s portfolio shift and “3D” strategy
Thames said Thermon has materially reduced its historical dependence on oil and gas. He said that when he joined roughly 11 years ago, about 65% of revenue was tied to oil and gas, including a meaningful upstream component. Today, he said oil and gas represents about 28%–30% of revenue, with only about 2% tied to upstream CapEx, and the remainder largely downstream with recurring characteristics.
Thames also described a shift in revenue mix from a more project-driven model to a more recurring one, saying the business moved from roughly “45% CapEx and 55% OpEx” to about “83% OpEx recurring revenues on the installed base.” He attributed growth to Thermon’s “3D strategy”—decarbonization, digitalization, and diversification—adding that more than 70% of revenue is now outside oil and gas, spanning markets such as general industrial, chemical and petrochemical, power, commercial, food and beverage, rail and transit, semiconductor, and pharmaceuticals.
On product development, Thames highlighted new launches around “medium voltage” heating for large industrial applications and “liquid load banks” targeting data centers. He said those two product lines could position Thermon for “5%–7% growth” from those offerings, and noted Thermon’s engineering backlog is at a record high. He added that customer capital spending is up 26% this year and said Thermon expects those trends to continue over the next three to five years, with an expectation of “double-digit growth” for what would be its fiscal 2027 and beyond.
Power and data centers: turbine-driven demand and pull-through
Gleason described gas-turbine power as a major growth driver, citing what turbine OEMs are saying about bookings and multi-year growth outlooks. He said the market is shifting toward larger “frame” units and large-scale facilities, which he said is where CECO “wins more,” narrowing the supplier set to “two or three” companies capable of providing a comprehensive suite of solutions.
To illustrate CECO’s role, Gleason said combustion creates “heat, noise and emissions,” and CECO’s solutions address heat movement and transfer, noise attenuation (which he referred to as “thermoacoustics”), and emissions reduction, including NOx. He also said CECO recently raised its bookings outlook to “greater than $1.5 billion,” up from an initial view of “greater than $1.2 billion,” and suggested there could be additional upside over the next 12–18 months driven by large turbine-related projects.
Thames said Thermon’s exposure to power is currently about 9%–10% of revenue, but outlined multiple touchpoints in the sector, including heat tracing in combined-cycle plants, boilers used as backup or for other systems, and nuclear-related work enabled by an “N-Stamp” certification. He also described Thermon’s position in natural gas processing projects such as fractionators, and said Thermon has booked “six or seven” LNG projects since the start of its fiscal year (which he said began April 1, 2025), with activity he believes is accelerating amid global supply uncertainty.
Balance sheet, M&A, and what management says investors may be missing
On capital allocation, Gleason said the priority is executing a successful integration while continuing to fund organic growth opportunities across the portfolio. He described the integration as “not complicated,” while acknowledging it still requires attention, and said Thermon would remain intact as CECO’s “largest strategic business group,” adding, “We’re not breaking up Thermon.”
Gleason also said the combined company would start with what he called a “very healthy balance sheet,” describing leverage at “2.5” at the combination. He said that financial flexibility, paired with the companies’ market positions, could support a “programmatic” M&A approach over time, focused on niche leadership and geographic expansion.
In response to an audience question about what the market may not fully appreciate, Gleason said there was initial confusion around the transaction’s financial profile, including concerns about leverage. He contrasted the deal with other combinations he said were “highly levered,” arguing this one is not. Gleason also said broader market headlines—he referenced “this little war that got started”—created an additional distraction shortly after the announcement, but said management believes investors will increasingly recognize what the combination unlocks “on day one,” and over longer horizons.
About Thermon Group (NYSE:THR)
Thermon Group, Inc (NYSE: THR) is a global provider of engineered thermal solutions designed to maintain process temperatures, prevent freezing and improve energy efficiency across industrial, commercial and power generation applications. The company specializes in the design, manufacture, installation and service of heat tracing systems, insulation and protective coatings for pipelines, tanks, vessels and other critical equipment.
Thermon’s core offerings include electric heat tracing, steam tracing, custom-engineered control panels, monitoring systems and advanced sensor technologies.
